Section 138 of the Negotiable Instruments Act, 1881 deals with the offence of cheque dishonour or “cheque bounce.” It was enacted to maintain the credibility of financial transactions and promote trust in the banking system. When a cheque issued by a person is returned unpaid due to insufficient funds or any other reason, it becomes a criminal offence under this section. The law empowers the payee to issue a legal notice to the drawer, demanding payment within 15 days of receiving the dishonour memo. If the payment is still not made, the aggrieved party can file a complaint in the court within the prescribed time limit.

The law was introduced to promote faith in commercial dealings and to discourage people from issuing cheques irresponsibly. It provides a clear and structured process for the aggrieved party (the payee) to seek justice. Once a cheque is returned unpaid, the payee must issue a legal notice within 30 days of receiving the bank’s return memo, demanding the amount due. The drawer then has 15 days to make the payment. If the payment is not made within this period, the payee has the right to file a criminal complaint before the Judicial Magistrate within one month.

Cases under Section 138 are not just civil in nature; they carry criminal liability, which can lead to imprisonment of up to two years, a fine up to twice the cheque amount, or both. The purpose of this provision is not only to penalize the offender but also to reinforce confidence in the financial system by ensuring that cheque transactions remain credible.

At Indraprastha Law Associates, we specialize in handling cheque bounce cases efficiently — from issuing statutory notices and drafting complaints to representing clients throughout court proceedings. Our experienced team ensures every step is handled with precision, timely action, and strategic planning to secure favorable outcomes and recover dues effectively.