Cheque bounce — the timeline
A dishonoured cheque runs on three fixed dates, and all three are strict. Enter the date on the bank's return memo and the notice, payment and complaint deadlines are worked out here.
Cheque bounce — the timeline
The slip on which the bank recorded why the cheque was returned. The thirty days under proviso (b) to s.138 run from that information.
This can be left blank. Proviso (c) to s.138 counts the fifteen days from the drawer's receipt of the notice, not from the day it was posted.
Refused, or returned "unclaimed"? Service is deemed on that date — enter it here (C.C. Alavi Haji, 2007).
Enter the return memo date above. All three windows are counted from it.
Section 142(1)(b) says “one month”, not “thirty days”. Under s.3(35) of the General Clauses Act, 1897 a month is reckoned by the calendar, so that is how this page counts it — one month from 31 January ends on 28 February, not on 2 March.
A bounced ECS / NACH / auto-debit mandate?
If an electronic funds transfer — an ECS or NACH mandate, an auto-debit — fails for want of funds, that is an offence under s.25 of the Payment and Settlement Systems Act, 2007: up to two years, or a fine up to twice the amount, or both. The clock is the same: a demand notice within thirty days of the bank's information, fifteen days to pay, and Chapter XVII of the NI Act (s.142 included) governs the complaint (s.25(5)). The dates above apply as they stand; in the notice, describe the mandate and the failed debit instead of a cheque.
Power to condone delay — the proviso to s.142(1)(b)
The proviso to s.142(1)(b) says that cognizance of a complaint may be taken by the court after the prescribed period, if the complainant satisfies the court that he had sufficient cause for not making the complaint within that period.
The relief lies in the court's discretion and is not automatic — the burden of showing the cause is on the complainant. But it does mean that a date shown above as passed is not a declaration that the matter is over.
Read the full sectionThe offence and the three conditions it depends on — s.138
Section 138 provides that where a cheque drawn by a person on his own account, for the discharge in whole or in part of any debt or other liability, is returned by the bank unpaid because the money standing to the credit of that account is insufficient, or because it exceeds the amount arranged to be paid from that account, that person is deemed to have committed an offence.
The punishment is imprisonment which may extend to two years, or fine which may extend to twice the amount of the cheque, or both. There is no ceiling on the fine expressed in rupees — it is a multiple of the cheque, so it is a different figure for every cheque.
But the proviso to s.138 says the section does not apply unless — (a) the cheque was presented to the bank within six months of the date on which it is drawn, or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course made a demand for payment by giving a notice in writing to the drawer within thirty days of receiving information from the bank that the cheque was returned unpaid; and (c) the drawer failed to pay within fifteen days of receiving that notice.
Do not read 'six months' and count six months. The proviso itself says 'or within the period of its validity, whichever is earlier', and under RBI circular DBOD.AML BC.No.47/14.01.001/2011-12 dated 4 November 2011, with effect from 1 April 2012 banks do not pay a cheque, draft, pay order or banker's cheque presented beyond three months from its date. So in practice the validity is three months, and three months is the 'whichever is earlier' period. A cheque presented in reliance on six months comes back marked stale — and a cheque returned as stale was not dishonoured for want of funds, so no offence under s.138 arises at all.
These three conditions are not procedural formalities laid over an existing offence; they are what makes the offence. Miss one and there is no offence left to complain about — which is why the dates come first on this page.
Read the full sectionWho complains, by when, and to which court — s.142
Section 142(1)(a) allows a court to take cognizance of an offence under s.138 only upon a complaint in writing made by the payee or the holder in due course. This is therefore not an FIR matter for the police — it is a complaint filed before a Magistrate.
Section 142(1)(b) requires that complaint to be made within one month of the date on which the cause of action arises under clause (c) of the proviso to s.138 — that is, on the expiry of the fifteen-day period.
Section 142(1)(c) provides that no court inferior to a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try an offence under s.138. Section 142(2) fixes which such court — ordinarily the one where the payee's own bank branch, at which the cheque was delivered for collection, is situated.
Read the full sectionThe money on this cheque
Which court — s.142(2)
(a) You deposited the cheque for collection through your account: the court where the branch at which you (the payee) keep that account is situated — wherever you handed the cheque in, it counts as delivered to your own branch.
(b) You presented the cheque for payment directly, not through an account: the court where the drawer's branch is situated.
It is a complaint case: the Magistrate examines the complainant on oath — BNSS s.223 (formerly CrPC s.200); under s.145 that evidence may be given on affidavit.
Interim compensation before judgment — s.143A
Under s.143A the court trying a s.138 case may order the drawer to pay interim compensation to the complainant — in a summary trial or a summons case where he pleads not guilty, and in any other case upon framing of charge. It may not exceed twenty per cent of the amount of the cheque, and is payable within sixty days of the order.
Read the full sectionEnding it by settlement — s.147
Section 147 makes every offence under this Act compoundable. In practice most cheque-dishonour cases end in a settlement once the money is paid; filing the complaint does not close that door.
Read the full sectionThe demand notice format
The notice has to describe the cheque, the amount, the reason for dishonour and make a clear demand for payment. Fill-in-and-print formats are kept on the drafting formats page.
Complaint and application formatsThe Negotiable Instruments Act, 1881 — s.6 and Chapter 17
The English text of these sections is in this library; the authoritative Hindi text has not been added yet. A statute's words will not be machine-translated here — until the official Hindi text is available, that field stays empty.
- 6Cheque — the definition
- 138Dishonour of cheque for insufficiency, etc., of funds in the account
- 139Presumption in favour of holder
- 140Defence which may not be allowed in any prosecution under section 138
- 141Offences by companies
- 142Cognizance of offences
- 142AValidation for transfer of pending cases
- 143Power of Court to try cases summarily
- 143APower to direct interim compensation
- 144Mode of service of summons
- 145Evidence on affidavit
- 146Bank's slip prima facie evidence of certain facts
- 147Offences to be compoundable
- 148Power of Appellate Court to order payment pending appeal against conviction
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