Cheque Bounce Notice in India: Section 138 Guide 2026

A bounced cheque is one of the most common money disputes in India. It affects small traders who accept post-dated cheques, landlords collecting rent by cheque, contractors awaiting running-bill payments, and individuals who have lent money privately. The law does not leave the payee helpless. Under the Negotiable Instruments Act, 1881, dishonour of a cheque for insufficiency of funds is a punishable offence — but that remedy opens only if you send a proper cheque bounce notice within a strict timeline.

This guide explains what a cheque bounce notice is, when it must be sent, what it must contain, how a Section 138 complaint proceeds, and what alternatives exist for recovering your money.

What Does “Cheque Bounce” Mean?

A cheque bounces when the bank refuses to honour it and returns it unpaid to the person who deposited it. The bank issues a written slip — commonly called a cheque return memo or dishonour memo — recording the reason for return. That memo is the starting point of the entire legal process, because the date on which you receive information of dishonour is the date from which your notice period is counted.

Common Reasons a Cheque Is Returned Unpaid

• Insufficient balance in the drawer’s account
• Amount exceeds the arrangement or overdraft limit sanctioned by the bank
• Payment stopped by the drawer
• Account closed, frozen or dormant
• Signature differs from the bank’s specimen
• Cheque is stale — presented after its validity period
• Words and figures on the cheque do not match
• Overwriting or alteration not authenticated by the drawer
• Drawer’s death, insolvency or insanity reported to the bank

Not every reason attracts criminal liability. Section 138 applies where the cheque is returned for insufficiency of funds, or because the amount exceeds the arrangement made with the bank. Courts have also held that a “stop payment” instruction or a closed account can fall within Section 138, since a drawer cannot defeat the law by blocking payment after issuing a cheque. Purely technical returns ordinarily do not attract the offence.

What Is a Cheque Bounce Notice?

A cheque bounce notice, also called a demand notice or a legal notice for dishonour of cheque, is a formal written demand sent by the payee to the drawer, calling upon the drawer to pay the cheque amount within 15 days. It is not an optional courtesy. It is a statutory pre-condition: without a valid notice served within time, a complaint under Section 138 cannot succeed.

The notice is the drawer’s last lawful opportunity to pay. If the amount is paid within the 15-day window, no offence under Section 138 is committed at all.

The Legal Framework: Section 138, Negotiable Instruments Act, 1881

Section 138 was inserted into the Negotiable Instruments Act, 1881 by an amendment in 1988, brought into force in 1989, to give credibility to cheques as an instrument of payment. It provides that where a cheque drawn for the discharge of a legally enforceable debt or other liability is returned unpaid for insufficiency of funds, or because it exceeds the arrangement made with the bank, the drawer is deemed to have committed an offence.

The Three Conditions in the Proviso

The proviso to Section 138 lays down three cumulative requirements. If even one of them fails, the complaint is not maintainable:

1. Presentation within validity. The cheque must be presented to the bank within its period of validity. Although the section speaks of six months, the Reserve Bank of India reduced the validity of cheques to three months from the date written on them with effect from 1 April 2012. In practice, therefore, a cheque must be banked within three months.
2. Notice within 30 days. The payee or holder in due course must make a demand for payment by giving a written notice to the drawer within 30 days of receiving information from the bank about the return of the cheque.
3. Default for 15 days. The drawer must fail to pay the amount within 15 days of receipt of that notice.

The offence is complete only on the sixteenth day. That is the date on which the cause of action arises, and the limitation for filing the complaint runs from there.

Punishment Under Section 138

The offence is punishable with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. In practice, magistrates most often award compensation reflecting the cheque amount, and custodial sentences are reserved for deliberate evasion.

The Cheque Bounce Timeline at a Glance

Stage	Action	Time limit	Legal basis
1	Present the cheque to the bank	Within 3 months of the date on the cheque	Proviso (a) to Section 138, read with RBI cheque validity norms
2	Collect the cheque return memo	Immediately on dishonour	Section 146 — bank memo is prima facie evidence of dishonour
3	Send the cheque bounce notice	Within 30 days of intimation of dishonour	Proviso (b) to Section 138
4	Wait for payment	15 days from receipt of the notice	Proviso (c) to Section 138
5	File the criminal complaint	Within 1 month of expiry of the 15-day period	Section 142
6	Summary trial before the Magistrate	Endeavour to conclude within 6 months	Section 143

Missing the 30-day notice window is fatal to a Section 138 case arising from that presentation. The Supreme Court has held, however, that a cheque may be presented again within its validity and a fresh notice issued on the fresh dishonour. Delay in filing the complaint, as distinct from delay in sending the notice, can be condoned if sufficient cause is shown.

How to Send a Cheque Bounce Notice: Step by Step

1. Secure the documents. Keep the original dishonoured cheque and the original bank return memo safely. Do not part with the originals; they are the core of your evidence.
2. Confirm the date of intimation. Note the date on which your bank informed you of the dishonour. Your 30 days run from that date, not from the date written on the cheque.
3. Verify the drawer’s address. Send the notice to the drawer’s last known residential or registered office address. Where the cheque is a company cheque, address the notice to the company and also to the directors or persons in charge of its affairs.
4. Have the notice drafted by an advocate. A defective notice — wrong amount, vague demand, no reference to the underlying liability — is the most common reason cheque bounce cases collapse.
5. Dispatch it properly. Registered post with acknowledgement due is the safest mode; speed post and a reputed courier are also accepted. Many practitioners use more than one mode.
6. Preserve proof of dispatch. Retain the postal receipt, the tracking record and the acknowledgement card. If the drawer refuses the notice, or it returns with a remark such as “not claimed”, service is generally presumed provided the address was correct.
7. Diarise the 15 days. Count 15 days from receipt of the notice. Do not file the complaint before that period expires — a premature complaint is liable to be dismissed.

What a Cheque Bounce Notice Must Contain

• Name, address and description of the payee and of the drawer
• Full particulars of the cheque — number, date, amount in figures and words, drawee bank and branch
• The transaction or liability for which the cheque was issued, described clearly, with invoice numbers, loan date, rent period or contract reference
• A statement that the cheque was presented within its validity, and the date of presentation
• The reason for dishonour as recorded in the bank memo, and the date of that memo
• The date on which the payee received intimation of dishonour
• An unambiguous demand to pay the cheque amount within 15 days of receipt of the notice
• A statement that failure to pay will invite proceedings under Section 138 of the Negotiable Instruments Act, 1881, along with civil recovery action
• Date, place and signature of the payee or the advocate, with the advocate’s enrolment and contact details

Two drafting cautions matter. First, the statutory demand should be for the cheque amount alone; claim interest, costs or damages separately, because an omnibus demand mixing the cheque amount with unquantified extras has been held defective. Second, never overstate the figure, as demanding more than the cheque value can invalidate the notice.

Filing a Complaint Under Section 138

Who Can File, and Where

Only the payee or the holder in due course can file the complaint, and it must be in writing. Cognizance is taken by a court not inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the First Class. Since the 2015 amendment, territorial jurisdiction follows the payee’s bank: where the cheque is delivered for collection through an account, the complaint lies where the branch holding that account is situated; where it is presented otherwise than through an account, the complaint lies where the drawee bank’s branch is located.

Procedure After Filing

1. The complaint is filed along with the original cheque, the return memo, a copy of the notice, proof of dispatch and service, and the complainant’s affidavit.
2. The Magistrate records preliminary evidence, which may be given on affidavit, and issues summons if a prima facie case is made out.
3. Summons may be served by speed post or by an approved courier service, in addition to the usual modes.
4. The accused appears, the plea is recorded, and the matter proceeds as a summary trial. The court is required to endeavour to conclude the trial within six months from the date of filing.
5. The court may direct the drawer to pay interim compensation of up to twenty per cent of the cheque amount during the trial, ordinarily payable within sixty days of the order.
6. On conviction, the court may award compensation to the complainant. If the drawer appeals, the appellate court may direct a deposit of not less than twenty per cent of the fine or compensation awarded.

The offence is compoundable, so a settlement may be recorded at any stage. Most cheque bounce matters do end in settlement — which is why a well-drafted notice, backed by clean documents, so often produces payment long before trial.

Section 138 Complaint or Civil Suit? A Comparison

A cheque bounce notice can lead to two remedies, and pursuing both is permissible: one punishes the dishonour, the other recovers the money.

Feature	Complaint under Section 138, NI Act	Summary suit under Order XXXVII, CPC
Nature of proceeding	Criminal, though quasi-civil in character	Civil recovery
Forum	Metropolitan Magistrate or Judicial Magistrate First Class	Civil court of competent pecuniary jurisdiction
Main objective	Punish dishonour and compensate the payee	Obtain a money decree
Relief available	Imprisonment up to two years and/or fine up to twice the cheque amount, with compensation	Principal amount with interest and costs
Interest	Not automatic; usually reflected in compensation	Claimed as part of the suit
Time to initiate	One month from the cause of action	Three years from dishonour, under the Limitation Act, 1963
Defendant’s position	Must appear and face trial	Must obtain leave of the court to defend
Typical pressure value	High, because of criminal consequences	Moderate

Many payees issue one notice referring to both remedies, file the Section 138 complaint first, and keep the civil suit in reserve.

Worked Example: Counting the Deadlines

A Delhi-based stationery supplier delivers goods worth Rs 4,50,000 against invoices and receives a post-dated cheque dated 5 March. He deposits it on 10 March. On 13 March his bank hands him a return memo marked “funds insufficient”. His 30-day notice period runs from 13 March, so the notice must go out by 12 April. He sends it on 20 March by registered post and the drawer receives it on 24 March. The 15-day period ends on 8 April. If no payment arrives, the offence is complete on 9 April and the complaint must be filed by 8 May before the Magistrate having jurisdiction over the branch where the supplier maintains his account.

Where the cheque is a company cheque, the notice must additionally be addressed to the directors or officers in charge of the company’s affairs, with specific averments about their role. Omitting them, or making only a bare allegation, often leads to their discharge later.

Mistakes That Weaken a Cheque Bounce Case

• Counting the 30 days from the date on the cheque instead of the date of intimation of dishonour
• Sending the notice to a stale or incorrect address without any attempt to verify the current one
• Making an unclear demand, or demanding a figure different from the cheque amount
• Filing the complaint before the 15-day period expires
• Losing the original cheque or the bank return memo
• Failing to describe the underlying debt, which allows the drawer to argue the cheque was only a security or was handed over blank
• Relying only on ordinary post or messaging apps, with no provable service

Defences Commonly Raised by the Drawer

The Act presumes, until the contrary is proved, that a cheque was drawn for the discharge of a debt or liability, and a bare denial will not rebut it. Defences typically pleaded include:

• No legally enforceable debt existed — for instance, the underlying claim was already time-barred when the cheque was issued
• The cheque was given as security and was not meant to be encashed on that date
• The cheque was lost or stolen and completed by someone else
• Material alteration of the amount or date after issue
• The notice was never served, or was issued beyond 30 days
• Payment was in fact made within the 15-day period

Documents, Costs and Realistic Timelines

Costs vary with the forum, the amount in dispute and the complexity of the matter, so any figure quoted in the abstract is unreliable. What is predictable is the document set to assemble before meeting a lawyer:

• Original dishonoured cheque and bank return memo
• Bank statement showing presentation and return
• Invoices, agreement, loan document or ledger establishing the liability
• Correspondence, including any written acknowledgement of the debt
• Identity and address details of the drawer, and company records if the drawer is a company

At Legal Dwar Associates, our litigation team drafts cheque bounce notices and appears in Section 138 matters before Magistrate courts in Delhi, as well as in recovery proceedings before civil courts, consumer forums, the Debt Recovery Tribunal and the NCLT. You can read more about our practice or get in touch.

Frequently Asked Questions

Is a cheque bounce notice compulsory before filing a case?

Yes, for a complaint under Section 138. The written demand is a statutory pre-condition, and a complaint filed without a valid notice served within 30 days of intimation of dishonour will not be maintainable. A civil suit for recovery, by contrast, does not depend on this notice, although sending one is still good practice.

What happens if I miss the 30-day deadline?

The right to prosecute on that particular dishonour is lost. If the cheque is still within its validity, you may present it again and, on a fresh dishonour, issue a fresh notice within 30 days. If validity has expired, the criminal remedy is generally gone, but a civil suit for recovery of the underlying debt usually remains available within the limitation period.

Can a cheque bounce notice be sent by email or WhatsApp?

Electronic delivery can be useful as supporting proof, but it should not be your only mode. Registered post with acknowledgement due, speed post or an approved courier remains the safest route, because service is the point most often disputed at trial.

What if the drawer refuses to accept the notice?

Deliberate refusal does not help the drawer. Where the notice is correctly addressed and returned unserved with a remark such as “refused” or “not claimed”, courts generally treat service as having been effected. This is why proof of the correct address and the postal record matter so much.

Is cheque bounce a criminal offence in India?

Yes, in the circumstances described in Section 138 it is punishable with imprisonment of up to two years, or fine of up to twice the cheque amount, or both. The offence is compoundable, and courts have described these proceedings as quasi-civil in character.

Can I claim interest on the cheque amount?

The statutory demand in the notice should be confined to the cheque amount. Interest and costs can be claimed separately in the notice and pursued in a civil suit, and a criminal court may also factor the loss into the compensation it awards. Keep the two claims clearly distinct in the drafting.

Can I file a case if the cheque was returned because the account was closed?

Generally yes. Courts have held that closing an account, or instructing the bank to stop payment, after issuing a cheque cannot be used to escape liability, since the object of Section 138 is to protect the credibility of cheques as a means of payment.

What is interim compensation in a cheque bounce case?

During the trial, the court may direct the drawer to pay the complainant interim compensation of up to twenty per cent of the cheque amount, ordinarily within sixty days. It is intended to reduce the hardship caused to a payee who has to wait for the trial to conclude.

Conclusion

A cheque bounce case is won or lost on discipline rather than argument. The law gives the payee a strong remedy, complete with a statutory presumption in favour of the holder, a summary trial and the possibility of interim compensation. But the entire structure rests on a single document sent on time: the cheque bounce notice. Count the 30 days from the bank’s intimation, describe the cheque and the underlying liability precisely, demand exactly the cheque amount, dispatch the notice through a provable mode, and preserve every receipt.

If those steps are taken carefully, most drawers pay within the 15-day window or settle shortly after summons. Where a significant sum is involved, or the drawer is a company, it is worth having the notice and the complaint prepared by an advocate who handles these matters regularly.