Why the procedure matters more than the merits
A cheque-bounce case is one of the few criminal proceedings where the complainant can lose a good case on dates alone, and the accused can lose a good defence by not responding on time. Both sides should therefore start with the calendar.
Step 1 — Presentation and dishonour
The cheque must be presented to the bank within its validity — three months from the date written on it. If it is returned unpaid, the bank issues a return memo stating the reason: “funds insufficient”, “exceeds arrangement”, “payment stopped by drawer”, “account closed”, “signature differs” and so on. Most reasons attributable to the drawer attract Section 138; the Supreme Court has held that “stop payment” and “account closed” are covered, and that a cheque issued for a legally enforceable debt is covered whatever the reason for dishonour, subject to the drawer’s defence.
Keep the original cheque and the return memo safely — both are exhibited in the complaint.
Step 2 — The demand notice (30 days)
Within 30 days of receiving the return memo, the payee must send a written demand notice to the drawer demanding payment of the cheque amount. The notice should identify the cheque, the transaction, the dishonour and the demand, and should be sent to the drawer’s correct address by a mode that generates proof of despatch and delivery — registered post with acknowledgement due, speed post, or courier, with an email copy as a supplement. A notice sent to the correct address is deemed served even if the drawer refuses or avoids it.
The notice should demand the cheque amount; a notice demanding a different sum without clearly identifying the cheque amount is a common ground of attack.
Step 3 — The 15-day period and the cause of action
The drawer has 15 days from receipt of the notice to pay. If payment is made in full within this period, no offence is committed. If it is not, the cause of action arises on the 16th day.
Step 4 — Filing the complaint (one month)
The complaint under Section 138 read with Section 142 must be filed within one month from the date the cause of action arose, before the Metropolitan Magistrate or Judicial Magistrate of the first class within whose jurisdiction the branch of the bank where the payee maintains the account is located (Section 142(2), as amended in 2015). A delayed complaint may be admitted only if the court is satisfied that the complainant had sufficient cause.
The complaint is filed with the complainant’s affidavit in lieu of examination under Section 145, and the documents: the cheque, the return memo, the notice with postal proof, the reply if any, and the documents evidencing the debt.
Step 5 — Cognizance and summons
On finding the complaint in order, the Magistrate takes cognizance and issues summons to the accused. Service of summons in Section 138 cases can be effected by speed post, courier and, under the 2018 amendments and the Delhi practice directions, by email and electronic means. The accused must appear on the date fixed, or through counsel with an application for exemption, and is released on bail on furnishing a bond.
An accused who does not appear risks a bailable and then a non-bailable warrant.
Step 6 — Interim compensation (Section 143A)
At the stage of framing notice under Section 251 CrPC (now Section 274 BNSS), the court may direct the accused to pay interim compensation of up to 20% of the cheque amount within 60 days (extendable by 30). It is discretionary and recoverable as a fine; if the accused is acquitted, it is refunded with interest.
Step 7 — Plea, defence and trial
The accused’s plea is recorded; if the accused pleads not guilty, the case proceeds as a summary trial. Because the complainant’s evidence is on affidavit, the accused applies under Section 145(2) to cross-examine the complainant. The defence evidence follows: the accused may file an affidavit and examine witnesses, and can apply to summon bank records.
The presumption under Section 139 — that the cheque was issued for a legally enforceable debt — is the centre of the trial. The accused must rebut it on a preponderance of probabilities, by showing, for example, that the cheque was a blank security cheque for a different transaction, that the amount claimed is not supported by the complainant’s own accounts, that the debt was time-barred, or that the notice or complaint is out of time or outside jurisdiction. The complainant, in turn, must be ready to prove the transaction — the loan, the invoice, the delivery — with documents, because a bald claim of a “friendly loan” of a large sum without records invites disbelief.
Step 8 — Settlement and compounding
The offence is compoundable under Section 147. Delhi courts refer Section 138 cases to mediation at the appearance stage, and a large proportion settle. Where compounding happens late — after evidence or in appeal — the Supreme Court’s framework in Damodar S. Prabhu (2010) requires the accused to deposit graded costs (10% to 20% of the cheque amount) with the Legal Services Authority, though the court may reduce them.
Step 9 — Judgment, sentence and appeal
On conviction, the court may impose imprisonment up to two years, a fine up to twice the cheque amount, or both, and usually directs compensation to the complainant under Section 357 CrPC (Section 395 BNSS). An appeal by the accused lies to the Sessions Court, and Section 148 allows the appellate court to direct deposit of a minimum of 20% of the fine or compensation as a condition. The complainant can appeal an acquittal to the High Court with special leave, and as a victim under the proviso to Section 413 BNSS.
Parallel civil remedy
A Section 138 complaint does not bar a civil suit for recovery of the same amount — a summary suit under Order XXXVII CPC where the claim is on a written contract or a negotiable instrument, or a commercial suit. Many payees pursue both; the criminal case creates pressure to pay, and the civil decree secures the amount with interest.
Frequently asked questions
Can I send the notice by WhatsApp or email only?
An email or WhatsApp notice may be treated as valid if receipt is proved, but the safe course is registered post or speed post to the correct address, with an email copy. The postal receipt and tracking record are exhibited in the complaint.
The cheque was given as security — is Section 138 attracted?
If the security cheque was given against a debt that had become due when the cheque was presented, Section 138 may apply; if there was no existing debt or liability at the time of presentation, the accused may rebut the presumption. It depends on the terms of the arrangement, which is why the underlying documents matter.
Can a company’s director be prosecuted?
Under Section 141, every person who was in charge of and responsible to the company for the conduct of its business at the time of the offence is liable, in addition to the company. The complaint must contain specific averments about the director’s role; a director who was not in charge, or a non-executive director, can seek discharge or quashing.
What happens if the accused pays after the complaint is filed?
The case can be compounded and the complaint closed on payment, with costs as directed by the court; the accused should insist on a written settlement and a compounding application rather than an informal withdrawal.
Talk about your matter
This article is general information. Your position depends on your documents and dates — call or WhatsApp to arrange a consultation.