Practice Areas

NI Act Matters

Cheque Dishonour Complaints under Section 138 of the Negotiable Instruments Act, 1881, for Complainants and for Accused.

Contact Our Chamber All Practice Areas

Dishonour of a Cheque issued to discharge a debt is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, punishable with imprisonment of up to two years, a fine of up to twice the Cheque amount, or both. The offence is made out only if a strict sequence of steps is followed, each within a fixed time.

Most Section 138 cases are won or lost on that sequence, and on the presumption that the Cheque was issued for a legally enforceable debt. Our Chamber acts for Payees in bringing Complaints and for Drawers in defending them, before Magistrates’ Courts and in the Appeal, Revision and Quashing Proceedings above.

Scope of Work

For the Payee

Bringing the Complaint.

  • Statutory Demand Notices
  • Complaints Before the Magistrate
  • Complaints Against Companies and Their Directors (Section 141)
  • Applications for Interim Compensation (Section 143A)
  • Recovery of Fine and Compensation

For the Drawer

Defending it.

  • Replies to Demand Notices
  • Defence at Trial and Rebuttal of the Statutory Presumption
  • Petitions to Quash Complaints and Summoning Orders
  • Defence of Directors Who Were Not in Charge of the Company’s Affairs

Appeals, Revisions and Settlement

After the Trial Court’s Judgment, or instead of it.

  • Appeals Against Conviction, and the Deposit Under Section 148
  • Appeals Against Acquittal
  • Criminal Revisions
  • Compounding and Settlement at Any Stage (Section 147)

Connected Recovery Proceedings

Other routes to the same money.

  • Summary Suits on Cheques and Other Instruments
  • Insolvency Applications on the Underlying Debt
  • Arbitration Under the Underlying Contract

Who This Concerns

  • Businesses and Traders Holding Dishonoured Cheques
  • Lenders, Non-Banking Finance Companies and Financial Institutions
  • Individuals Who Have Lent Money or Are Owed Payment
  • Companies, Directors and Authorised Signatories Facing Complaints
  • Persons Who Issued Cheques as Security

The Approach

  • Dates are checked against the return memo and the postal record before the Complaint is drafted.
  • For the defence, the first question is whether a legally enforceable debt existed on the date of the Cheque.
  • Settlement is explored early; the offence can be compounded at any stage.

The Sequence Under Section 138

Each step has its own time limit. A Complaint that misses one of them fails.

  1. Present the Cheque

    Within three months of the date on it, or within its validity if that is shorter.

  2. Send the Demand Notice

    In writing, within 30 days of receiving the bank’s return memo.

  3. Wait for Payment

    The Drawer has 15 days from receipt of the Notice to pay.

  4. File the Complaint

    Within one month after those 15 days end.

Sections 138 and 142, Negotiable Instruments Act, 1881. Stated generally; take advice on your own dates.

Frequently Asked Questions

Where Must the Complaint Be Filed?

Since the 2015 amendment, in the Court within whose jurisdiction the Payee’s bank branch is situated, where the Cheque was deposited for collection through an account. If the Cheque was presented for payment otherwise, it is the Court where the Drawer’s bank branch is situated.

I Missed the One-Month Period for Filing the Complaint. Is the Case Lost?

Not necessarily. The Court may take Cognizance of a Complaint filed late if the Complainant shows sufficient cause for the delay. The 30-day period for sending the Notice cannot be extended, though the Cheque may be presented again within its validity and a fresh Notice sent.

The Cheque Was Given Only as Security. Is That a Defence?

Not by itself. If a debt had become payable by the date the Cheque was presented, a security Cheque attracts Section 138 like any other. It is a defence if no legally enforceable debt existed at that time, or if the amount on the Cheque exceeds what was actually due.

Can Directors Be Prosecuted When the Cheque Was the Company’s?

Yes, under Section 141, but only those who were in charge of and responsible for the conduct of the company’s business when the offence was committed, and the Complaint must say so specifically. The Managing Director and the signatory of the Cheque are liable by virtue of their position. The company itself must be made an Accused.

Can the Court Order Payment Before the Trial Ends?

Yes. Under Section 143A the Court may direct the Drawer to pay Interim Compensation of up to twenty per cent of the Cheque amount once the plea of not guilty is recorded. The power is discretionary. On Conviction, an Appellate Court may also require a deposit of at least twenty per cent of the fine or compensation under Section 148.

General information as of October 2026, not legal advice. Take advice on your own facts and dates.

To discuss a matter in this area, write to our Chamber with a brief outline.

Contact Our Chamber