Overview
Dishonour of a cheque for insufficiency of funds or similar reasons triggers a strict timeline under Section 138 of the Negotiable Instruments Act. Both complainants and drawers must respect notice, limitation, and jurisdiction rules.
Who does this apply to?
This guide applies to residents of India facing the process described above — including first-time filers, respondents, and anyone comparing DIY steps with professional legal help.
Step-by-step
1Obtain bank dishonour memo
Collect the return memo stating reason for dishonour—typically "funds insufficient" or "account closed." This is foundational proof for the complaint.
2Send statutory demand notice within 30 days
Serve notice within 30 days of bank intimation demanding payment within 15 days. Use registered post or other provable service. Retain tracking and proof of delivery.
3Wait for statutory payment period
Complaint lies only if drawer fails to pay within 15 days of receiving notice. Premature filing may be dismissed.
4File complaint within limitation
File before magistrate within one month after expiry of 15-day notice period. Jurisdiction is linked to bank branch where cheque was presented in many cases—verify current law and precedents.
5Appear and explore settlement
Courts encourage compounding and Lok Adalat settlement. Structured repayment with interest may resolve matter faster than full trial.
6Accused: prepare lawful defences
Defences require careful legal framing—stop payment instructions, disputed debt, or procedural defects must be pleaded with evidence, not casual denial.
Common mistakes
- Missing 30-day notice window from bank memo date
- Filing complaint before 15-day notice period ends
- Presenting cheque repeatedly without strategy after known dishonour
- Issuing cheques without maintainable account balance knowingly
- Ignoring court summons as accused—leading to process and warrant