Section 138 — Statutory Notice and Limitation

A prosecution under Section 138 of the Negotiable Instruments Act, 1881 stands or falls on the calendar. Three clocks run in sequence: the thirty-day clock for the statutory notice of demand under proviso (b), the fifteen-day clock for the drawer's failure to pay under proviso (c), and the one-month clock for the filing of the complaint under Section 142(b). The clocks do not overlap and they are not interchangeable. Together they sit inside the wider regime governing dishonour of negotiable instruments under Sections 91 to 93. Aspirants who answer a Section 138 fact-pattern by saying “the complaint must be filed within thirty days” are conflating the notice clock with the complaint clock and will lose the question. This chapter walks the timeline forward, then backward, and explains the case-law that has fixed each link in the chain.

The substantive ingredients of the offence and the cause-of-action analysis are dealt with in Bouncing of Cheques — Section 138 Essentials; the procedure on complaint is in the summons-trial vs summary-trial chapter. This chapter assumes the offence is otherwise made out and concentrates on the procedural choreography that converts a dishonoured cheque into a maintainable complaint. Like the rest of the Section 138 cluster, the register here is criminal-procedural — quasi-criminal, summary, with its own jurisdiction, notice and limitation discipline, distinct from anything else in the Negotiable Instruments Act.

The three clocks at a glance

Before the case-law, the calendar.

1. Notice of demand — proviso (b). The payee or holder in due course must, within thirty days of receiving information from the bank that the cheque has been returned unpaid, give written notice to the drawer demanding payment of the cheque amount. The clock starts on the date the bank's intimation is received by the payee.
2. Failure to pay — proviso (c). The drawer must fail to make payment within fifteen days of the receipt of the said notice. The clock starts on the date the drawer receives the notice. The cause of action accrues on the day immediately following the expiry of this fifteen-day window.
3. Complaint — Section 142(b). The complaint must be filed by the payee or holder in due course within one month of the date on which the cause of action arose under proviso (c). The clock starts on the day the cause of action accrued, not on any earlier event.

Each clock has its own zero-point and its own statutory consequence on expiry. Mixing them up is the single most common reason Section 138 complaints are quashed.

Proviso (b) — the thirty-day notice of demand

The statutory text is short. Proviso (b) reads, in substance, that the payee or holder in due course shall make a demand for the payment of the cheque amount by giving a notice in writing to the drawer of the cheque within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. (The original text said fifteen days; the 2002 amendment expanded the window to thirty.) Three doctrinal points in the proviso are worth absorbing.

The trigger is the receipt of bank's intimation, not the date on the bank memo. The thirty-day clock runs from the day the payee actually receives the dishonour memo or telephonic intimation from the bank, not from the date the bank stamped the return memo. In practice the dates are usually within a day of one another, but where there is a delay in transmission the payee gets the benefit of the actual receipt date.

The notice must be in writing and must contain a demand. The Supreme Court in K.R. Indira v. G. Adinarayana AIR 2003 SC 4689 held that in the absence of a specific demand for payment, the demand notice is invalid and acquittal must follow. A notice that merely intimates the dishonour, without demanding payment, is not a notice under proviso (b). At the same time, a single consolidated notice in respect of the dishonour of multiple cheques is not invalid by reason of consolidation alone — the test is whether each dishonour is identifiable and the demand for the aggregate sum is unequivocal.

The cheque amount must be unambiguously demanded. A notice that demands the cheque amount along with interest, costs, or compensation under Section 357 CrPC does not become invalid by reason of including the additional sums; what is required is that the cheque amount itself be specifically demanded. The Supreme Court in Suman Sethi v. Ajay K. Churiwal AIR 2000 SC 828 held that the additional demand for compensation, costs or interest does not vitiate the notice so long as the cheque amount is clearly demanded.

Service of the notice — the giving versus the receipt

The proviso uses two different words at two different points: the payee must give the notice within thirty days, and the drawer's fifteen-day window starts on the receipt of the notice. The Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 explained the difference. Giving is a process that the payee accomplishes by sending the notice to the drawer at the correct address; receipt is the accomplishment of that process at the drawer's end. The payee discharges his obligation by sending; the drawer's window begins on receipt.

The deeming provision in Section 27 of the General Clauses Act, 1897 supplies a powerful presumption of service. Where a notice is properly addressed, prepaid, and posted by registered post, the service is deemed effected at the time the letter would, in the ordinary course of post, be delivered. The presumption is rebuttable, but the rebuttal must come from the drawer.

The Supreme Court in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. AIR 2001 SC 676 emphasised that it is the receipt of the notice, not the giving, that gives the cause of action, but also held that a strict construction that allowed an evader to escape simply by dodging the postman would defeat the object of the section. A notice returned with a postal endorsement of “refused”, “not available in the house”, “house locked”, or “addressee not in station” is therefore deemed served.

In C.C. Alavi Haji v. Palapetty Muhammed 2007 (7) SCALE 380 a three-judge Bench resolved the long-running controversy on whether the complainant must specifically aver in the complaint that the accused had a role in the non-receipt of the notice. The Bench held that when the notice is sent by registered post to the correct address, the mandatory requirement of issue of notice under proviso (b) stands complied with by reason of the Section 27 presumption. The complaint need not aver evasion. It is open to the drawer to rebut the presumption at trial by showing that he had no knowledge of the notice or that the postman's report was incorrect, but the complaint is not defective for omitting an averment of evasion.

The doctrinal upshot is that the payee who sends the notice by registered post acknowledgement due to the drawer's correct address has done his job. The clock then runs from the deemed date of receipt, computed in the ordinary course of post.

Proviso (c) — the fifteen-day failure-to-pay window

Proviso (c) requires that the drawer fail to make payment of the cheque amount within fifteen days of the receipt of the notice. The window is a grace period for the honest drawer, designed to permit him to make amends without facing prosecution — a procedural safeguard that mirrors the formal notice of dishonour requirements that govern the rest of the Act. Three points fix its operation.

The clock starts on receipt by the drawer. Either actual receipt or deemed receipt under Section 27 of the General Clauses Act. Where the notice is returned unclaimed, the deemed date of delivery in the ordinary course of post is the start date.

The window is non-extendable. The drawer cannot ask the payee for more time, and a request for time accepted by the payee does not extend the statutory window for the purposes of the criminal offence (though it may inform the magistrate's view of mens rea). The fifteen days are statutory, not negotiable.

The cause of action accrues on the day after expiry. If the notice is received on day 1, the fifteen-day window expires at the end of day 15, and the cause of action accrues on day 16. Day 16 is the “cause of action date” for the purposes of Section 142(b). This is the day from which the one-month complaint clock starts to run, not from any earlier event.

Section 142(b) — the one-month complaint clock

Section 142(b) provides that no court shall take cognizance of an offence under Section 138 except upon a written complaint by the payee or holder in due course filed within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138. The phrase “cause of action” is critical — it points unambiguously to the day after the fifteen-day window under proviso (c) expires.

Three operational rules.

The clock is one month, not thirty days. One month is computed under the General Clauses Act and the rule of civil computation applies: the clock runs from the cause-of-action date and ends on the corresponding date of the next month. A complaint filed on day 31 may be in time, depending on the length of the calendar month. A complaint filed on the corresponding day of the next month is the safest path.

Cognizance only on complaint. Section 142(a) requires the complaint to be in writing and signed by the payee or holder in due course. A police report is not a substitute. The complainant must be the payee or holder in due course; in the case of a corporate payee, an authorised person on behalf of the company complies (see M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. AIR 2002 SC 182).

The proviso to Section 142(b) permits condonation. The 2002 amendment inserted a proviso authorising the court to take cognizance after the one-month period if the complainant satisfies the court that he had sufficient cause for not making the complaint within such period. The discretion is judicial; the court may not condone routinely. Sufficient cause is a question of fact in each case, and the standard tracks the case-law on Section 5 of the Limitation Act.

Multiple presentations and successive notices

The most contested zone in Section 138 procedure was settled by the three-judge Bench in MSR Leathers v. S. Palaniappan (2013) 1 SCC 177. The earlier rule in Sadanandan Bhadran v. Madhavan Sunil Kumar (1998) 6 SCC 514 had treated the cause of action as arising once and only once on the first dishonour, with the consequence that a holder who failed to file a complaint within one month of the first cause of action lost the right to prosecute.

MSR Leathers overruled Sadanandan Bhadran and held that a payee may present the cheque any number of times within its validity, and that on each presentation followed by a fresh notice and a fresh failure to pay within fifteen days, a fresh cause of action accrues. The holder is not obliged to launch prosecution on the first default; he may defer at the request of the drawer or for any other reason, present the cheque again, and prosecute on the second or third default. What he cannot do is to issue more than one notice on the same dishonour and pick freely among them — once a notice under proviso (b) has been issued and the fifteen-day window has expired, the cause of action attached to that notice is fixed and the one-month complaint clock starts.

The reconciliation with the proviso clauses is that each presentation must satisfy proviso (a) (within validity), each notice must independently satisfy proviso (b) (within thirty days), and each fifteen-day window under proviso (c) must independently expire. The complaint must then be within one month of whichever cause of action the holder elects to act upon. The MSR Leathers ratio is the leading exam authority on multiple presentations and is regularly tested.

The doctrinal subtlety in MSR Leathers is the distinction between a fresh right of presentation (which arises on each dishonour) and a fresh cause of action (which arises only on the concurrence of all three procedural steps under provisos (a), (b) and (c)). Sadanandan Bhadran had recognised the former but denied the latter; MSR Leathers recognises both.

The accrual of cause of action — N. Harihara Krishnan

The Supreme Court in N. Harihara Krishnan v. J. Thomas (2018) 13 SCC 663 reaffirmed the composite character of the cause of action and clarified that Section 138 is unusual among penal provisions in tying cognizance to a date computed from a private notice rather than from the act of the offender. The cause of action does not arise on the date of dishonour, nor on the date of the notice, nor on the date of receipt of the notice; it arises on the day after the fifteen-day failure-to-pay window expires.

The aspirant must therefore distinguish four candidate dates — the date of dishonour, the date the notice was sent, the date the notice was received, and the date the cause of action accrued — and use the fourth as the zero-point for the one-month complaint clock under Section 142(b). Confusion among the four is a common error and a regular MCQ trap.

Service variations and difficult presumptions

A few service problems recur enough to deserve their own treatment.

Notice returned with “refused”. Refusal amounts to service. The drawer is deemed to have received the notice on the date of refusal; the fifteen-day clock runs from that date.

Notice returned unclaimed. Unclaimed is treated equivalently to refused for the purposes of the Section 27 presumption (per Dalmia Cement); the drawer must rebut the presumption at trial. The clock runs from the deemed date in the ordinary course of post.

Notice returned “not available”, “house locked”, “addressee abroad”, etc. These postal endorsements are also treated as service for the Section 27 presumption (per C.C. Alavi Haji). The drawer must show at trial that the postman's report was incorrect or that he had no knowledge of the notice.

The dispatcher's options. The Supreme Court in Dalmia Cement recognised two options open to the dispatcher of a notice that returns unserved. The first is to concede the drawer's stand that he did not receive the notice and to issue a fresh notice on a fresh presentation. The second is to contest the drawer's stand and rely on the Section 27 presumption. Both are legitimate; the choice depends on the strength of the dispatcher's evidence and the calendar.

In Dalmia Cement, the appellant had received an unusual reply — the addressee claimed to have received an empty envelope — and chose to present the cheque again, issue a fresh notice, and file the complaint within one month of the second cause of action. The Supreme Court upheld the complaint, holding that on the second presentation a fresh cause of action had accrued and the limitation under Section 142(b) was satisfied.

Condonation under the proviso to Section 142(b)

The proviso to Section 142(b), inserted by the 2002 amendment, reads: Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.

Two consequences flow.

First, the one-month period is no longer absolute. A complaint filed beyond one month is not automatically barred; the magistrate has discretion to take cognizance on satisfaction of sufficient cause. The discretion is structured by reference to the standard of sufficient cause familiar from Section 5 of the Limitation Act.

Second, condonation is not automatic. The complainant must apply for condonation, plead the cause, and satisfy the magistrate. A bare ipse dixit will not do. The Supreme Court in Subodh S. Salaskar v. Jayprakash M. Shah (2008) 13 SCC 689 confirmed that the proviso confers a real but disciplined discretion.

Death of the complainant or accused during proceedings

Two questions of continuity arise often enough to be tested. First, where the original complainant dies after filing the complaint, the legal heirs may be added and proceedings continue without abatement — an indulgence consistent with the wider scheme of compoundable offences under Section 147. Second, where the accused dies, the proceedings abate; the legal heirs cannot be substituted in his place because the offence under Section 138 is personal and not transmissible. Both rules track the broader logic of criminal proceedings, adjusted for the quasi-criminal character of Section 138.

Jurisdiction — the 2015 amendment

The Supreme Court in Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129 held that the only court competent to try an offence under Section 138 was the court in whose territorial jurisdiction the drawee bank was situated. The decision overruled K. Bhaskaran's wider rule, under which any of the five constituent acts (drawing, presentation, return, notice, failure to pay) could ground jurisdiction.

Parliament reversed Dashrath Rupsingh by the Negotiable Instruments (Amendment) Act, 2015, which inserted Section 142(2). The new rule is that the offence shall be tried by the court within whose local jurisdiction the bank branch where the payee or holder maintains the account is situated — that is, the bank in which the cheque was delivered for collection. Jurisdiction therefore now follows the payee's banker, not the drawer's banker. The shift is procedurally important and is dealt with in detail in the Sections 139 to 142 chapter.

The cognate rules on summary trial under Section 143, mode of summons under Section 144, and affidavit evidence under Section 145 are dealt with separately in the summary trial and summons and affidavit evidence chapters; the present chapter is confined to the notice-and-limitation discipline.

Walking the timeline backward

The single-best diagnostic for any Section 138 fact-pattern is to walk the timeline backward from the date the complaint was filed.

Step one: date of complaint. Step two: subtract one month — this is the latest permissible cause-of-action date under Section 142(b). Step three: from the cause-of-action date, subtract one day — this is the date the fifteen-day failure-to-pay window expired. Step four: subtract fifteen days — this is the latest permissible date of receipt of the notice by the drawer. Step five: from the date of receipt, look back to the date the notice was sent, then to the date the bank's intimation was received by the payee — the gap between intimation receipt and notice issuance must be within thirty days.

Walking the timeline backward exposes every potential limitation defect. A complaint filed on day 95 from the dishonour date may be perfectly within time if the notice was issued on day 25, the receipt was on day 30, the fifteen-day window expired on day 45, and the complaint was filed within thirty days thereafter. A complaint filed on day 50 from the dishonour date may be out of time if the notice was issued on day 35, beyond the thirty-day window, even though the calendar between the notice and the complaint is short.

The aspirant who has internalised the three clocks — thirty, fifteen, one month — and the four candidate dates — intimation, notice, receipt, accrual — will navigate every Section 138 limitation question without confusion. The procedural register of Section 138 is unforgiving; it rewards the kind of calendar discipline that the criminal-procedural register of the cluster as a whole demands.

Frequently asked questions

What is the difference between the thirty-day notice clock and the one-month complaint clock?

The thirty-day clock under proviso (b) to Section 138 governs the time within which the payee must give a written notice of demand to the drawer, computed from the date the payee received the bank's information about the dishonour. The one-month clock under Section 142(b) governs the time within which the complaint must be filed in court, computed from the date the cause of action accrued — that is, the day after the fifteen-day failure-to-pay window under proviso (c) expired. The two clocks have different zero-points and different statutory consequences.

When does the cause of action under Section 138 accrue for limitation purposes?

The cause of action accrues on the day immediately following the expiry of fifteen days from the receipt of the statutory notice by the drawer, under proviso (c) to Section 138. Until that day no offence has been committed; the one-month complaint clock under Section 142(b) starts running from that day, not from any earlier event such as dishonour, despatch of notice, or receipt of notice. The Supreme Court in N. Harihara Krishnan v. J. Thomas (2018) and K. Bhaskaran (1999) confirmed this composite computation.

Is the statutory notice deemed served when the registered post is returned 'refused' or 'unclaimed'?

Yes. Section 27 of the General Clauses Act, 1897 raises a presumption that a notice properly addressed and posted by registered post is served at the time it would, in the ordinary course of post, have been delivered. The Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed (2007) and Dalmia Cement v. Galaxy Traders (2001) held that postal endorsements such as 'refused', 'unclaimed', 'house locked', and 'addressee not in station' are equivalent to service for this presumption. The drawer may rebut the presumption at trial by showing he had no knowledge of the notice.

Can the magistrate take cognizance of a complaint filed beyond one month?

Yes, but only on satisfaction of sufficient cause. The proviso to Section 142(b), inserted by the 2002 amendment, empowers the court to take cognizance of a complaint filed beyond the one-month period if the complainant shows sufficient cause for the delay. The discretion is structured by reference to the case-law on Section 5 of the Limitation Act and is not automatic. The complainant must apply for condonation, plead the cause, and satisfy the court.

Can the payee issue a fresh notice on a second presentation of the same cheque?

Yes. The three-judge Bench in MSR Leathers v. S. Palaniappan (2013) overruled Sadanandan Bhadran (1998) and held that the payee may present the cheque any number of times within its validity, and that on each presentation followed by a fresh notice within thirty days and a fresh fifteen-day failure-to-pay window, a fresh cause of action accrues. The complaint must then be filed within one month of the chosen accrual date. The payee cannot, however, issue more than one notice on the same dishonour.

What must the statutory notice contain to be valid under proviso (b)?

The notice must be in writing and must contain a clear demand for payment of the cheque amount. A notice that merely intimates dishonour without demanding payment is not a notice under proviso (b) (K.R. Indira v. G. Adinarayana, 2003). A consolidated notice in respect of multiple cheques is not invalid by reason of consolidation alone, provided each dishonour is identifiable and the demand for the aggregate is unequivocal. A notice that demands the cheque amount along with interest, costs or compensation is not vitiated by the additional sums (Suman Sethi v. Ajay Churiwal, 2000).