Applies when a cheque given to you to settle a debt or liability is dishonoured (bounced) by the bank -- the law provides a strict notice-then-complaint procedure to seek criminal punishment, compensation, and recovery.
1. Confirm the reason for dishonour from your bank.
Collect the bank's official cheque return memo, which states an RBI reason code (insufficient funds, account closed, signature mismatch) and, critically, the exact date of return -- this date starts your legal clock for every later deadline.
2. Send a written demand notice within 30 days.
Have a legal notice sent (registered/speed post, ideally with an email/WhatsApp copy for delivery proof) to the drawer demanding payment of the exact cheque amount, within 30 days of receiving the bank's return memo.
3. Wait for the drawer's 15-day payment window.
The drawer has 15 days from the date they RECEIVE the notice (not from when it was sent) to pay in full; if they pay within this window, no offence is committed and no complaint can be filed.
4. File a criminal complaint within 1 month.
If payment isn't made within the 15-day window, file a written complaint under s.138 before the Magistrate within one month of the day that window expired -- courts can condone delay for sufficient cause under s.142(1)(b).
5. File at the correct court -- the payee's own bank branch.
The Supreme Court's November 2025 ruling in Jai Balaji Industries Ltd. v. HEG Ltd. confirmed the complaint must be filed where the payee's own bank account is located (the branch the cheque was deposited into for collection) -- not where the drawer's bank is.
6. Attend the cognizance and summons stage.
The Magistrate takes cognizance and issues summons to the accused. Courts increasingly use digital service of summons and may facilitate an early settlement, though the exact procedure and whether a digital-payment settlement option is offered varies by court.
7. Trial proceeds as a summary/summons case.
Evidence is led -- the cheque, return memo, notice, delivery proof -- and the statutory presumption under s.139 (that the cheque was issued for a real debt) favours the complainant unless rebutted; courts aim for disposal within roughly 90 days.
8. Settle or proceed to judgment.
At any stage, the parties can settle; since s.147 makes NI Act offences compoundable, settlement with the complainant's consent ends in acquittal. Otherwise, conviction can mean up to 2 years' imprisonment and/or a fine up to twice the cheque amount.
9. Consider a parallel civil recovery suit.
Independent of the criminal case, a separate civil suit can recover the money with interest -- this doesn't require the s.138 notice procedure at all and follows the ordinary Limitation Act timeline.
eCourts National e-Filing System (general gateway; not NI Act-specific): https://filing.ecourts.gov.in/pdedev/
Handled by: Judicial Magistrate First Class / Metropolitan Magistrate (criminal court)
Who can use this: The 'payee' or lawful holder of the cheque -- whoever it was made out to, or who lawfully holds it -- when it was given to discharge a real existing debt and was dishonoured within its 3-month validity period.
This does not cover: Does not cover a cheque issued with no real, legally enforceable debt behind it (e.g. a gift cheque, or a disputed blank/security cheque) -- s.138's own proviso excludes these. Does not decide who is right in the underlying commercial dispute. Does not cover cheque theft or forgery by someone never a party to the transaction -- that's a police/FIR matter. Does not guarantee recovery of the money -- a compensation order is discretionary, not automatic.
Time limit: Send notice within 30 days of the bank's return memo; if unpaid, file the complaint within 1 month after the drawer's 15-day window lapses (delay condonable for sufficient cause). (NI Act 1881, s.138 proviso (b)-(c); s.142(1)(b) [1-month limit to file, condonable])
Cost: No ad valorem court fee tied to the cheque amount; a small fixed process fee plus legal-notice/advocate charges.
You'll need:- Cheque number, date, drawer's name, and drawee bank/branch
- Date the cheque was presented and date of the bank's return memo, with the exact reason code
- The payee's own bank account/branch where the cheque was deposited (fixes jurisdiction)
- Date the demand notice was sent and received
- Proof of the underlying debt the cheque was meant to settle
Documents that help:- The original dishonoured cheque
- Bank's cheque return memo
- Copy of the demand notice with proof of dispatch and delivery
- Underlying invoice, loan agreement, or IOU evidencing the debt
- Bank statement showing the cheque was presented and returned
- A sworn affidavit and case synopsis, required at filing under the September 2025 directions
What happens after: The Magistrate takes cognizance and, per the September 2025 directions, serves summons digitally and offers a court-facilitated UPI/QR payment option. If unresolved, a summary trial follows, with s.139's presumption favouring the complainant unless rebutted. The outcome is either acquittal (on merits, or by compounding under s.147) or conviction (up to 2 years' imprisonment and/or a fine up to twice the cheque amount); either side may appeal to the Sessions Court.
These are the remedies Indian law provides for this kind of situation -- not a recommendation, and not every remedy will apply to your own facts.
Interim compensation
Judicial Magistrate First Class / Metropolitan Magistrate
Section 143A of the Negotiable Instruments Act, 1881 lets the Magistrate order the drawer to pay up to 20% of the cheque amount as interim compensation while the trial is still pending, on the complainant's application -- refundable to the drawer with interest if later acquitted.
Compensation from a fine on conviction
Judicial Magistrate First Class / Metropolitan Magistrate
Section 395 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (successor to CrPC s.357) lets the court, on convicting the drawer, order the fine collected -- up to twice the cheque amount under s.138 -- to be paid to the complainant as compensation for the loss caused.
Independent civil suit for recovery
Civil Court -- ordinary money-suit jurisdiction
A civil suit for recovery of the cheque amount with interest can be filed independently of the criminal complaint, does not require the s.138 notice procedure at all, and runs on the ordinary 3-year limitation period under Article 35 of the Limitation Act, 1963 rather than the strict criminal-complaint deadlines.
What if I don't know the exact date my bank returned the cheque?
Your bank's own return memo is the authoritative record of that date -- request a duplicate or certified copy if you've misplaced it. Your 30-day countdown to send the demand notice, and every deadline after that, is calculated from that memo's date.
Can I still file a case if I already deposited the cheque again and it bounced twice?
Yes. The Supreme Court has held that prosecution based on a second or later dishonour is maintainable, as long as you complete the full notice-and-wait procedure again after that later dishonour. Once you've sent a notice after a bounce, you cannot present that same cheque again -- your only option after that notice is to file the complaint once the 15 days lapse.
What if the drawer says the cheque was stolen or forged?
This is a defence, and the burden of proving it rests on the drawer. The Supreme Court held in Rangappa v. Sri Mohan, (2010) 11 SCC 441 that the statutory presumption under s.139 extends to the existence of a legally enforceable debt, and the accused must raise a probable defence, not merely a bare denial, to rebut it -- courts have consistently refused to accept a bare, unsupported claim of theft or forgery with no corroborating evidence like a prior FIR.
Does the case get dropped if the drawer pays after I've already filed?
Effectively, yes. Section 147 makes every NI Act offence compoundable at any stage -- trial court, appeal, or even the Supreme Court. If the drawer pays and you consent to compounding, the accused is acquitted and the case closes. The accused cannot force a settlement without your consent.
Is a bounced cheque a criminal offence or a civil matter?
Both, and you can pursue them together. Section 138 makes it a criminal offence punishable with imprisonment and/or a fine, but you can also independently file a civil suit to recover the money with interest.
Which court do I file in?
Following the Supreme Court's November 2025 ruling in Jai Balaji Industries Ltd. v. HEG Ltd., the case must be filed in the court where YOUR bank account -- the one the cheque was deposited into for collection -- is located, not where the drawer's bank is or wherever you happen to reside.
Governing law: Negotiable Instruments Act 1881, s.138 (offence), s.142 (jurisdiction), s.147 (compounding)
Source: Negotiable Instruments Act, 1881, ss.138, 142, 143A, 147; Jai Balaji Industries Ltd. v. HEG Ltd., 2025 INSC 1362; Rangappa v. Sri Mohan, (2010) 11 SCC 441.
Aadhrix does not decide which route applies to you. This describes the official process as published — consider an advocate for advice specific to your situation.
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