Cheque Bounce (Section 138): Notice, Timelines and What to Do Next

Why cheque bounce matters to businesses

Cheque dishonour cases are among the most common commercial disputes in India. Following the procedure and timelines strictly is critical, because missing one step can weaken the case.

The usual sequence under Section 138

• The cheque is presented within its validity period and returned unpaid, with a bank return memo stating the reason.
• The payee sends a written demand notice to the drawer within 30 days of receiving the return memo.
• The drawer has 15 days from receiving the notice to pay.
• If payment is not made, the payee may file a complaint within one month after that period ends.
• Courts may encourage compounding or settlement at various stages.

Practical tips

• Keep the original cheque, return memo and proof of delivery of the notice.
• State the amount and the cheque details accurately in the notice.
• Use a method that gives proof of delivery.
• Preserve the underlying invoice, agreement or ledger.

From the drawer's side

If you receive a notice, do not ignore it. Check the amount, reply through a lawyer and consider payment or settlement within the notice period.

Contents of a good legal notice

The notice should identify the parties, the cheque number, date, amount and bank, the date and reason for dishonour, the underlying transaction and a clear demand for payment within the statutory period. It should be sent to the correct address of the drawer by a method that proves delivery, such as registered post along with email where appropriate. Errors in names, amounts or addresses can create avoidable technical defences.

Keep the postal receipt, tracking report and email delivery proof safely; they are needed when the complaint is filed.

Documents to prepare for the complaint

Prepare the original cheque, the bank's return memo, a copy of the notice and proof of service, any reply received, and documents showing the underlying debt such as invoices, agreements, ledger statements and confirmations. A short chronology of events helps your advocate draft a complaint that is complete and consistent with the evidence.

Settlement and its practical forms

Many cases end in settlement. Typical outcomes include full payment with a court-recorded compromise, instalment plans with post-dated payment instruments or a settlement on a reduced amount. Insist on written terms, secure the payments properly and ensure that the court proceedings are closed in the right form once the payment is made.

Get help

ATTPL Legal can draft and review notices and replies and coordinate with advocates for recovery matters in Jaipur and across India.

Frequently asked questions

Sources and further reading

• India Code: Negotiable Instruments Act, 1881
• eCourts Services