On this page
The short answer
Send a written demand notice within 30 days of receiving the bank's return memo. If the drawer does not pay within 15 days of receiving it, file a complaint before the Judicial Magistrate within one month after those 15 days, usually where your own bank branch is. The offence is punishable with up to two years' imprisonment or a fine of up to twice the cheque amount, and it can be settled at any stage.
When Section 138 applies
Section 138 of the Negotiable Instruments Act, 1881 makes the dishonour of a cheque an offence when all of these are true:
- the cheque was issued to discharge, in whole or part, a legally enforceable debt or other liability (not, for example, a pure gift);
- it was presented to the bank within its validity period, which under RBI rules is generally three months from the date on the cheque;
- it was returned unpaid for insufficient funds, or because it exceeded the arrangement with the bank (returns such as "account closed" or payment countermanded by the drawer have also been treated as covered in many cases);
- the payee sent a written demand notice within the time allowed; and
- the drawer did not pay within 15 days of receiving the notice.
Once the cheque and signature are admitted, the court presumes under Section 139 that it was issued for a debt or liability. The drawer can rebut this by showing, on a balance of probabilities, that there was no such debt.
The timeline
| Step | Time limit | Provision |
|---|---|---|
| Present the cheque | Within its validity (generally 3 months from its date) | Section 138(a); RBI rules |
| Send the demand notice | Within 30 days of receiving the bank's return memo | Section 138(b) |
| Drawer to pay | Within 15 days of receiving the notice | Section 138(c) |
| File the complaint | Within one month after the 15 days end | Section 142(1)(b) |
The court can condone delay in filing the complaint if sufficient cause is shown, but the notice deadline is strictly applied. A complaint filed before the 15-day period ends is premature.
The demand notice
- Send it in writing, by registered post with acknowledgement, speed post or another provable mode, to the drawer's correct address. Courts have also accepted service by email and messaging in appropriate cases.
- State the cheque number, date, amount, bank, the date of the return memo and the reason for return, and demand payment of the cheque amount within 15 days.
- Keep the postal receipts, tracking report and acknowledgement. Notice is generally deemed served if correctly addressed and returned as refused or unclaimed.
- Where a company issued the cheque, address the notice to the company and to the directors or officers responsible for its business, because Section 141 makes them liable too.
Where to file in Odisha
The complaint is filed before the Judicial Magistrate First Class. Under Section 142(2), if the cheque was deposited for collection through an account, the case lies in the court within whose jurisdiction the payee's bank branch where that account is maintained is situated. If it was presented across the counter, the court where the drawer's bank branch is located. So a payee whose account is in Bhubaneswar generally files in Bhubaneswar, even if the drawer lives elsewhere. Court details are under courts.
Papers to file with the complaint
- The original cheque and the bank's return memo;
- a copy of the demand notice, with postal receipts and the acknowledgement or tracking report;
- documents showing the debt, such as a loan agreement, invoices, bank transfers or account statements;
- the complainant's affidavit of evidence; and
- for a company complainant, a board resolution or authorisation for the person filing.
Section 138 cases are complaint cases before the Magistrate; the police do not register an FIR for them.
How the case runs
- Cognizance and summons. The court examines the complaint and the affidavit and issues summons. The Supreme Court has directed that summons may be served by electronic means as well as by post, and that courts should allow payment at the earliest stage.
- Appearance and bail. The accused appears and furnishes bail. The offence is bailable.
- Summary trial. Section 143 provides for summary trial, with the aim of finishing within six months, though delays are common.
- Interim compensation. Under Section 143A, the court may order the drawer to pay interim compensation of up to 20 per cent of the cheque amount, in a summary trial where the drawer pleads not guilty. It is payable within 60 days, which can be extended by up to 30 days, and is refunded with interest if the drawer is acquitted.
- Judgment. On conviction, the punishment can be imprisonment of up to two years, or a fine of up to twice the cheque amount, or both. Courts usually award compensation to the complainant out of the fine.
- Appeal. The convicted drawer can appeal to the Sessions Court. Under Section 148, the appellate court may order deposit of at least 20 per cent of the fine or compensation.
Settlement and compounding
The offence is compoundable under Section 147, so the parties can settle at any stage, including in appeal. Settlement through the court's mediation centre or a Lok Adalat is common. In Damodar S. Prabhu v. Sayed Babalal H. (2010), the Supreme Court set graded costs for compounding at later stages, to encourage early settlement, and it revised that scheme in Sanjabij Tari v. Kishore S. Borcar (2025). That judgment also asked district courts to provide online payment links so that an accused can pay the cheque amount directly, and held that a cash loan given in breach of the Income Tax Act's cash limits is not for that reason unenforceable. Check the current costs with the court before settling.
If you are the person who issued the cheque
- Do not ignore the notice. Paying the cheque amount within 15 days of receiving it means no offence is committed.
- If you dispute the debt, reply to the notice in writing setting out why, for example that the cheque was given as security for a liability that never arose, or that the debt was already paid.
- Keep records of every payment made, with dates and modes.
- Attend court on each date; non-appearance can lead to warrants.
Civil recovery alongside
A Section 138 case punishes the dishonour. The payee can also file a civil suit for recovery of the money, including a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 where it applies. Both can run at the same time.
How a recovery suit works, including the Order XXXVII summary procedure, is explained in money recovery suits in Odisha. For drafting or answering the demand notice, see legal notices in Odisha, and for time limits in other kinds of case, the limitation period chart.
For eligibility for free legal services, see free legal aid in Odisha. If an FIR has also been registered on related allegations such as cheating, see what to do if an FIR is registered against you. Related work is described under criminal matters and civil litigation.
Frequently asked questions
What is the time limit to send a cheque bounce notice?
Within 30 days of receiving the bank's return memo informing you of the dishonour. The drawer then has 15 days from receiving the notice to pay.
Where do I file a cheque bounce case if the drawer lives in another state?
Under Section 142(2), where the cheque was deposited through your account, the case is filed in the court where your bank branch maintaining that account is located, regardless of where the drawer lives.
What is the punishment for cheque bounce?
Imprisonment of up to two years, or a fine of up to twice the cheque amount, or both. Courts usually direct compensation to the complainant out of the fine.
Can I file a case if I missed the one-month deadline?
The court can condone delay in filing the complaint if sufficient cause is shown, with an application explaining the delay. The 30-day notice deadline, by contrast, is strictly applied.
What is interim compensation under Section 143A?
In a summary trial where the drawer pleads not guilty, the court may order interim compensation of up to 20 per cent of the cheque amount, payable within 60 days and refundable with interest if the drawer is acquitted.
Can a cheque bounce case be settled?
Yes. The offence is compoundable under Section 147, so the parties can settle at any stage, often through mediation or a Lok Adalat. Costs may apply for compounding at later stages.
Official sources
- Negotiable Instruments Act, 1881 (India Code)
- Supreme Court of India: Sanjabij Tari v. Kishore S. Borcar (2025) and Damodar S. Prabhu (2010)
- eCourts services: case status and orders
- Report on the Sanjabij Tari guidelines (Verdictum)
General information, not legal advice. Every matter turns on its own facts and documents, and the law and official procedures change. Check the current position with the concerned office, or take advice on your own facts, before acting.