Cheque Dishonour Under Section 138, NI Act: What Happens Next
A dishonoured cheque isn't automatically a criminal matter — it becomes one only if the payee follows a specific procedure within specific timelines. Missing those timelines can mean losing the right to prosecute under Section 138 altogether, even if the underlying debt is genuine.
The procedure, step by step
- The cheque is presented for payment and returned unpaid by the bank (for insufficient funds, or a similar reason)
- The payee must issue a legal notice demanding payment within 30 days of receiving the bank's return memo
- The drawer then has 15 days from receiving that notice to make the payment
- If payment isn't made within that 15-day window, a criminal complaint can be filed — within one month of the cause of action arising
Why the timelines matter
Section 138 is deadline-driven at every stage. A notice sent late, or a complaint filed outside the limitation window, can hand the drawer a straightforward technical defense regardless of the merits of the underlying transaction. Getting the sequence right from the moment a cheque bounces is worth more than trying to fix it later.
This article is for general information only and does not constitute legal advice. Every matter turns on its own facts — see our disclaimer, and speak to the firm directly about your specific situation.
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