A bounced (dishonoured) cheque — typically due to insufficient funds, a signature mismatch, or account issues — is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, and one of the most commonly litigated matters in Indian courts given how frequently it arises in everyday business and personal lending.
The process is time-bound and strict. Once a cheque is returned unpaid, the payee must issue a written demand notice to the drawer (the person who wrote the cheque) within 30 days of receiving the bank's dishonour memo. The drawer then has 15 days from receiving that notice to make payment. If payment still isn't made, the payee can file a criminal complaint before the Judicial Magistrate within one month of the 15-day notice period expiring — missing any of these windows can jeopardise the complaint entirely, though courts have some discretion to condone delay in genuine cases.
A conviction under Section 138 can result in imprisonment of up to two years, a fine of up to twice the cheque amount, or both — but the offence is compoundable, meaning the parties can settle at any stage, including after conviction, which is how a large share of these cases actually resolve. Because of the strict notice-and-filing timeline, whether you're owed money on a bounced cheque or have been sent a demand notice yourself, it's worth getting legal advice quickly rather than waiting near a deadline.