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Cheque Bounce Notice

A cheque bounce notice is the mandatory legal demand you must send under Section 138 of the Negotiable Instruments Act,...

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Key takeaways

A cheque bounce notice is the statutory demand sent under Section 138 of the Negotiable Instruments Act, 1881 when a cheque is dishonoured.
The notice must be sent within 30 days of receiving the bank’s cheque return memo.
The drawer (cheque issuer) then gets 15 days to pay before a criminal complaint can be filed.
A complaint must be filed within 30 days of the expiry of that 15-day window.
Dishonour of a cheque is a criminal offence punishable with imprisonment up to two years, a fine up to twice the cheque amount, or both.
The case is tried by a Judicial Magistrate, and the notice is the essential first step before any complaint.

Overview

What is a cheque bounce notice?

A cheque bounce notice is a formal legal demand sent to the person who issued a cheque (the drawer) after that cheque is returned unpaid by the bank. It is the mandatory first step before any legal action can be taken under Section 138 of the Negotiable Instruments Act, 1881, which makes the dishonour of a cheque a punishable offence.

Cheques bounce for several reasons, most commonly insufficient funds, but also signature mismatch, a stopped payment, an overwriting, or an expired cheque. Whatever the reason, the law gives the payee a clear remedy: send a properly drafted notice demanding payment, and if it is ignored, pursue a criminal complaint to recover the amount.

Common reasons a cheque is dishonoured

Insufficient funds in the drawer’s account
Signature does not match bank records
Payment stopped by the drawer
Overwriting or alteration on the cheque
Cheque presented after it has expired (stale)
Mismatch in the amount in words and figures

Who needs it

When should you send a notice?

If you have received a cheque that the bank has returned unpaid, you should act quickly. The right to prosecute under Section 138 depends entirely on sending a valid notice within the prescribed time.

Situation	Why a notice matters
Business payment dishonoured	Recover dues from a client or vendor against goods or services supplied.
Loan repayment cheque bounced	Enforce repayment of a friendly or commercial loan.
Rent or EMI cheque returned	Pursue arrears against tenants or borrowers.
Security or post-dated cheque	Act where a cheque issued to discharge a liability is dishonoured.

Essential condition	Requirement
Legally enforceable debt	The cheque must be towards a genuine debt or liability.
Presented in time	Within its validity period (three months from the date on the cheque).
Return memo	A bank dishonour memo stating the reason is required.
Notice in time	Demand notice issued within 30 days of the return memo.

How it works

The Section 138 process, step by step

Cheque bounce matters run on strict timelines. Missing a deadline can extinguish your right to prosecute, so the sequence below must be followed carefully.

The demand notice

Dishonour
The bank returns the cheque unpaid and issues a return memo stating the reason for dishonour.
Draft the notice
Within 30 days of the memo, a legal notice is drafted demanding payment of the cheque amount.
Dispatch
The notice is sent to the drawer by registered post or speed post, with proof of dispatch retained.
Wait 15 days
The drawer has 15 days from receipt to make the payment and settle the matter.

The criminal complaint

Cause of action
If payment is not made within 15 days, a cause of action arises to prosecute the drawer.
File the complaint
A complaint is filed before the Judicial Magistrate within 30 days of the 15-day period ending.
Summons and trial
The court issues summons, records evidence and conducts a summary trial.
Judgment
The court may order payment of compensation and impose a fine or imprisonment.

Strict timelines

The deadlines that make or break your case

Section 138 of the Negotiable Instruments Act, 1881 lays down a precise timeline. Each clock starts on a specific event, and a delay at any stage can defeat an otherwise strong claim. We track these dates for you so nothing lapses.

3 months: the window within which the cheque must be presented to the bank from its date.
30 days: time to send the demand notice from the date of the bank return memo.
15 days: the period the drawer is given to make payment after receiving the notice.
30 days: time to file the criminal complaint after the 15-day payment period ends.

What goes in it

Contents of a valid notice

A notice that misses a required element can be challenged in court. A properly drafted cheque bounce notice should clearly set out the following.

Cheque details

The cheque number, date, amount and the drawee bank.

Underlying transaction

The debt or liability the cheque was issued to discharge.

Dishonour facts

The date of presentation, return and the reason stated in the memo.

Demand for payment

A clear demand for the cheque amount within 15 days of receipt.

Legal consequences

A statement that prosecution under Section 138 will follow on default.

Authorised signature

Signed by the payee or an advocate duly instructed on their behalf.

Paperwork

Documents required

Original dishonoured cheque
Bank cheque return memo stating the reason for dishonour
Proof of the underlying debt or transaction (invoice, agreement, ledger)
Identity and address details of the drawer and the payee
Bank statement showing the cheque was presented
Any earlier correspondence or reminders for payment

What we do

How we help

Assess your case and confirm the cause of action
Draft a precise, legally sound demand notice
Dispatch by registered and speed post with proof retained
Track the 15-day window and advise on next steps
Prepare and file the complaint before the Magistrate if needed
Represent you through the trial to recover your money

Need related help? See our Legal Notice and Consumer Complaint services.

Why it matters

Benefits of sending a proper notice

Quick settlement

Most drawers pay once a formal notice arrives, settling the matter without litigation.

Preserves your rights

A timely notice keeps your right to prosecute under Section 138 intact.

Documented record

It creates clear, dated evidence of demand that strengthens any later complaint.

Recovery with compensation

Courts can award compensation up to twice the cheque amount.

Negotiating leverage

The threat of criminal prosecution often brings the other side to the table.

Avoids delay traps

Professional handling ensures every statutory deadline is met on time.

Penalties

What the law provides

Section 138 treats the dishonour of a cheque as a criminal offence, not merely a civil default. On conviction, the court can impose:

Remedy	Details
Imprisonment	For a term that may extend up to two years.
Fine	Up to twice the amount of the dishonoured cheque.
Compensation	The court may direct the convicted drawer to compensate the complainant.
Interim compensation	The court may order interim compensation during the pendency of the trial.

Has a cheque bounced on you?

Send us the cheque and the return memo, and we will confirm your deadlines, draft the notice and start recovery without delay.

Talk to a legal expert

Why Diligence Certifications

Recovery handled end to end

Experienced advocates who handle Section 138 matters routinely
Notices drafted to withstand technical challenges in court
Strict diary management so no statutory deadline is ever missed
Transparent updates from notice through to final hearing
Representation across courts wherever your matter is filed
A single point of contact for the entire recovery process

FAQ

Frequently asked questions

What is a cheque bounce notice?

It is a formal legal demand sent to the person who issued a dishonoured cheque, under Section 138 of the Negotiable Instruments Act, 1881. It demands payment of the cheque amount and is the mandatory first step before filing a criminal complaint.

Within how many days must the notice be sent?

The notice must be sent within 30 days of receiving the bank’s cheque return memo. The drawer then has 15 days from receipt of the notice to make the payment.

What happens if the drawer ignores the notice?

If the cheque amount is not paid within 15 days of receiving the notice, you can file a criminal complaint before the Judicial Magistrate within the next 30 days to prosecute the drawer.

What is the punishment for a bounced cheque?

On conviction under Section 138, the drawer can face imprisonment of up to two years, a fine of up to twice the cheque amount, or both, along with compensation to the complainant.

Can the matter be settled without going to court?

Yes. In most cases the drawer pays the amount once a formal notice is received, and the dispute is settled. The criminal complaint is only filed if payment is not made within the 15-day period.

Within what time must the cheque be presented to the bank?

A cheque must be presented within its validity period, which is three months from the date written on the cheque. A cheque presented after this period is stale and cannot be the basis of a Section 138 complaint.

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