Cheque Bounce Cases under Section 138: Deadlines, Notice and Procedure

By the legal team at Neeraj Associates · Updated 30 September 2026 · 7 min read

When is it an offence?

Under Section 138 of the Negotiable Instruments Act, 1881, dishonour of a cheque is a criminal offence if the cheque was issued to discharge a legally enforceable debt or liability, and it was returned unpaid because of insufficient funds or because it exceeded the arrangement with the bank — and the drawer then fails to pay after receiving a proper demand notice.

The four deadlines

1. Presentation: the cheque must be presented to the bank within its validity — three months from the date on the cheque.
2. Demand notice: the payee must send a written demand notice to the drawer within 30 days of receiving information from the bank that the cheque was returned.
3. Payment period: the drawer has 15 days from receiving the notice to make payment.
4. Complaint: if payment is not made, the complaint must be filed within one month after the 15-day period ends. The court may condone delay for sufficient cause.

Our Section 138 deadline calculator gives you indicative dates for each step.

The legal demand notice

The notice is the foundation of the case. It should clearly state the cheque details, the date and reason for dishonour, the underlying debt, and demand payment of the cheque amount within 15 days. Send it by a method that gives proof of dispatch and delivery, such as registered post with acknowledgement, and keep copies of everything.

Where to file

After the 2015 amendment, the complaint is filed before the Magistrate within whose jurisdiction the payee's bank branch — where the cheque was delivered for collection through the payee's account — is located.

Penalty and interim compensation

The offence is punishable with imprisonment of up to two years, a fine of up to twice the cheque amount, or both. Under Section 143A, the court may direct the accused to pay interim compensation of up to 20% of the cheque amount while the case is pending.

If you are the accused

The law presumes the cheque was issued for a debt, but this presumption can be rebutted. Common defences include that there was no legally enforceable debt, the notice was defective or not served, the complaint was filed out of time, or the cheque was misused. Respond to the notice and consult an advocate promptly.

Settlement

The offence is compoundable under Section 147, so the parties can settle at any stage — often through mediation or Lok Adalat. Many cheque bounce cases end in a negotiated payment plan.