A dishonoured cheque is not merely a civil debt — it is a criminal offence. Strict timelines apply from the moment the bank returns the cheque. Missing any deadline makes the complaint non-maintainable.
Quick Summary
Dishonour of a cheque due to insufficiency of funds attracts criminal liability under Section 138 of the Negotiable Instruments Act, 1881. The offence is complete when: the cheque is returned unpaid; the payee sends a written demand notice within 30 days of receiving the bank's return memo; the drawer fails to pay within 15 days of receiving the notice; and the payee files a complaint within one month of the cause of action arising. The complaint is filed before the Judicial First Class Magistrate Court having jurisdiction over the bank where the cheque was presented for payment.
Conviction under Section 138 carries imprisonment up to 2 years, a fine up to twice the cheque amount, or both. Simultaneously, a civil suit for recovery of the cheque amount can be filed — both proceedings are independent. For amounts above Rs. 3 lakhs, the Commercial Court at Ernakulam provides a summary judgment mechanism under Order XXXVII CPC. The Supreme Court in Rangappa v. Sri Mohan (2010) confirmed that Sections 118 and 139 raise a presumption of legally enforceable debt, which the accused must rebut.
Key references: Negotiable Instruments Act, 1881 · eCourts · Kerala High Court · Supreme Court · Last reviewed: June 2026
The office is located in Kakkanad, Ernakulam. Section 138 NI Act cheque bounce proceedings for Kochi and Ernakulam district are filed before the Judicial Magistrate Courts, having jurisdiction over the police stations concerned. The practice regularly appears before the Chief Judicial Magistrate Court and Judicial Magistrate Courts in Ernakulam and other districts.
Section 138 is not triggered merely because a cheque bounced. Four conditions must all be satisfied before a criminal complaint is maintainable:
The cheque must have been drawn in discharge of a legally enforceable debt — not a gift, not a security deposit in dispute, not an advance that the payer had a contractual right to revoke.
The cheque must be presented to the bank within 3 months of the date on the cheque (the cheque's validity period under banking rules). A stale cheque presentation is not maintainable.
The bank must have returned the cheque unpaid specifically because of insufficient funds in the account or account closure — not due to a signature mismatch, stop payment instruction, or technical defect.
The payee must issue a written demand notice within 30 days of receiving the cheque return memo. The drawer must fail to pay within 15 days of receipt of that notice.
Bank issues a cheque return memo specifying the reason for dishonour. Retain the original cheque and the memo — both are essential evidence.
A written demand notice is sent to the drawer (registered post AD + speed post + WhatsApp for evidentiary belt-and-suspenders) demanding payment of the cheque amount. The notice must clearly state the dishonour, the amount, and the demand for payment within 15 days.
The drawer's 15-day window to pay the amount expires. If payment is not made, the payee acquires the right to file a criminal complaint.
The payee files a criminal complaint under Section 138 before the Judicial Magistrate First Class (JMFC) in the jurisdiction where the payee's bank branch (where the cheque was deposited) is located. This 30-day deadline is strict.
On conviction under Section 138, the Magistrate may impose:
Section 147 of the NI Act makes Section 138 offences compoundable. At any stage — including after conviction — the parties may settle. The drawer pays the full cheque amount plus negotiated compensation, the payee files a compounding petition, and the court acquits the accused. This is the most common resolution and often the fastest route to actual recovery.
The Negotiable Instruments (Amendment) Act, 2018 introduced Section 143A, which empowers the trial court to direct the drawer to pay interim compensation of up to 20% of the cheque amount at the time of framing of charges — before the trial concludes. This gives the complainant partial relief without waiting for final judgment.
Related service
Consumer court lawyer KeralaThe 30-day window to issue the demand notice starts running the moment the bank returns the cheque. The office prepares and issues legal demand notices on the same day of instruction and files complaints before the Magistrate within the strict statutory deadlines. Contact immediately.
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