Updated: 1 September 2026
Section 138 NI Act & Order XXXVII CPC: Cheque Bounce Notice, Limitation and Summary Suit
Cheque dishonour can give rise to both criminal and civil remedies. This guide explains Section 138 of the Negotiable Instruments Act, 1881, the summary-suit procedure under Order XXXVII of the Code of Civil Procedure, 1908, statutory notice periods, limitation, presumptions, interim compensation, appeal deposits and company liability.
Important correction: the summary procedure is under Order XXXVII CPC (Order 37), not Order XXXVIII. Order XXXVIII concerns arrest and attachment before judgment and is a different part of the CPC.
1. DishonourBank returns cheque unpaid.
2. NoticeDemand notice within 30 days of bank information.
3. Payment windowDrawer gets 15 days from receipt.
4. ComplaintFile within one month after cause of action, subject to condonation.
2024 Supreme Court update: Section 143A interim compensation is discretionary, not mandatory. The trial court must assess the prima facie merits, defence and relevant circumstances and give brief reasons before directing payment.
Questions 1-10
| No. | Question | Updated answer |
|---|---|---|
| 1 | What legal remedies are available after cheque dishonour? | A payee or holder in due course may, depending on the facts, file a complaint under Section 138 of the Negotiable Instruments Act, 1881 and may also pursue a civil recovery action. If the claim falls within Order XXXVII CPC, a summary suit may be available. The remedies are distinct and can ordinarily proceed simultaneously. |
| 2 | What is the difference between a Section 138 complaint and an Order XXXVII summary suit? | A Section 138 case is a criminal prosecution for dishonour of a cheque in discharge of a legally enforceable debt or liability, subject to the statutory conditions. An Order XXXVII suit is a civil summary procedure for specified money claims. Its object is recovery, not punishment. |
| 3 | Is leave to defend available in an Order XXXVII suit? | Yes. The defendant must enter appearance and, after service of summons for judgment, may seek leave to defend. Leave is not automatically unavailable. The court considers whether the defence raises a substantial or triable issue and may grant unconditional or conditional leave. |
| 4 | Is court fee payable in an Order XXXVII suit? | Yes. Court fee is payable as in a civil money suit under the applicable Court Fees law and State amendments. The amount is not uniform across India and depends on the claim value and local court-fee law. |
| 5 | Is court fee payable for a Section 138 complaint? | Filing fees and process fees are governed by the applicable State court-fee law, High Court rules and local criminal court practice. There is no single all-India 'small fixed fee' that should be stated without checking the forum. |
| 6 | What is the time limit for issuing the Section 138 demand notice? | The written demand notice must be issued within 30 days of receipt of information from the bank regarding return of the cheque unpaid. |
| 7 | How much time does the drawer get to make payment after receipt of notice? | The drawer gets 15 days from receipt of the notice to pay the cheque amount. If payment is made within that period, the offence under Section 138 is not completed. |
| 8 | What is the limitation for filing the Section 138 complaint? | The complaint must ordinarily be filed within one month from the date on which the cause of action arises after expiry of the 15-day payment period. The proviso to Section 142 permits cognizance after that period if the complainant satisfies the court that there was sufficient cause for delay. |
| 9 | What is the limitation for a civil summary suit on a cheque? | The limitation depends on the nature of the underlying cause of action and the Limitation Act, 1963. A three-year period is common for money claims founded on negotiable instruments or contracts, but the exact starting point and applicable article must be checked from the facts. |
| 10 | Can a Section 138 complaint and a civil recovery suit be filed together? | Yes. A criminal prosecution under Section 138 and a civil recovery suit enforce different legal consequences. Subject to the facts and procedural law, both may proceed simultaneously. |
Questions 11-20
| No. | Question | Updated answer |
|---|---|---|
| 1 | Are original documents always required with an Order XXXVII plaint? | The plaintiff must comply with the CPC, applicable High Court rules and e-filing/document rules. If an original cheque is already filed in a criminal case, the civil court may be informed and appropriate certified copies, inspection or production orders can be sought. There is no universal rule that originals are never required. |
| 2 | Is an offence under Section 138 compoundable? | Yes. Section 147 of the Negotiable Instruments Act makes offences under the Act compoundable, subject to the law laid down by the Supreme Court and the facts of the case. |
| 3 | What is interim compensation under Section 143A? | The trial court may order interim compensation up to 20% of the cheque amount. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024), the Supreme Court held that this power is discretionary, not mandatory, and reasons must be recorded after considering the prima facie case, defence and relevant circumstances. |
| 4 | What is the deposit power under Section 148 during appeal? | In an appeal by the drawer against conviction under Section 138, the appellate court may direct deposit of a sum which shall be a minimum of 20% of the fine or compensation awarded by the trial court, in addition to any interim compensation paid under Section 143A. |
| 5 | Can Section 138 apply where payment was stopped by the drawer? | Yes. A stop-payment instruction does not by itself defeat a Section 138 prosecution. The court still examines whether the cheque represented a legally enforceable debt or liability and whether all statutory requirements are satisfied. |
| 6 | Where are summons served on the accused? | Service is governed by the applicable criminal-procedure provisions and court rules. Summons may be served at the accused's residence, place of business or other legally permissible address, including through modes permitted by the court and applicable electronic-service rules. |
| 7 | What if the complaint limitation has expired? | Do not assume that simply presenting the cheque again will always cure the delay. If the cheque is still within its validity period, successive presentation may generate a fresh cause of action if the statutory requirements are fulfilled. Separately, the proviso to Section 142 allows the court to condone delay on sufficient cause. |
| 8 | What are the main ingredients of Section 138? | The cheque must be drawn on an account maintained by the drawer; it must be issued for discharge, wholly or partly, of a legally enforceable debt or other liability; it must be presented within its validity period; it must be returned unpaid; the statutory demand notice must be issued within 30 days; and the drawer must fail to pay within 15 days of receipt of notice. |
| 9 | What is the usual validity period of a cheque? | RBI directions provide that banks should not make payment of cheques, drafts, pay orders or banker's cheques presented beyond three months from the date of the instrument. |
| 10 | Is a legally enforceable debt or liability necessary? | Yes. Section 138 applies only where the cheque was issued for discharge, in whole or in part, of a legally enforceable debt or other liability. |
Questions 21-31
| No. | Question | Updated answer |
|---|---|---|
| 1 | What is a cheque? | Under Section 6 of the Negotiable Instruments Act, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, including electronic forms recognized by the Act. |
| 2 | Is a statutory demand notice mandatory? | Yes. A written demand notice complying with Section 138(b) is a condition precedent to a complaint. The notice must be issued within 30 days from receipt of information from the bank about dishonour. |
| 3 | What documents are commonly required for a Section 138 complaint? | Common documents include the cheque, bank return memo, copy of the statutory demand notice, proof of dispatch/service, relevant account or transaction documents and the complaint with affidavit or sworn statement as required by law and local rules. |
| 4 | When does the court issue summons? | After examining the complaint and supporting material and taking cognizance, the Magistrate may issue process if sufficient grounds exist. Summons is not an automatic administrative step merely because a complaint has been filed. |
| 5 | What is the punishment under Section 138? | On conviction, the court may impose imprisonment up to two years, or fine up to twice the amount of the cheque, or both, subject to sentencing law and compensation powers. |
| 6 | Does a cheque issued purely as a gift or donation attract Section 138? | A cheque issued purely as a gift or donation, without any legally enforceable debt or liability, ordinarily does not satisfy Section 138. The label given by the parties is not conclusive; the real transaction must be examined. |
| 7 | What are the practical consequences of cheque dishonour? | Possible consequences include bank return charges, civil recovery proceedings, criminal prosecution under Section 138 where the ingredients are met, commercial consequences and credit-profile effects depending on the banking or lending relationship. There is no universal rule that every cheque bounce automatically lowers a credit score. |
| 8 | Who bears the burden regarding legally enforceable debt? | Sections 118 and 139 create rebuttable presumptions in favour of the holder once foundational facts such as execution/signature are established. The accused may rebut the presumption on the standard applicable in law. The complainant does not always have to prove the debt as though starting from zero. |
| 9 | Is the signatory of the cheque automatically liable in every case? | The drawer/signatory is ordinarily the principal person proceeded against under Section 138, but liability still depends on the statutory ingredients and available defences. Where the cheque is issued by a company, Section 141 governs vicarious liability of persons in charge and responsible for its business. |
| 10 | What is the legal effect of a voluntarily signed blank cheque? | A voluntarily signed cheque handed over in connection with a transaction can attract the statutory presumptions even if particulars were later filled in, subject to rebuttal by the accused. Liability still requires proof of the statutory ingredients and a legally enforceable debt or liability. |
| 11 | Must the company be made an accused when the cheque is issued on behalf of a company? | Ordinarily yes for prosecution invoking Section 141. In Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd., the Supreme Court held that arraigning the company as an accused is imperative for maintaining prosecution against persons on the basis of vicarious liability, subject to limited situations where prosecution of the company is legally impossible. |
Territorial jurisdiction for Section 138 complaints
Jurisdiction is governed by Sections 142(2) and 142A of the Negotiable Instruments Act. Broadly, where the cheque is delivered for collection through an account, jurisdiction lies with the court where the payee or holder in due course maintains the bank account into which the cheque was delivered for collection. Where the cheque is presented otherwise than through an account, the statutory rule points to the branch of the drawee bank where the drawer maintains the account. The facts of presentation should always be checked before filing.
Order XXXVII CPC: practical points
Order XXXVII applies only to classes of suits specified in the Order, including certain suits upon bills of exchange, hundies and promissory notes and specified liquidated demands. The plaint must state that it is filed under Order XXXVII and that no relief outside the scope of the Order is claimed. A defendant who is served must follow the special appearance and leave-to-defend procedure; failure to do so can result in the allegations being deemed admitted and a decree being passed.
Official legal sources
For authoritative verification refer to India Code, Supreme Court of India, Reserve Bank of India and the relevant High Court or District Court website for local filing, court-fee, e-filing and process rules.
Disclaimer: limitation, jurisdiction, court fee, documentary requirements and procedure can depend on the facts, State amendments and local court rules. This page is for general legal education and should not replace case-specific legal advice.