Cheque bounce cases under Section 138: the key timelines
When a cheque given to pay a debt is returned unpaid, for example for "insufficient funds", the person who received it may be able to file a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. The remedy is effective, but it depends on following a fixed sequence of steps on time.
1. Present the cheque while it is valid
A cheque is generally valid for three months from the date written on it. It must be presented to the bank within that period.
2. Send a written demand notice within 30 days
After the bank returns the cheque with a memo, the payee must send a written notice to the drawer demanding payment of the cheque amount. This notice must be sent within 30 days of receiving information from the bank about the dishonour.
3. Allow 15 days for payment
The drawer has 15 days from receiving the notice to pay. If they pay within this period, no offence is made out.
4. File the complaint within one month
If payment is not made, the complaint must be filed within one month after the 15-day period ends. The court can accept a late complaint if there was sufficient cause for the delay, but it is risky to rely on this.
Where the case is filed
Since the 2015 amendment, the complaint is generally filed in the court with jurisdiction over the bank branch where the payee presented the cheque for collection.
What the law provides
- The offence is punishable with imprisonment of up to two years, a fine of up to twice the cheque amount, or both.
- The court may order the drawer to pay interim compensation of up to 20% of the cheque amount while the case is pending (Section 143A).
- The cheque must have been issued for a legally enforceable debt or liability.
Missing any of these deadlines can defeat the complaint, so it helps to keep the bank memo, a copy of the notice and proof of its dispatch and delivery.