When a cheque is returned unpaid, the holder does not have to rely only on a slow civil recovery suit. Under Section 138 of the Negotiable Instruments Act, 1881, dishonour of a cheque for insufficient funds is a criminal offence in Bangladesh. The remedy is powerful, but it depends on meeting a series of strict deadlines. Missing even one can end the case before it starts.

When does Section 138 apply?

• A cheque was drawn on the drawer's own bank account in favour of another person.
• The bank returned it unpaid because the funds were insufficient or the amount exceeded the arrangement with the bank.
• The cheque was presented within six months of its date, or within its period of validity, whichever is earlier.

The timeline you must follow

A cheque can be presented more than once within its validity, but the notice and complaint deadlines must be met for the dishonour you rely on.

How to serve the legal notice

The Act recognises three ways of serving the notice:

1. Delivering it to the drawer personally.
2. Sending it by registered post with acknowledgement due to the drawer's last known address.
3. Publishing it in a nationally circulated Bangla daily newspaper.

Many lawyers use more than one method to avoid disputes about service. The notice should state the cheque number, date, amount, bank, the date and reason of dishonour, and a clear demand for payment within 30 days.

Where the case is filed and tried

The complaint is a written petition of complaint filed before a Magistrate, who examines the complainant and takes cognisance. The offence is tried by a Court of Sessions, so the case is then sent to the Sessions Judge or a Joint Sessions Judge for trial. The complaint must be made by the payee or the holder in due course of the cheque.

Documents to keep ready

• The original dishonoured cheque
• The bank's dishonour slip or return memo
• A copy of the legal notice
• Postal receipt and acknowledgement card, or the newspaper copy
• Any agreement, invoice or record showing why the cheque was given

Punishment

On conviction, the court may impose imprisonment for up to one year, or a fine of up to three times the cheque amount, or both. From the fine recovered, the amount of the cheque is paid to the holder.

Appeal and the 50 percent deposit

Under Section 138A, a convicted drawer cannot file an appeal without first depositing at least 50 percent of the dishonoured cheque amount in the trial court. This rule is strictly applied and is one reason many cheque cases are settled after judgment.

If the cheque was issued by a company

Under Section 140, where the drawer is a company, the persons who were in charge of and responsible for its business at the time, as well as the company itself, can be held liable. A director can escape liability by proving the offence was committed without their knowledge or that they exercised due diligence.

Common defences raised by drawers

• The notice was not sent within time or was never properly served.
• The complaint was filed too early or too late.
• The cheque was presented after six months.
• The amount was paid within the notice period.
• The cheque was lost, stolen or given as security and misused.

Is a civil suit still possible?

Yes. A Section 138 case does not bar a separate civil suit for recovery of money. In practice, many creditors start with the criminal case because it is usually faster and creates stronger pressure to settle.

Practical tips

• Write the dates on a calendar as soon as the cheque bounces.
• Never hand over the original cheque to anyone except your lawyer or the court.
• If you are the drawer, respond to the notice in writing and keep proof of any payment you make.

This article is for general information only and is not legal advice. Court decisions on cheque cases continue to develop, so speak to a lawyer about your specific facts. You can find experienced lawyers on Ukilpara.com.