Cheque Returned Unpaid: Section 138 NI Act Complaint and Order 37 CPC Recovery Suit
Updated: 1 September 2026
When a cheque is returned unpaid, the payee may have more than one legal remedy. The most common are a complaint under Section 138 of the Negotiable Instruments Act, 1881, where the statutory conditions are satisfied, and a civil action to recover the money, including a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 where that procedure applies.
1. Section 138 Negotiable Instruments Act: procedure and time limits
Section 138 applies where a cheque issued for discharge, wholly or partly, of a legally enforceable debt or liability is returned unpaid for reasons covered by the provision, and the payee or holder in due course completes the statutory steps.
| Step | Time limit / rule |
|---|---|
| Present the cheque | Within its validity period. Under RBI directions, banks do not pay cheques presented beyond three months from the date of the instrument. |
| Demand notice | Send a written demand notice within 30 days from receipt of information from the bank that the cheque was returned unpaid. |
| Time for drawer to pay | 15 days from receipt of the statutory notice. |
| Cause of action | Arises if the drawer fails to make payment within the 15-day period. |
| File complaint | Ordinarily within one month from the date the cause of action arises. The court may take cognizance after that period if sufficient cause for delay is shown. |
Can the cheque be presented again?
A cheque may generally be re-presented during its validity period. Re-presentation does not extend the cheque's validity. Because the statutory timetable can become fact-sensitive, especially where there are multiple presentations or notices, prompt legal advice is advisable.
Where should the Section 138 complaint be filed?
Jurisdiction is governed by Section 142(2) of the Negotiable Instruments Act. Broadly, when the cheque is delivered for collection through an account, jurisdiction is linked to the branch of the bank where the payee or holder in due course maintains the account through which the cheque is collected. Where the cheque is presented otherwise than through an account, jurisdiction is linked to the drawee bank branch where the drawer maintains the account. The precise filing court must also have the required criminal jurisdiction.
Documents commonly required
- Complaint with complete particulars of the complainant and accused.
- Original dishonoured cheque, subject to the filing practice of the court.
- Cheque return memo / bank dishonour memo.
- Copy of the statutory demand notice.
- Proof of dispatch and available proof of delivery or service of notice.
- Documents showing the underlying legally enforceable debt or liability.
- Affidavit/evidence and list of documents or witnesses as required by the applicable court procedure.
- Vakalatnama where the complainant is represented by an advocate.
- For a company, firm or other juristic entity, appropriate authorization such as a board resolution, power of attorney or authorization document, as applicable.
- Application for condonation of delay, if the complaint is filed beyond the prescribed period.
Punishment, interim compensation and appeal deposit
On conviction under Section 138, the drawer may be punished with imprisonment for a term that may extend to two years, or fine that may extend to twice the amount of the cheque, or both.
Section 143A permits the trial court, in the situations specified in that provision, to order interim compensation not exceeding 20% of the cheque amount. Section 148 separately empowers the appellate court, in an appeal by the drawer against conviction, to order deposit of a sum that is a minimum of 20% of the fine or compensation awarded by the trial court, subject to the statutory conditions.
2. Recovery of money through an Order XXXVII CPC summary suit
Order XXXVII of the Code of Civil Procedure provides a special summary procedure for specified categories of money claims. It applies, among other things, to suits upon bills of exchange, hundies and promissory notes, and to certain suits seeking only recovery of a debt or liquidated demand in money arising from a written contract, enactment or guarantee.
An Order XXXVII suit is therefore not available merely because a cheque was dishonoured. The claim must fall within the classes covered by Order XXXVII and the plaint must comply with its special requirements. If Order XXXVII does not apply, an ordinary civil recovery suit may still be available, subject to jurisdiction, limitation and the facts of the transaction.
Limitation for civil recovery
A three-year limitation period commonly applies to many money recovery claims involving negotiable instruments or written obligations, but the starting point depends on the nature of the instrument and cause of action. The Limitation Act, 1963 contains separate articles for different instruments and claims. The limitation period should therefore be calculated from the legally applicable starting date rather than assumed to run from the date of cheque dishonour in every case.
Court fee and interest
Civil court fee is governed by the applicable court-fees law and rules in the State or Union Territory and may depend on the amount claimed. A plaintiff may also claim contractual or legally permissible interest and costs, subject to the agreement, applicable law and the court's discretion.
Can Section 138 and a civil suit be filed together?
Yes, subject to the facts and maintainability of each proceeding. A Section 138 complaint is a penal proceeding arising from cheque dishonour, whereas a civil suit seeks recovery of the underlying money claim. Pursuing one does not by itself extinguish the other remedy. Any amount actually recovered or paid must, however, be properly accounted for so that there is no double recovery.
Section 138 complaint vs. civil recovery suit
| Point | Section 138 NI Act | Civil / Order XXXVII suit |
|---|---|---|
| Primary purpose | Penal consequence for qualifying cheque dishonour | Recovery of money |
| Statutory notice | Mandatory written demand notice within prescribed time | Depends on cause of action and applicable law; not the Section 138 notice regime |
| Limitation | Complaint generally within one month after cause of action under Section 138 accrues | Depends on the Limitation Act and nature of the claim; three years is common for many qualifying money claims |
| Result sought | Conviction, fine/compensation and other statutory consequences | Money decree, permissible interest and costs |
| Can both proceed? | Yes, where each remedy is independently maintainable. | |
Frequently asked questions
Is a lawyer compulsory for sending a Section 138 notice?
The Act requires a written demand notice; it does not state that the notice must be issued only through an advocate. Because errors in amount, service, dates or wording can affect a complaint, professional drafting is often prudent.
What if the cheque was issued as security?
The label "security cheque" does not by itself decide liability. The key issue is whether a legally enforceable debt or liability existed when the cheque became payable and was presented, considering the facts and applicable case law.
Does every bank return reason attract Section 138?
No. Liability depends on the statutory provision and judicial interpretation of the particular dishonour reason, together with proof of a legally enforceable debt or liability and compliance with the notice and filing requirements.
Can a delayed Section 138 complaint still be entertained?
Section 142 permits the court to take cognizance after the prescribed period if the complainant satisfies the court that there was sufficient cause for not filing within time.
Official legal references
Legal note: This page provides general legal information and does not replace advice on the facts of a particular case. Limitation, jurisdiction, service of notice, court fee and maintainability can depend on the transaction, parties, place of banking and local court rules.