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Cheque Bounce

Section 138 NI Act: Cheque Bounce Notice & Legal Process

Cheque bounce is a criminal offense. Don't miss the 30-day notice deadline. A complete guide to Section 138 NI Act.

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Dishonour of a cheque due to "Insufficient Funds" is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881. It carries a penalty of up to 2 years in jail or double the cheque amount as fine.


1. The Strict Legal Timeline (Do Not Miss This)

Most cheque bounce cases fail because of missed deadlines. Follow this strictly:

  1. Cheque Presentation: Within 3 months of date.
  2. Legal Notice: Send a notice within 30 days of receiving the return memo.
  3. Waiting Period: Give the defaulter 15 days to pay.
  4. File Case: If not paid, file a complaint in court within the next 30 days.

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Frequently Asked Questions

Can I go to jail for a cheque bounce?

Yes, Section 138 is a criminal offence punishable by up to 2 years imprisonment, though courts often encourage settlement.

Where should the cheque bounce case be filed?

The case must be filed in the court within whose jurisdiction the *payee's bank* (where you deposited the cheque) is located.

Can I settle the case after filing it?

Yes, Section 138 cases are compoundable. You can settle with the other party at any stage, even after conviction.

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