A cheque bounce case is a criminal complaint under Section 138 of the Negotiable Instruments Act 1881. It is filed before the magistrate within whose local jurisdiction the branch of the bank where the payee keeps the account is situated. The payee must first send a written demand notice within 30 days of being informed that the cheque was returned unpaid, allow the drawer 15 days to pay, and then file the complaint within one month of that period ending.
This page sets out that sequence from start to finish, what a magistrate will look at, and the documents a complaint cannot be filed without.
Who this applies to
Section 138 applies when a cheque drawn on an account for payment of a legally enforceable debt or liability is returned unpaid by the bank for either of two reasons: insufficient funds, or because the amount exceeds the arrangement the drawer has with the bank. It does not apply to a cheque given as security in a different sense, or returned for a technical reason such as a signature mismatch, a stale cheque, a post-dated cheque presented early, or a closed account. Those returns are not covered by Section 138 and must be pursued as an ordinary money claim.
Either a person or a company may be a payee. Where the drawer is a company, the persons in charge of and responsible for its business at the time of the offence are also arraigned. A cheque issued to discharge a debt that the payee cannot prove exists will not support a conviction.
Step by step: how the case moves through court
- Step 1 — the dishonour. The cheque is presented within its validity and returned with a return memo. That memo is the trigger for everything that follows; keep the original.
- Step 2 — the demand notice. Within 30 days of the payee receiving information of the dishonour, send a notice by registered post or speed post demanding payment of the cheque amount. The notice must be addressed to the drawer at the correct address and must demand payment, not merely inform the drawer that the cheque bounced. See legal-notice-recovery for how the notice is drafted.
- Step 3 — the 15-day window. The drawer has 15 days from receipt of the notice to pay. If full payment comes in, the offence is not committed and no complaint can be filed. A part payment does not wipe out the offence.
- Step 4 — the complaint. If nothing is paid, the cause of action arises on the sixteenth day and the complaint must be filed within one month of it. The complaint is filed by the payee or a holder in due course before the Judicial Magistrate First Class.
- Step 5 — summons and appearance. The magistrate examines the complainant, takes cognisance, and issues summons. The accused appears, either personally or through counsel, and pleads. The trial is conducted in a summary manner.
- Step 6 — interim compensation. During trial the court may direct the accused to deposit interim compensation up to part of the cheque amount, which is recoverable if the accused is ultimately acquitted.
- Step 7 — evidence and compounding. The complainant's evidence is recorded on affidavit, the accused leads defence evidence, and the court hears arguments. The offence is compoundable, so the parties may settle at any stage and the accused may be acquitted on compounding. Filing of a cheque-bounce complaint is only the beginning; the practical outcome in most matters is settlement.
Documents to attach
- The original cheque that was dishonoured.
- The original return memo or bank's dishonour advice showing the reason code.
- A copy of the demand notice together with the postal receipt and, if returned, the unclaimed or refused envelope.
- The postal acknowledgement (AD card) or any other proof that the notice was delivered.
- A statement of the payee's account or a ledger extract showing the debt or liability the cheque was meant to discharge.
- The complaint itself with the verification, and a list of documents filed with the court.
Keep certified copies of each file after filing. The court records are the file of reference at every later stage.
Timelines and limitation
The clock has three points. First: 30 days from information of dishonour to send the notice. Second: 15 days after receipt of notice for the drawer to pay. Third: one month from the day that 15-day window closes to file the complaint. Any one of these missed, and the complaint is liable to be dismissed as time-barred. If the notice comes back unclaimed or refused, the law treats it as served where it was correctly addressed and despatched, so the 15-day window still runs. Where the drawer is a company and a notice was sent to the company but not the directors, a fresh notice to the directors may be needed before they can be arraigned.
Common questions
Where exactly is the case filed?
The complaint is filed before the court having jurisdiction over the branch of the bank where the payee holds the account in which the cheque was presented for collection. That is why a payee in Kolkata usually files in Kolkata even if the drawer's bank or address is elsewhere.
Can the accused be sent to jail?
The offence is punishable with imprisonment up to two years, or a fine up to twice the cheque amount, or both. In practice a first-time offender who pays during the case is generally let off on compounding, and the court is more concerned with recovery than with incarceration.
Is a cheque given as security covered?
A cheque issued towards a legally enforceable debt or liability is covered. A cheque handed over merely as security for a future or contingent obligation, or one that was never meant to be presented, is a defence that the drawer will raise and the payee must be ready to answer with the underlying transaction documents.
What if the drawer never received the notice?
If the notice was correctly addressed and sent by registered post and returned unclaimed, courts treat it as served. If it was sent to a wrong address or was never despatched, the complaint will fail and a fresh notice may be needed, which may push the matter beyond limitation. A ready cheque-bounce complaint format is a useful checklist for the plaint. Send the file for a first review via our contact page.
FileX Advocates & Legal Consultants, 14 Hare Street, Kolkata, drafts and files these matters before the Calcutta High Court, the City Civil and Sessions courts, the magistrates, and the tribunal forums. Call +91 7439811422 or WhatsApp us for a free first consultation.