Cheque Dishonour Under Section 138 NI Act: Timelines & Court Procedure

When a bank returns a cheque unpaid with remarks such as "Insufficient Funds" or "Exceeds Arrangement", Section 138 of the Negotiable Instruments Act, 1881 provides a potent statutory remedy. However, Section 138 cases are strictly governed by statutory limitation periods — a delay of even one day at any stage can dismiss the case as time-barred.

Strict Timeline for Filing a Cheque Dishonour Case

• Step 1: Cheque Presentation — Present the cheque to the drawee bank within its validity period (usually 6 months from the date written on the cheque).
• Step 2: Statutory Legal Notice (Within 30 Days) — Within 30 days of receiving the written Dishonour Memo from the bank, you must issue a formal Legal Demand Notice via Registered Post with A/D, personal delivery, or national newspaper publication.
• Step 3: 30-Day Payment Window — The drawer is granted exactly 30 days from the date of receipt of the legal notice to clear the dishonoured amount.
• Step 4: Filing Complaint Before Magistrate (Within Next 30 Days) — If the drawer fails to pay within 30 days, the cause of action arises. You must file a formal complaint under Section 138/141 before the Metropolitan Magistrate (CMM) or Chief Judicial Magistrate (CJM) within the next 30 days.

Statutory Punishments Under Section 138:

Upon conviction, the court may sentence the offender to imprisonment for a term up to one year, or with a fine which may extend to thrice the amount of the cheque, or with both.