Cheque Bounce Notice (Section 138)
When a cheque given to you bounces, Section 138 of the Negotiable Instruments Act lets you demand payment by written notice within 30 days of the bank’s return memo. If the drawer does not pay within 15 days, you can file a criminal complaint within the next month. We draft the notice for your review, and a practising advocate signs and sends it.
What it is
A cheque bounce notice is the written demand a payee sends to the drawer after the bank returns a cheque unpaid. It is the step that turns a bounced cheque into a criminal case. No notice, no case.
The law is Section 138 of the Negotiable Instruments Act, 1881. It applies when a cheque issued for a legally enforceable debt or other liability is returned because the account has insufficient funds or the cheque exceeds the arranged amount. The punishment is imprisonment of up to two years, a fine of up to twice the cheque amount, or both.
We draft the notice, and later the complaint papers, for your review. The notice and any court filing must be signed by a practising advocate.
Who it applies to
You hold a cheque that bounced
The payee, or a holder in due course, sends the notice. In Laxmi Dyechem (2012), the Supreme Court held that returns marked “account closed”, “payment stopped” or “signatures do not match” can also lead to a Section 138 case.
The cheque paid a real debt
A loan, unpaid sale price or rent all count. In Sanjabij Tari (25 September 2025), the Supreme Court held that a cash loan above ₹20,000 in breach of Section 269SS of the Income-tax Act does not make the debt unenforceable. It can still raise income-tax questions, so get tax planning advice before lending in cash.
You received a cheque bounce notice
Paying the cheque amount within 15 days of receiving the notice stops the offence from arising. If you dispute the debt, reply in writing within that time.
Why it matters
Act inside a short, strict clock
You get 30 days to send the notice. The drawer gets 15 days to pay, and then you have one month to file. Miss a step and the complaint on that dishonour can fail.
Start with the law on your side
Under Section 139, a court presumes the cheque was received for a legally enforceable debt. The drawer must rebut that with evidence.
Get money moving during the trial
Section 143A allows interim compensation of up to 20% of the cheque amount during trial, and Section 148 a deposit of at least 20% in an appeal.
Documents required
The cheque and bank papers
- The original cheque
- The bank’s return memo showing the reason
- Bank statement or deposit slip showing when you presented it
Proof of the debt
- Loan agreement, invoices or rent agreement
- A ledger account from your books of account
- Emails or WhatsApp messages acknowledging the dues
About the drawer
- Full name and every known address
- Email, mobile and WhatsApp number, which the Supreme Court now wants stated in the complaint with an affidavit
- For a company: registered office and the directors in charge of its business
How it works
Check the cheque, memo and dates
We confirm the cheque was presented within its validity and count the 30 days from the date you received the return memo.
Draft the cheque bounce notice for your review
The notice gives the cheque number, date, amount and bank, the reason for return and the debt behind it, and demands the cheque amount within 15 days.
Sign and send it to every address
A practising advocate signs the notice. It goes by Speed Post or registered post with acknowledgement due to every known address, plus an email copy. For a company, send it to the registered office and to the directors in charge, because Section 141 can make them accused too.
Watch the 15 days
The 15 days run from the date the drawer receives the notice. If they pay, the matter ends there. If the envelope comes back unopened, keep it sealed. It is evidence.
File the complaint in the right court
Your advocate files it within one month before a Judicial Magistrate of the first class or a Metropolitan Magistrate, usually where your bank branch is. Since Sanjabij Tari, the complaint opens with a synopsis of the cheque, dishonour, notice and cause of action.
Timelines
| Step | Time limit | Law |
|---|---|---|
| Present the cheque | Within its validity: three months from the cheque date | Section 138(a); RBI rule from 1 April 2012 |
| Send the cheque bounce notice | Within 30 days of the bank’s information that it was returned unpaid | Section 138(b) |
| Drawer pays | Within 15 days of receiving the notice | Section 138(c) |
| File the complaint | Within one month of the cause of action, which arises when the 15 days end without payment | Section 142(1)(b) |
| Pay interim compensation, if ordered | Within 60 days of the order, extendable by up to 30 days | Section 143A(3) |
Here is the catch: the 30 days run from when the bank tells you, not from the cheque date. Picture a Faridabad building-material supplier whose contractor’s cheque bounces just after Diwali, when nobody is watching the post. In practice, we send the notice within days of the memo, not on day 29. That leaves time to fix an address that turns out wrong.
Interim compensation, appeals and settlement
Under Section 143A, the trial court may order the drawer to pay interim compensation of up to 20% of the cheque amount: in a summary or summons trial once the drawer pleads not guilty, and in other cases when the charge is framed. If the drawer is later acquitted, the complainant repays it with interest at the RBI bank rate. In Rakesh Ranjan Shrivastava (2024), the Supreme Court held that this power is discretionary, not automatic.
If the drawer is convicted and appeals, Section 148 lets the appellate court order a deposit of at least 20% of the fine or compensation. In Bharat Mittal (18 December 2025), the Supreme Court said exemption from that deposit is for exceptional cases only.
The offence is compoundable, so the parties can settle. In Sanjabij Tari, the Supreme Court revised the cost of compounding:
| When the case is settled | Cost of compounding |
|---|---|
| Before the drawer’s defence evidence | No cost |
| After defence evidence, before the trial court’s judgment | 5% of the cheque amount |
| In revision or appeal before the Sessions Court or High Court | 7.5% of the cheque amount |
| Before the Supreme Court | 10% of the cheque amount |
The same judgment noted that Section 138 cases make up nearly half of trial court pendency (49.45% in Delhi) and asked courts to let drawers pay through QR codes or UPI links at the summons stage.
What happens if you miss a deadline
Present the cheque after three months
A bank will not pay a cheque more than three months old, and Section 138 does not apply to one presented after its validity. You can still sue on the debt itself in a civil court.
Send the notice after 30 days
Say a Faridabad auto-parts dealer spots the return memo in his statement six weeks late. That dishonour cannot support a complaint. If the cheque is still valid, present it again: in MSR Leathers, the Supreme Court held that a fresh dishonour followed by a fresh notice gives a new cause of action.
Ignore the notice as the drawer
Once 15 days pass without payment, the offence is complete. On conviction, the court can impose up to two years’ imprisonment, a fine up to twice the cheque amount, or both.
Frequently asked questions
What is the time limit to send a cheque bounce notice?
The notice must be sent within 30 days of receiving the bank’s information that the cheque was returned unpaid, under Section 138(b) of the Negotiable Instruments Act. It must be in writing and demand payment of the cheque amount. We prepare it within days of the memo, so the deadline is never at risk.
How many days does the drawer get to pay?
The drawer gets 15 days from receiving the notice. Payment within that time means no offence. If they claim the notice never reached them, the Supreme Court held in C.C. Alavi Haji (2007) that they can still pay within 15 days of receiving the court summons; a drawer who does not pay even then cannot dispute service. Either way, you are protected.
When and where is the cheque bounce complaint filed?
Within one month of the cause of action, which arises when the 15 days end without payment, under Section 142(1)(b). It goes before a Judicial Magistrate of the first class or a Metropolitan Magistrate. Under Section 142(2)(a), if you deposited the cheque in your account, the case is filed where your bank branch is located. A payee who banks in Faridabad files in Faridabad.
What is the punishment for cheque bounce under Section 138?
Imprisonment of up to two years, a fine of up to twice the cheque amount, or both. During trial, the court may also order interim compensation of up to 20% of the cheque amount under Section 143A. The offence is compoundable, so the drawer can settle with the payee, and paying early always costs least.
Can a cheque bounce case be settled?
Yes, the offence is compoundable. Under the Supreme Court’s revised scale in Sanjabij Tari (25 September 2025), there is no cost if the case is settled before the drawer’s defence evidence, 5% of the cheque amount after that but before judgment, 7.5% in the Sessions Court or High Court, and 10% in the Supreme Court. So the earlier you settle, the less it costs.
How long is a cheque valid in India?
Three months from the date written on it. The RBI reduced the validity of cheques from six months to three months with effect from 1 April 2012. Section 138(a) requires presentation within six months or the validity period, whichever is earlier, so in practice the limit is three months. If your cheque is close to expiry, deposit it now.
Does Section 138 apply if payment was stopped or the account closed?
It can. In Laxmi Dyechem (2012), the Supreme Court held that returns for reasons such as “payment stopped”, “account closed” or “signatures do not match” can also attract Section 138, not just “insufficient funds”. The question is whether the drawer is responsible for the dishonour. Send us the return memo and we will tell you where you stand.
Can I present a bounced cheque again?
Yes, as long as it is still within its three-month validity. In MSR Leathers v S. Palaniappan, the Supreme Court held that each fresh dishonour followed by a fresh notice gives a new cause of action. So if the drawer asks you to re-deposit, you can agree safely. Just send a new notice within 30 days if it bounces again.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Ready to begin?
Send us the cheque and the return memo today, and we will have the notice ready for your review well inside the 30 days.