You lent money to a friend, or sold goods to a customer, and received a cheque in return. You deposited it, and the bank sent it back unpaid. Now what? Many people panic, or keep calling the other person for months, and by the time they decide to act, the legal deadlines are over.
In India, a bounced cheque is not just a broken promise. Under Section 138 of the Negotiable Instruments Act, 1881, it can be a criminal offence. But the law is strict about timelines, and one missed date can end your case. This guide explains the complete procedure, the deadlines, the punishment, the important defences, and the latest 2025 Supreme Court guidelines.
Contents
- When Is Cheque Bounce a Crime?
- Step-by-Step Procedure
- How to Send a Valid Legal Notice
- Filing the Complaint
- 2025 Supreme Court Guidelines
- Presumption and Burden of Proof
- Punishment and Remedies
- If You Are the Person Who Issued the Cheque
- Landmark Supreme Court Judgments
- FAQs
When Is Cheque Bounce a Crime?
Not every bounced cheque leads to a Section 138 case. All of the following conditions must be satisfied:
| # | Condition |
|---|---|
| 1 | The cheque was issued to pay a legally enforceable debt or liability. A gift or an illegal transaction does not count. |
| 2 | The cheque was presented to the bank within its validity, which is 3 months from the date on the cheque. |
| 3 | The bank returned it unpaid, for example because of insufficient funds or because the amount exceeds the arrangement with the bank. |
| 4 | The holder sent a written demand notice within 30 days of getting the information about the return from the bank. |
| 5 | The drawer failed to pay within 15 days of receiving the notice. |
Step-by-Step Procedure
Step 1: Deposit the cheque on time
Present the cheque within 3 months of the date written on it (the validity period fixed by the Reserve Bank of India). A post-dated cheque is valid from the date written on it, and the 3 months are counted from that date.
Step 2: Get and keep the cheque return memo
If the cheque bounces, the bank issues a Cheque Return Memo stating the reason. Keep the original cheque, the memo, and any SMS or email from the bank. The date on which you receive this information starts the 30-day clock for the notice.
Step 3: Send the legal notice within 30 days
This is the most important step, and it is mandatory for a Section 138 case. Details are below.
Step 4: Wait for 15 days
The drawer gets 15 days from the date of receiving the notice. If the full cheque amount is paid within this time, no offence is made out under Section 138.
Step 5: File the complaint within 30 days
If the drawer does not pay, the cause of action arises after the 15 days end, and you must file the complaint within one month from that date (Section 142). A court can accept a delayed complaint if you show sufficient cause, but you should never plan on this.
How to Send a Valid Legal Notice
- Demand the cheque amount clearly. Mention the cheque number, date, amount, bank, date of presentation, date of return and the reason for return.
- Give 15 days to pay from the date of receipt, and state that criminal action under Section 138 will follow if payment is not made.
- Send it in writing to the correct address of the drawer. Use Registered Post with AD (acknowledgement due) and keep the postal receipt and tracking record. Sending a copy by email or WhatsApp as well is a useful addition.
- Get it drafted by an advocate if possible. Errors in a notice are among the most common reasons for cases to fail.
Sample notice format (have an advocate review it)
To,
[Name and address of the person who issued the cheque]
Subject: Notice under Section 138 of the Negotiable Instruments Act, 1881
1. You issued cheque no. [___] dated [___] for Rs. [___], drawn on [Bank, Branch], in favour of [my name] towards payment of [debt/liability, for example a loan or supply of goods].
2. I presented the cheque on [date], and it was returned unpaid on [date] with the remark "[reason]", as per the bank's return memo dated [___].
3. I hereby demand payment of Rs. [___] within 15 days of receipt of this notice. If you fail to do so, I will initiate criminal proceedings against you under Section 138 of the Act, apart from civil recovery, at your risk and cost.
[Your name, address, date and signature]
Filing the Complaint
Where to file? (Section 142(2))
The complaint is filed before the Judicial Magistrate of First Class (or Metropolitan Magistrate) having jurisdiction. If the cheque was deposited through the payee's own bank account, the court where the payee's bank branch is located has jurisdiction. If it was presented otherwise than through an account, the court where the drawee bank branch is located has jurisdiction.
Documents to attach
- Original cheque and the bank's return memo
- Legal notice with postal receipt, tracking report and AD card or delivery proof
- The drawer's reply to the notice, if any
- Proof of the debt: agreement, invoice, bank transfer record, ledger, chats or receipts
- Your ID proof and an affidavit of evidence (evidence can be given on affidavit under Section 145)
The complaint is a private complaint to the Magistrate (under Section 223 BNSS), not an FIR at the police station. If you cannot afford a lawyer, you may be eligible for free legal aid. See our guide on free legal aid in India.
2025 Supreme Court Guidelines
In Sanjabij Tari v. Kishore S. Borcar (2025), the Supreme Court noted the massive backlog of cheque bounce cases and issued fresh directions, including:
- Summons by more modes: summons may be served dasti (by the complainant) and by electronic means, in addition to the usual modes.
- Accused's contact details: the complainant should provide the accused's email, mobile number or messaging details, supported by an affidavit.
- Standard synopsis: each Section 138 complaint should carry a short synopsis in the format laid down by the Court.
- Early payment option: the summons should inform the accused that the cheque amount can be paid at the initial stage, which encourages settlement.
- No pre-cognizance summons to the accused under Section 223 BNSS in these complaints.
- Cash loans: the Court clarified that a cash loan above Rs. 20,000 can still be a legally enforceable debt for Section 138, although tax law may penalise such cash dealing.
The Court also revisited the guidelines on compounding of these offences. Practices can differ by court, so please check the current procedure with a local advocate.
Presumption and Burden of Proof
Under Sections 118(a) and 139, once the drawer admits that the cheque is theirs and the signature is theirs, the court presumes that the cheque was issued for a legally enforceable debt. It is then for the drawer to rebut this presumption with evidence, on the standard of "preponderance of probabilities". The Supreme Court has held that this presumption can apply even when the drawer says the cheque was a blank cheque that was signed and handed over.
Punishment and Remedies
- Punishment (Section 138): imprisonment up to 2 years, or fine up to twice the cheque amount, or both.
- Interim compensation (Section 143A): the court can direct the drawer to pay up to 20% of the cheque amount to the complainant at the start of the case.
- Appeal deposit (Section 148): a convicted drawer who appeals must deposit at least 20% of the fine or compensation ordered by the trial court.
- Summary trial (Section 143): these cases are tried in a summary manner and the law aims for disposal within about 6 months.
- Compounding (Section 147): the offence can be settled between the parties, even at a later stage, though the court may impose costs for late settlement.
- Companies (Section 141): when a company's cheque bounces, persons in charge of its business at the time can also be prosecuted.
- Civil recovery: you can also file a civil suit for recovery of the amount and interest, alongside or after the criminal case.
If You Are the Person Who Issued the Cheque
This guide is useful for both sides, so here is the other perspective:
- Never ignore the notice. Reply in writing, and if the debt is genuine, pay within 15 days to avoid the case.
- Pay within the period and keep proof. Timely payment ends the Section 138 liability.
- Possible defences include: no legally enforceable debt, the cheque was given as security and the debt was not due, the cheque was lost or misused, the notice was defective or late, or the complaint was filed out of time.
- Bail: Section 138 is generally treated as a bailable offence. See our guide on bail in India under BNSS.
- Settle early: the courts encourage settlement, and compounding is possible.
Landmark Supreme Court Judgments
- Rangappa v. Sri Mohan (2010): The statutory presumption includes the existence of a legally enforceable debt, and the burden then shifts to the drawer to rebut it.
- C.C. Alavi Haji v. Palapetty Muhammed (2007): A notice sent by registered post to the correct address is presumed to be served.
- Dashrath Rupsingh Rathod v. State of Maharashtra (2014): The Court held that the complaint must be filed where the cheque was dishonoured. Parliament then changed the law in 2015, so the present rule in Section 142(2) governs.
- Meters and Instruments v. Kanchan Mehta (2017): The offence is mainly a civil wrong with a criminal remedy, so courts can encourage payment of the cheque amount with interest and costs and close the case.
- Bir Singh v. Mukesh Kumar (2019): The presumption under Section 139 applies even to a signed blank cheque voluntarily handed over.
Frequently Asked Questions
Is a legal notice compulsory?
Yes. Unlike some other matters, a Section 138 case cannot succeed without a valid demand notice sent within 30 days.
Can I file a police FIR for a bounced cheque?
No. A Section 138 case is started by a complaint to the Magistrate. It is not registered as an FIR at the police station.
Can I present the cheque again if it bounces?
Yes, a cheque can be presented again within its validity period. However, the deadlines run from each dishonour, so please take legal advice before you do this.
What if the cheque was post-dated?
A post-dated cheque is valid. The 3-month validity is counted from the date written on the cheque.
Do I need a lawyer?
It is not compulsory, but strongly recommended for drafting the notice and the complaint, because small mistakes can be fatal to the case.
Conclusion
Section 138 is a strong tool, but only for those who follow the timeline. Remember the three numbers: 30 days for the notice, 15 days for the drawer to pay, and 30 days to file the complaint. Keep every document, use registered post, and act early. If you are on the other side of the cheque, respond to the notice promptly and seek advice.
Official Sources for Reference
- Negotiable Instruments Act, 1881 and BNSS, 2023: India Code
- Cheque validity and banking rules: Reserve Bank of India
- Case status: eCourts
- Judgments: Supreme Court of India and Indian Kanoon
Last updated: September 30, 2026
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