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Pravesh DabasAdvocate Delhi, India

06 · Banking, Finance & Insurance

Cheque Dishonour Cases

Cheque dishonour cases concern cheques returned unpaid, which can be a criminal offence under section 138 of the Negotiable Instruments Act, 1881.

Cases under section 138 of the Negotiable Instruments Act, 1881, when a cheque is returned unpaid.

What this covers

  1. 01Statutory demand notices
  2. 02Filing complaints under section 138
  3. 03Defending complaints
  4. 04Settlement and compounding
  5. 05Appeals and revisions

How it generally works

When a cheque given for a debt or liability is dishonoured, the payee must send a written demand within thirty days of receiving the bank's return memo. The drawer then has fifteen days to pay.

If payment is not made, a complaint can be filed before the magistrate within one month after those fifteen days expire. The offence is punishable with imprisonment, a fine of up to twice the cheque amount, or both.

The offence can be compounded — settled — at any stage, and courts encourage settlement in these cases.