Cheque bounce: the deadlines
A case under Section 138 of the Negotiable Instruments Act, 1881 depends on strict time limits:
- The demand notice must be sent within 30 days of receiving the bank's information that the cheque was dishonoured.
- The drawer then has 15 days from receiving the notice to pay.
- If payment is not made, the complaint must be filed within one month of the end of those 15 days, under Section 142.
Missing any of these dates can defeat an otherwise valid claim, so the notice should be sent as soon as the cheque returns.
What the court can order
The offence is punishable with imprisonment up to two years, or a fine up to twice the cheque amount, or both. Under Section 143A, the court may also direct the accused to pay interim compensation of up to 20 percent of the cheque amount while the case is pending.
If you are accused
A notice under Section 138 should be answered with care. Defences can include that the cheque was not given for a legally enforceable debt, that the notice was defective or late, or that the complaint was filed out of time. Many cases are also settled through compounding at any stage.
Recovering money without a cheque
Where money is due on a loan, invoice or agreement, a civil suit for recovery can be filed. A summary suit under Order XXXVII of the Code of Civil Procedure, 1908 is available for claims on written contracts and negotiable instruments, and the defendant must obtain leave of the court to defend it.