B K R RAO / 5 yrs ago /


Cheque is a negotiable instrument.  Normally, cheques are issued either for the reason of statutory requirement or for the reason of securing proof of payment.  Crossed and account payee cheques are not negotiable by any person other than the payee.  It has to be deposited into his bank account.  In legal parlance, author of the cheque is called ‘drawer’, the person in whose favour it is drawn is called ‘payee’ and the bank who is directed to pay the amount is called ‘drawee’.  It is always safe to issue crossed “Account Payee Only” cheques in order to avoid its misuse.  Blank cheques are not safe.  It is better to date the cheque invariably.  A cheque is valid for payment only for six months from the date mentioned in the cheque.  After the period of six months, such a cheque is called ‘stale cheque’.


A cheque becomes due for payment on the date mentioned on it.  Before issuing a cheque author of the cheque should ensure that he has sufficient funds in his account. Lest, it would bounce with remarks ‘insufficient funds’.  Bouncing in common parlance is referred to dishonour of  cheques.

Bouncing of a ball is a fun but bouncing of a cheque is a criminal offence.  The Negotiable Instruments Act, 1881 is applicable for the cases of dishonour of cheque. This Act has been amended many times since 1881 and I am going to discuss the provisions of this Act as it stands today.


Immediately upon dishonour the drawee bank issues a ‘Cheque Return Memo’ to the banker of the payee citing the reason for non-payment.  In turn the payee’s banker shall handover the dishonoured cheque and the memo to the payee.  


The payee has an option open to him either to re-present the cheque if and when he thinks the cheque could be honoured but within six months from the date of the cheque or proceed legally to prosecute the drawer.  The payee may prosecute the drawer for dishonour of cheque only if the amount mentioned in the cheque is towards discharge of a debt or any other legal liability of the drawee towards payee.  Mere issuance of a cheque say for the purposes of gift, or towards lending a loan or for unlawful purposes would not amount to legal liability and the drawer cannot be prosecuted in such cases.


If he decides to proceed legally, then the drawer should be given an opportunity of making good the cheque amount immediately.  Such an opportunity has to be afforded only by means of a notice in writing. 


Under Section 138 of the Negotiable Instruments Act, 1881 as amended up to date, the notice has to be sent by the payee to the drawer in writing within thirty days from the date of receiving Cheque Return Memo from the bank and demand the cheque amount to be paid to him within fifteen days from the date of receipt of such a notice by the drawer.


Law prescribes certain conditions to be fulfilled in order to attract provisions of Section 138. 

A)     The cheque should have been drawn by the drawer on an account maintained by him.

B)     It should have been returned unpaid either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.

C)    Cheque must have been issued towards discharge of a debt or legal liability.

D)    If after receiving the notice, the drawer does not make payment within fifteen days from the date of receiving such a notice, then he commits an offence punishable under Section 138 of the Negotiable Instruments Act. 


Punishment prescribed for such an offence is fine which may extend to twice the amount of the cheque or imprisonment for a term which may be extended to two years or both.


If the drawer makes payment of the cheque amount within fifteen days from the date of receipt of the notice, then drawer does not commit any offence.  Otherwise, the payee may proceed to file a complaint in the court of the jurisdictional magistrate within one month from the date of expiry of fifteen days prescribed in the notice. 

If the payee fails to file the complaint within thirty days, the complaint becomes barred by limitation of time.  The jurisdictional magistrate court may refuse to entertain such a belated complaint.  However, if the payee has sufficient reasons to justify delay in filing the complaint, he may make an application before the magistrate along with the complaint, to explain the reasons for delay and seek condoning of delay.  Cognizance of the complaint may be taken if the Court is satisfied that the payee had sufficient cause for not making the complaint within the prescribed period.

After the complaint is filed and taken on record the proceedings against the drawer being.   


The payee may also initiate money recovery procedure in a jurisdictional civil court apart from prosecuting the drawer for criminal offence.  It is essential in this case to consult an advocate who is well versed and experienced in this area of practice to proceed further in the matter.


The procedure of filing complaint and prosecuting the drawer in a court of magistrate involves certain finer points like cause of action, preparation of legal notice and complaint in accordance with legal requirements, modes of sending the written legal notice, service of summons and non-bailable warrants, conducting the criminal case etc.  It is advisable to consult an advocate who is well versed and experienced in this area of practice.

Jatin Malaviya / / 7 months ago
Jatin Malaviya

I file the cheque bouncing complain in August 2012 and till date there are no result victim is coming there or not but complainer must be there at court - one year is over with Rs. 50000/- bouncing cheque my total expenses with fees / transportation/postage - communication Rs. 35 to 40000 and + 50000 bouncing amount total amount is Rs. 90000.00 in 12 month - I had not count interest, every time day/date as per the court order complainer always there but victim will be note there and does not make in difference because our systems has many loop holes so before proceeding you need good and correct adviser/ advocate - /Jatin

ZIA ABBAS / / 10 months ago

How Many time cheque should dishonored for legal action...

annesha sikdar / / 11 months ago
annesha sikdar

If a person has given a cheque which dishonored by the bank nd after dat he ran away nd he is not available .. den wht to do ?? can i lodge a FIR ??? nd if yes den under which sec ??

Rathan V / / 11 months ago
Rathan V

Hope our court"s don;t become recovery agents for money lenders who make most use of this act . Legal way of extortion it is the poor people who give posted cheque and fall prey .money lenders are few but their prey are 2.5 crore cases

dhandapany / / 1 year ago

how to overcome from cheque case

shahid / / 11 months ago

if the payee of the cheque is fraud

shivraj patil / / 1 year ago
shivraj patil

After issuing notice for payment , and lapsing of 15 days of no payment receivables from defaulter , how much time required to handle criminal case ?

Approx time line to complete the procedure to get my money back

If i am moving from one location to another what is the provision to handle this case by my lawyer ?

shivraj patil / / 1 year ago
shivraj patil

can i file complaint after 15 days of notice serve to fast track court. if yeas how much approx time required to see result of this complaint ?

If i am moving from such location to other can i give petition to my lawyer to handle the case up to result?

MY GIGI 13057649 / / 2 yrs ago
MY GIGI 13057649

Can you sugest a good advocate to handle my case in Noida

PRASAD / / 4 months ago

Dear Sir, I have a small problem, that 2003 & 2004 i had issued a cheque for Rs 2000.00 and it was dishonored as informed by the person,( i need to check) and it was not come to my notice and no intimation had come in this regards.

Now the person/company is coming back and demanding for the same informing that they are sending a legal notice.

How is that works after 10 years

Kindly suggest me.

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