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A question about Section 138 of the Negotiable Instruments Act, answered in Sanhita with the Act and the cases beside it.

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When is a cheque bounce complaint under Section 138 of the Negotiable Instruments Act maintainable, and what notice must be served first?

Direct answer

A complaint under Section 138 of the Negotiable Instruments Act, 1881, is maintainable when a cheque drawn for the discharge of a debt or other liability is returned unpaid due to insufficient funds or exceeding the arranged amount. This maintainability is subject to three mandatory conditions: timely presentation of the cheque, issuance of a written demand notice, and the drawer’s failure to make payment within fifteen days of receiving the notice.

Statutory basis

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid…

Leading authority

M/s. Rahul Builders v. M/s. Arihant Fertilizers & Chemical & Anr (2007, Supreme Court), on serving a proper notice.

1Statute

The Negotiable Instruments Act, 1881

Section 138, from India Code

Dishonour of cheque for insufficiency, etc., of funds in the account.

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IPC 302BNS 103Murder
IPC 420BNS 318(4)Cheating
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