Cheque dishonour under section 138: the notice, the deadline and the case
A bounced cheque carries a criminal remedy as well as a civil one, but it runs on deadlines measured in days. More good claims are lost here to the calendar than to any defence.
The sequence, and why order matters
Section 138 of the Negotiable Instruments Act 1881 creates the offence where a cheque is dishonoured for insufficient funds or because payment has been stopped. The remedy depends on completing a sequence in order, and each step carries a time limit: present the cheque within its validity, obtain the bank’s dishonour memo, serve a written demand notice within the prescribed period of the dishonour, allow the drawer the period given to pay, and file within the window that then opens.
What the demand notice has to do
The notice must identify the cheque, the dishonour and the amount, and demand payment. It has to reach the drawer properly, and you must be able to prove that it did. Proof of service is the first thing a defendant attacks, and the most common point on which otherwise sound claims fail.
The case, and getting the money
The section 138 case goes before the Magistrate. It is a criminal proceeding and its practical purpose is to compel payment. The civil claim for the money itself can be pursued alongside, and running both is usually the right approach, because a conviction does not automatically put the amount into your hand.
Defences that actually work
Not every dishonoured cheque is an offence. Genuine defences include a cheque given only as security, a blank or undated cheque later completed by the holder, a real dispute about whether the underlying debt exists at all, and a defective or improperly served notice. These are argued on the documents, not on assertion.
If you are the drawer
If you have received a notice, the period to pay is an opportunity: paying within it ends the matter. If the claim is wrong, reply within the period, in writing, setting out why. Silence tends to be treated as acceptance and is the worst available response.
Check the dates first
Establish presentation and dishonour, and whether the notice window is still open.
Serve the demand notice
Draft it correctly, serve it properly, and keep provable proof of service.
File within the window
If payment is not made in the period allowed, file the case within the window that follows.
Run both tracks
Conduct the section 138 case and pursue the money civilly alongside it.
Common questions
How long do I have after a cheque bounces?
Days and weeks, not months. There are separate limits for presenting the cheque, for serving the notice and for filing, and missing any one of them ends the section 138 route.
The cheque was given as security, not payment. Is that a defence?
It can be, as can a blank cheque later filled in, or a genuine dispute over whether the debt exists. It depends on the documents.
Will the case get me my money?
Not automatically. The section 138 case is criminal and compels payment through pressure and penalty; the civil claim is what recovers the sum. Running both together is usually right.
A cheque has bounced
Come to us within days, while the notice window is still open.