When a cheque given towards a debt or liability is returned unpaid for insufficient funds or because it exceeds the arrangement, Section 138 of the Negotiable Instruments Act, 1881 provides a strong remedy. The law is strict about timelines — a notice sent late or a complaint filed out of time can defeat an otherwise genuine claim.
Adv. S. Mohamed Yunus assists individuals, traders and businesses in Coimbatore with drafting the statutory demand notice, filing the complaint within time, seeking interim compensation and recovering the cheque amount. Persons who have received a cheque bounce notice are also advised on settlement and compounding.
Scope
Matters handled
- Statutory demand noticeDrafting and sending the legal notice within 30 days of receiving the bank's return memo.
- Filing the complaintComplaint under Section 138 before the court having jurisdiction, within the limitation period.
- Interim compensationApplications for interim compensation while the case is pending.
- Settlement & compoundingNegotiated settlement and compounding of the case at any stage.
- Civil recoveryCivil suits for recovery of the amount, including summary suits.
- Reply to noticesAdvising persons who receive a cheque bounce notice on their options and settlement.
Process
How the process works
- 1
Check timelines
Verifying the cheque date, presentation date and the date of the bank's return memo.
- 2
Demand notice
Sending the notice demanding payment within 15 days of its receipt.
- 3
Complaint
Filing the complaint within one month after the 15-day period expires without payment.
- 4
Hearing or settlement
Evidence, interim compensation and final hearing — or settlement and compounding.
Documents to keep ready
- Original dishonoured cheque
- Bank return memo
- Proof of the underlying debt or liability (agreement, invoice, acknowledgment)
- Copy of the legal notice with postal receipt / tracking
- Proof of delivery or return of the notice
- Bank account statement
Relevant laws
- Negotiable Instruments Act, 1881 — Sections 138 to 147
- Code of Civil Procedure, 1908 — Order XXXVII (summary suits)
- Indian Contract Act, 1872
FAQ
Frequently asked questions
What is the time limit to send a cheque bounce notice?
The written demand notice must be sent within 30 days from the date of receiving information from the bank that the cheque was returned unpaid.
When should the complaint be filed?
If payment is not made within 15 days of receipt of the notice, the complaint must be filed within one month from the date on which that 15-day period expires. Delay may be condoned only for sufficient cause.
Where can a cheque bounce case be filed?
The complaint is filed before the court within whose local jurisdiction the payee's bank branch — where the cheque was delivered for collection — is situated.
What can the court order in a cheque bounce case?
The court may impose imprisonment of up to two years, a fine of up to twice the cheque amount, or both. It can also direct the drawer to pay interim compensation of up to 20% of the cheque amount during the case.
The information on this page is general in nature, based on the law as generally understood, and is not legal advice. Legal positions change and outcomes depend on the facts of each case. Please consult before acting on any information.
