When a cheque given to you for a debt is returned unpaid, the law gives you a criminal remedy under Section 138 of the Negotiable Instruments Act, 1881. The remedy works on a strict timetable, and a missed date can sink an otherwise strong case.
1. Present the cheque while it is valid
A cheque is generally valid for three months from its date. It must be presented to the bank within that period.
2. Send a demand notice within 30 days
Once the bank returns the cheque with a memo, you have 30 days from receiving that information to send a written demand notice to the drawer asking for payment.
3. Wait 15 days for payment
The drawer has 15 days from receiving the notice to pay. If they pay, the matter ends there.
4. File the complaint within one month
If no payment arrives, the complaint must be filed before the Magistrate within one month after the 15-day period ends. Courts can condone delay for good reason, but you should not count on it.
What to keep safe
- The original cheque and the bank's return memo
- Proof of the underlying debt: invoices, loan papers or messages
- A copy of the notice and the postal or courier receipt
During the trial the court may order the accused to pay interim compensation, and settlement is possible at any stage.
