Section 138 NI Act — Payee's Guide
Acting for the Complainant
The offence is complete only when a fixed sequence has run in time: presentation, dishonour, notice, fifteen days of silence, then a complaint. Most lost complaints fail on one broken link, not on the merits. Build the file around proving each link.
Is there an offence?
Section 138 provisos (a) to (c)- The cheque was issued by the drawer on an account the drawer maintains, to discharge a debt or liability that is legally enforceable.
- It was presented to the bank within three months of the date on it, or within its validity if that is shorter.
- It came back unpaid for insufficient funds, or because it exceeds the arrangement with the bank. Account closed and payment stopped by the drawer are treated the same way.
- The payee sent a written demand notice within 30 days of learning of the return.
- The drawer did not pay the cheque amount within 15 days of receiving that notice.
- The complaint is filed within one month after the 15 days expire, by the payee or holder in due course.
Step by step
From dishonour to decreeSecure the instrument and the memo
Keep the original cheque, the bank's return memo with its reason, the deposit slip, and a statement showing the presentation. Note the exact date your bank told you of the return, because the 30-day notice clock runs from it. Check the stated reason. Insufficient funds, exceeds arrangement, account closed and payment stopped are safe. Reasons such as signature differs or alterations need authentication are contested; if validity remains, consider presenting again. Repeated presentation within validity is allowed, and each dishonour followed by a fresh notice gives a fresh cause of action.
Send the statutory notice
Identify the cheque by number, date, amount and bank, with the dates of presentation and return and the reason. Demand the cheque amount within 15 days of receipt. If you add interest or costs, keep them clearly separate so the notice does not become a composite demand that overstates the cheque amount. Address the drawer at every known address. For a company, address the company and the signatory, and name the directors you intend to prosecute. Send by speed post or registered post with acknowledgement, and also by email and WhatsApp. Keep postal receipts, tracking printouts, the AD card and email headers. A refused or unclaimed notice is generally treated as served, so the tracking record matters as much as the notice.
Wait, and log every payment
Do not file early. A complaint filed before the 15 days run out is premature and the cognizance is liable to be set aside. If the drawer pays part, record it and keep the notice period running for the balance.
Draft and file the complaint
Court: under s.142(2), the court where the payee's account branch sits, if the cheque was delivered for collection through that account. Otherwise the drawer's branch. Parties: the drawer as accused. For a company, array the company itself, then each director with specific averments that he was in charge of and responsible for its business. A director cannot be proceeded against alone. Pleadings: the debt, the cheque, each date in the sequence, service of notice, non-payment, and a plain limitation paragraph. With the complaint: affidavit of evidence under s.145, originals and copies, board resolution or authority letter if a company is the payee, and the synopsis in the format the Supreme Court prescribed in 2025. Late filing: if you are out of time, file an application for condonation with the complaint, showing sufficient cause under the proviso to s.142(1)(b). Prayer: conviction, fine up to twice the cheque amount, and compensation under s.357(3) CrPC (s.395 BNSS).
Summons and appearance
Your evidence before summons goes in by affidavit. If the accused lives outside the court's area, an inquiry under s.202 CrPC (s.225 BNSS) is mandatory. The accused need not be heard before cognizance. Supply email and phone details so summons can go by electronic service. Once the accused appears and pleads not guilty, the case proceeds as a summons case.
Ask for interim compensation early
Section 143A lets the court direct the drawer to pay up to 20 percent of the cheque amount while the trial is pending, within 60 days. The Supreme Court has treated this power as discretionary, so give the court reasons: documents, no credible defence in the reply, and the drawer's conduct.
Prove the case
Your affidavit is your examination-in-chief under s.145(1); be ready for cross-examination on it. The bank's return memo carries a presumption of dishonour under s.146. Expect the drawer to apply to recall you or call a bank officer under s.145(2). Section 143 puts the trial on the summary track, so keep applications for adjournment to a minimum.
Judgment and recovery
Conviction carries imprisonment up to two years, fine up to twice the cheque amount, or both. Ask for the fine to be applied as compensation. Fine can be levied as per s.421 CrPC (s.461 BNSS). If the drawer appeals, s.148 requires a deposit of at least 20 percent of the fine or compensation, which you can ask to withdraw. A civil recovery suit, such as a summary suit under Order XXXVII, can run alongside.
Evidence that holds up
The presumption helps, but prepare as if it will be testedOnce the drawer admits the signature, ss.118 and 139 presume consideration and a legally enforceable debt. The drawer must rebut that on a preponderance of probabilities. Still prepare the underlying story.
Trade and contract debts
- Agreement, purchase order or invoice
- Ledger or statement of account, signed if possible
- Delivery challans, GST returns, emails and messages acknowledging dues
Cash and personal loans
- Bank withdrawals close to the loan date
- Income tax returns and the source of the money
- Messages or calls showing the request and the promise to repay
Service and dishonour
- Original return memo with reason
- Tracking report, AD card or refusal endorsement
- The drawer's reply to the notice, or proof there was none. Silence can support an adverse inference.
Mistakes that sink complaints
- Notice sent after the 30 days, or never proved to have been sent.
- Complaint filed before day 16 or after the one-month window with no condonation application.
- Notice demanding a sum that differs from the cheque amount without separating the heads.
- Company not arrayed as an accused, or directors named with no averment of their role.
- Complaint filed by an attorney who did not witness the transaction and without pleading his authority and knowledge.
- Wrong court on territorial jurisdiction.
- Merging cheques carelessly. Each cheque with its own dishonour and notice is a separate cause of action; the Supreme Court held in January 2026 that one transaction does not merge them into one.
Settlement levers
Section 147 makes the offence compoundableMost cases settle. Compounding at the first hearing is cheapest; the court-imposed costs rise the later it happens, and the 2025 guidelines revised those percentages downward, so read the current table before quoting terms. For a payment plan, record the instalments in the consent terms and state what happens on default, including whether the complaint revives. Keep the cheque amount, agreed interest and your costs as separate lines.
Need representation as a complainant?
Mr. Mehandru handles cheque dishonour matters from notice to conviction.