Complete Court Procedure for Cheque Bounce Case under NI act, 1881

Complete Court Procedure for Cheque Bounce Case under The Negotiable Instruments Act, 1881

1. Cheque is Issued

A person (drawer) issues the cheque to another (Payee) for discharge of a legally enforceable debt or liability

1. Drawer- the person who sign and issued any type of Negotiable Instrument.

2. Payee- the person to whom cheque is given/issued to withdraw the money.

2. Cheque is Presented to the Bank

The payee presents the cheque in their bank within 3 months from the date on the cheque.

3. Cheque is Dishonoured (Bounced)

The bank returns the cheque unpaid due to reasons like:

“Insufficient Funds”
“Account Closed”
“Payment Stopped by Drawer”
“Signature Mismatch”, etc.

The bank issues a "Cheque Return Memo" to the payee, stating the reason for dishonour.

4. Demand Notice is Issued by the Payee to Drawer

The payee must send a legal notice (demand notice) under Section 138 of The Negotiable Instruments Act, 1881 in writing to the drawer within 30 days of receiving the cheque return memo
The notice must:

State that the cheque was dishonoured.
Demand payment of the cheque amount within 15 days of receipt of notice.

Payee should kept the legal Notice (demand notice) safely to the for future evidence that Payee has already send the Legal notice waiting for the demand of completion of his debt within 15 days

5. Wait for 15 Days

After the drawer receives the notice, the payee must wait for 15 days.
If the drawer pays within 15 days, no case can be filed.
If payment is not made within 15 days, then the offence under Section 138 is committed.

6. File Criminal Complaint (Section 138 NI Act)

The payee can file a complaint before a Judicial Magistrate First Class (JMFC) or Metropolitan Magistrate within 1 month after the expiry of the 15-days Notice period.
Limitation Period:
- 30 days from the cause of action (i.e., 15 days after notice period ends).
Documents Required:
Original bounced cheque.
Cheque return memo.
Copy of legal notice and postal receipt.
Proof of delivery of notice (acknowledgement or tracking report).

7. Court Takes Cognizance

Court examines the complaint and documents.
May record the statement of the complainant on affidavit.
If the court finds prima facie case, it issues summons to the accused.

8. Appearance of Accused

Accused (drawer) appears in court.
Can seek bail or may be arrested if fails to appear.
Court may try for compounding (settlement).

9. Trial Begins

The case proceeds as summary trial (fast-track) as mentioned under Ss. 262-265 CrPC or
court may send the Summon, bailable warrant or not bailable warrant based on the fact and circumstances.
Court try/ preferred that the Case should be disposed of within 6 months.

Evidence by:

Complainant (payee)
Accused (drawer)

Cross-examination and arguments.

10. Judgment

If the accused is found guilty, court may award:
Imprisonment: Up to 2 years.
Fine: Up to double the cheque amount.
Compensation: To the complainant.
If found not guilty, accused is acquitted.

11. Appeal

Either party can appeal to the Sessions Court or High Court depending on the relief sought.

Additional Provisions

Section 139: Presumption in favour of holder that cheque was issued for discharge of debt.
Section 142: Specifies who can file complaint and where.
Section 143A & 148 (amended): Power to order interim compensation during trial or appeal.

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