Cheque dishonour under Section 138 of the Negotiable Instruments Act: a step-by-step guide
From the statutory demand notice to the dishonour complaint and compounding, the key rules and deadlines that govern cheque-bounce cases.
The statutory conditions
A complaint under Section 138 of the Negotiable Instruments Act, 1881 can proceed only if the cheque was presented within its validity, was returned unpaid for insufficiency of funds, a written demand notice was served within 30 days of the return memo, and the drawer failed to pay within 15 days of receiving the notice.
All four conditions matter. Missing any of them — especially the 30-day window for the notice — is a common reason complaints fail.
Complaint and evidence
The complaint must be filed within one month of the cause of action arising, supported by the cheque, the bank return memo, the notice and the service proof. The presumption of consideration under the Act shifts the evidentiary burden onto the drawer, but the complainant must still establish that the debt or liability existed.
Practical advice
Preserve the envelope, courier receipt and any email records of the notice. Where the matter is commercial, parties often compound the offence after settlement; the court records the compromise and the drawer is acquitted.
This note is general information, not legal advice.