Why the timeline matters
Dishonour of a cheque for insufficient funds is an offence under Section 138 of the Negotiable Instruments Act, 1881. The law, however, imposes strict time limits. Missing a deadline can make the complaint not maintainable, even when the debt is genuine.
The sequence step by step
- Present the cheque within its validity period, which is three months from the date on the cheque.
- On dishonour, collect the cheque return memo from your bank stating the reason.
- Send a written demand notice to the drawer within 30 days of receiving information of dishonour.
- The drawer has 15 days from receipt of the notice to pay the cheque amount.
- If payment is not made, file the complaint within one month after the 15-day period expires.
Where to file
The complaint is generally filed before the court within whose local jurisdiction the branch of the payee's bank, where the cheque was delivered for collection, is situated.
What the court can order
On conviction, the drawer may be punished with imprisonment of up to two years, a fine of up to twice the cheque amount, or both. The court may also direct interim compensation of up to twenty per cent of the cheque amount during the trial. The offence is compoundable, so the parties may settle at any stage.
Practical tips
- Send the notice by registered post with acknowledgement and keep postal receipts and tracking records.
- State the exact cheque amount in the notice; demanding a different sum can weaken the case.
- If a deadline has passed, consult an advocate promptly. Delay in filing the complaint may be condoned for sufficient cause.
This article is for general information only and does not constitute legal advice. The law may change and its application depends on the facts of each case. Please consult an advocate about your specific situation.
