If you are stuck in such a situation, here is what to do.

Mr. Khanna, a resident of Aravalli Nagar, found himself in a difficult financial situation. A few years ago, in 2020, he had lent a sum of ₹2 lakh to an acquaintance, Mr. Verma, for a business venture related to a tech startup called “Innovate Forward Ltd.” The transaction was based on mutual trust, without a formal written agreement. Subsequently, Mr. Verma issued two cheques of ₹1 lakh each to repay the amount. However, when Mr. Khanna presented the cheques to his bank, both were dishonoured due to “insufficient funds.” He received the official bank return memos and kept the original cheques safely. Now, in 2024, having not initiated any legal proceedings, Mr. Khanna is worried whether he has lost his chance to recover the money and is seeking to understand his available legal options.

Advice in such cases

When dealing with a dishonoured cheque, especially after a significant delay, the path to recovery is complicated by strict legal timelines, known as the period of limitation. Acting promptly is key, but if time has passed, a strategic approach is necessary.

• Gather all documentation: Ensure you have the original dishonoured cheque, the bank’s return memo, any proof of the initial transaction (like bank statements), and any communication with the other party regarding the debt.
• Understand the limitation periods: The law prescribes specific deadlines for filing different types of cases. Missing these deadlines can extinguish your right to a legal remedy.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The primary laws governing such situations are:

• The Negotiable Instruments Act, 1881 (NI Act): Section 138 of this Act makes the dishonour of a cheque for insufficiency of funds a criminal offence. It provides a specific and fast-tracked procedure for recovery.
• The Code of Civil Procedure, 1908 (CPC): This governs the procedure for civil suits. A summary suit under Order 37 for recovery of money is a swift option, or a regular civil suit can be filed.
• The Limitation Act, 1963: This Act prescribes the time limits within which legal action can be initiated. For most civil recovery suits, the period is three years. For a complaint under Section 138 of the NI Act, the timeline is much shorter and more rigid.
• Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023: The procedural aspects of criminal complaints, including those under the NI Act, are now governed by the BNSS, which has replaced the old Criminal Procedure Code (CrPC).

If you are the complainant

As the person who received the bounced cheque, your main challenge is the delay. Here is what you need to consider:

• Criminal Complaint under Section 138, NI Act: This is the most common remedy. However, it has a strict timeline: a legal notice must be sent to the drawer within 30 days of the cheque bounce, and if they fail to pay within 15 days of receiving the notice, a complaint must be filed in court within the next 30 days. In this scenario, the deadline has long passed. You can file an application for “condonation of delay,” but you must provide a very strong and convincing reason for not acting for several years, and the court has the discretion to reject it.
• Civil Recovery Suit: The limitation period for filing a civil suit to recover money is three years from the date the cause of action arose (e.g., the date on the cheque or the date of dishonour). Since the cheques were from 2020, this three-year period has also likely expired.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. An experienced advocate can analyze the facts to see if there is any way to argue that the limitation period started later (for example, if the debtor acknowledged the debt in writing at a later date, which could reset the clock).

If you are the victim

Being the victim of a bounced cheque can be frustrating. Your legal standing is significantly impacted by the delay in taking action.

• Acknowledge the Time-Bar Hurdle: Your primary legal remedies, both criminal and civil, appear to be barred by the statute of limitations. Pursuing them now would require convincing a court to overlook the significant delay, which is a difficult task.
• Explore Alternative Avenues: While formal court proceedings may be challenging, sometimes a strongly worded legal notice from an advocate can prompt the other party to negotiate a settlement, as they may wish to avoid the hassle of litigation, even if they believe you are late.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. A lawyer is essential to assess if any facts in your case could justify the delay or open up a new cause of action.

How the police behave in such cases

It is a common misconception that the police are the first point of contact for a cheque bounce case. A case under Section 138 of the NI Act is a “private complaint,” which means you, through your lawyer, file the case directly before a Magistrate’s court. The police do not register an FIR or conduct an investigation for a Section 138 complaint. Their role is limited to serving summons or warrants if the accused fails to appear in court when ordered. Filing a separate police complaint for criminal breach of trust or cheating is a different legal route and is often discouraged by courts when a specific remedy under the NI Act is available.

FAQs people normally have

Can I still file a criminal case for the bounced cheque?
It is highly unlikely. The strict timeline for filing a complaint under Section 138 of the NI Act expired years ago. You would need an exceptionally strong reason for the court to condone such a long delay.

What about a civil case to recover the money?
This is also likely time-barred. The limitation period for a recovery suit is three years, which appears to have passed. Unless the person who gave you the cheque has acknowledged the debt in writing recently, a new suit may not be maintainable.

Does the absence of a written agreement for the original deal matter?
Not necessarily. The cheque itself is considered a promise to pay and a strong piece of evidence acknowledging a legally enforceable debt. The burden of proof would shift to the person who issued the cheque to prove that it was not for a valid debt.

What evidence is required?

For a cheque bounce case, the following evidence is crucial:

• The original dishonoured cheque.
• The cheque return memo issued by the bank, stating the reason for dishonour.
• A copy of the legal notice sent to the drawer within the prescribed time (if it was sent).
• Proof of delivery of the legal notice (e.g., postal receipts).
• Any other communication or document that proves the existence of the debt, such as emails, messages, or the original (now expired) agreement.

How long will the investigation take?

In a Section 138 NI Act case, there is no police investigation. The process is a court trial. After the complaint is filed and the court takes cognizance, it issues a summons to the accused. The duration of the trial depends on various factors, including the court’s case load, the cooperation of the parties, and the complexity of the evidence. These cases can take anywhere from several months to a few years to reach a final judgment.

Advocate Sudhir Rao, Supreme Court of India