Cheque bounce notice and complaint under Section 138 of the NI Act
When a cheque is returned unpaid for insufficient funds, the payee must send a legal notice demanding payment within 30 days of learning of the dishonour. If the drawer does not pay within 15 days of receiving the notice, the payee can file a complaint under Section 138 of the Negotiable Instruments Act, 1881 within one month after that 15-day period ends.
Key points
- Present the cheque within its validity (three months from its date).
- Notice within 30 days of receiving the bank’s return memo (Section 138(b)).
- The drawer has 15 days from receiving the notice to pay (Section 138(c)).
- Complaint within one month of the cause of action (Section 142(1)(b)); delay can be condoned for sufficient cause.
- Jurisdiction: the court where the payee’s bank branch is located, when the cheque is delivered for collection through an account (Section 142(2)).
- Interim compensation up to 20% of the cheque amount (Section 143A); deposit of at least 20% of the fine or compensation in appeal (Section 148).
The law: old and new provisions
| Subject | Law now | Before 1 July 2024 |
|---|---|---|
| Dishonour of cheque | Section 138 NI Act, 1881 | — |
| Cognizance and limitation for the complaint | Section 142 NI Act | — |
| Complaint procedure before the Magistrate | Section 223 BNSS | Section 200 CrPC |
Which court or authority
The court of the Judicial Magistrate of the First Class within whose jurisdiction the payee’s bank branch is situated (Section 142 NI Act).
What the document should contain
- Notice: cheque details, date of return and reason, demand to pay within 15 days
- Complaint: transaction and legally enforceable debt, presentation, dishonour, notice and its service, failure to pay, limitation
- Verification and list of witnesses
- Affidavit of evidence (complaints are usually tried summarily on affidavit evidence)
Documents to attach
- Original cheque and the bank return memo
- Copy of the legal notice, postal receipts and tracking or acknowledgment
- Documents of the underlying debt (invoices, agreement, ledger)
- Board resolution or authority letter if the payee is a company
Procedure
- Send the demand notice within 30 days of the return memo
- Wait 15 days from service of notice
- File the complaint within the next one month with an affidavit
- Pre-summoning evidence on affidavit; summons; plea; evidence; judgment
Common mistakes
- Notice sent after 30 days
- Complaint filed before the 15-day period ends
- Wrong territorial jurisdiction
- Not proving service of notice
Sample cheque bounce notice and complaint (section 138 ni act) format
A short model to show the structure. Adapt the cause title, facts and prayer to your matter.
Frequently asked questions
What is the time limit to send a cheque bounce notice?
Within 30 days of receiving information from the bank that the cheque was returned unpaid.
When can I file the Section 138 complaint?
After the 15 days given in the notice expire without payment, and within one month from then.
Where should the cheque bounce case be filed?
In the court within whose jurisdiction the payee’s bank branch (where the cheque was presented for collection) is situated.
Is a security cheque covered by Section 138?
It can be, if on the date of presentation there was a legally enforceable debt or liability; this depends on the facts.