If a cheque given to you for a debt or liability is returned unpaid — because of “insufficient funds”, “exceeds arrangement” or even “account closed” — the law gives you a strong remedy under Section 138 of the Negotiable Instruments Act, 1881. However, the remedy is available only if every timeline is followed carefully.
When does Section 138 apply?
- The cheque was issued to discharge a legally enforceable debt or liability (not a gift or a donation).
- The cheque was presented within its validity period of three months from the date on the cheque.
- It was returned unpaid by the bank for insufficiency of funds or because it exceeded the arrangement.
Step 1: Send a legal notice within 30 days
A written demand notice must be sent to the drawer within 30 days of receiving the bank’s return memo. The notice should demand payment of the cheque amount. It is best sent by registered post/speed post and also by email or WhatsApp where possible.
Step 2: Wait 15 days for payment
The drawer gets 15 days from receiving the notice to pay. If payment is made within this period, no offence is committed.
Step 3: 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. Delay can be condoned only for sufficient cause. The complaint is filed before the court having jurisdiction where the payee’s bank branch (where the cheque was presented for collection) is located.
Documents required
- Original cheque and the bank return memo
- Copy of the legal notice with postal receipts and tracking/delivery proof
- Documents showing the debt — agreement, invoices, ledger, bank transfers, messages
- Affidavit of evidence of the complainant
Punishment and compensation
The offence is punishable with imprisonment up to two years, or a fine up to twice the cheque amount, or both. Under Section 143A, the court may also direct the accused to pay interim compensation of up to 20% of the cheque amount during the trial.
If you are the accused
A cheque bounce case can often be defended — for example, where there was no enforceable debt, the cheque was misused, the notice was defective or the complaint was filed out of time. Settlement is also encouraged at any stage, including through mediation and Lok Adalat.
Get help
Adv. Swati Suman handles cheque bounce complaints and defence in Delhi courts. Call or WhatsApp 8789818007 to discuss your matter.
Disclaimer: This article is for general legal awareness only and is not legal advice. Every case depends on its own facts — please consult an advocate before taking any step.
