A dishonoured cheque can lead to criminal liability under Section 138 of the Negotiable Instruments Act, 1881. The statute sets short, strict deadlines, and a missed step can defeat a complaint.
Both sides need to act quickly: the payee to protect the right to complain, and the drawer to respond to the notice and prepare a defence.
What this covers
- Statutory demand notices
- Replies to demand notices
- Section 138 complaints
- Defence of the accused
- Interim compensation
- Compounding and settlement
- Appeals and revisions
- Quashing petitions, where appropriate
Principal laws
| Law | Relevance |
|---|---|
| Negotiable Instruments Act, 1881 | Sections 138 (offence), 139 (presumption), 141 (companies), 142 (cognizance and jurisdiction), 143A and 148 (interim deposits), 147 (compounding). |
Where it is heard
The Magistrate Court where the payee's bank branch is located, in the cases covered by Section 142(2), with appeals to the Sessions Court and revisions to the High Court.
Usual steps
- Check the cheque, return memo and underlying debt
- Send the demand notice within 30 days
- Wait for the 15-day payment period to end
- File the complaint within one month
- Summons, evidence and trial
- Judgment, settlement or appeal
Documents that are often relevant
- Original cheque and bank return memo
- Demand notice with postal proof
- Agreement, invoice or ledger showing the debt
- Any reply received
Please keep these safe, but do not send confidential documents until we have confirmed that we will act for you.
Time limits and key points
| Item | Position |
|---|---|
| Demand notice | Within 30 days of learning of the dishonour |
| Payment by the drawer | Within 15 days of receiving the notice |
| Complaint | Within 1 month after the 15-day period ends. Not before it ends |
| Delay in filing the complaint | May be condoned on sufficient cause (Section 142) |
Common questions
What is the maximum punishment?
Imprisonment up to two years, a fine up to twice the cheque amount, or both.
Can the case be settled?
Yes. The offence is compoundable under Section 147, and parties may settle at various stages, subject to the court's directions.
This is general information, not legal advice. The law may have changed, and the answer may differ on your facts.