Financial transactions rely heavily on trust, especially when payments are made through cheques. However, when a cheque gets dishonoured due to insufficient funds, technical errors, or closure of account, it leads to a cheque bounce — a situation that may result in financial loss and legal complications. To protect the interests of the payee, Section 138 of the Negotiable Instruments Act, 1881 provides a strong legal remedy.
In India, a cheque bounce is treated as a criminal offence. The law empowers individuals and businesses to seek compensation and hold the defaulter accountable through a structured legal procedure.
📌 1️⃣ Issue of Legal Notice — Within 30 Days
After the bank returns the cheque unpaid, the payee must send a written legal notice to the drawer within 30 days of receiving the return memo. This notice demands payment of the cheque amount.
📌 2️⃣ 15 Days’ Time for Payment
The drawer gets 15 days from the date of receiving the notice to make the payment.
✔️ If they pay → The matter stands resolved.
📌 3️⃣ Filing Complaint Before Magistrate — Within 30 Days
If the payment is not made within 15 days, the payee can file a criminal complaint before the Jurisdictional Magistrate Court within the next 30 days.
Imprisonment up to 2 years
Fine up to twice the cheque amount
Payment of compensation to the complainant
Criminal record and legal consequences
Timelines are strict in cheque bounce cases. A skilled lawyer helps by:
Drafting an error-free legal notice
Ensuring timely court filing
Representing the complainant effectively
Securing maximum compensation
Cheque bounce disputes are serious and can’t be ignored. Section 138 acts as a protective shield, ensuring your hard-earned money is not lost due to someone else’s negligence. Whether you are an individual or a business owner, taking timely legal action safeguards your rights and maintains financial accountability.