Cheque dishonour proceedings under section 138 of the Negotiable Instruments Act 1881 are a fast and effective creditor remedy — provided the strict statutory timeline is observed.
The critical timeline
- Present the cheque within its validity period
- On dishonour, obtain the bank's return memo
- Serve a legal notice on the drawer within 30 days of receiving notice of dishonour
- Wait 30 days from service for the drawer to pay
- File the complaint within 30 days of that period expiring
These periods are jurisdictional. A complaint filed outside them is liable to be dismissed regardless of the merits of the underlying debt.
What you must prove
- The cheque was drawn on an account maintained by the accused
- It was issued to discharge a legally enforceable debt or liability
- It was dishonoured for insufficiency of funds or exceeding arrangement
- Notice was validly served and payment was not made within the statutory period
Common defences
Drawers commonly argue that the cheque was issued as security rather than in discharge of a debt, that it was materially altered, or that notice was not validly served. Preserving your documentary trail from the outset largely neutralises these arguments.
Practical advice
Diarise every deadline the moment a cheque is returned. Send the legal notice by a method that produces proof of service. And keep the underlying contract, invoices and account statements together — the criminal complaint succeeds or fails on the strength of the civil debt behind it.