Cheque bounced? What to do in the first 7 days

What has probably happened

You were given a cheque — for a loan you made, rent, the price of goods, a salary or a settlement — and when you deposited it, your bank returned it unpaid. With the cheque, the bank gives you a return memo: a slip that says why it was not paid, such as "funds insufficient" or "exceeds arrangement".

The law has a name for this. Under Section 138 of the Negotiable Instruments Act, 1881, it is an offence to give a cheque for a debt or liability and have it returned because there is not enough money in the account. The person who signed the cheque is called the drawer; you, the person it was made out to, are the payee.

The offence is only complete when three things have happened, in this order. These are the steps below, and each has a deadline.

1. The cheque was presented to the bank while it was still valid.
2. You sent the drawer a written demand for the money within 30 days of learning it bounced.
3. The drawer did not pay within 15 days of receiving that demand.

The penalty the court can impose is imprisonment of up to two years, a fine of up to twice the amount of the cheque, or both. That is what makes the notice work: most people pay once they receive one.

What to do, step by step

Day 0 — the day you learn it bounced. Write down the date you received the return memo or the bank's message. Every deadline counts from here. Keep the original cheque and the memo safe; do not write on them or hand over the originals to anyone.

Days 1 to 7 — check three things.

• Was the cheque presented in time? Section 138 applies only if the cheque was presented within six months of its date, or within its period of validity if that is shorter. Banks treat a cheque as valid for three months from the date written on it, so in practice the limit is three months.
• Was it for a debt or a liability? The section covers a cheque given to pay what is legally owed. A cheque given as a gift is not covered.
• Do you have the drawer's correct address? The notice must reach them. Use the address you know they live or work at, and add any other address you have.

By day 30 at the latest — send the demand notice. The notice must be in writing and must demand payment of the cheque amount. Say what the cheque was for, its number, date, amount and bank, the date it was returned and the reason on the memo, and that the drawer has 15 days from receiving the notice to pay. Send it by registered post or speed post with acknowledgement due, and keep the postal receipt and the tracking printout.

15 days after they receive it — the drawer's window. Count 15 days from the day the drawer received the notice (the delivery date on the tracking record). If they pay the full cheque amount in that time, the matter ends there.

The month after that — the complaint. If they have not paid, the offence is complete. Under Section 142, you then have one month to file a complaint before a Metropolitan Magistrate or a Judicial Magistrate of the first class. The case is heard by the court where your bank branch — the one where you deposited the cheque — is situated. A late complaint can be accepted only if you show the court a sufficient reason for the delay, so do not count on it.

Filing and running the complaint is court work. An independent advocate from our panel can take it on; they quote their fee before you pay anything.

What happens after you file

Once the magistrate takes the complaint, the drawer is summoned. The law starts by presuming that the cheque was given for a debt or liability (Section 139); it is for the drawer to show otherwise. If the drawer pleads not guilty, the court can order them to pay you interim compensation of up to 20% of the cheque amount while the case goes on (Section 143A). The case can be settled at any stage (Section 147).

Timeline and costs

When	What	Who pays
Day 0	Cheque returned, memo received	—
Within 30 days	Demand notice sent	You: ₹999 with eMunshi, all-inclusive — drafted, checked and sealed by a panel advocate, sent by registered post
Notice + 15 days	Drawer's time to pay	—
The month after	Complaint before the magistrate	Court fee (set by your state) and the advocate's fee, which they quote first

Documents to keep handy

• The original cheque.
• The bank's return memo, and the account statement showing the cheque returned.
• Whatever shows what the cheque was for: an agreement, invoices, messages, a loan record, bank transfers.
• The notice you sent, the postal receipt and the tracking printout or acknowledgement card.
• The drawer's addresses, and any reply they send.

Mistakes that sink people

• Waiting past day 30. People wait for the drawer to "sort it out". Talk all you like, but send the notice inside the 30 days.
• Sending the notice to the wrong address, or by ordinary post with no proof of sending.
• Getting the amount wrong. The notice must demand the cheque amount. Interest or other dues can be claimed separately; keep the demand clear.
• Filing the complaint too early (before the 15 days have run out) or too late (more than a month after).
• Giving away the originals. The court will want to see the original cheque and memo.

When this is not a Section 138 case

If more than 30 days have passed since the cheque bounced and the cheque can no longer be presented again, the criminal route is usually closed. You may still be able to recover the money in a civil suit. An advocate can tell you what is left; a 30-minute call starts at ₹999.