Key points on cheque dishonour under Section 138
Cheque validityPresent the cheque within its validity period. RBI directions provide a three-month validity period for cheques, drafts, pay orders and banker's cheques.
Demand noticeThe payee or holder in due course must issue the statutory written demand notice within 30 days of receiving information from the bank about dishonour.
Time to payThe drawer gets 15 days from receipt of the statutory notice to make payment.
PunishmentOn conviction, imprisonment may extend to two years, or fine may extend to twice the cheque amount, or both.
Complaint timeline: Under Section 142, a complaint is ordinarily to be made within one month from the date on which the cause of action arises under Section 138(c), subject to the court's power to condone delay on sufficient cause.
Important later provisions
Section 142A: validates transfer of pending cheque-dishonour cases in accordance with the statutory jurisdiction rules.
Section 143A: permits the trial court, in specified Section 138 proceedings, to order interim compensation up to 20% of the cheque amount. The statute also provides timelines and refund consequences if the drawer is acquitted.
Section 148: in an appeal by the drawer against conviction under Section 138, the appellate court may order a deposit of at least 20% of the fine or compensation awarded by the trial court, in addition to interim compensation under Section 143A.
This page is an informational overview. For filing, limitation and jurisdiction in a specific matter, verify the current statutory text and applicable court decisions.
Chapter-wise section index
Chapter I: Preliminary
- Section 1 - Short title
- Section 2 - Repeal of enactments
- Section 3 - Interpretation clause
Chapter II: Notes, Bills and Cheques
- Section 4 - Promissory Note
- Section 5 - Bill of exchange
- Section 6 - Cheque
- Section 7 - Drawer, Drawee
- Section 8 - Holder
- Section 9 - Holder in Due Course
- Section 10 - Payment in due Course
- Section 11 - Inland Instrument
- Section 12 - Foreign Instrument
- Section 13 - Negotiable Instrument
- Section 14 - Negotiation
- Section 15 - Endorsement
- Section 16 - Endorsement in blank and in full endorsee
- Section 17 - Ambiguous instruments
- Section 18 - Where amount is stated differently in figures and words
- Section 19 - Instruments payable on demand
- Section 20 - Inchoate stamped instruments
- Section 21 - At sight, On presentment, After sight
- Section 22 - Maturity
- Section 23 - Calculating maturity of bill or note payable so many months after date or sight
- Section 24 - Calculating maturity of bill or note payable so many days after date or sight
- Section 25 - When day of maturity is a holiday
Chapter III: Parties to Notes, Bills and Cheques
- Section 26 - Capacity to make, etc., the promissory notes, etc
- Section 27 - Agency
- Section 28 - Liability of agent signing
- Section 29 - Liability of legal representative signing
- Section 30 - Liability of drawer
- Section 31 - Liability of drawee of cheque
- Section 32 - Liability of maker of note and acceptor of bill
- Section 33 - Only drawee can be acceptor except in need or for honour
- Section 34 - Acceptance by several drawees not partners
- Section 35 - Liability of indorser
- Section 36 - Liability of prior parties to holder in due course
- Section 37 - Maker, drawer and acceptor principals
- Section 38 - Prior party a principal in respect of each subsequent party
- Section 39 - Suretyship
- Section 40 - Discharge of indorser's liability
- Section 41 - Acceptor bound, although, indorsement forged
- Section 42 - Acceptance of bill drawn in fictitious name
- Section 43 - Negotiable instrument made, etc., without consideration
- Section 44 - Partial absence or failure of money-consideration
- Section 45 - Partial failure of consideration not consisting of money
- Section 45A - Holder's right to duplicate of lost bill
Chapter IV: Of Negotiation
- Section 46 - Delivery
- Section 47 - Negotiation by delivery
- Section 48 - Negotiation by indorsement
- Section 49 - Conversion of indorsement in blank into indorsement in full
- Section 50 - Effect of indorsement
- Section 51 - Who may negotiate
- Section 52 - Indorser who excludes his own liability or makes it conditional
- Section 53 - Holder deriving title from holder in due course
- Section 54 - Instrument indorsed in blank
- Section 55 - Conversion of indorsement in blank into indorsement in full
- Section 56 - Indorsement for part of sum due
- Section 57 - Legal representative cannot by delivery only negotiate instrument indorsed by deceased
- Section 58 - Instrument obtained by unlawful means or for unlawful consideration
- Section 59 - Instrument acquired after dishonour or when overdue
- Section 60 - Instrument negotiable till payment or satisfaction
Chapter V: Of Presentment
- Section 61 - Presentment for acceptance
- Section 62 - Presentment of promissory note for sight
- Section 63 - Drawee's time for deliberation
- Section 64 - Presentment for payment
- Section 65 - Hours for presentment
- Section 66 - Presentment for payment of instrument payable after date or sight
- Section 67 - Presentment for payment of promissory note payable by installments
- Section 68 - Presentment for payment of instrument payable at specified place and not elsewhere
- Section 69 - Instrument payable at specified place
- Section 70 - Presentment where no exclusive place specified
- Section 71 - Presentment when maker, etc., has no known place of business or residence
- Section 72 - Presentment of cheque to charge drawer
- Section 73 - Presentment of cheque to charge any other person
- Section 74 - Presentment of instrument payable on demand
- Section 75 - Presentment by or to agent, representative of deceased, or assignee of insolvent
- Section 76 - When presentment unnecessary
- Section 77 - Liability of banker for negligently dealing with bill presented for payment
- Section 75A - Excuse for delay in presentment for acceptance or payment
Chapter VI: Of Payment and Interest
Chapter VII: Of Discharge from Liability on Notes, Bills and Cheques
- Section 82 - Discharge from liability
- Section 83 - Discharge by allowing drawee more than forty-eight hours to accept
- Section 84 - When cheque not duly presented and drawer damaged thereby
- Section 85 - Cheque payable to order
- Section 86 - Parties not consenting discharged by qualified or limited acceptance
- Section 87 - Effect of material alteration
- Section 88 - Acceptor or indorser bound notwithstanding previous alteration
- Section 89 - Payment of instrument on which alteration is not apparent
- Section 90 - Extinguishment of rights of action on bill in acceptor's hands
- Section 85A - Drafts drawn by one branch of a bank on another payable to order
Chapter VIII: Of Notice of Dishonour
- Section 91 - Dishonour by non-acceptance
- Section 92 - Dishonour by non-payment
- Section 93 - By and to whom notice should be given
- Section 94 - Mode in which notice may be given
- Section 95 - Party receiving must transmit notice of dishonour
- Section 96 - Agent for presentment
- Section 97 - When party to whom notice given is dead
- Section 98 - When notice of dishonour is unnecessary
Chapter IX: Of Noting and Protest
Chapter X: Of Reasonable Time
Chapter XI: Of Acceptance and Payment for Honour and Reference in Case of Need
- Section 108 - Acceptance for honour
- Section 109 - How acceptance for honour must be made
- Section 110 - Acceptance not specifying for whose honour it is made
- Section 111 - Liability of acceptor for honour
- Section 112 - When acceptor for honour may be charged
- Section 113 - Payment for honour
- Section 114 - Right of payer for honour
- Section 115 - Drawee in case of need
- Section 116 - Acceptance and payment without protest
Chapter XII: Of Compensation
Chapter XIII: Special Rules of Evidence
- Section 118 - Presumptions as to negotiable instruments
- Section 119 - Presumption on proof of protest
- Section 120 - Estoppel against denying original validity of instrument
- Section 121 - Estoppel against denying capacity of payee to indorse
- Section 122 - Estoppel against denying signature or capacity of prior party
Chapter XIV: Of Crossed Cheques
- Section 123 - Cheque crossed generally
- Section 124 - Cheque crossed specially
- Section 125 - Crossing after issue
- Section 126 - Payment of cheque crossed generally
- Section 127 - Payment of cheque crossed specially more than once
- Section 128 - Payment in due course of crossed cheque
- Section 129 - Payment of crossed cheque out of due course
- Section 130 - Cheque bearing not negotiable
- Section 131 - Non-liability of banker receiving payment of cheque
- Section 131A - Application of Chapter to drafts
Chapter XV: Of Bills in Sets
Chapter XVI: Of International Law
Chapter XVII: Penalties in Case of Dishonour of Certain Cheques
- Section 138 - Dishonour of cheque for insufficiency, etc., of funds in the account
- Section 139 - Presumption in favour of holder
- Section 140 - Defence which may not be allowed in any prosecution under section 138
- Section 141 - Offences by companies
- Section 142 - Cognizance of offences
- Section 142A - Validation for transfer of pending cases
- Section 143 - Power of Court to try cases summarily
- Section 143A - Power to direct interim compensation
- Section 144 - Mode of service of summons
- Section 145 - Evidence on affidavit
- Section 146 - Bank's slip prima facie evidence of certain facts
- Section 147 - Offences to be compoundable
- Section 148 - Power of Appellate Court to order payment pending appeal against conviction