Section 138 of the Negotiable Instruments Act, 1881 is unforgiving about dates. The law is straightforward; the deadlines are what kill cases.
The clock
- Cheque return memo. The bank returns the cheque unpaid with a memo. The date on that memo starts everything.
- 30 days to send the demand notice, in writing, to the drawer, demanding payment of the cheque amount.
- 15 days for the drawer to pay, counted from receipt of the notice.
- 30 days to file the complaint. The cause of action arises when those 15 days expire, and the complaint must be filed within the next 30 days before the Magistrate.
The 30 days for the notice is the one people miss. Miss it and the criminal remedy under Section 138 is usually gone for that presentation. Delay in filing can be condoned for sufficient cause. Delay in noticing generally cannot. A civil recovery suit may still be available.
The three documents that carry the case
- The dishonoured cheque itself
- The bank's cheque return memo
- Proof the notice was sent and delivered: postal receipt and tracking or acknowledgement
Keep the originals. Courts want the original cheque and memo produced.
Recovery, not just punishment
Section 138 is criminal, punishable with up to two years or a fine up to twice the cheque amount, or both. But the practical leverage is money. Under Section 143A the court can direct interim compensation of up to 20 percent of the cheque amount before the trial concludes, and under Section 148 an appellate court can require a deposit of at least 20 percent. A large share of these matters settle once a serious notice and a complaint are on record.
Where to file
Jurisdiction lies with the court where the branch of the payee's bank at which the cheque was presented is located.