When a cheque is dishonoured for insufficient funds, stop payment or account closure, Section 138 of the Negotiable Instruments Act applies. You must send a written notice within 30 days of receiving the bank's return memo; the drawer then has 15 days to pay; if he does not, a complaint must be filed within one month after that. Conviction carries up to two years imprisonment or a fine up to twice the cheque amount, or both. FundRaksha handles the notice, the complaint and the recovery for 30% of what is recovered.
The timeline that decides everything
Section 138 is strict about time. Miss a window and the criminal remedy is gone, leaving only a civil suit. The sequence:
- Presentation. Present the cheque within its validity (three months from the date on it).
- Return memo. The bank returns it with a memo stating the reason: funds insufficient, payment stopped, account closed, signature mismatch and others.
- Notice within 30 days. From the date you receive the memo, you have 30 days to send a written demand for the cheque amount.
- 15 days to pay. The drawer has 15 days from receipt of the notice.
- Complaint within one month. If unpaid, file the complaint before the magistrate within one month after the 15 days end.
Use the cheque bounce timeline to compute your dates, and send us the memo the day you get it.
What makes a Section 138 case succeed
- The cheque was issued for a legally enforceable debt or liability (an invoice, a loan, a settlement). Keep the documents showing what it was for.
- The notice was sent within 30 days, to the correct drawer, demanding the cheque amount, with proof of dispatch and delivery.
- The complaint was filed in time, in the right court (where the payee's bank branch is located), with the original cheque, memo, notice and proof of service.
- For a company drawer, the company and the persons in charge of its affairs (Section 141) are named correctly.
Courts can order interim compensation of up to 20 percent of the cheque amount at the start of the trial, and the Supreme Court has repeatedly directed magistrates to handle these cases summarily. A well-prepared complaint usually produces settlement before the trial advances.
Common defences and how they are met
| Drawer says | Answer |
|---|---|
| "It was a security cheque" | Once the debt fell due and the cheque was presented and dishonoured, the offence is complete; the purpose does not matter |
| "The cheque was blank, you filled it in" | A signed cheque voluntarily handed over can be filled in by the holder; the presumption under s.139 is in your favour |
| "I never got the notice" | Registered post to the correct address is deemed served; refusal is service; e-notice records are kept |
| "The debt is disputed" | The drawer must rebut the s.139 presumption with evidence, not assertion |
| "I have paid part of it" | Part-payment after dishonour does not undo the offence; the balance remains due |
How FundRaksha handles your bounced cheque
- Send the cheque, the return memo and the invoice or agreement behind it, through a free consultation.
- Advocate assigned and the Section 138 notice sent within 24 hours, well inside the 30-day limit, by registered post and e-notice.
- Negotiation during the 15-day period. Many drawers pay here to avoid a criminal complaint.
- Complaint filed within the one-month window if unpaid; the advocate appears at every hearing and seeks interim compensation.
- Settlement or judgment, and recovery of the amount with compensation where awarded.
Fee: 30% of the amount recovered. Court fees for a Section 138 complaint are modest and are told to you upfront.
Where the cheque is one part of a larger unpaid ledger, the advocate runs the civil recovery in parallel. See trade debt recovery.
Cheque bounce cases across India
The complaint is filed where your bank branch is, which usually means your own city. FundRaksha advocates appear in magistrate courts in Mumbai, Delhi, Hyderabad and across the country. For how to judge any provider, see best cheque bounce lawyer service online. Time is the one thing you cannot recover: send us the return memo today.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.