If you have received a demand notice because a cheque you issued was dishonoured, the law gives you fifteen days from the date of receipt of that notice to pay the cheque amount. That fifteen-day window is fixed by Section 138 of the Negotiable Instruments Act, 1881, and it decides whether a criminal complaint follows or the matter closes.
This article explains the sequence that leads to the notice, the options you have in the fifteen days, what a proper reply should contain, and how a company or its officers can be drawn in.
Who this applies to
- Anyone who has drawn a cheque — as an individual, a proprietor, a partner or a company — and received a dishonour demand notice.
- Directors and signatories of companies who may be named under Section 141.
- Payees who want to understand the strict timelines so their complaint is not dismissed.
The Section 138 sequence
The offence is created by Section 138 only when a chain of steps is completed. First, the cheque is presented and the bank returns it unpaid with a dishonour memo stating the reason. Second, the payee must send a written demand for the cheque amount to the drawer within thirty days of receiving the dishonour memo. Third, the drawer then has fifteen days from the receipt of that notice to make the payment. If the drawer pays within the fifteen days, the cause of action ends and no offence is committed. If the drawer does not pay, the offence is complete, and the payee may file a complaint before the Magistrate generally within one month of the day on which the cause of action arose, as Section 142 provides.
Your options in the fifteen-day window
- Pay and close: paying the cheque amount within the fifteen days ends the matter under Section 138. If you also clear any lawful interest or cost agreed, so much the better, but payment of the cheque amount is what the statute speaks of.
- Dispute the debt: if the cheque was not issued for a legally enforceable debt, or was obtained by fraud, or given as security only, you may reply setting out your defence. A bare denial is weak; set out facts and documents.
- Seek time: you may write requesting time to pay. This does not extend the statutory fifteen days, but a genuine offer to pay in instalments often results in settlement or compounding.
What a proper reply contains
- The reference to the notice, its date and the date of receipt.
- The cheque number, bank, date and amount.
- A clear admission or denial of the debt, with reasons.
- The facts of the transaction — why the cheque was issued, whether goods were supplied, whether the work was done.
- Documents relied on, enclosed.
- If you are paying, the mode and date of payment and a request for withdrawal of the notice.
- If you are the payee replying to a defence, your rebuttal with the ledger and correspondence.
If a company issued the cheque
Where the drawer is a company, Section 141 makes the persons in charge of and responsible for the conduct of the business at the time of the offence liable along with the company. A director who was not in charge of the business, or who had no knowledge of the transaction, may have a defence, but it must be raised on facts. A notice naming the persons responsible helps both sides know who is being proceeded against. Merely being a director is not by itself enough; responsibility has to be shown.
Documents to attach
- The dishonour memo or bank return slip.
- A copy of the cheque, front and back.
- The invoices, delivery proofs or statements of account for the underlying transaction.
- Correspondence where the debt was admitted or time was sought.
- Where payment is made, the payment proof and a covering letter.
Compounding and settlement
Section 147 allows the offence under Section 138 to be compounded — settled between the parties — and courts encourage this because the provision is meant to secure payment of the cheque amount rather than to punish. A settlement recorded before the Magistrate, or an agreement under which the amount is paid, usually ends the proceedings. Where payment is made before the complaint is filed, the offence itself does not arise under Section 138.
Common mistakes
- Ignoring the notice and letting the fifteen days pass.
- Sending an evasive reply without the underlying facts.
- Assuming a part payment stops the prosecution; unless the payee accepts it in full settlement, the complaint may still be filed.
- In a company case, not identifying who was responsible for the conduct of the business.
Is fifteen days from the notice date or from receipt?
The fifteen days run from the date of receipt of the notice by the drawer, not from the date the notice was issued. That is why proof of service — postal acknowledgement or tracking record — matters.
Can I be prosecuted if I pay after fifteen days but before the complaint?
Payment before a complaint is filed generally means no offence is made out under Section 138, because the offence is complete only on non-payment within the fifteen-day period. If a complaint has already been filed, payment may lead to compounding or disposal.
Who can be prosecuted in a company's cheque case?
Under Section 141 the company and the persons who were in charge of and responsible for its business at the time of the offence can be prosecuted. A director without such responsibility may take that defence on the facts.
Can the case be settled later?
Yes. Section 147 permits compounding, and courts routinely allow settlement because the object of Section 138 is to secure payment of the cheque amount.
FileX Advocates & Legal Consultants, 14 Hare Street, Kolkata 700001, advises drawers and payees on cheque dishonour matters and drafts statutory replies and complaints. Call +91 7439811422 or message https://wa.me/917439811422 . See /services/cheque-bounce for the practice area, /legal-formats/cheque-bounce-recovery for formats, /services/legal-notice-drafting for notice work, and /contact to reach the team.