Cheque Bounce Notice (Section 138 NI Act)
Cheque Bounce Notice — Section 138, Negotiable Instruments Act, 1881
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A cheque bounce case under section 138 of the Negotiable Instruments Act does not end with the notice. Once the complaint is filed, the court presumes the cheque was given for a debt (s. 139), can order the drawer to pay up to 20% of the cheque amount as interim compensation (s. 143A), and can require a convicted drawer who appeals to deposit at least 20% of the fine or compensation (s. 148). The offence is compoundable, so the parties can settle it (s. 147).
Key takeaways
- The court presumes, until the contrary is proved, that the cheque was received for the discharge of a debt or liability (s. 139).
- Interim compensation of up to 20% of the cheque amount can be ordered once the drawer pleads not guilty in a summary or summons trial, or on framing of charge (s. 143A), payable within 60 days.
- Where the drawer is a company or firm, everyone in charge of and responsible for its business at the time is also liable, unless they prove lack of knowledge or due diligence (s. 141).
- A convicted drawer who appeals can be ordered to deposit at least 20% of the fine or compensation (s. 148).
- Every offence under the Act is compoundable, so the parties can settle the case (s. 147).
iGuideline Summary
A cheque bounce notice (also called demand notice) is a mandatory prerequisite before filing a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. When a cheque is dishonoured (bounced) for "insufficient funds" or "account closed", the payee must send a written demand notice to the drawer within 30 days of receiving the bank's memo of dishonour. The drawer then has 15 days to make the payment. If payment is not made within 15 days of receiving notice, a criminal complaint can be filed in the Magistrate's Court within 1 month of expiry of the 15-day period. Section 138 is a criminal offence with up to 2 years imprisonment or fine or both. Negotiable Instruments Act 1881, Section 138–142.
Three separate clocks run in a Section 138 case and they are easy to merge into one. Work out your dates before you draft anything:
- Cheque bounce deadline calculator — all three clocks from the bank memo date, counted from receipt rather than from despatch
- Recovery notice format — the civil claim for the money, which runs alongside the prosecution and survives a missed s. 138 clock
- All free legal tools — if the cheque is not the whole of the problem
When to File This Complaint
- Bank has returned a cheque with memo "Insufficient Funds"
- Cheque returned as "Account Closed"
- Cheque returned as "Stop Payment" (in some cases)
- Cheque was given for legally enforceable debt or liability
- Dishonour memo received from bank within last 30 days
- Cheque was given for repayment of loan, services, or goods
Documents Required
- Original dishonoured cheque
- Bank's memo of dishonour (bank return memo)
- Underlying transaction document (loan agreement, invoice, receipt)
- Your own bank account details where cheque was deposited
- Drawer's (issuer's) correct address for notice service
- Previous demand notices sent (if any)
Common Mistakes to Avoid
- Missing the 30-day window for sending notice (fatal to the case)
- Sending notice by ordinary post instead of Speed Post with Registration
- Incorrect address — accused can claim non-service
- Notice for wrong cheque amount or wrong cheque number
- Filing complaint after 1-month window from notice expiry
- Cheque for past liability or gift (not legally enforceable debt)
Frequently Asked Questions
What is the punishment for cheque bounce in India?
Section 138 NI Act prescribes imprisonment up to 2 years or fine up to twice the cheque amount or both. Additionally, the complainant can file a civil suit for recovery of the cheque amount with interest.
What is the 30-day window for cheque bounce notice?
After receiving the bank's dishonour memo, you must send the demand notice within 30 days. This is a strict limitation period — missing it will make your Section 138 complaint not maintainable in court.
What if the cheque bounces a second time?
If you re-present the cheque and it bounces again, you can send a fresh demand notice within 30 days of the second dishonour and restart the process. Both dishonour memos should be kept.
Can I file a civil suit along with Section 138 complaint?
Yes. You can simultaneously file a civil suit for recovery of the cheque amount along with the Section 138 criminal complaint. Both proceedings are independent and can proceed simultaneously.
Does GetNyay provide legal advice on cheque bounce cases?
No. GetNyay is an AI drafting tool. The demand notice generated is a draft — given the strict timelines under Section 138, please consult a qualified advocate immediately after receiving the bank's dishonour memo.
After the complaint is filed: sections 139 to 148
These provisions decide how a section 138 case runs once it reaches court. They apply notwithstanding the general criminal procedure, and where the Act still names the Code of Criminal Procedure, 1973, that reference is read as one to the Bharatiya Nagarik Suraksha Sanhita under section 8 of the General Clauses Act, 1897.
| Section | What it provides |
|---|---|
| 139 | Presumption that the holder received the cheque for the discharge, in whole or in part, of a debt or other liability, unless the contrary is proved. |
| 140 | It is no defence that the drawer had no reason to believe the cheque would be dishonoured. |
| 141 | Where the drawer is a company — including a firm or association — every person in charge of and responsible for its business at the time is liable, unless they prove the offence was committed without their knowledge or despite due diligence. Directors nominated because they hold government office are excluded. |
| 142 | Cognizance only on a written complaint by the payee or holder in due course, within one month of the cause of action (delay may be excused for sufficient cause), before a Judicial Magistrate of the first class or Metropolitan Magistrate, in the court where the payee’s account branch is (for a cheque deposited through an account) or the drawer’s branch (for one presented otherwise). |
| 143 | Summary trial; a sentence of up to one year and fine above ₹5,000 is allowed in it. Trial day to day, with an endeavour to finish within six months of the complaint. |
| 143A | Interim compensation of up to 20% of the cheque amount, payable within 60 days (extendable by 30). Repaid with interest if the drawer is acquitted. |
| 144 | Summons may be served by speed post or approved courier; a refusal endorsement counts as service. |
| 145 | The complainant’s evidence may be given on affidavit; the court may, and on application must, summon the deponent. |
| 146 | The bank’s return memo is presumed to prove dishonour, unless disproved. |
| 147 | Every offence under the Act is compoundable. |
| 148 | On appeal against conviction, the appellate court may order a deposit of at least 20% of the fine or compensation, within 60 days (extendable by 30). Repaid with interest on acquittal. |
Read from the Negotiable Instruments Act, 1881 as amended. Sections 143A and 148 were inserted by Act 20 of 2018 with effect from 1 September 2018.
Money during the case: interim compensation and the appeal deposit
Two provisions let money move before the case is finally over. Both are discretionary — the court "may" order them — and both are reversible.
Section 143A. In a summary trial or summons case, once the drawer pleads not guilty, or in any other case once the charge is framed, the court may order interim compensation of up to 20% of the cheque amount. It must be paid within 60 days, or up to 30 more if the court allows for sufficient cause, and can be recovered as if it were a fine. If the drawer is acquitted, the complainant must repay it with interest at the Reserve Bank’s bank rate. Any fine or compensation at the end is reduced by what was paid.
Section 148. If the drawer is convicted and appeals, the appellate court may order a deposit of at least 20% of the fine or compensation awarded, in addition to any interim compensation, and may release it to the complainant while the appeal is pending — again repayable with interest if the appeal succeeds.
| Stage | Provision | Amount |
|---|---|---|
| Drawer pleads not guilty in a summary trial | s. 143A(2) | Interim compensation of up to ₹1,00,000 (20% of ₹5,00,000) |
| Trial court convicts and awards compensation of ₹8,00,000 | — | Reduced by any interim compensation already paid (s. 143A(6)) |
| Drawer appeals | s. 148(1) | Deposit of at least ₹1,60,000 (20% of ₹8,00,000), on top of the interim compensation |
Illustrative figures. Both orders are at the court’s discretion; 20% is the ceiling under s. 143A and the floor under s. 148.
More questions about this page
What is the presumption under section 139 of the NI Act?▼
What is interim compensation under section 143A?▼
Can a cheque bounce case be settled by compromise?▼
Are the directors liable when a company’s cheque bounces?▼
Does a convicted drawer have to deposit money to appeal?▼
Official sources checked
The statutes, rules and regulator pages the statements on this page were checked against.
- Read 13 September 2026, with the footnotes dating ss. 143A and 148 to Act 20 of 2018, in force from 1 September 2018.
- How the Act’s references to the repealed Code of Criminal Procedure are read.
Draft Your Complaint
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Escalation Path
- 1Receive bank memo of dishonour
- 2Send Section 138 demand notice within 30 days of memo
- 3Wait 15 days for payment
- 4File criminal complaint before Magistrate within 1 month of expiry
- 5Magistrate examines complaint and summons accused
- 6Trial — conviction can result in imprisonment / fine / both
Important Disclaimer
GetNyay is not a law firm, not an advocate, and is not affiliated with any government body. We do not provide legal representation or guarantee complaint resolution. All information is for educational and self-help purposes only. Users are responsible for verifying final content before submission. Regulator contact details and timelines are informational — always verify at official government portals before relying on them.