Cheque Bounce Under Section 138: Law, Notice & Legal Remedies

What the Law Says and What You Should Do

A dishonoured cheque is one of the most common legal disputes in India — and one of the most misunderstood. Many people do not realise that a bounced cheque is not merely a civil matter. It is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, punishable with imprisonment of up to two years, a fine that may be twice the cheque amount, or both.

When Does Section 138 Apply?

For a cheque bounce case to be maintainable, four conditions must be met:

The cheque must have been issued for discharge of a legally enforceable debt or liability.
It must have been returned unpaid by the bank.
The payee must have sent a written demand notice within 30 days of receiving the bank’s return memo.
The drawer must have failed to make payment within 15 days of receiving that notice.

The Demand Notice — A Critical Step

The legal notice sent after the cheque bounces is arguably the most important document in a Section 138 case. It must be sent within the prescribed 30-day period, clearly demand payment of the cheque amount, and be dispatched in a manner that creates a presumption of receipt (registered post or speed post).

A defective notice can destroy an otherwise strong case.

What Happens If the Drawer Does Not Pay?

If the drawer fails to pay within 15 days of receiving the notice, you may file a criminal complaint before the Magistrate having jurisdiction within 30 days of the expiry of that 15-day period.

The complaint must be accompanied by:

The original cheque
The bank return memo
The demand notice
Proof of dispatch and delivery

For the Accused — Defences Available

If you have received a Section 138 notice or complaint, there are legitimate defences available — including that the cheque was a security cheque not issued for a debt, that it was issued under coercion, or that the amount claimed is incorrect.

These defences require careful legal strategy and early engagement with a lawyer.