Criminal · Commercial · July 2026
Cheque Bounce Under Section 138: Notice, Timeline and Your Options
A dishonoured cheque is one of the most common commercial disputes we see. When a cheque bounces for insufficient funds or a similar reason, the law provides a specific remedy — but it runs on strict deadlines. Missing a single one can end the case before it begins. Here is how the process works. This is a general explainer, not advice on any particular case.
What Section 138 covers
Section 138 of the Negotiable Instruments Act, 1881 makes it an offence when a cheque is returned unpaid because the amount exceeds the funds in the account, or for reasons such as a stopped payment or a closed account — provided the cheque was issued to discharge a legally enforceable debt or liability. It applies to both individuals and companies.
The timeline that matters most
The Section 138 remedy is built around three deadlines. They must be followed in order:
- 30 days — demand notice. After the cheque is returned unpaid (shown by the bank's return memo), the payee must send a written demand notice to the drawer within 30 days, calling for payment of the cheque amount.
- 15 days — the drawer's window. The drawer then has 15 days from receiving the notice to make the payment. If they pay within this window, the matter ends there.
- 30 days — filing the complaint. If the amount remains unpaid after the 15-day window closes, the payee has 30 days to file a criminal complaint before the competent Magistrate.
Because these periods are strict, the return memo, the notice, and proof of its dispatch and delivery should all be preserved carefully.
Who files, and where
The complaint is filed by the payee (or the holder in due course) before a Judicial Magistrate. Following amendments to the Act, a complaint is generally filed where the payee's bank branch is located. A cheque-bounce matter is tried as a summons case, and the drawer is given the opportunity to present a defence.
Possible consequences
On conviction, Section 138 provides for imprisonment of up to two years, or a fine which may extend to twice the cheque amount, or both. In practice, many matters are resolved through payment or compounding (settlement) at various stages, because the object of the provision is to secure the payment rather than simply to punish.
If you are the drawer (the person who issued the cheque)
Receiving a Section 138 notice does not automatically mean conviction. There are recognised defences — for instance, that the cheque was not issued for a legally enforceable debt, that the notice was defective, or that the amount was already paid. If you receive a demand notice, act within the 15-day window and take advice promptly rather than ignoring it.
The practical takeaway
Whether you are chasing an unpaid cheque or defending a complaint, the deadlines leave little room for delay. Gather your documents — the cheque, the bank return memo, and any correspondence — and get advice early so the notice or complaint is drafted correctly. You can read more about how we handle these matters on our criminal defence page.
This article is for general information only and does not constitute legal advice. For advice on a specific situation, please get in touch.