Legal Solutions for
NI Act Section 138

What is the time limit to send a legal notice after a cheque bounce?

You must send a legal notice to the drawer within 30 days from the date you receive the 'Cheque Return Memo' from the bank. Failing this deadline may bar you from filing a criminal case under Section 138.

Is cheque bounce a criminal offense in India?

Yes, under Section 138 of the Negotiable Instruments Act, 1881, cheque dishonour is a criminal offense punishable with imprisonment for up to 2 years, or with a fine which may extend to twice the amount of the cheque, or both.

Can I get bail if a case is filed against me?

Yes, the offense under Section 138 is bailable. As an accused, you are entitled to bail as a matter of right upon appearing in court and furnishing surety. However, ignoring court summons can lead to a Non-Bailable Warrant (NBW).

In which court should the cheque bounce case be filed?

The case must be filed in the Magistrate Court having jurisdiction over the branch of the bank where the payee (complainant) maintains their account.

Can I claim interim compensation during the trial?

Yes, under Section 143A of the NI Act, the court has the power to order the accused to pay interim compensation of up to 20% of the cheque amount to the complainant while the trial is pending.

Is a "Stop Payment" instruction by the drawer actionable?

Yes. If the drawer issues a "Stop Payment" instruction to the bank and the cheque is returned for that reason, it attracts Section 138 proceedings just like insufficient funds, provided there is an existing debt.

What happens if the legal notice returns as "Unclaimed"?

According to Supreme Court precedents, if a notice is sent to the correct address and returns as "unclaimed" or "refused", it is deemed to be served. You can proceed with filing the complaint.

Can "Security Cheque" be a valid defense?

Yes. If the accused can prove that the cheque was given merely as security (e.g., for a loan application) and not towards the discharge of a legally enforceable debt at the time of presentation, it can lead to acquittal.

How long does a cheque bounce case take?

While the Act mandates summary trial (6 months), practically cases in Bengaluru can take 1-3 years depending on court load. However, summary judgments and mediation can expedite this significantly.

Can the case be settled out of court after filing?

Yes, Section 147 of the NI Act makes the offense compoundable. The parties can settle the matter at any stage of the trial (or even appeal), and the court can acquit the accused upon payment.