INTRODUCTION

A bounced cheque can transform an ordinary payment issue into a serious criminal matter under the Section 138 NI Act. This blog simplifies what the Section 138 NI Act entails, outlining the sequence of legal steps a payee must take, common defenses, potential penalties, and practical advice for handling a dishonoured cheque, whether you are receiving or issuing one. For expert guidance on matters related to the Section 138 NI Act in Patna, you can consult a dedicated advocate like Shrishti Rani, who practices in the Patna civil court.

What is Section 138?

Section 138 criminalizes the situation in which a cheque sent to pay off a debt or other obligation is returned to the bank unpaid due to lack of money or where the sum is greater than an agreed overdraft. Simply put, when you write a cheque to settle a debt and it bounces due to those reasons, the person to whom you have sent the cheque can send you a demand notice—and when you still do not pay, complain to a criminal court.

Elements of the offense

A successful Section 138 prosecution generally requires the complainant (who is the payee/holder) to prove:

• The payer had a legally binding debt or a liability.
• A cheque was drawn in discharge of that debt.
• The cheque was given to the bank and dishonored due to lack of funds or overarranged overdraft.
• The payer issued a written demand notice to the drawer during the statutory time.
• The drawer did not pay the money within a 15-day time period after receiving the notice.
• Assuming that these are established, Section 138 may be established.

Timelines that you should know

• Timing regulations are rigid; continue to miss them, and your case may be blocked.
• Presentation of cheque: A cheque should generally be deposited to the bank within three months of the date on the cheque. 
• Legal notice (demand notice): Once the payee has received the cheque return memo from the bank, he has to send a written demand notice to the drawer within 30 days of receiving the memo. 
• Cure period of 15 days: When the drawer is presented with the notice of the demand, he has 15 days to pay up. When they do not achieve success, the cause of action occurs. 
• Submission of the complaint: The complainant needs to submit the criminal complaint within one month of the date of occurrence of the cause of action (i.e., 30 days after the expiry of the cure period of 15 days).
• In some cases, courts excuse delay when there is adequate reason to do so, although it is unsafe to count on that. 

What can the drawer be subjected to?

• A drawer who is found guilty under Section 138 can be sentenced to not less than 2 years imprisonment or to a fine that can be up to twice the amount of cheque or both.
• The courts have construed that the fines are supposed to be proportional and can be given to pay off the complainant. 

Ordinary defenses that the drawer can raise

Some standard defenses are

• The cheque was not given in discharge of an enforceable debt (it was a gift or token).
• This was paid prior to the filing of a complaint (evidence of payment, receipts, bank records).
• Cheque was postdated and brought out too soon or after an unreasonable delay (stale cheque).
• Cheque signature made in error.

Caution: There are certain statutory presumptions favoring the payee, which simplify his case, but good documentary evidence will overcome presumptions.

What can an advocate do, and why is local representation in Patna important?

A qualified lawyer will:

• Write and post a legally valid demand notice (correct form, evidence of dispatch). 
• Gather bank memos, presentation receipts, and other evidence.
• Choose between negotiating terms of payment and making a criminal complaint.
• Appear on your behalf in the magistrate court and defend or prosecute on trial, or settle.

Practical checklist: Would you like to proceed as a payer

• Hold the bank dishonor memo (this starts the clock).
• Pay the cheque in 3 months of the date on cheque. 
• Give demand notice within 30 days—through registered post or courier with acknowledgement or legal notice through an advocate. Keep proof. 
• Wait 15 days—failure to pay—file complaint within 30 days. 
• Record everything and maintain all the communications and bank accounts; get a lawyer early.

Conclusion

Section 138 of the NI Act is a potent clause that would protect creditors and help them be more financially disciplined. It has tight deadlines and documentary conditions, though. When the cheque you are to receive is bounced, be fast and save the bank memo, issue a legal demand letter within 30 days, and seek the help of an expert lawyer in Patna to present the complaint. As a drafter, you should respond promptly to a notice and employ the services of an attorney in order to avoid criminal liability.

If you are in Patna and need help, reach out to Advocate Shrishti Rani—experienced in Patna civil court matters—or any qualified best lawyer in Patna you trust for personalized legal representation.

Contact Advocate Shrishti Rani for expert divorce legal guidance: +91 89202 07918.