Banking and Insurance - Laws and Practice · Payment and Collection of Cheques and Other Negotiable Instruments

Dishonour of Cheques and Procedure for Prosecution

Updated 11 October 2026 · Fact-checked

Prosecution for cheque dishonour under Section 138 starts with a written complaint by the payee or holder in due course, made within one month of the cause of action. Section 142(2) fixes the court by the payee's collecting branch or the drawer's bank branch. Section 142A keeps related and pending cases in one court.

Understand Dishonour of Cheques and Procedure for Prosecution

A cheque is a bill of exchange drawn on a specified banker and payable on demand (Section 6). It includes a truncated cheque image and a cheque in electronic form. If a cheque is dishonoured, the drawer is bound to compensate the holder, provided due notice of dishonour is given to or received by the drawer (Section 30). The criminal offence is in Section 138. This topic covers how a court takes up that offence and how the case is tried.

Start with cognizance under Section 142. A court can take cognizance of a Section 138 offence only on a written complaint by the payee or, as the case may be, the holder in due course. A police report or a third party's complaint is not enough. The complaint must be made within one month of the date the cause of action arises under clause (c) of the proviso to Section 138. The court may still take cognizance after that period if the complainant shows sufficient cause for the delay. Only a Metropolitan Magistrate or a Judicial Magistrate of the first class can try the offence.

Next, territorial jurisdiction under Section 142(2). If the cheque is delivered for collection through an account, the court is where the payee's or holder's bank branch holding the account is situated. If the cheque is presented for payment otherwise than through an account, the court is where the drawer's account branch of the drawee bank is situated. If a cheque is delivered at any branch of the payee's bank, it is deemed delivered to the branch where the payee maintains the account.

Section 142A deals with the transition after the 2015 amendment. Cases transferred to the court with jurisdiction under Section 142(2) are deemed transferred under the Act. Once a complaint against a drawer is pending in that court, all later Section 138 complaints against the same drawer go to the same court. This applies whether those cheques were delivered for collection or presented for payment within its territory. If more than one prosecution by the same payee or holder against the same drawer was pending in different courts on the commencement date of the 2015 Act, the court must transfer the case to the court where the first case was filed and is pending, once the fact is brought to its notice.

The trial itself is summary in nature (Section 143). The complainant's evidence may be given on affidavit (Section 145). The court may order interim compensation (Section 143A) and an appellate court may order a deposit pending appeal (Section 148). Every offence under the Act is compoundable (Section 147).

Key rules to remember

Cognizance (Section 142(1)): Written complaint by payee or holder in due course + within 1 month of cause of action + court not inferior to Metropolitan Magistrate or JMFC; Delay can be condoned if the complainant shows sufficient cause.
Jurisdiction: cheque delivered for collection through an account (Section 142(2)(a)): Court where the payee's or holder's account branch is situated; Delivery at any branch of the payee's bank is deemed delivery to the branch where the account is held.
Jurisdiction: cheque presented otherwise than through an account (Section 142(2)(b)): Court where the drawer's account branch of the drawee bank is situated; Applies to presentment by the payee or holder directly at the drawee bank.
Section 142A(2): Pending complaint in the Section 142(2) court → later complaints against the same drawer go to that same court; Applies irrespective of where those cheques were delivered or presented.
Section 142A(3): Multiple prosecutions by the same payee against the same drawer pending on the 2015 Act's commencement → transfer to the court of the first case; The transfer follows once the court is told of the fact.
Interim compensation (Section 143A): Interim compensation ≤ 20% of the cheque amount, payable within 60 days (extendable by up to 30 days on sufficient cause); Ordered when the drawer pleads not guilty in a summary trial or summons case, or on framing of charge in other cases.
Deposit pending appeal (Section 148): Deposit ≥ 20% of the fine or compensation awarded, in addition to any interim compensation; Deposit is within 60 days of the order, extendable by up to 30 days.

How to solve Dishonour of Cheques and Procedure for Prosecution questions

Use this order for any case-based question on cheque dishonour prosecution. Write provision, facts, conclusion.

1Identify the offence and the stage: complaint, cognizance, jurisdiction, trial or appeal.
2Check who is complaining. Only the payee or holder in due course can file under Section 142(1)(a).
3Check the time limit: one month from the cause of action under clause (c) of the proviso to Section 138. Look for facts showing sufficient cause for delay.
4Fix the court under Section 142(2): was the cheque delivered for collection through an account, or presented otherwise? Name the relevant branch's location.
5Check whether another complaint by the same payee against the same drawer is pending. If yes, apply Section 142A(2) or (3).
6Apply trial rules: summary trial, affidavit evidence, interim compensation, compounding as the facts require.
7State the conclusion in one clear sentence naming the court or the outcome.

Quickest way: Four-question check

When to use it: Use it when a short case question gives you a few minutes and asks which court or whether a complaint is valid.

Who filed? Payee or holder in due course, in writing.
When? Within one month of the cause of action, or sufficient cause shown.
Where? Payee's collecting account branch if through an account; drawer's drawee-bank branch otherwise.
Is an earlier complaint against the same drawer pending? If yes, Section 142A sends it to that court.

Common mistakes in Dishonour of Cheques and Procedure for Prosecution

Choosing the court by where the cheque was issued or where the drawer lives.
Students carry over old general ideas of territorial jurisdiction.
Fix: Use only Section 142(2): the payee's account branch or the drawer's drawee-bank branch.
Saying the one-month limit is absolute.
The proviso to Section 142(1)(b) is forgotten.
Fix: State that the court may take cognizance after the period if the complainant shows sufficient cause.
Stating that a complaint can be made by any person aggrieved or by the police.
Confusing it with ordinary criminal complaints.
Fix: Write that the complaint must be in writing and by the payee or holder in due course.
Applying Section 142A(2) only to old cases.
The title mentions transfer of pending cases, so students stop at sub-section (3).
Fix: Sub-section (2) governs all later Section 138 complaints against the same drawer once one is pending in the Section 142(2) court. Sub-section (3) covers cases pending on the 2015 Act's commencement.
Quoting the interim compensation cap as 20% of the fine.
Mixing Section 143A with Section 148.
Fix: Section 143A is up to 20% of the cheque amount. Section 148 is a minimum of 20% of the fine or compensation awarded.

Worked examples

Example 1

Aarav Traders, Jaipur, deposits a cheque drawn by Meera Industries Ltd, Pune, in its account at a Jaipur branch of its bank. The cheque is dishonoured. Meera's account is at a Pune branch of the drawee bank. Where can Aarav Traders file the Section 138 complaint?

Show the solution

Provision: Section 142(2) fixes the court by delivery for collection or presentment for payment.
Facts: the cheque was delivered for collection through Aarav's account at the Jaipur branch.
Clause (a) applies: the court is where the payee's account branch is situated.
Pune, where the drawer's account is held, is relevant only if the cheque had been presented otherwise than through an account.

Answer: The complaint must be filed before the court having jurisdiction over the Jaipur branch where Aarav Traders maintains its account, being a Metropolitan Magistrate or Judicial Magistrate of the first class.

Example 2

Kavita files a Section 138 complaint against Rohan in a court in Indore, which has jurisdiction under Section 142(2). While that complaint is pending, another cheque of Rohan to Kavita is dishonoured. That cheque was presented through Kavita's account at a Bhopal branch. Where should the second complaint be filed?

Show the solution

Provision: Section 142A(2) overrides Section 142(2) where a complaint against the same drawer is already pending in the Section 142(2) court.
Facts: the first complaint by the same payee against the same drawer is pending in Indore.
The second cheque was presented within Bhopal's territory, but the section applies irrespective of where cheques were delivered or presented.
Conclusion: the later complaint goes to the same court.

Answer: Kavita must file the second complaint before the same Indore court where the first complaint is pending, not in Bhopal.

Exam tips

Quote the section numbers with the rule: 142(1) for cognizance, 142(2) for jurisdiction, 142A for transfer and clubbing of cases.
In case questions, always name the branch that fixes jurisdiction and say why.
Remember the three limbs of Section 142A. Sub-section (1) validates transfers, (2) governs later complaints, (3) governs multiple pending cases.
Link the topic to Sections 143, 143A, 145, 147 and 148 for a complete procedure answer.
Close with a one-line conclusion; do not leave the court unnamed.

Practice questions from Payment and Collection of Cheques and Other Negotiable Instruments

Dishonour of Cheques and Procedure for Prosecution in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ExecutiveDishonour of Cheques and Penalties

Dishonour of Cheques and Procedure for Prosecution: frequently asked questions

What does Section 142A of the NI Act do?

It validates the transfer of cases to the court with jurisdiction under Section 142(2). It sends later Section 138 complaints against the same drawer to the same court where one complaint is pending. It also requires transfer of multiple pending prosecutions by the same payee against the same drawer to the court of the first case.

Within what time must a cheque bounce complaint be filed?

The complaint must be made within one month of the date the cause of action arises under clause (c) of the proviso to Section 138. The court may take cognizance after that period if the complainant shows sufficient cause for the delay.

Which court has jurisdiction in a cheque bounce case?

Under Section 142(2), it is the court where the payee's account branch is situated if the cheque was delivered for collection through an account. Otherwise, it is where the drawer's account branch of the drawee bank is situated. Only a Metropolitan Magistrate or Judicial Magistrate of the first class can try the offence.

Can a cheque bounce case be settled?

Yes. Section 147 makes every offence under the Act compoundable. This applies notwithstanding anything in the Code of Criminal Procedure, 1973.

Is interim compensation compulsory in a cheque bounce trial?

No. Under Section 143A the court may order it, up to 20% of the cheque amount. If the drawer is acquitted, the complainant must repay it with interest at the bank rate.