Cheque bounce & NI Act

Section 138 practice end to end: notice, complaint, presumptions and recovery.

Questions advocates ask about Cheque bounce & NI Act

A dishonoured cheque is an offence under Section 138 of the Negotiable Instruments Act only if a chain of time limits is kept: the cheque presented in time, a written demand within 30 days of learning it bounced, 15 days for the drawer to pay, and a complaint within a month after that. Most cases are lost on the dates, not on the merits.

When does a bounced cheque become a criminal offence?

When a cheque drawn to discharge, wholly or partly, a legally enforceable debt or liability is returned unpaid because of insufficient funds or because it exceeds the amount arranged with the bank, and the drawer then fails to pay within 15 days of receiving a demand notice. The punishment is imprisonment up to two years, or a fine up to twice the cheque amount, or both.

Negotiable Instruments Act, 1881, s. 138

What are the deadlines?

The cheque must be presented to the bank within three months of its date or within its validity, whichever is earlier. The payee must send the written demand within 30 days of receiving information from the bank that the cheque was dishonoured. The drawer then has 15 days from receiving the notice to pay. The complaint must be filed within one month from the date the cause of action arises, that is, after those 15 days end; the court may condone a delay for sufficient cause.

NI Act s. 138 proviso (a), (b), (c); NI Act s. 142(1)(b)

Which court can hear the complaint?

Since the 2015 amendment, jurisdiction follows the payee's bank. Where the cheque was delivered for collection through an account, the complaint is filed in the court within whose area the branch where the payee or holder in due course maintains that account is situated. The amendment was made after the Supreme Court had tied jurisdiction to the drawee bank's branch.

NI Act s. 142(2); Negotiable Instruments (Amendment) Act, 2015

Can the drawer be made to pay something before the trial ends?

Yes, in two ways. The trial court may order the drawer to pay interim compensation of up to 20% of the cheque amount, and the appellate court may order the appellant drawer to deposit a minimum of 20% of the fine or compensation while the appeal is pending. Both were added by the 2018 amendment.

NI Act s. 143A (interim compensation); NI Act s. 148 (deposit on appeal); Surinder Singh Deswal v. Virender Gandhi, (2019) 11 SCC 341

Does the case end if the drawer pays?

The offence can be compounded, which ends the case, and payment of the cheque amount with the costs the court directs is the usual basis for it. The Supreme Court has issued guidelines on the costs payable when compounding is sought at different stages.

NI Act s. 147; Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663

Prepared by The EduLaw Editorial Team on 2 November 2026. It has not yet been reviewed by a named advocate. Educational content, not legal advice; check the current text of each provision before relying on it.

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