Cheque Bounce — Section 138, Negotiable Instruments Act

Last updated: 11 July 2026 · General legal information, not legal advice

The chamber represents both complainants (payees recovering money) and accused persons (drawers defending or seeking quashing) in Section 138 proceedings before the Magistrate courts at Faridabad, appeals before the Sessions Court, and quashing petitions before the Punjab & Haryana High Court. Faridabad's industrial and trading base makes cheque dishonour one of the most common commercial disputes in the district — the process below is exactly how it unfolds.

The complete timeline (the case lives or dies on these dates)

Missing the notice or filing window is usually fatal to the complaint, though courts can condone delay in filing for sufficient cause under Section 142(1)(b) proviso. A cheque can be presented more than once within its validity, and the cause of action can be founded on a subsequent dishonour.

What the complainant must establish

• The cheque was issued towards a legally enforceable debt or liability — not a gift or a time-barred debt. Section 139 raises a statutory presumption in the payee's favour; the burden shifts to the drawer to rebut it.
• Dishonour for insufficiency of funds, "exceeds arrangement", account closed, or stop payment without valid reason — all treated as deemed dishonour by the courts.
• Strict compliance with the notice and filing timeline above. Courts have accepted properly served notices by email and WhatsApp where IT Act requirements are met (Rajendra v. State of U.P., Allahabad High Court, 2024).

Where the case is filed — jurisdiction after the 2015 amendment

Under Section 142(2), inserted by the 2015 amendment, the complaint lies before the Magistrate having jurisdiction over the branch of the bank where the payee maintains the account and presented the cheque. For a payee banking in Faridabad, this means the Judicial Magistrate courts at the District Court complex, Sector 12, Faridabad — regardless of where the drawer lives. All subsequent complaints against the same drawer are consolidated before the same court under Section 142A.

Trial, interim compensation, and appeal

1. Cognizance & summons: the Magistrate examines the complaint and documents (cheque, return memo, notice, postal receipts) and summons the accused. Trial proceeds as a summons case, with the mandate of Section 143 for expeditious, day-to-day trial.
2. Interim compensation: under Section 143A, the court may direct the accused to pay up to 20% of the cheque amount to the complainant during the trial itself.
3. Evidence: complainant's affidavit evidence is permitted (Section 145); the Section 139 presumption frames the defence burden.
4. Judgment & sentence: up to 2 years' imprisonment, or fine up to twice the cheque amount, or both. Courts routinely use the fine to compensate the complainant.
5. Appeal: to the Sessions Court, Faridabad; under Section 148, the appellate court can require deposit of at least 20% of the fine/compensation. Further challenge lies to the Punjab & Haryana High Court.

Defending a Section 138 case

Common defence lines include: absence of a legally enforceable debt (loan already repaid, security cheque misused, time-barred debt), material alteration of the cheque, notice defects, limitation defects, and lack of vicarious liability. Where a company's cheque bounces, Section 141 extends liability to the company and the persons in charge of its business at the time — but a director who was not responsible for day-to-day affairs can contest summoning. Where the complaint is fundamentally defective, a quashing petition under Section 528 BNSS before the Punjab & Haryana High Court is the remedy.

Settlement — possible at every stage

The offence is compoundable. Parties can settle before the Magistrate, in appeal, or even later; in Damodar S. Prabhu v. Sayed Babalal H. (2010), the Supreme Court prescribed graded costs for compounding at later stages — settling early costs nothing extra, settling in appeal costs more. In practice, a large share of Faridabad Section 138 matters resolve through settlement, often at the Lok Adalats held at the Sector 12 complex.

Frequently asked questions