Cheque Bounce Cases (Section 138 NI Act) in Delhi

The offence under Section 138

Section 138 of the Negotiable Instruments Act, 1881 makes it an offence when a cheque issued for the discharge of a legally enforceable debt or liability is returned unpaid for insufficiency of funds or because it exceeds the arrangement with the bank. The offence is punishable with imprisonment up to two years, or fine up to twice the cheque amount, or both.

The NI Act was not replaced by the new criminal laws. Procedure in these cases is now governed by the BNSS in place of the CrPC, and questions about electronic records are governed by the Bharatiya Sakshya Adhiniyam, 2023 (BSA) — for example, the certificate for electronic evidence under Section 63 BSA (formerly Section 65B of the Indian Evidence Act).

Key timelines

1. The cheque must be presented to the bank within its period of validity, which is currently three months from the date of the cheque.
2. After dishonour, the payee must send a written demand notice within 30 days of receiving information of dishonour from the bank.
3. The drawer has 15 days from receipt of the notice to make payment.
4. If payment is not made, the complaint must be filed within one month of the cause of action arising (Section 142). Delay may be condoned by the court for sufficient cause.

Where the complaint is filed

Under Section 142(2)(a), where the cheque is delivered for collection through an account, the complaint is filed before the court within whose local jurisdiction the branch of the bank where the payee maintains the account is situated. In Delhi, these complaints are heard by Metropolitan Magistrates in the district courts.

Interim compensation and appeals

• Section 143A: the trial court may direct the drawer to pay interim compensation of up to 20% of the cheque amount during the trial.
• Section 148: in an appeal against conviction, the appellate court may direct the appellant to deposit a minimum of 20% of the fine or compensation awarded by the trial court.
• Section 147: offences under the Act are compoundable, and parties may settle at any stage, including through mediation.

Common defences raised

The law presumes that a cheque was issued for a legally enforceable debt (Sections 118 and 139), but this presumption is rebuttable. Defences commonly examined by courts include the absence of a legally enforceable debt, defects in the statutory notice, a complaint filed beyond limitation, the cheque having been issued as security without a crystallised liability, and questions of jurisdiction. Whether any defence applies depends on the facts and evidence of each case.

Company cheques

Where the drawer is a company, Section 141 extends liability to persons who were in charge of and responsible for the conduct of its business at the time of the offence. The complaint must contain specific averments regarding their role.