A cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881 runs on four fixed deadlines: the cheque must be presented within its validity, the payee must send a written demand within thirty days of learning of the dishonour, the drawer then has fifteen days to pay, and the complaint must be filed within one month after those fifteen days run out. Miss the first three and the complaint fails; miss the fourth and you need the court to condone the delay. Everything else in a Section 138 case, from interim compensation to compounding, sits on top of this sequence, which is why examiners keep returning to it.
What turns a dishonoured cheque into an offence?
A dishonoured cheque becomes an offence only when every ingredient of Section 138 is present and the three conditions in its proviso are satisfied. The ingredients are:
- The cheque is drawn by a person on an account maintained by him with a bank.
- It is issued for the discharge, wholly or partly, of a debt or other liability. The Explanation narrows this to a legally enforceable debt or liability; a cheque given as a gift is outside the section.
- The bank returns it unpaid because the funds are insufficient or the amount exceeds the arrangement with the bank.
The Supreme Court has read the third ingredient broadly. In Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) a stop-payment instruction was held not to take the case outside the section, and in NEPC Micon Ltd. v. Magma Leasing Ltd. (1999) the same was held for a cheque returned because the account had been closed. The punishment is imprisonment up to two years, fine up to twice the cheque amount, or both.
Once the cheque and signature are admitted, Section 139 presumes that the holder received it for the discharge of a debt. In Rangappa v. Sri Mohan (2010) a three-judge bench held that this presumption covers the existence of a legally enforceable debt, and that the accused can rebut it on a preponderance of probabilities, not proof beyond reasonable doubt.
The full timeline at a glance
The statutory clock has four stages, and each one starts from a specific trigger rather than from the date on the cheque.
| Stage | Time limit | Runs from | Provision |
|---|---|---|---|
| Presentation | Six months or the cheque's validity, whichever is earlier | Date on the cheque | s.138, proviso (a) |
| Demand notice | 30 days | Receipt of information from the bank about the return | s.138, proviso (b) |
| Drawer's chance to pay | 15 days | Receipt of the notice by the drawer | s.138, proviso (c) |
| Complaint | One month | Date the cause of action arises under proviso (c) | s.142(1)(b) |
| Delay in complaint | Court may condone | On sufficient cause shown | Proviso to s.142(1)(b) |
Step 1: Presenting the cheque within its validity
The cheque must reach the bank within six months of its date or within its period of validity, whichever is earlier. Since April 2012 the Reserve Bank of India has fixed cheque validity at three months, so in practice the three-month period controls.
A dishonoured cheque can be presented again while it is still valid. In MSR Leathers v. S. Palaniappan (2013) the Supreme Court held that a second dishonour followed by a fresh notice can found a prosecution even where the payee did not prosecute after the first dishonour. What the payee cannot do is send a notice, let the deadline pass, and then rely on that same old notice later.
Step 2: Sending the demand notice within thirty days
The payee or holder in due course must make a written demand for the cheque amount within thirty days of receiving information from the bank that the cheque has bounced. The period was fifteen days until the 2002 amendment raised it to thirty.
A notice that does its job usually states:
- the cheque number, date, amount and the bank it was drawn on;
- the date of presentation and the date and reason in the return memo;
- the underlying transaction that created the debt;
- a clear demand for payment of the cheque amount within fifteen days of receipt.
The demand must be for the cheque amount. In Suman Sethi v. Ajay K. Churiwal (2000) the Court held that a notice may mention other claims such as interest or costs, but the demand for the cheque amount must be clear and separable. Practitioners send the notice by registered post with acknowledgement due or speed post and keep the tracking record; a template for a notice in this form is available as a cheque bounce notice draft on LegalDrive.
Service is often disputed. In C.C. Alavi Haji v. Palapetty Muhammed (2007) a three-judge bench held that a notice sent to the correct address by registered post is presumed served, and that a drawer who says he never received it can pay within fifteen days of receiving the court's summons and avoid prosecution. A drawer who does not pay then cannot rely on non-service.
Step 3: The fifteen days and the date the offence is complete
The offence is complete only when the drawer fails to pay within fifteen days of receiving the notice. The cause of action arises the day after those fifteen days end.
Suppose a cheque for Rs 3,00,000 dated 2 January is presented on 20 March, returned on 22 March, and the payee receives the return memo on 23 March. The notice must go out by 22 April. If it reaches the drawer on 24 April, the drawer has until the end of 9 May to pay. If nothing arrives, the cause of action arises the next day and the one-month window for the complaint begins.
A complaint filed before the fifteen days run out is premature. In Yogendra Pratap Singh v. Savitri Pandey (2014) a three-judge bench held that no court can take cognizance of such a complaint, though a fresh complaint may be filed after the cause of action actually arises, with the delay explained if needed.
Step 4: Filing the complaint within one month, and where
The complaint must be in writing, by the payee or holder in due course, within one month of the date the cause of action arises, as Section 142 requires. Only a Metropolitan Magistrate or a Judicial Magistrate of the first class can try it.
Two rules in this step generate most of the litigation:
- Condonation. Since 2002 the court may take cognizance of a late complaint if the complainant shows sufficient cause. File the delay application with the complaint, not afterwards.
- Territorial jurisdiction. Section 142(2), inserted in 2015, gives jurisdiction to the court where the payee's bank branch is located when the cheque was deposited for collection through an account. This undid the effect of Dashrath Rupsingh Rathod v. State of Maharashtra (2014), which had tied jurisdiction to the drawee bank.
Where the drawer is a company, the company must be made an accused. Under Section 141, persons in charge of and responsible for its business are liable along with it, but Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. (2012) holds that directors cannot be prosecuted alone when the company has not been arraigned. Name the company first, then the officers, and plead their role specifically.
What happens after the complaint is filed?
After filing, the magistrate takes cognizance on the complaint and the sworn statement, and issues summons; the case is then tried summarily under Section 143 unless the magistrate records reasons to convert it. In a summary trial the sentence cannot exceed one year, and the section asks for the trial to be finished within six months of filing.
In Sanjabij Tari v. Kishore S. Borcar (2025) the Supreme Court issued practice directions that High Courts and district courts were to implement by 1 November 2025:
- summons are to be served through the usual modes and also dasti by the complainant, and electronically where rules framed under the BNSS allow, with the accused's email and phone details given on affidavit;
- district courts are to set up online payment links so the accused can pay the cheque amount at the threshold;
- every complaint must open with a standard synopsis giving party, cheque, dishonour, notice and jurisdiction details;
- no pre-cognizance notice to the accused under Section 223 of the BNSS is needed in these cases;
- at the post-cognizance stage the court may put direct questions under Section 274 of the BNSS (formerly section 251 CrPC), such as whether the accused admits the signature and the liability.
The same judgment reminds trial courts that they must give effect to the presumptions in Sections 118 and 139, and must not treat the case as a civil recovery suit that requires the complainant to prove the debt from scratch.
Section 143A, in force since 1 September 2018, lets the court order interim compensation of up to twenty per cent of the cheque amount, payable within sixty days, extendable by thirty.
Settling or appealing: compounding and the section 148 deposit
Compounding at each stage
Every offence under the NI Act is compoundable under Section 147, and the Supreme Court actively encourages settlement. In Damodar S. Prabhu v. Sayed Babalal H. (2010) it fixed graded costs to discourage late compounding. Sanjabij Tari revised those figures:
| When the accused pays the cheque amount | Cost for compounding |
|---|---|
| Before recording of defence evidence | No cost |
| After defence evidence, before judgment | Additional 5% of cheque amount, to the Legal Services Authority or as directed |
| Before the Sessions Court or High Court in appeal or revision | 7.5% of cheque amount |
| Before the Supreme Court | 10% of cheque amount |
Where the complainant, typically a lender, insists on more than the cheque amount, the Court suggested that the magistrate may invite the accused to plead guilty and consider Section 278 of the BNSS (formerly section 255 CrPC) or the Probation of Offenders Act, 1958.
The deposit on appeal
A convicted drawer who appeals can be directed to deposit at least twenty per cent of the fine or compensation under Section 148. The deposit is in addition to any interim compensation already paid, is due within sixty days (extendable by thirty), and may be released to the complainant during the appeal. On acquittal, the complainant repays it with interest.
Common mistakes and how exams test this
Most failed complaints trace back to a handful of avoidable errors:
- counting the thirty days from the date of the cheque instead of the date the payee learnt of the dishonour;
- filing the complaint before the drawer's fifteen days have expired;
- prosecuting directors without making the company an accused;
- sending a notice that demands a lump sum mixing principal, interest and costs without separating the cheque amount;
- assuming a "security cheque" label defeats the case. In Sripati Singh v. State of Jharkhand (2021) the Court held that a security cheque may be presented once the debt is due.
In prelims, expect direct numerical questions: 30 days for notice, 15 days to pay, one month for complaint, 20 per cent under Sections 143A and 148, and the one-year sentence cap in summary trials. AIBE questions also test the compoundable nature of the offence and the presumption under Section 139; the AIBE previous year papers are a good place to practise them. In mains, a common problem gives dates and asks whether the complaint is maintainable, so practise computing each stage from the triggering event.
This is general information; for a specific dispute, consult a lawyer, and the public guide on filing a cheque bounce case explains the process for non-lawyers.
Key points to remember
- The clock has four stages: validity, 30-day notice, 15 days to pay, one-month complaint.
- The thirty days run from receipt of information about the dishonour, not from the cheque date.
- A complaint filed before the fifteen days end is premature (Yogendra Pratap Singh, 2014).
- Late complaints can be admitted on sufficient cause under the proviso to Section 142(1)(b).
- Jurisdiction lies where the payee's collecting branch is, under Section 142(2).
- The company must be arraigned before its directors can be prosecuted (Aneeta Hada, 2012).
- Interim compensation and appellate deposit are both capped at or start from twenty per cent.
- Compounding costs now run from nil to ten per cent depending on the stage (Sanjabij Tari, 2025).
Where to go next
Read Sections 138 to 148 in order on the Negotiable Instruments Act bare act page, then test the numbers with the Negotiable Instruments Act mock tests. The full facts and directions are on the Sanjabij Tari judgment page.