Cheque Bounce Under Section 138: The Thirty-Day Notice, the Fifteen-Day Window and the Evidence a Business Needs
A bounced cheque from a customer starts a clock. The notice must go within thirty days of the bank's return memo, the drawer has fifteen days to pay, and the complaint must be filed within a month after that. The steps, the notice contents, and how to keep the evidence a court will need.
Cheques still move a large share of Indian business payments, and a bounced one gives the payee a criminal remedy that an unpaid invoice does not. The remedy depends on strict timelines that start the day the bank returns the cheque. Miss one and the remedy is gone. This guide sets out the sequence under section 138 of the Negotiable Instruments Act, 1881, what the notice must contain, and the evidence to assemble. Position as of October 2026.
The ingredients of the offence
Section 138 makes it an offence for a drawer to issue a cheque for the discharge of a debt or liability that is returned unpaid for insufficiency of funds (or because it exceeds the arrangement), provided:
- (a) the cheque was presented to the bank within its validity period;
- (b) the payee made a demand for payment by written notice within thirty days of receiving information from the bank that the cheque was returned unpaid; and
- (c) the drawer failed to pay within fifteen days of receiving the notice.
The cause of action arises on the expiry of the fifteen days, and the complaint must be filed within one month of that date (section 142). Courts can condone delay in filing the complaint for sufficient cause, but not the notice timeline.
The timeline
| Event | Deadline |
|---|---|
| Cheque presented | Within validity (currently three months from the date on the cheque) |
| Bank return memo received | Day 0 |
| Written notice demanding payment | Within 30 days of Day 0 |
| Drawer's payment window | 15 days from receipt of notice |
| Complaint before the magistrate | Within 1 month after the 15-day window ends |
Calendar every step from the return memo, not from the cheque date.
What the notice must contain
- Identification of the cheque: number, date, amount, bank, drawer.
- The debt or liability it was issued for (invoice, loan, contract reference).
- The fact and date of dishonour and the bank's reason.
- A clear demand for payment of the cheque amount within fifteen days of receipt.
- A statement that failing payment, the payee will initiate proceedings under section 138.
- Sender's name, address and signature (or authorised signatory for a company).
Send by registered post with acknowledgement due or a courier with proof of delivery, to the drawer's known address; many practitioners also send by email. Keep the postal receipt, tracking record and acknowledgement. Section 27 of the General Clauses Act, 1897 supports deemed service by properly addressed registered post.
Evidence to assemble
- The original cheque and the bank's return memo.
- Proof of the underlying debt: contract (stamped, with signature audit trail), invoices, delivery or acceptance records, ledger.
- The notice as sent, the dispatch proof and any reply.
- Correspondence showing the drawer's acknowledgement of the debt, if any.
- For a company drawer, details of the signatory and the persons in charge (section 141 extends liability to persons responsible for the conduct of the company's business).
Electronic records (emails, platform logs) are proved under section 63 of the Bharatiya Sakshya Adhiniyam, 2023; keep exports with their certificates.
Interim compensation and settlement
Since the 2018 amendment, section 143A allows the trial court to order interim compensation of up to 20% of the cheque amount to the complainant during the trial, and section 148 allows the appellate court to order deposit of a minimum of 20% of the fine or compensation awarded on appeal. Most section 138 matters settle; a settlement should be in writing, with a payment schedule, and the complaint withdrawn or compounded on performance. ****
Preventing the problem
- Prefer electronic payment for new customers; reserve cheques for established accounts.
- Record the cheque against the invoice at receipt so the liability is traceable.
- Automate the return-memo trigger: a bounced cheque creates a notice task with the 30-day deadline.
Where Legatio fits. Legatio links the cheque record to the contract and invoice, generates the section 138 notice from a template, dispatches it with a delivery log and tracks the 30-day, 15-day and one-month deadlines. The complaint is filed by your counsel.
Position stated as of October 2026. General information, not legal advice.