Section 138, Negotiable Instruments Act
Cheque bounce offence
Section 138 of the Negotiable Instruments Act, 1881 makes it an offence to issue a cheque for a debt that is returned unpaid for insufficient funds, provided the payee sends written notice within 30 days and the drawer fails to pay within 15 days of receiving it.
The remedy is a strong one — the offence is punishable with imprisonment for up to two years, a fine of up to twice the cheque amount, or both — but it exists only if the three conditions in the proviso to the section are met. The cheque must have been presented within its validity. The payee must demand payment by written notice within 30 days of receiving the bank's information that it was returned unpaid. And the drawer must have failed to pay within 15 days of receiving that notice.
The complaint has a deadline of its own. Under section 142(1)(b) it must be filed within one month of the date the cause of action arises — that is, from the end of the drawer's 15 days. A complaint filed before those 15 days have run is premature. A court may accept a late complaint if sufficient cause for the delay is shown, but that is a discretion to argue for, not a plan.
The lesson for a trader is that the clock starts with the bank's return memo, not with the day someone in the office notices. A bounce found three weeks late leaves days, not weeks, to send notice; one found five weeks late may have lost the criminal remedy altogether, leaving a civil suit for recovery.
Key facts
- Notice: in writing, within 30 days of receiving the bank's information of return.
- Drawer's time to pay: 15 days from receiving the notice.
- Complaint: within one month after those 15 days end (s.142(1)(b)); later only with sufficient cause shown.
- Penalty: up to 2 years' imprisonment, a fine up to twice the cheque amount, or both.
- Applies to a cheque given in discharge of a legally enforceable debt or liability.
Who this affects
Anyone who accepts cheques, and especially businesses holding post-dated cheques for credit sales.
How YarnTally handles it
Every bounce in the cheque register gets its own dates: the last day to send notice, the drawer's 15-day window and the complaint window, with late notices, missed windows and premature complaints flagged. It tracks the dates; it does not draft or send a notice and it is not legal advice, which the screen says.
See what else it doesReviewed September 2026. This is general information about how these rules work, not tax or legal advice, and thresholds and due dates do change. Check your own position with your chartered accountant before acting on it.