Filing a cheque-bounce complaint — where, when, and how

A bounced cheque does not automatically become a criminal case. The payee converts the grievance into a prosecution by filing a written complaint under Section 142 of the Negotiable Instruments Act, 1881, before a Judicial Magistrate of the First Class or a Metropolitan Magistrate, within one month of the cause of action accruing under clause (c) of the proviso to Section 138. Section 142(2), inserted by the 2015 amendment, then fixes the court — the Magistrate within whose territorial jurisdiction the branch of the bank where the payee maintains the account is situated. Section 143 directs the case to be tried summarily; Section 143A allows interim compensation up to twenty per cent of the cheque amount during pendency; Sections 144 to 146 carry the rules on service of summons, affidavit evidence and the bank-memo presumption. The Constitution Bench in K Bhaskaran v Sankaran Vaidhyan Balan, (1999) 7 SCC 510 broke the offence into five constituent acts, and the procedural template in Indian Bank Association v Union of India, (2014) 5 SCC 590 supplies the trial-court route map every Magistrate now follows. This guide sets out the court, the clock and the document chain a payee needs to file a Section 138 complaint after the 2015 jurisdiction reset.

A Section 138 prosecution is the only criminal route a payee has against the drawer of a dishonoured cheque, and it is hedged by a tight statutory timetable. The cheque must have been presented within three months of its date (or its validity period, whichever is earlier) under proviso (a) to Section 138; the demand notice must have been issued in writing within thirty days of receipt of bank intimation under proviso (b); the drawer's fifteen-day window to pay under proviso (c) must have expired; and the complaint must be filed within one month of the date on which that fifteen-day window closed, under Section 142(1)(b). Miss any of these windows and the complaint is liable to be dismissed at the threshold. The 2002 amendment introduced a proviso to Section 142 allowing the Magistrate to condone delay on a showing of sufficient cause; the 2015 amendment rewrote Section 142(2) to fix jurisdiction at the payee's bank branch and overrule the contrary position taken in Dashrath Rupsingh Rathod v State of Maharashtra, (2014) 9 SCC 129; and the 2018 amendment inserted Section 143A to allow interim compensation. The procedural map is now stable. The question for the payee is how to execute it.

Cognizance under Section 142 — the one-month clock

Section 142(1)(a) of the Negotiable Instruments Act, 1881 carries a non-obstante clause overriding the Code of Criminal Procedure, 1973 and confirms that cognizance of an offence under Section 138 can be taken only on a written complaint made by the payee or, as the case may be, the holder in due course of the cheque. Section 142(1)(b) sets the limitation — the complaint must be made within one month of the date on which the cause of action arose under clause (c) of the proviso to Section 138. The cause of action under clause (c) accrues on the day immediately after the fifteen-day notice period expires without payment. Section 142(1)(c) restricts the trying court to a Metropolitan Magistrate or a Judicial Magistrate of the First Class.

The proviso to Section 142(1)(b), inserted by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, allows the court to take cognizance of a complaint filed after the one-month period if the complainant satisfies the court that he had sufficient cause for not making the complaint within that period. The proviso is a self-contained condonation regime — Section 5 of the Limitation Act, 1963 is not invoked separately. The Supreme Court's exposition in Subodh S Salaskar v Jayprakash M Shah, (2008) 13 SCC 689 confirms that the amendment confers a fresh discretion on the Magistrate and that the sufficient-cause threshold is to be applied with the object of the statute in mind, not as a routine hurdle.

The cause of action does not arise from the dishonour alone. The Constitution Bench in K Bhaskaran v Sankaran Vaidhyan Balan, (1999) 7 SCC 510 broke the offence into five constituent acts — (i) drawing of the cheque; (ii) presentation of the cheque to the bank; (iii) returning of the cheque unpaid by the drawee bank; (iv) giving notice in writing to the drawer demanding payment of the cheque amount; and (v) failure of the drawer to make the payment within fifteen days of receipt of the notice. All five must concatenate; the limitation under Section 142(1)(b) runs from the day immediately after the fifteenth day following receipt of the notice — not from the day of dishonour or the day the notice was sent. The distinction between "giving" and "receipt" of the notice — settled in Dalmia Cement (Bharat) Ltd v Galaxy Traders & Agencies Ltd, AIR 2001 SC 676 — is determinative for the limitation calculation.

Where the cheque has been presented more than once and dishonoured each time, the three-judge Bench in M S R Leathers v S Palaniappan, (2013) 1 SCC 177 overruled the earlier position in Sadanandan Bhadran v Madhavan Sunil Kumar, (1998) 6 SCC 514 and held that a fresh cause of action accrues on each presentation-dishonour-notice cycle, provided the payee has not already issued a statutory notice on an earlier dishonour and let the limitation expire. Successive prosecutions on successive defaults are permissible so long as the proviso conditions are satisfied each time.

Section 142(2) — jurisdiction at the payee's bank branch

The jurisdictional regime under Section 138 has shifted twice. In K Bhaskaran v Sankaran Vaidhyan Balan, (1999) 7 SCC 510 the Court read Section 178(d) of the Code of Criminal Procedure, 1973 with the five constituent acts to hold that any court within whose territorial limits any one of the five acts had been performed could try the offence — a near-five-courts-for-one-cheque rule that gave payees substantial forum choice. Dashrath Rupsingh Rathod v State of Maharashtra, (2014) 9 SCC 129 reversed that approach and limited jurisdiction to the court within whose territorial limits the drawee bank (the bank on which the cheque was drawn) was located — pulling almost all Section 138 cases to the drawer's bank's address and triggering wholesale transfers of pending prosecutions.

The Negotiable Instruments (Amendment) Act, 2015 — which received Presidential assent on 26 December 2015 with retrospective effect from 15 June 2015 — substituted Section 142(2) and inserted Section 142A to overrule Dashrath Rupsingh. The new Section 142(2) reads, in substance, that the offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction the branch of the bank where the payee or holder in due course maintains the account is situated (where the cheque is delivered for collection through an account), or where the drawee branch of the bank is situated (where the cheque is presented for payment over the counter). Section 142A retrospectively transferred pending cases to the courts now competent under Section 142(2).

The Supreme Court in Bridgestone India Pvt Ltd v Inderpal Singh, (2016) 2 SCC 75 confirmed that the amended Section 142(2) operates with retrospective effect from 15 June 2015 and that all complaints filed after that date are governed by the new jurisdictional rule, even if the cause of action accrued earlier. Cases filed before 15 June 2015 continue under the Dashrath Rupsingh framework. The practical effect for the payee is that the complaint is now to be filed where the payee banks — the payee's branch where the dishonoured cheque was deposited for collection — and not where the drawer banks.

Pleadings — what the complaint must contain

The complaint under Section 142 is a written document drafted in the form of a private criminal complaint addressed to the Magistrate. The Section 138 offence has multiple ingredients, and the complaint must aver each. The Supreme Court in Indian Bank Association v Union of India, (2014) 5 SCC 590 directed Magistrates to ensure that every complaint contains the material particulars before summons is issued — a failure to plead any constituent ingredient is fatal at the threshold under Section 203 of the Code of Criminal Procedure, 1973 [Section 226 of the Bharatiya Nagarik Suraksha Sanhita, 2023].

The standard particulars are eight — (i) the parties' description and addresses, with the drawer's address read from the cheque; (ii) the existence of a legally enforceable debt or other liability, with a description of the transaction in which the cheque was issued; (iii) the date of drawing the cheque, the cheque number, the cheque amount, the drawee bank and branch; (iv) the date of presentation through the payee's bank, with the bank-deposit memo; (v) the date and ground of dishonour, with the drawee bank's return memo annexed; (vi) the date and manner of the demand notice under proviso (b) to Section 138, with the postal receipt and the acknowledgement-due card (or the returned envelope where service was refused or returned unclaimed); (vii) the failure of the drawer to make payment within fifteen days of receipt of the notice; and (viii) the jurisdictional fact under Section 142(2) — that the payee's bank branch (where the cheque was deposited for collection) lies within the territorial limits of the court being addressed.

Where the drawer is a company or other juristic person, Section 141 of the Negotiable Instruments Act, 1881 attaches vicarious criminal liability to every person who, at the time the offence was committed, was in charge of and responsible to the company for the conduct of its business. The Constitution Bench in S M S Pharmaceuticals Ltd v Neeta Bhalla, (2005) 8 SCC 89 held that a specific averment of role and responsibility is essential — a bald repetition of the statutory formula will not suffice — and the Constitution Bench in Aneeta Hada v Godfather Travels & Tours Pvt Ltd, (2012) 5 SCC 661 confirmed that the company itself must be arraigned as an accused before the natural-person directors can be prosecuted. A complaint that arraigns only the directors and not the company is liable to be quashed.

Where the payee is a company — authorisation and power of attorney

Section 142 requires the complaint to be by the payee or holder in due course. Where the payee is a company, the complaint is filed through an authorised representative — typically an officer of the company holding a board resolution or a power of attorney authorising him to file and prosecute the Section 138 complaint. The Constitution Bench in A C Narayanan v State of Maharashtra, (2014) 11 SCC 790 settled three points — first, an authorised representative under a power of attorney can file a Section 138 complaint and depose on oath as a witness; second, the complaint must contain an averment of the basis of the representative's knowledge of the underlying transaction; and third, the power of attorney should be filed with the complaint or, at the latest, produced before the Magistrate at the verification stage.

The Supreme Court in M M T C Ltd v Medchl Chemicals and Pharma Pvt Ltd, AIR 2002 SC 182 confirmed that the eligibility criterion under Section 142 is satisfied as long as the complaint is in the name and on behalf of the payee company; the company may, at any stage, send a different competent representative without affecting the complaint's maintainability. The recurring drafting mistake is to file the complaint in the name of the authorised representative rather than the company — a defect that can be cured by amendment but that invites avoidable threshold litigation.

Filing — court fee, verification, and the Section 200 examination

The complaint is filed in the relevant Magistrate's court along with — the original cheque (or a certified copy, with the original produced for inspection), the original bank return memo, the original demand notice with its postal proofs, the original acknowledgement card or returned envelope, a certified copy of the board resolution or power of attorney where the payee is a company, a list of witnesses, a list of documents, the court fee per the state court-fee schedule, and the process fee for issuance of summons. The court fee on a Section 138 complaint is a fixed sum under the state Court Fees Act — typically a modest figure not linked to the cheque amount.

On presentation, the complainant or the authorised representative is examined on oath by the Magistrate under Section 200 of the Code of Criminal Procedure, 1973 [Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023]. The examination is brief and confirms the substance of the complaint and the deponent's authority. The Magistrate then has a choice under Section 202 [Section 225 of the BNSS, 2023] — to take cognizance and issue process under Section 204 [Section 227 of the BNSS, 2023], or to postpone the issue of process and order an inquiry. In practice, Section 138 complaints are routinely processed for issue of summons after Section 200 examination, because the Supreme Court in Indian Bank Association v Union of India, (2014) 5 SCC 590 directed Magistrates to streamline the process and avoid the Section 202 inquiry where the complaint is otherwise complete and the cheque amount and dishonour are documented.

Section 143 — summary trial and the Indian Bank Association template

Section 143 of the Negotiable Instruments Act, 1881 — inserted by the 2002 amendment — provides that all offences under Chapter XVII of the Act shall be tried by a Judicial Magistrate of the First Class or a Metropolitan Magistrate and that the trial shall be summary, save where the Magistrate is of the opinion that the nature of the case is such that a sentence of imprisonment for a term exceeding one year may have to be passed, in which case the Magistrate shall, after hearing the parties, record an order to that effect and proceed under the regular summons-case procedure. The 2002 amendment also directed Magistrates to endeavour to conclude the trial within six months — an aspiration that has, in practice, been routinely missed but that remains the legislative benchmark.

The Supreme Court in Mandvi Co-operative Bank Ltd v Nimesh B Thakore, (2010) 3 SCC 83 clarified the contours of summary trial under Section 143 — the Magistrate retains the option to convert to a summons-case trial where sentence beyond one year is foreseeable, but the default mode is summary. The procedural template laid down by the Court in Indian Bank Association v Union of India, (2014) 5 SCC 590 is the most-followed guide for Magistrates conducting Section 138 trials — five sequenced steps: (i) Magistrate scrutinises complaint at filing, takes cognizance, examines complainant on affidavit and issues summons; (ii) on appearance of accused, particulars are read out under the simplified plea-recording, accused is asked to deposit such sum, by way of interim compensation, as the Court deems fit; (iii) complainant's evidence is by affidavit under Section 145; (iv) accused is examined under Section 313 of the Code of Criminal Procedure, 1973 [Section 351 of the BNSS, 2023] and defence evidence is led; (v) arguments and judgment.

The Supreme Court in Meters and Instruments Pvt Ltd v Kanchan Mehta, (2018) 1 SCC 560 extended the procedural framework — Magistrates may use technology and audio-visual conferencing for evidence; where the accused tenders the cheque amount with reasonable interest at the first hearing, the Court may close proceedings; non-appearance after issuance of summons can lead to dispensing with personal appearance under Section 205 of the Code of Criminal Procedure, 1973 [Section 228 of the BNSS, 2023]. The Meters and Instruments directions have been substantially absorbed into trial-court practice, though the Court itself revisited some of them in Expeditious Trial of Cases under Section 138 of N I Act, In re, (2021) 16 SCC 116.

Section 143A — interim compensation up to twenty per cent

Section 143A of the Negotiable Instruments Act, 1881 was inserted by the Negotiable Instruments (Amendment) Act, 2018 with effect from 1 September 2018. The provision empowers the trial court to direct the drawer of the cheque to pay interim compensation to the complainant in a Section 138 proceeding — an amount not exceeding twenty per cent of the cheque amount. The compensation may be ordered (i) in a summary trial or a summons case, where the drawer pleads not guilty to the accusation made in the complaint, and (ii) in any other case, upon framing of charge. The amount is payable within sixty days of the order, extendable by another thirty days on sufficient cause. If the drawer is later acquitted, the complainant must repay the interim compensation with interest at the prevailing bank rate, within sixty days of the acquittal order, under Section 143A(4).

The Supreme Court in Rakesh Ranjan Shrivastava v State of Jharkhand, (2024) 4 SCC 419 clarified the contours of Section 143A — the power is discretionary, not mandatory, and the Magistrate must apply judicial mind to the prima-facie case, the financial capacity of the drawer, the conduct of parties and the likelihood of recovery before ordering interim compensation. A mechanical award of twenty per cent in every case is impermissible. The provision is, on the complainant's side, a counter to the perennial criticism that Section 138 prosecutions take years to recover the cheque amount.

Sections 144, 145 and 146 — service, affidavit evidence, and the return-memo presumption

Section 144 of the Negotiable Instruments Act, 1881 provides that summons in a Section 138 case may be served by speed post or by an authorised courier service. A summons sent by post or authorised courier service which is not accepted is treated as duly served. Section 145 provides that the evidence of the complainant may be given on affidavit and that the affidavit, subject to the rules of evidence, may be read in evidence in any inquiry, trial or other proceeding — the routine practice is for the complainant to file an affidavit-in-chief at the first hearing, with cross-examination conducted on the affidavit. Section 146 provides that the court shall, on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until the fact is disproved.

These three provisions — the speed-post-summons rule under Section 144, the affidavit-evidence regime under Section 145, and the return-memo presumption under Section 146 — together accelerate the trial. The complainant's affidavit-in-chief, the cheque, the return memo, the demand notice, the postal receipts, and the acknowledgement card or returned envelope are typically tendered in evidence at the first or second hearing. The Section 146 presumption discharges the complainant's primary burden of proving dishonour without the need to call a bank witness. The Section 145 affidavit absorbs the complainant's examination-in-chief.

The Supreme Court in C C Alavi Haji v Palapetty Muhammed, (2007) 6 SCC 555 — a three-judge Bench — confirmed that where the demand notice is sent by registered post at the correct address of the drawer, the presumption of service under Section 27 of the General Clauses Act, 1897 read with Section 114 of the Indian Evidence Act, 1872 [Section 119 of the Bharatiya Sakshya Adhiniyam, 2023] operates automatically and need not be specifically pleaded; the drawer may rebut the presumption by leading evidence of non-receipt. The decision settles the proof of service question at the threshold stage.

Trial procedure — from summons to judgment

The Section 138 trial after the 2002 amendment and the 2018 amendment unfolds in roughly ten stages. First, the Magistrate takes cognizance on Section 200 examination and issues summons to the drawer under Section 204 of the Code of Criminal Procedure, 1973 [Section 227 of the BNSS, 2023]. Second, on the drawer's appearance, the substance of the accusation is read over and the drawer's plea recorded — this is the summary equivalent of plea recording under Section 251 of the Code of Criminal Procedure, 1973 [Section 274 of the BNSS, 2023]. Third, if the drawer pleads not guilty, the complainant moves the Section 143A application for interim compensation, which the Magistrate decides on the principles set out in Rakesh Ranjan Shrivastava. Fourth, the complainant files the Section 145 affidavit-in-chief and tenders documents — cheque, return memo, demand notice, postal proofs, acknowledgement card, bank-deposit memo. Fifth, the drawer is given the opportunity to cross-examine the complainant.

Sixth, the complainant closes evidence. Seventh, the drawer is examined under Section 313 of the Code of Criminal Procedure, 1973 [Section 351 of the BNSS, 2023] — the incriminating circumstances are put to the drawer for explanation. Eighth, the drawer leads defence evidence, if any — typically directed to rebutting the Section 139 presumption on the preponderance-of-probabilities standard fixed by the Constitution Bench in Rangappa v Sri Mohan, (2010) 11 SCC 441. Ninth, arguments are heard. Tenth, the Magistrate delivers judgment — acquittal or conviction with sentence up to two years' imprisonment and a fine up to twice the cheque amount, plus compensation under Section 357 of the Code of Criminal Procedure, 1973 [Section 395 of the BNSS, 2023] or Section 357(3) for amounts beyond the fine cap.

The Supreme Court in Suganthi Suresh Kumar v Jagadeeshan, AIR 2002 SC 681 emphasised that Magistrates should make liberal use of Section 357(3) to direct payment of compensation to the complainant equivalent to the cheque amount and reasonable interest — particularly where the cheque amount exceeds the fine cap. A token sentence with a small fine in a high-value cheque case is now treated as inadequate and is routinely set aside on revision.

Non-appearance of the complainant — Section 256

Section 256 of the Code of Criminal Procedure, 1973 [Section 286 of the BNSS, 2023] provides that if the complainant fails to appear on the date fixed for hearing in a summons case, the Magistrate shall, unless he thinks proper to adjourn the hearing, acquit the accused. A Section 138 case tried summarily under Section 143 is, for this purpose, a summons case. The risk for the payee is real — repeated non-appearance, particularly in early hearings, leads to acquittal of the drawer on a procedural ground without any adjudication on the merits of the dishonour. The remedy is to ensure that the authorised representative attends every hearing or that an application under Section 205 of the Code of Criminal Procedure, 1973 is moved at the first hearing seeking permission to be represented by counsel and dispensation of personal appearance where the payee is a company or is unable to attend in person.

Compounding and appeal

Section 147 of the Negotiable Instruments Act, 1881 — inserted by the 2002 amendment — makes every offence punishable under the Act compoundable, notwithstanding anything contained in the Code of Criminal Procedure, 1973. The compounding may take place at any stage — before trial, during trial, or even at the appellate stage. The Supreme Court in Damodar S Prabhu v Sayed Babalal H, (2010) 5 SCC 663 fixed guideline costs for compounding at successive stages — nil if compounded at the first or second hearing; 10 per cent of the cheque amount if compounded after that; 15 per cent at the appellate stage; 20 per cent before the Supreme Court — to discourage strategic deferral of settlement. The payee who is settling should record the compounding application jointly with the drawer and obtain a formal compounding order.

An order of conviction under Section 138 is appealable as a matter of right under Section 374 of the Code of Criminal Procedure, 1973 [Section 415 of the BNSS, 2023] — the appeal lies to the Court of Session within thirty days of the date of the order. An order of acquittal is appealable by the complainant under Section 378(4) of the Code of Criminal Procedure, 1973 [Section 419(4) of the BNSS, 2023] with the leave of the High Court — a special provision for private complaints that bypasses the State's appellate monopoly in police cases. Section 482 of the Code of Criminal Procedure, 1973 [Section 528 of the BNSS, 2023] inherent powers are also available, but the Supreme Court in Indian Bank Association v Union of India, (2014) 5 SCC 590 deprecated the routine resort to Section 482 quashing petitions in Section 138 matters.

The 2015 amendment, transition cases, and practice today

The 2015 jurisdictional reset under Section 142(2) is now nearly a decade old, and the pre-2015 transition has largely worked its way through the system. The complaint today is filed at the payee's bank-branch court; the Magistrate's procedural template comes from Indian Bank Association v Union of India, (2014) 5 SCC 590 and the Meters and Instruments / Expeditious Trial sequence; the standard of proof for the Section 139 presumption is preponderance of probabilities per Rangappa v Sri Mohan, (2010) 11 SCC 441; interim compensation under Section 143A is awarded on the Rakesh Ranjan Shrivastava framework. The translation to the Bharatiya Nagarik Suraksha Sanhita, 2023 is procedural — Sections 200/202/204/313 of the Code of Criminal Procedure, 1973 read across as Sections 223/225/227/351 of the BNSS, 2023, and Section 256 reads across as Section 286 — but the substantive Section 138 to Section 147 framework of the Negotiable Instruments Act, 1881 is unchanged.

The payee's task is to put the documentary chain together — cheque, deposit slip, return memo, demand notice, postal receipt, acknowledgement card, board resolution or power of attorney, list of witnesses — and to file the complaint at the right court within the one-month window. The procedural law has been streamlined; the substantive doctrine has been settled. What remains is execution.