Cheque Bounce Rules: The 30-Day Notice, 15-Day Wait and Section 138 Deadlines Explained

Kavita runs a small catering business in Pune. On 6 October 2026 she deposits a cheque for ₹85,000 from a corporate client, dated 5 October. The next evening her bank’s SMS says the cheque has been returned: “funds insufficient”. She has the cheque, a return memo and a client who has stopped answering calls. What she does in the next 30 days decides whether a cheque bounce stays a payment dispute or becomes a criminal complaint the client has to answer in court.

This guide follows Kavita’s ₹85,000 cheque through the law and the bank’s process, with the exact deadlines she has to meet. It also covers the other side: what to do if a cheque you issued is likely to bounce.

What Section 138 actually says

Cheque bounce cases fall under Section 138 of the Negotiable Instruments Act, 1881. It applies when a cheque issued “for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account”. The drawer can then be punished “with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both”.

Two words in that text matter for Kavita. The cheque must be for a debt or liability, and the Act’s explanation says this means “a legally enforceable debt or other liability”. Her invoice for catering services qualifies. A cheque given as a gift or a donation does not.

Section 138 also sets three conditions. The cheque must be presented within six months of its date “or within the period of its validity, whichever is earlier”. The payee must send a written demand notice “within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid”. And the drawer must fail to pay “within fifteen days of the receipt of the said notice”. Only after all three does the offence arise.

Kavita’s deadlines, date by date

Section 142 says the complaint must be “made within one month of the date on which the cause of action arises”. Courts can condone some delay for sufficient cause, but planning around that is risky. A common practice is to send the notice within a week of the return, by registered post or speed post with tracking, and keeping the postal receipt and the delivery record.

How long is a cheque valid?

Three months. In a November 2011 notification, RBI directed that from 1 April 2012, “banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument”. That is why Section 138’s six-month limit, which yields to the cheque’s validity period if that is shorter, now works out to three months in practice. Kavita’s cheque dated 5 October can be presented until early January 2027.

She can present it a second time within that period if the client asks her to, for example after promising to fund the account. The Supreme Court held in MSR Leathers v. S. Palaniappan (2013) that a prosecution can rest on a later dishonour, provided the notice and complaint timelines are followed from that later return. If the second presentation also fails, Kavita’s 30-day window runs from the bank’s information about that second return.

What the bank does when a cheque bounces

Under RBI’s cheque truncation system, cheques are cleared from scanned images on the same day they are presented. After RBI’s December 2025 change to its continuous clearing circular, the presentation session runs from 9 AM to 3 PM and the confirmation session from 9 AM to 7 PM, so a return usually reaches the depositor the same day or the next morning. Phase 2 of the faster system, which would have shortened the confirmation window further, was “postponed, until further notice”.

Kavita’s bank gives her the physical cheque back with a return memo stating the reason. Both documents are evidence, so she keeps the originals safely and works only with photocopies. The bank also debits a cheque return charge from the account of the person who issued the cheque, and many banks charge the depositor as well. The amount differs by bank and is listed in each bank’s schedule of charges.

The legal notice and what goes into it

The notice is a written demand for the cheque amount. It should state the cheque number, date, amount, bank, the date of return and the reason on the memo, and demand payment of ₹85,000 within 15 days of receipt. Kavita’s lawyer sends it to the client’s address on record, and to any other known address, so that delivery cannot easily be disputed.

If the client pays the full amount within 15 days, the matter ends there; no offence arises. Many disputes settle at this stage because the drawer now faces a fixed deadline and a court case if it is missed.

What happens once the complaint is filed

The complaint goes to the magistrate’s court with jurisdiction over the branch where Kavita deposited the cheque, since Section 142 now ties jurisdiction to the place where the cheque is delivered for collection. Two later amendments help payees.

Under Section 143A, the court trying the case can order the drawer to pay interim compensation, which “shall not exceed twenty per cent. of the amount of the cheque”. For Kavita’s cheque that is up to ₹17,000. If the drawer is convicted and appeals, Section 148 lets the appellate court order a deposit of “a minimum of twenty per cent. of the fine or compensation awarded by the trial Court”.

Cases can take months or longer, and courts often push the parties toward settlement or mediation. A criminal complaint also does not stop Kavita from filing a separate civil suit to recover the money if she chooses to.

Still open for Kavita: how long her trial would last, since that depends on the caseload of the local magistrate’s court and no fixed timeline applies; and when clearing gets faster, because RBI has postponed Phase 2 of continuous cheque clearing “until further notice” without naming a new date.

If a cheque you issued may bounce

Suppose Kavita had paid her vegetable supplier with a ₹40,000 cheque and then a client payment was delayed. The practical steps are simple: transfer funds into the account before the cheque is presented, or ask the supplier to hold it and pay by NEFT or IMPS instead. Our guide to NEFT, IMPS and RTGS explains which one settles fastest. If the cheque has already bounced and a notice arrives, paying the full amount within 15 days of receiving it closes the matter before any offence arises.

Business owners who rely on an overdraft or cash credit to cover cheques should watch the limit as well, because “exceeds arrangement” is also a Section 138 return reason. Our explainer on how a CC limit works covers drawing power. For depositing cash takings quickly to fund cheques, see our bank cash deposit rules.

The 30-day notice deadline is the one date a payee cannot afford to miss.

FAQs

Can I file a cheque bounce case without sending a legal notice?

No. The written demand notice within 30 days, and the drawer’s failure to pay within 15 days of receiving it, are conditions in Section 138 itself. Without them, the complaint is likely to be dismissed.

Is a bounced security cheque covered?

It depends on whether a legally enforceable debt existed on the date the cheque was presented. Courts have allowed cases on security cheques where the debt had fallen due by then, and rejected them where it had not. Take legal advice on your own documents.

The bank returned my cheque for “signature differs”. What now?

Ask the drawer for a fresh cheque or a bank transfer. A signature mismatch is usually treated as a technical return, and it is a weak basis for a Section 138 case on its own.

How much does a cheque bounce cost in bank charges?

Each bank sets its own cheque return charges, usually different for the drawer and the depositor, plus GST. Check the “service charges” page of your bank’s website or ask the branch for the current schedule.

Disclaimer: This article explains the law in general terms. For a cheque bounce case, consult a lawyer about your own facts and documents.