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Cheque bounce (Section 138 NI Act)
Dishonour of a cheque for insufficient funds can be a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, but only if strict time limits are followed.
Published by Master Legal Work · Sources and use of this guide
Stage by stage
Presentation and return
The cheque must be presented within its validity period (currently three months from its date under RBI directions) and returned unpaid, for example for insufficient funds.
Legal notice — 30 days
The payee must send a written demand notice to the drawer within 30 days of receiving information of the return (s.138(b)).
Time to pay — 15 days
The drawer has 15 days from receipt of the notice to pay (s.138(c)). The offence is complete only if payment is not made in that time.
Complaint — one month
The complaint must be filed within one month of the cause of action (s.142(1)(b)); the court may condone delay for sufficient cause.
Trial
The court presumes the cheque was for a debt or liability (s.139); the accused may rebut this. Cases are to be tried summarily where possible (s.143), and the trial court may order interim compensation of up to 20% (s.143A).
Rangappa v. Sri Mohan, AIR 2010 SC 1898, Supreme Court of India, decided 07.05.2010 · Meters and Instruments Pvt. Ltd. v. Kanchan Mehta, (2018) 1 SCC 560, Supreme Court of India, decided 05.10.2017 · Negotiable Instruments Act, 1881
Appeal
In an appeal against conviction, the appellate court may order deposit of at least 20% of the fine or compensation (s.148).
Settlement
The offence is compoundable (s.147). The Supreme Court has encouraged settlement and early disposal.
Meters and Instruments Pvt. Ltd. v. Kanchan Mehta, (2018) 1 SCC 560, Supreme Court of India, decided 05.10.2017 · Makwana Mangaldas Tulsidas v. State of Gujarat (order), SLP (Crl.) 5464/2016, order dated 05.03.2020, Supreme Court of India, decided 05.03.2020 · Negotiable Instruments Act, 1881
What to prepare
- Keep the original cheque and the bank's return memo safely.
- Calculate the 30-day notice deadline from the date you learned of the return.
- Send the notice by a provable method (registered post / speed post, and email or WhatsApp where possible) and keep the receipts and tracking.
- Keep the documents that show the debt (agreement, invoices, ledger, messages).
Documents to keep ready
- Original cheque
- Bank return memo
- Copy of legal notice with postal receipts and tracking report
- Proof of the underlying debt
- For a company: board resolution or authority letter
Frequently asked questions
What if I miss the 30-day notice deadline?
A complaint under Section 138 is not maintainable without a valid notice within 30 days of information of the return. You may be able to present the cheque again within its validity and start afresh; take advice quickly.
Can the case be settled?
Yes. The offence is compoundable under s.147 of the NI Act, and the Supreme Court has encouraged compounding at an early stage.
Is interim compensation automatic?
No. Under s.143A the trial court may order interim compensation of up to 20%; the Supreme Court has held this power is discretionary.
I have been convicted. Must I deposit money to appeal?
The appellate court may direct a deposit of at least 20% of the fine or compensation under s.148; it can, in exceptional cases with reasons, decide otherwise.
Official sources
- Negotiable Instruments Act, 1881 (India Code)
- Rangappa v. Sri Mohan, AIR 2010 SC 1898, Supreme Court of India, decided 07.05.2010 (Indian Kanoon)
- Meters and Instruments Pvt. Ltd. v. Kanchan Mehta, (2018) 1 SCC 560, Supreme Court of India, decided 05.10.2017 (Supreme Court of India (PDF))
- Makwana Mangaldas Tulsidas v. State of Gujarat (order), SLP (Crl.) 5464/2016, order dated 05.03.2020, Supreme Court of India, decided 05.03.2020 (Supreme Court of India (PDF))
General information only, not legal advice. Statutory references show BNSS / BNS / BSA with the earlier CrPC / IPC / Evidence Act where relevant. Check the precise commencement notification and savings: pending proceedings may remain governed by the earlier procedural law, and the offence date determines the applicable substantive penal law. Judgments are linked as reported; check the full text and any later decisions. Last reviewed 9 October 2026.
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Related model formats
03 Complaint under Section 138 NI Act (cheque bounce)
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