What the law says
Section 138 makes it an offence for the drawer of a cheque to have it returned unpaid because the money in the account was insufficient, or because the amount exceeded the arrangement agreed with the bank. The cheque must have been drawn to discharge a legally enforceable debt or other liability, and it must have been presented to the bank within its period of validity, which the Reserve Bank of India has fixed at three months from the date it bears.
The offence is not complete when the cheque is returned. Three further conditions in the proviso to Section 138 have to be satisfied. The payee must make a demand for the amount by a written notice to the drawer within 30 days of receiving information from the bank that the cheque has been returned unpaid. The drawer then has 15 days from receipt of that notice to pay. Only when those 15 days pass without payment does the offence take shape and the cause of action arise.
The punishment prescribed is imprisonment for up to two years, or a fine up to twice the amount of the cheque, or both. In practice the compensation ordered matters more to most complainants than the sentence. Section 143A allows the trial court to direct the drawer to pay interim compensation of up to 20 percent of the cheque amount before the trial concludes, and Section 148 allows an appellate court to require a deposit of at least 20 percent of the fine or compensation awarded as a condition of the appeal.
Two presumptions work in the complainant's favour. Section 118(a) presumes that every negotiable instrument was made for consideration, and Section 139 presumes, until the contrary is proved, that the holder of a dishonoured cheque received it in discharge of a debt or liability. The burden of displacing them rests on the drawer, and the standard is rebuttal on a preponderance of probabilities, not a bare denial.
The procedure, stage by stage
Most complaints that fail do so on limitation, not on merits. Three dates are worth writing down the day the cheque comes back.
- 30 days
- to issue the statutory demand notice, counted from when you receive information of the return from your bank.
- 15 days
- for the drawer to pay after receiving that notice. A complaint filed before this period expires is premature.
- 1 month
- to file the complaint, counted from the day the cause of action arose under Section 142(1)(b). A court may take a complaint filed after this period if sufficient cause for the delay is shown.
1. Cheque returned by the bank
The bank returns the cheque with a memo stating why it was not paid. That memo fixes the date everything else is counted from, so keep the original, along with the pay-in slip showing when the cheque was presented. Note the reason printed on it: insufficiency of funds and exceeds arrangement are the two returns the section names directly.
2. Statutory demand notice, within 30 days
The notice must be in writing, must demand the cheque amount, and must reach the drawer at the correct address. Send it by registered post with acknowledgement due, and keep the receipt and the acknowledgement, because service is a fact you may later have to prove.
Missing the 30 day window is not always fatal. The Supreme Court has held that successive presentation of a cheque within its validity gives rise to a fresh cause of action, so a cheque that is still in date can be presented again and the notice issued on the fresh return.
3. Fifteen day payment period
The drawer has 15 days from receiving the notice to pay. If payment comes in that window, no offence is made out and the matter ends there. A complaint filed before the 15 days expire is premature and liable to be dismissed on that ground alone, so the wait is not optional.
4. Complaint before the Magistrate, within one month
The cause of action arises the day the 15 days end unpaid, and the complaint must be filed within one month of that day under Section 142(1)(b). It is filed in writing by the payee or holder in due course, with a sworn statement and the documents. A later complaint may still be taken on file if the court is satisfied that there was sufficient cause for the delay.
5. Cognizance and summons
If the Magistrate takes cognizance, summons issues to the drawer. Service is the usual cause of delay at this stage, particularly where the address on the cheque is old, which is why the drawer's current address is worth establishing before filing.
VERIFY WITH ADVOCATE — typical interval from filing to service of summons, and from summons to judgment, in the Thiruvananthapuram Judicial First Class Magistrate courts.
6. Summary trial, evidence on affidavit
These cases are tried summarily under Section 143, and Section 145 allows the complainant's evidence to be given on affidavit, which is why a well prepared complaint carries most of the work. Cross examination follows, then the drawer's statement and any defence evidence. The court may also order interim compensation under Section 143A at this stage.
7. Judgment, then appeal or compounding
The offence is compoundable under Section 147, so the parties can settle at any stage, and the Supreme Court has laid down a graded scale of costs that rises the later a settlement comes. Settling early costs less. On conviction, an appeal lies, and the appellate court may require a deposit of at least 20 percent of the fine or compensation under Section 148. A parallel civil remedy also exists: a summary suit under Order XXXVII of the Code of Civil Procedure to recover the amount itself, which can be pursued alongside the criminal complaint.
What to bring to the first meeting
Tick these off as you gather them. The list stays ticked on this device, and the page prints cleanly if you would rather carry it on paper.
Which court hears these matters in Thiruvananthapuram
Jurisdiction under Section 142(2) follows the bank, not the parties. Where the cheque was delivered for collection through an account, the complaint lies before the court within whose local limits the branch of the bank where the payee maintains that account is situated. Where it was presented for payment over the counter, it lies where the drawer's branch is situated. For payees banking in the city, that is ordinarily the Judicial First Class Magistrate courts in the Vanchiyoor court complex.
VERIFY WITH ADVOCATE — confirm the correct JFCM court and its numbering for cheque cases arising in [[ LOCALITY ]], and whether any matters are routed to a special court.
Common questions
The cheque was returned for signature mismatch, not insufficient funds. Does Section 138 still apply?+
Returns marked insufficiency of funds or exceeds arrangement are squarely covered by the section. Returns for other reasons have been treated as covered in several decisions where the drawer's own act defeated payment. VERIFY WITH ADVOCATE — which line of authority to cite for returns other than insufficiency of funds.
I did not send the notice within 30 days. Is the claim gone?+
Not necessarily. The Supreme Court has held that a cheque may be presented again within its period of validity, and each dishonour gives a fresh cause of action, so a cheque still in date can be re-presented and a notice issued on the fresh return. Once the cheque is out of date this route closes, though a civil suit for the money may remain available.
Can the matter be settled after the complaint is filed?+
Yes. The offence is compoundable under Section 147, and settlement is possible at any stage. The Supreme Court has laid down a graded scale of costs that increases the later the settlement comes, so settling early is cheaper.
Do I have to attend every hearing?+
The complainant's evidence can be given on affidavit under Section 145, which reduces the number of appearances needed, and the court may exempt a party from personal appearance in appropriate cases. VERIFY WITH ADVOCATE — the corresponding provision on exemption from personal appearance under the Bharatiya Nagarik Suraksha Sanhita, 2023.
In Malayalam
ഈ പേജ് മലയാളത്തിൽ വായിക്കുക+
മലയാളം സംഗ്രഹം ഇവിടെ ചേർക്കും. (150 to 200 word Malayalam summary, pending translation, held for a later pass per instruction.)
150 to 200 word summary, Manjari, lang="ml". Slot reserved, copy pending your instruction to hold Malayalam for a later pass.