- The offence under section 138 is complete only after dishonour, a notice within 30 days, 15 days of non-payment and a complaint within one month.
- The cheque must be presented to the bank within its validity — three months from the date on the cheque — and must relate to a legally enforceable debt or liability.
- The law presumes the cheque was issued for a debt (section 139); the accused must rebut it on a balance of probabilities.
- Penalty: imprisonment up to two years, or a fine up to twice the cheque amount, or both; the court may order interim compensation of up to 20 percent (section 143A).
The statutory sequence — each step has a deadline
- Day 0Cheque issued for a legally enforceable debt or other liability.
- Within 3 months of cheque dateCheque presented to the payee’s bank (validity under RBI rules); may be presented more than once within validity.
- DishonourBank returns the cheque with a memo — insufficient funds, exceeds arrangement, or another ground within section 138.
- Within 30 days of receiving the return memoPayee sends a written demand notice to the drawer demanding payment of the cheque amount (section 138(b)).
- 15 days from receipt of noticeDrawer has 15 days to pay.
- Within 1 month after the 15 days expireComplaint filed before the magistrate (section 142(1)(b)). The court may condone delay on sufficient cause.
Ingredients of the offence
- A cheque drawn on an account maintained by the drawer with a bank, in favour of the payee.
- Issued in whole or in part for the discharge of any debt or other liability that is legally enforceable.
- Returned unpaid because of insufficient funds, or because the amount exceeds the arrangement with the bank.
- Presented within the period of validity and notice given in the statutory form and time.
- Drawer fails to pay within fifteen days of receiving the notice.
Presumptions and defences
Section 139 presumes, unless the contrary is proved, that the holder received the cheque for the discharge of a debt or liability. Section 118 adds the presumption that a negotiable instrument was made for consideration. The accused rebuts these not by proving a negative beyond doubt but by raising a probable defence — such as that the debt did not exist, was time-barred, or that the cheque was issued as security and not against a crystallised liability. Courts have drawn a line between a cheque given as security for a loan (not a debt until the loan crystallises) and one issued in payment of a liability that had matured.
Defences that sometimes succeed
- Notice not issued in time, or sent to the wrong address
- Debt time-barred or not legally enforceable
- Cheque issued as security with no crystallised liability on the date of presentation
- Signature, material alteration or forgery — proved with evidence
Defences that usually do not
- The drawer “stopped payment” after issuing the cheque, with no ground in the debt
- Cheque was blank when signed — a signed blank cheque is presumed to be issued with authority
- The payee was paid in cash later without any receipt
- Closing the account before presentation — dishonour for “account closed” is within the section
Companies, directors and partners
Where the drawer is a company, section 141 deems every person who was in charge of, and responsible for, the conduct of its business at the time of the offence guilty, along with the company. A mere director is not liable unless the complaint says in terms how they were in charge; a signatory of the cheque is on a different footing. See directors’ duties and liabilities for the wider context.
Interim compensation and appeals
| Provision | What it does |
|---|---|
| Section 143A | The court may direct the drawer to pay interim compensation to the complainant of up to 20 percent of the cheque amount, within 60 days, while the trial is pending |
| Section 148 | On appeal against conviction, the appellate court may order the appellant to deposit a minimum of 20 percent of the fine or compensation |
| Section 143 | Trial is summary, to be completed as far as possible within six months of the filing of the complaint |
| Section 147 | The offence is compoundable — the complaint can be settled with the court’s permission |
Jurisdiction
Under section 142(2), as amended in 2015, a complaint is filed before the court having jurisdiction over the branch of the bank where the payee maintains the account into which the cheque was presented for collection. That is a deliberate choice by the legislature to prevent complainants from being forced to litigate in the drawer’s home city.
Complainant’s documents
- Original cheque and the bank’s return memo
- Debt documents: invoice, ledger, contract, acknowledgment or loan agreement
- Statutory demand notice, with proof of dispatch and delivery
- Postal receipts and tracking, or e-mail records if used for service
- Authority letter, if a company, and certified board resolution
- Affidavit of evidence in lieu of examination in chief
Frequently asked
Can the cheque be presented again after a bounce?
Yes, within its three-month validity, and each fresh dishonour can found a separate cause of action — but a complaint can be founded on only one dishonour that has followed the statutory notice and 15-day sequence.
Is a post-dated cheque covered?
Yes. A post-dated cheque is a cheque once it becomes payable, and the three-month validity runs from the date written on it.
Is a notice by e-mail valid?
Service by e-mail can be valid where the law and the circumstances support it, but registered post or courier with proof of delivery remains the safest course.
What if the debt is for a loan between friends?
A loan is a legally enforceable debt, and it can found a complaint. Where the loan is large and given in cash, courts have asked the complainant to account for the source and capacity to lend, particularly when the drawer disputes the debt.
The Negotiable Instruments Act is amended periodically and the procedure for criminal trials follows the Bharatiya Nagarik Suraksha Sanhita, 2023. Verify the current text and recent Supreme Court directions on cheque-bounce procedure. Not a substitute for advice from an advocate or chartered accountant on your facts.