Legal Guides / Cheque Bounce & Money Recovery

Cheque Bounce under Section 138: Step-by-Step

Last Updated: October 9, 2026

When a cheque given to you is returned unpaid because of insufficient funds, or because it exceeds the arrangement with the bank, Section 138 of the Negotiable Instruments Act, 1881 lets you take criminal action against the person who issued it. The Supreme Court has held that the same remedy can also apply when a cheque is returned for other reasons, such as "account closed", "payment stopped" or "signature mismatch". The process is mostly about meeting a few strict deadlines.

1. Get the cheque return memo

The bank returns the cheque with a memo that states the reason it was dishonoured. Keep both the original cheque and this memo safe. Note that the cheque should have been presented within its validity period, which is three months from the date on the cheque.

2. Send a legal notice within 30 days

You must send a written demand notice to the person who issued the cheque within 30 days of receiving the return memo. The notice asks them to pay the cheque amount. Sending it by a trackable method, such as registered post, gives you proof that it was sent.

3. Wait 15 days for payment

After receiving the notice, the person has 15 days to pay. If they pay in full, the matter usually ends there.

4. File a complaint within one month

If they don't pay within 15 days, a complaint can be filed before the magistrate within one month after the 15-day period ends. Under Section 142(2), the complaint is filed in the court that has jurisdiction over the place where your bank branch (where you deposited the cheque for collection) is located. Courts can condone some delay if there is good reason, but it's best not to rely on that.

What the law provides

If the offence is proved, the court can impose imprisonment of up to two years, a fine of up to twice the cheque amount, or both. Many cases are settled along the way, and the law encourages settlement.

Documents to keep ready

• The original bounced cheque
• The bank's return memo
• A copy of the legal notice and proof it was sent and delivered
• Anything showing the money was legally owed: invoices, an agreement, messages or bank records

Is the debt presumed?

The cheque must have been given for a legally enforceable debt or liability. Under Section 139, the law presumes that it was, but the person who issued the cheque can try to show otherwise, for example by claiming it was given only as security. Keeping supporting records helps you answer that.

Common mistakes

• Missing the 30-day notice deadline
• Sending the notice to the wrong address, or without proof of delivery
• Filing the complaint in the wrong court
• Not keeping records of the underlying debt in case it is challenged

This guide is general information, not legal advice. Laws and procedures can change and depend on your situation, so please consult an advocate about your specific case.