Cheque Bounced? What to Do — Section 138 Process, Notice and Costs

What counts as a "cheque bounce"

A cheque "bounces" (is dishonoured) when the bank returns it unpaid. The return memo from the bank states the reason — the most common ones are:

• Insufficient funds in the issuer's account
• Payment stopped by drawer (a stop-payment instruction)
• Account closed
• Signature mismatch or the amount in words and figures differing

Section 138 of the Negotiable Instruments Act, 1881 makes dishonour of a cheque a criminal offence when the cheque was issued to discharge a legally enforceable debt or liability — for example repayment of a loan, payment for goods or services, rent, or salary. A cheque given as a pure gift or donation generally does not qualify.

Two conditions must also be met:

1. The cheque was presented to the bank within its validity period of 3 months from the date written on it.
2. The statutory notice-and-waiting process below was followed on time.

The timeline the law gives you

The Section 138 process is driven entirely by deadlines. Miss one, and you may have to re-present the cheque (if it is still valid) to restart the clock.

| Step | Time limit | Counted from | | --- | --- | --- | | Present the cheque | Within 3 months | Date on the cheque | | Receive the return memo | — | Bank issues it when the cheque bounces | | Send written demand notice | Within 30 days | The day you receive the return memo | | Issuer's window to pay | 15 days | The day the issuer receives your notice | | File the criminal complaint | Within 1 month | The day the 15-day payment window expires |

A complaint filed after the one-month window needs the court's condonation of delay, which is not guaranteed — so treat these dates as hard deadlines.

Step-by-step: what to do after the cheque bounces

Step 1 — Collect the return memo and keep the cheque safe

When the cheque is dishonoured, your bank gives you a cheque return memo stating the date and reason. Keep the original memo and the original cheque safely: both are core evidence. If you deposited the cheque through an app or CTS clearing, ask the branch for the physical memo or the system-generated advice.

Step 2 — Send the demand notice within 30 days

The demand notice is a written letter to the cheque issuer that must:

• Identify the cheque (number, date, amount, bank) and the debt it was for
• State the fact and date of dishonour and the bank's reason
• Demand payment of the cheque amount within 15 days of receipt
• Be sent within 30 days of your receiving the return memo

Send it by registered post with acknowledgement due (RPAD) and, in practice, also by courier and email/WhatsApp so delivery is easy to prove. Keep the postal receipts and tracking records. A notice drafted and sent by an advocate on their letterhead is not legally mandatory, but it is taken more seriously, avoids drafting mistakes that can sink the case, and gives you clean proof of dispatch.

Step 3 — Wait 15 days

The issuer has 15 days from receiving the notice to pay. If they pay the full cheque amount in this window, the matter ends — the offence is not made out. If they pay partly, refuse in writing to treat it as full settlement unless you agree otherwise, and consult an advocate before accepting.

Step 4 — File the complaint within the next month

If the 15 days pass without payment, a criminal complaint under Section 138 can be filed before the Judicial Magistrate of the First Class for the area where the branch of your bank (where you presented the cheque) is located. The complaint is typically filed through an advocate, along with:

• The original cheque and return memo
• A copy of the demand notice with proof of dispatch and delivery
• Proof of the underlying debt (agreement, invoice, loan record, messages)
• Your affidavit and a list of witnesses, if any

Costs and what to expect

| Item | Typical range | Notes | | --- | --- | --- | | Demand notice through an advocate | ₹500 – ₹3,000 | WakilBhai's advocate-sent notice is ₹999 | | Court fee for the complaint | Varies by state and cheque amount | Usually modest for Sec 138 complaints | | Advocate's fee for the case | ₹5,000 – ₹50,000+ | Depends on city, court and complexity | | Case duration | Roughly 1 – 3 years | Summary trial is intended to be faster; delays are common |

If convicted, the drawer faces imprisonment up to 2 years, or a fine up to twice the cheque amount, or both. Courts can also direct interim compensation of up to 20% of the cheque amount while the case is pending (Section 143A), and appellate courts can require deposit of at least 20% of the fine or compensation for an appeal (Section 148).

Criminal case, civil suit — or both

The Section 138 complaint is a criminal proceeding designed to pressure payment. You can also (or instead) file a civil recovery suit for the money itself — for cheques, a summary suit under Order 37 CPC is common because the defendant needs the court's permission to even defend the case. Many people run the criminal complaint first because it is faster to start and often produces a settlement.

Practical points that decide real cases:

• Paper trail wins. Keep the agreement, invoices, delivery records or loan transfer proof that show a legally enforceable debt.
• Don't fill in a blank cheque casually. Disputes about when and by whom the cheque was filled complicate the case.
• Settlement is possible at any stage. Section 138 offences are compoundable — cases regularly settle at the notice stage itself, which is why a properly drafted notice matters.

State-specific notes

The Section 138 process is identical across India — it is a central law. What varies by state is the court fee on the complaint and how quickly Magistrate courts move. Metropolitan areas (Delhi, Mumbai, Kolkata, Bengaluru) have dedicated NI Act courts that move faster than mofussil courts.