How To · Cheque Bounce · Section 138

How to File a Cheque Bounce Case Under Section 138

Updated for 2026 · Claw Editorial

A cheque bounce case under Section 138 of the Negotiable Instruments Act 1881 is a criminal complaint you file when a cheque given to you is returned unpaid for want of funds or because the account is closed or payment is stopped. The law gives you a fixed path with hard deadlines: you must send a written demand notice within 30 days of the bank return memo, give the drawer 15 days to pay, and if the money does not come, file your complaint before a Magistrate within the next 30 days. Miss a deadline and the case can be thrown out at the threshold, so the dates matter as much as the merits. This page sets out the full process, the papers you need, where the case is filed, what the drawer faces if convicted, and how to keep track of the matter once it is in court. The Negotiable Instruments Act was not replaced by the new criminal codes of 2023, so Section 138 and its procedure continue as before. Last verified October 2026.

01When Section 138 applies

Section 138 applies only when all of these are true:

• The cheque was given to discharge a legally enforceable debt or liability, not as a gift or security for a future amount.
• The cheque was presented to the bank within its validity period (three months from the date on the cheque).
• The bank returned it unpaid for insufficient funds, because the amount exceeds the arrangement, or because payment was stopped or the account closed.

Keep the cheque return memo (the slip the bank gives with the reason for dishonour) safe. It is the document that starts your clock and proves the bounce.

02Step 1: the demand notice

Once the cheque bounces, you must send the drawer a written legal demand notice:

• Within 30 days of the date you receive the bank return memo.
• Demanding payment of the exact cheque amount within 15 days of the drawer receiving the notice.
• Sent to the drawer's correct address by registered post with acknowledgement and, usually, by courier and email as well, keeping all dispatch proof.

The notice is a precondition. A case filed without a valid notice, or with a notice sent after the 30 day window, is liable to be dismissed. Most people have a lawyer draft it, but the law does not require one.

For a line by line walkthrough of the notice itself, see the Section 138 cheque bounce notice explained.

03Step 2: filing the complaint

After the notice is received, the drawer has 15 days to pay. The cause of action arises only if payment is not made in those 15 days. You then have 30 days from the end of the 15 day period to file your complaint. In short:

The complaint is filed in writing before the Magistrate, supported by the cheque, the return memo, a copy of the notice with dispatch and delivery proof, and your sworn statement. A delayed complaint can still be accepted if the court condones the delay for sufficient cause under the proviso to Section 142, but do not rely on it.

04Which court and jurisdiction

A Section 138 complaint is tried by a Judicial Magistrate of the First Class or a Metropolitan Magistrate. On jurisdiction, after the 2015 amendment to the Act, the case is filed where the payee's bank branch (the branch where you deposited or presented the cheque for collection) is located. This is set out in Section 142(2).

Section 138 matters are usually tried as summary trials to keep them quick, though a Magistrate can switch to a regular trial where the likely sentence is longer. In practice these cases are high in volume and can run for months or years, which is why keeping the dates and orders tracked matters.

05Punishment, compensation and settlement

On conviction the drawer can face imprisonment up to two years, or a fine up to twice the cheque amount, or both. Two features of the law are practically important:

• Interim compensation (Section 143A). The court may order the drawer to pay the complainant up to 20 percent of the cheque amount even while the trial is on.
• Deposit on appeal (Section 148). If the drawer is convicted and appeals, the appellate court may direct a deposit of at least 20 percent of the compensation or fine.

Cheque bounce cases are compoundable, which means the parties can settle at any stage, often through a Lok Adalat or mediation, and the complaint is then closed. Many matters end in settlement rather than a full conviction.

06Common mistakes that sink a case

• Missing the 30 day notice window after the return memo.
• Demanding the wrong amount in the notice, for example adding interest or costs to the cheque figure.
• Filing before the 15 days are over, so no cause of action has arisen yet.
• No proof of service of the notice. Keep registered post receipts and tracking.
• Presenting the cheque after it expired (more than three months from its date).

07Tracking the case with Claw

Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.

Once your Section 138 complaint is filed, it becomes a magistrate court matter with its own number, next hearing dates and orders, and it can run for a long time. You can create a FREE Claw account and add the case to follow every listing, order and movement without calling the court or the lawyer for each date. Claw covers 9,102 courts, benches and forums, so the magistrate court that hears your cheque case has a real tracking home, and judgment search spans 30 crore+ judgments (Supreme Court decisions from 1950 and High Court decisions from 1990) with results in under 5 seconds if you want to read how similar matters were decided. A clean search only means nothing was found on the forums and date searched, so it is an input, not legal advice on your case.

If you are a lender, auditor or finance team seeing repeat cheque defaults across a book, a scored litigation search helps you read a counterparty before you accept the next cheque. See how auditors use ClawScore litigation search.

08Sources and further reading

• India Code (bare text of the Negotiable Instruments Act 1881): indiacode.nic.in
• eCourts (case status for magistrate courts): ecourts.gov.in
• National Judicial Data Grid: njdg.ecourts.gov.in
• Virtual Courts (online disposal of some matters): vcourts.gov.in
• Claw: clawlaw.in

This page is general information for an Indian audience, not legal advice. Section numbering and procedure should be confirmed against the bare Act and current rules for your state before you act.

09Frequently asked questions