Saya & Associates
Received a cheque bounce notice? The first 15 days
Do not file the notice with the bank messages
A supplier deposits a cheque your business issued. It comes back unpaid, and a lawyer's notice follows under section 138 of the Negotiable Instruments Act, 1881.
The accounts team says the amount was disputed, so someone will reply after the next reconciliation. That delay can change the legal position.
The notice starts a statutory process with short time limits. The first task is to establish what happened and when, while the records are still easy to find.
Put the dates on one page
| Step | Time limit | Provision |
|---|---|---|
| Presentation of the cheque | Within six months of its date or within its validity, whichever is earlier; RBI has limited validity to three months since 1 April 2012 | Section 138, proviso (a) |
| Payee's written demand | Within 30 days of the bank's information that the cheque was returned unpaid | Section 138, proviso (b) |
| Drawer's payment | Within 15 days of receiving the notice | Section 138, proviso (c) |
| Complaint | Within one month of the cause of action, unless the court accepts sufficient cause for delay | Section 142(1)(b) |
The 15 days run from receipt of the notice, not from the date printed on it. Keep the envelope, the delivery record, any email and any acknowledgement. Work out the dates from documents, not memory.
Check when the cheque was drawn, presented and returned. A step taken outside its period can affect whether a complaint can be made at all.
What is at stake
The offence carries imprisonment of up to two years, a fine of up to twice the cheque amount, or both.
If the drawer pleads not guilty, section 143A lets the court order interim compensation of up to 20 per cent of the cheque amount. It is repayable, with interest, if the drawer is acquitted.
The offence is compoundable under section 147, so a recorded settlement between the parties can end the case.
Rebuild the transaction behind the cheque
Section 138 applies to a cheque issued to discharge, in whole or in part, a legally enforceable debt or other liability. Section 139 presumes, until the contrary is proved, that the holder received the cheque for that purpose.
So a drawer who disputes the demand needs a documented account, not just the sentence "there was no debt".
Collect the contract, invoices, ledger, bank statement, cheque copy, return memo, correspondence and any credit notes or earlier payments.
Then ask: was the cheque for the sum now demanded? Was the amount already paid or adjusted? Who drew it, an individual, a firm or a company? Who signed it, and from which account?
Do not destroy or alter records because the dispute has become formal. Preserve the whole transaction trail, including messages that do not support your version.
Payment, correction or dispute
If the cheque amount is due, take advice promptly on paying within the 15 days, and keep proof that the payee received the payment. A promise to pay later is not payment.
If the amount is disputed, give counsel the records early enough for a precise reply. A reply can set out the drawer's position, but it does not replace payment where payment is in fact due.
Avoid an angry, generic denial. It can bury a narrower and stronger point, such as a wrong amount, a recorded settlement or a mismatch between the cheque and the claimed liability.
Calling the cheque "security" does not settle the question either. What liability existed when it was presented remains a fact-sensitive issue.
When a company or firm drew the cheque
Section 141 treats every person who was in charge of, and responsible to, the company for its business when the offence was committed as guilty along with the company, subject to the defences the section provides.
It also reaches a director, manager, secretary or other officer whose consent, connivance or neglect is proved. For this section, a firm is a company and its partners are directors.
A notice naming directors or partners should be checked against their actual roles at the time. Do not simply forward it to the person who signed the cheque.
The first-day list
- Record the receipt. Note how and when the notice arrived, and keep the delivery evidence.
- Collect the bank papers. Get the cheque, the bank's return memo and the complete notice with its attachments.
- Assemble the transaction file. Gather the contract, invoices, ledger, payment history and correspondence.
- Identify the parties. Confirm the drawer, the account holder, the signatory and the amount actually claimed.
- Calculate the dates. Have counsel work out every statutory date from the documents.
- Decide before day 15. Choose between payment, correction and a reasoned reply before the period ends.
The immediate goal is not to win the whole dispute by email. It is to keep time on your side while checking whether the demand matches a legally enforceable liability.
Frequently asked questions
When do the 15 days start?
From the date the drawer receives the notice, under proviso (c) to section 138, not from the date written on it. Keep the delivery record to prove when it arrived.
What happens if I do not pay within 15 days?
If the other conditions in section 138 are met, the payee can file a complaint within one month under section 142. The offence carries up to two years' imprisonment, a fine of up to twice the cheque amount, or both.
Is replying to the notice enough?
Not where the amount is actually due. A reply sets out the drawer's position, but only payment within the 15 days prevents the cause of action where the debt is owed.
Can directors be prosecuted for a company's bounced cheque?
Yes, under section 141, if they were in charge of and responsible for the company's business when the offence was committed, or if the offence involved their consent, connivance or neglect. Their actual role matters.
Can a cheque bounce case be settled?
Yes. Section 147 makes the offence compoundable, so the parties can settle and have the case closed. A written settlement recorded before the court is safer than an informal promise.
The takeaway
The first 15 days decide more of a cheque bounce case than most people expect. Fix the dates from documents, rebuild the transaction, and make a deliberate choice before the period ends.
To discuss a notice you have received, contact Saya & Associates.
This article provides general information as at 25 September 2026. Section 138 cases turn on the cheque, the debt, the bank record, the notice, service and the procedural history. Time limits should be calculated for the particular matter. It is not legal advice.