Cheque bounce: what is Section 138 NI Act and the procedure?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-07-28 · ~5 min read

⚡ Quick answer

Section 138 of the Negotiable Instruments Act makes the dishonour of a cheque for insufficient funds a criminal offence. If a cheque bounces, the payee must send a written demand notice within 30 days of the return memo; the drawer then gets 15 days to pay; if they don't, the payee can file a complaint in the Magistrate's court within the next 30 days. Punishment can extend to two years' imprisonment, a fine of up to twice the cheque amount, or both.

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A bounced cheque can leave you out of pocket and unsure what to do next. Indian law gives you a strong, time-bound remedy under Section 138 of the Negotiable Instruments Act — but it only works if you follow the deadlines exactly. Miss a single step and the case can collapse. This guide explains, in plain language, what makes a cheque-bounce a crime, the precise timeline you must follow, what you have to prove, and the defences the other side may raise.

1When a bounced cheque becomes a Section 138 offence

Not every bounced cheque is a crime. Section 138 applies when a cheque issued to discharge a legally enforceable debt is dishonoured because of insufficient funds (or because it exceeds the arrangement with the bank). The cheque must be presented within its validity period (3 months).

⚠️ ImportantIf a cheque bounces for a reason other than funds — like a stopped payment to cover up insufficient funds, or a signature mismatch — courts have still allowed Section 138 cases in many situations. But a genuinely disputed debt is a valid defence.

2The mandatory timeline — get this exactly right

The whole remedy hinges on three deadlines. Missing any one of them can defeat your case:

Day 0: the cheque is dishonoured. Collect the bank's cheque-return memo — it's your key evidence.
Within 30 days: send a written legal demand notice to the drawer, demanding payment of the cheque amount.
Drawer's 15 days: from receiving the notice, the drawer has 15 days to pay.
Next 30 days: if they don't pay, file your complaint in the Magistrate's court within 30 days after that 15-day period ends.

✅ TipSend the demand notice by registered post AD and keep the receipt and tracking. Proof that the notice was sent (and deemed delivered) is often the difference between winning and losing.

3What you must prove

To win a Section 138 case, you generally need to establish:

The cheque was issued to discharge a legally enforceable debt or liability
It was presented to the bank within its validity
It was dishonoured for insufficient funds (the return memo proves this)
You sent the demand notice within 30 days
The drawer failed to pay within 15 days of the notice

4Common defences the drawer may raise

The person who issued the cheque can defend the case. Knowing these helps you prepare:

There was no legally enforceable debt (the cheque was a gift, security, or for an unenforceable loan)
The cheque was given blank or as security, not for a present debt
The demand notice was defective or not served within time
The complaint was filed after the deadline

💡 ExampleSuresh lent ₹2 lakh to a supplier who paid him back with a cheque that bounced. Suresh kept the return memo, sent a registered demand notice on day 10, waited 15 days for payment, and filed his complaint on day 20 after that — all within the limits. Because his paperwork and timeline were clean, the court took up the case and the supplier eventually settled to avoid conviction.

5What happens in court

Section 138 is tried as a summary criminal case in the Magistrate's court. The drawer may settle at any stage (the offence is compoundable). If convicted, the punishment can be up to two years' imprisonment, a fine up to twice the cheque amount, or both — and courts often order interim compensation to the payee during the case.

Key takeaways

Section 138 NI Act makes a cheque bounced for insufficient funds a criminal offence.
Timeline: demand notice within 30 days → 15 days for the drawer to pay → file the complaint within the next 30 days.
Keep the bank's cheque-return memo and send the notice by registered post AD — proof is everything.
You must show the cheque was for a legally enforceable debt; a genuinely disputed debt is a defence.
Punishment can be up to 2 years' jail or twice the cheque amount; the case can be settled at any stage.

Frequently asked questions

What is the time limit to file a cheque bounce case?

Send the demand notice within 30 days of the bounce. The drawer gets 15 days to pay; if they don't, file your complaint within the next 30 days. In short, the complaint window opens after the 15-day notice period and lasts 30 days.

Can I file a cheque bounce case without sending a notice?

No — the written demand notice within 30 days is mandatory under Section 138. Without a valid, timely notice, the criminal case fails. (You can still sue separately to recover the money in a civil court.)

What if I miss the 30-day deadline to file the complaint?

If you miss it, the criminal complaint can be barred. Courts can condone a delay only on showing sufficient cause. You may still pursue a civil recovery suit for the debt itself.

Is jail certain if a cheque bounces?

No. Many cases are settled before judgment, and courts often prefer compensation over imprisonment. But a conviction can carry up to two years' jail or a fine up to twice the cheque amount — which is why most drawers settle.