When a cheque issued by someone is returned by the bank due to insufficient funds, account closure, or signature mismatch, it is legally termed as "cheque dishonour". Under Section 138 of the Negotiable Instruments Act, 1881, this act is a criminal offence punishable with fine and/or imprisonment.
When Does Section 138 Apply?
Section 138 is applicable if:
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A cheque is issued for discharge of a legal debt or liability
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It is presented within 3 months from the date of issue
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The cheque is dishonoured by the bank
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The payee sends a legal demand notice within 30 days of dishonour
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The drawer (issuer) fails to make payment within 15 days of receiving the notice
Legal Procedure in Maharashtra:
1. Send Legal Notice
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Must be sent within 30 days of cheque return
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Demanding the amount within 15 days
2. Filing a Complaint
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If no payment is made, the payee can file a criminal complaint under Section 138
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Complaint must be filed in the Magistrate Court within 30 days of expiry of the 15-day notice period
3. Court Process
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Court issues summons to the drawer
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Trial begins; parties may be asked to settle or provide evidence
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If found guilty, drawer may face:
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Up to 2 years imprisonment, or
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Fine up to twice the cheque amount, or both
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4. Compounding of Offence
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At any stage, parties can settle the matter mutually and close the case
Documents Required:
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Original bounced cheque
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Bank return memo
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Copy of legal notice
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Courier/postal receipt
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Complaint affidavit
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ID proof and address of complainant
Timeframe:
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Depending on the court’s schedule and response from the accused, cases may take 6 months to 2 years for resolution
Courts Handling 138 Cases in Maharashtra:
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Judicial Magistrate First Class (JMFC) Courts
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Metropolitan Magistrate Courts (in Mumbai, Pune, Nagpur, etc.)
Why Legal Help Is Important:
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Drafting the notice and complaint properly is crucial for success
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Lawyers can guide through court procedures and settlements
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Non-compliance with procedure can lead to dismissal of the case
💰 Cheque Bounce Case – Section 138 of the NI Act – A Mumbai Story
Ajay had provided a cheque of ₹1,00,000 to his supplier for raw materials. But when the supplier deposited it, the cheque bounced due to insufficient funds.
The supplier sent a legal notice demanding payment. Ajay ignored it, hoping the issue would go away.
The supplier then filed a case under Section 138 of the Negotiable Instruments Act through DRS Group.
The court issued summons, and Ajay had to either pay the amount or face penalties, including fines or imprisonment.
📌 The Takeaway:
Ignoring a bounced cheque notice can lead to serious legal consequences under Section 138 of the NI Act. Always handle cheque payments responsibly.
DRS Group – Experts in Cheque Bounce Cases & Legal Proceedings.
Get legal help before it’s too late.
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