Section 138 of the Negotiable Instruments Act, 1881 makes it a criminal offence for a cheque to bounce due to insufficient funds, provided certain procedural steps are followed. Despite being extremely common, the process trips up a lot of people simply because the timelines are easy to miss.
The procedural sequence
The complainant must issue a demand notice to the drawer of the cheque within 30 days of receiving the bank's dishonour memo. The drawer then has 15 days to make the payment. Only if payment is not made within that window does a cause of action to file a criminal complaint arise — and that complaint must be filed within one month of the 15-day period expiring.
For the accused
Being named in a cheque bounce complaint does not necessarily mean liability is settled. Defenses can include disputing the existence of a legally enforceable debt, challenging service of the demand notice, or showing that payment was in fact made within the stipulated period.
For the complainant
Complainants should preserve the original cheque, the dishonour memo, proof of dispatch of the demand notice, and any acknowledgment of debt. Courts scrutinise these procedural requirements closely, and a technical lapse can delay recovery considerably.
- Demand notice must be sent within 30 days of the dishonour memo
- Drawer has 15 days to pay before a complaint can be filed
- Complaint must be filed within one month after the 15-day period lapses
- Documentation and timelines are frequently the deciding factor
This article is for general informational purposes only and does not constitute legal advice. Every matter has its own facts — please consult directly for guidance specific to your situation.