Corporate & Contracts · For businesses and individuals
What the payee must do when a cheque is dishonoured. General legal information only. Time limits are strict.
Step by step
- Present the cheque within its validity period (three months from the date on it).
- Get the return memo from the bank stating the reason for dishonour.
- Send a demand notice in writing to the drawer within 30 days of receiving the bank’s information about the dishonour.
- Wait 15 days from receipt of the notice, for the drawer to pay.
- File a complaint before the Magistrate within one month of the end of that 15-day period, if payment is not made.
Points to note
- The cheque must have been issued for a legally enforceable debt or liability.
- Keep proof of the notice: the postal receipt, delivery proof, email records.
- The court where the complaint can be filed is determined by the Act and by Supreme Court directions on jurisdiction.
- Courts may direct interim compensation and the matter can be compounded by settlement.
For the drawer
Respond to the notice in writing, check whether the debt existed, and consider payment or settlement. A reply should be factual and consistent.
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Important disclaimer: This article is general legal information, not legal advice. It does not create a lawyer-client relationship and is not an advertisement or solicitation under Bar Council of India rules. Verify current statutes, rules and judgments before relying on it.
