A cheque return memo is the slip issued by the payee's bank (relaying the drawee bank's reason) when a presented cheque is returned unpaid. It carries the cheque details, the date of return and a reason code such as "funds insufficient", "exceeds arrangement", "payment stopped by drawer" or "account closed". The 30-day period for the Section 138 notice runs from the day the payee receives this memo.
How the return memo works in India
When a cheque is presented through clearing (CTS) and the drawee bank does not pay, the return reason is transmitted to the collecting bank, which hands the payee the memo with the cheque image or physical cheque. Most memos carry a standard reason code and description. The payee's advocate relies on the memo to show (a) presentation within validity, (b) the reason for dishonour, and (c) the date from which the 30 days are counted. If the memo is lost, the bank can issue a certificate, but the original is far better evidence.
| Reason on memo | Section 138? |
|---|---|
| Funds insufficient / exceeds arrangement | Yes, squarely covered |
| Payment stopped by drawer | Yes (Supreme Court: treated as dishonour for insufficiency if debt exists) |
| Account closed | Yes |
| Drawer's signature differs / incomplete | Courts have held yes in several cases; fact-specific |
| Post-dated cheque presented early | No, re-present on or after the date |
Why it matters for getting paid
The memo is the starting gun. Suppliers often sit on a returned cheque for weeks while chasing the buyer by phone, and miss the 30-day notice window; the remedy then is to re-present the cheque within its validity and get a fresh memo. Note the receipt date on the memo the day you get it, and send the cheque bounce notice at once. The cheque bounce timeline calculator works out every deadline from the memo date.
How FundRaksha uses it
FundRaksha asks for a clear scan of the memo and the cheque at the free consultation, checks the reason and dates, and dispatches the notice within 24 hours. If the window has been missed, the advocate advises on re-presentation or on the civil route. 700+ businesses have been paid through FundRaksha; the fee is 30% of recovery.
Worked example (hypothetical)
A Ludhiana cycle-parts maker deposits a ₹2,00,000 cheque dated 10 June on 12 June. The bank returns it on 14 June with the memo "funds insufficient"; the maker collects the memo on 16 June. The notice deadline is 16 July (30 days from receipt). The notice is sent on 20 June and received on 23 June; payment is due by 8 July; the complaint can be filed from 9 July to 8 August. The maker also notes the cheque remains valid until 9 September and can be re-presented if a fresh cycle is ever needed.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.