Steps of a 138 NI Act Case in India – Complete Guide

• admin
• Section 138 NI Act
• December 8, 2025

A cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881, is a criminal proceeding initiated when a cheque is dishonoured due to insufficient balance or other legally valid reasons. This law ensures financial discipline and protects the rights of the payee.

Below is a step-by-step explanation of the legal process involved in a 138 NI Act case:

Step 1: Dishonour of Cheque

The process begins when:

• The payee presents the cheque to the bank.
  
• The bank returns the cheque unpaid due to:
  
  • Insufficient funds
    
  • Account closed
    
  • Payment stopped
    
  • Signature mismatch
    

The bank issues a Cheque Return Memo stating the reason for dishonour.

Step 2: Sending of Legal Demand Notice (Within 30 Days)

The payee must send a written legal notice to the drawer:

• Within 30 days from the date of cheque return.
  
• Demanding payment of the cheque amount.
  

This notice is mandatory under Section 138.

Step 3: 15-Day Waiting Period

After receiving the notice:

• The drawer gets 15 days to make the payment.
  
• If payment is made → The matter ends.
  
• If not → Legal action begins.
  

Step 4: Filing of Complaint (Within 30 Days After Notice Period)

If no payment is made within 15 days:

• The complainant can file a criminal complaint under Section 138 NI Act.
  
• The case must be filed within 30 days after the notice period expires.
  
• Filed before the Judicial Magistrate having jurisdiction.
  

Step 5: Cognizance by Court

The Magistrate:

• Examines the complaint and documents.
  
• If a prima facie case is found:
  
  • Takes cognizance.
    
  • Issues summons to the accused.
    

Step 6: Appearance of Accused

The accused appears before the court and:

• Is usually granted bail.
  
• Signs a personal bond.
  

Step 7: Plea of the Accused

The accused:

• Pleads guilty → Court may pass immediate order.
  
• Pleads not guilty → Trial begins.
  

Step 8: Pre-Trial Proceedings / Settlement

The court may:

• Encourage compounding or settlement.
  
• If settlement fails → The trial continues.
  

Step 9: Complainant’s Evidence

The complainant submits:

• Affidavit of evidence.
  
• Original cheque.
  
• Bank return memo.
  
• Legal notice.
  
• Postal receipts and acknowledgment.
  

Step 10: Cross-Examination of Complainant

The defence lawyer:

• Cross-examines the complainant.
  
• Tries to disprove liability or validity of the cheque.
  

Step 11: Defence Evidence

The accused may:

• Produce documents.
  
• Examine defence witnesses.
  
• Or choose not to lead any evidence.
  

Step 12: Final Arguments

Both parties:

• Present their final oral arguments.
  
• Submit written submissions (if permitted).
  

Step 13: Judgment

The court delivers judgment:

• Conviction, OR
  
• Acquittal
  

Step 14: Sentence / Compensation

If convicted, the accused may face:

• Imprisonment up to 2 years, OR
  
• Fine up to twice the cheque amount, OR
  
• Both
  
• The court may also order compensation to the complainant.
  

Step 15: Appeal / Revision

Either party may:

• File an appeal before the Sessions Court.
  
• Later approach the High Court if required.
  

Conclusion

A cheque bounce case under the 138 NI Act follows a strict legal timeline. Missing any deadline – especially the notice period or complaint filing period – can result in dismissal. Therefore, legal guidance is strongly advised at every stage.