Cheque Bounce Case Section 138: Procedure, Timelines, Rulings

ByJurisAxios

A cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881 is a criminal complaint a payee may file when a cheque is returned unpaid and the drawer fails to pay within 15 days of a written demand. The Act fixes strict timelines for the notice, the payment window and the complaint, and the Supreme Court has repeatedly directed faster disposal. This is the position as on 1 October 2026.

What Section 138 punishes

Section 138 applies when a cheque issued for a legally enforceable debt is returned for insufficient funds or because it exceeds the arrangement with the bank. The punishment is imprisonment of up to two years, a fine of up to twice the cheque amount, or both, with compensation under Section 395 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) [earlier Section 357 CrPC]. Sections 118 and 139 presume consideration and a debt, which the drawer must rebut on a preponderance of probabilities.

The timeline: 3 months, 30 days, 15 days, one month

  1. Presentation: within three months of the cheque date.
  2. Notice within 30 days of receiving the return memo, demanding the cheque amount in writing [proviso (b)].
  3. 15-day payment window: the drawer avoids prosecution by paying within 15 days of receiving the notice [proviso (c)].
  4. Complaint within one month of the cause of action, which arises the day after the 15-day window ends [Section 142(1)(b)].

Delay in filing can be condoned on sufficient cause, but in S. Nagesh v. Shobha S. Aradhya (6 January 2026) the Supreme Court held that condonation must precede cognizance. A notice posted to the correct address is deemed served; in Sainaba v. State of Kerala (30 September 2026) receipt by a family member was held sufficient, shifting the burden to the drawer.

Summary trial and the expedited-disposal directions

Section 143 requires summary trial under BNSS Sections 283 to 288 [earlier Sections 262 to 265 CrPC], to be concluded, as far as practicable, within six months. A Constitution Bench in In Re: Expeditious Trial of Cases under Section 138 (2021) directed that Magistrates record reasons before converting a summary trial into a summons trial and that an inquiry under Section 225 BNSS [earlier Section 202 CrPC] be held on affidavit evidence where the accused lives outside the jurisdiction.

In Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158 the Court added practical measures: summons by e-mail and WhatsApp; QR code or UPI links so an accused can pay at the summons stage and have the case closed under Section 147; six questions to be put to the accused before any conversion to a summons trial; and no pre-cognizance hearing under Section 223 BNSS.

The legislative intent was to restore the credibility of cheques as a trustworthy substitute for cash payment and to promote a culture of using cheques.

Supreme Court, Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158, para 14

Interim compensation under Section 143A

Section 143A lets the trial court direct the drawer to pay up to 20 per cent of the cheque amount once he pleads not guilty; it is refundable with interest on acquittal. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) the Supreme Court held that “may” cannot be read as “shall”: the court must assess the complaint and defence prima facie, consider the drawer’s financial capacity and record brief reasons.

Appeal and the Section 148 deposit

An appeal lies to the Sessions Court under Section 415 BNSS [earlier Section 374 CrPC]. Section 148 permits an order to deposit at least 20 per cent of the fine or compensation awarded. Surinder Singh Deswal v. Virender Gandhi (2019) read this as ordinarily mandatory, but Muskan Enterprises v. State of Punjab, 2024 INSC 1046 recognises a narrow discretion to waive or reduce it in exceptional cases with reasons.

Compounding, mediation and settlement

Section 147 makes the offence compoundable notwithstanding Section 359 BNSS [earlier Section 320 CrPC], and the Supreme Court treats Section 138 as compensatory rather than punitive. Appeals and revisions are routinely referred to mediation and Lok Adalats. Sanjabij Tari revised the graded costs of Damodar S. Prabhu v. Sayed Babalal (2010): no cost if the accused pays before defence evidence; 5 per cent of the cheque amount to the Legal Services Authority if paid before judgment; 7.5 per cent before the Sessions Court or High Court; and 10 per cent before the Supreme Court.

Multiple cheques and rulings of 2025 to 2026

No amendment to Sections 138 to 148 has been enacted in 2025 or 2026. In Sumit Bansal v. MGI Developers, 2026 INSC 40 : 2026 SCC OnLine SC 49 (January 2026) the Supreme Court held that separate complaints for separate dishonoured cheques in one transaction are not an abuse of process, since each dishonour followed by notice and non-payment is a distinct cause of action. The firm’s criminal defence and civil litigation practices handle such matters. For advice on your own matter, you may contact the firm.

Frequently asked questions

What is the time limit for a cheque bounce notice under Section 138?

The written demand must be sent within 30 days of receiving the bank’s return memo, and the drawer has 15 days from receipt to pay. If he does not, the complaint must be filed within one month under Section 142(1)(b).

Can a cheque bounce complaint be filed after one month?

Only with the Magistrate’s leave on sufficient cause under the proviso to Section 142(1)(b). In S. Nagesh v. Shobha S. Aradhya (January 2026) the Supreme Court held that the delay must be condoned before cognizance is taken.

Is 20 per cent interim compensation automatic under Section 143A?

No. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) the Supreme Court held the power is discretionary: the court must weigh the prima facie case, the plausibility of the defence and the drawer’s means, and record brief reasons.

Can a cheque bounce case be settled after conviction?

Yes. Section 147 makes the offence compoundable at any stage. Under Sanjabij Tari v. Kishore S. Borcar (2025), settlement before defence evidence attracts no cost; later settlements attract 5, 7.5 or 10 per cent of the cheque amount payable to the Legal Services Authority.

Sources

This article is general information on the law as of 1 October 2026 and is not legal advice. Outcomes depend on the facts of each matter; readers should consult a qualified advocate before acting on it.

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