When a cheque is dishonoured for insufficient funds or exceeding arrangement, the payee must send a written demand notice to the drawer within 30 days of receiving the bank's return memo. If the drawer does not pay within 15 days of receiving the notice, a criminal complaint under Section 138 of the Negotiable Instruments Act can be filed within one month.
Conditions for a Section 138 case
- Cheque issued for a legally enforceable debt or liability
- Presented within its validity period (three months)
- Dishonoured for insufficient funds or exceeding arrangement
- Notice sent within 30 days of the return memo
- Drawer fails to pay within 15 days
Contents of the notice
- Cheque details and dishonour reason
- The underlying debt
- Demand for payment within 15 days
- Consequences of non-payment
Filing the complaint
File before the magistrate having jurisdiction, generally where the payee's bank branch is located, within one month after the 15-day period ends, with the cheque, memo, notice and proof of delivery.
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Get expert help →Settlement options
Many cases settle at the notice stage or through compounding during trial. Interim compensation may be ordered by the court.
Frequently asked questions
What if I miss the 30-day notice deadline?
You can present the cheque again within its validity, and on fresh dishonour send notice within 30 days of the new memo, subject to case law.
Can I send the notice by email or WhatsApp?
Courts have accepted electronic service in some cases, but registered post or speed post with tracking remains the safest proof.
Is the case civil or criminal?
Section 138 is a criminal offence, though it is compoundable. A civil suit for recovery can also be filed separately.
Does stop payment count as dishonour?
Yes. Courts have held that dishonour due to stop payment instructions can attract Section 138 if funds were insufficient or the stop was to avoid a genuine liability.
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