Disputes over dishonoured cheques and banking fraud sit at the meeting point of criminal and commercial law. The chamber of Advocate Manish Jha appears for both complainants and accused persons in these matters before Delhi's Magistrate courts, Sessions Courts and the High Court of Delhi.
Cheque Dishonour — Section 138, Negotiable Instruments Act, 1881
Section 138 makes the dishonour of a cheque for insufficiency of funds a criminal offence, provided the statutory ingredients are met: the cheque was issued for the discharge of a legally enforceable debt or liability, it was presented within its validity period, and it was returned unpaid by the bank.
- The payee must send a written demand notice to the drawer within 30 days of receiving the bank's return memo.
- The drawer then has 15 days from receipt of the notice to pay the cheque amount.
- If payment is not made, a complaint must be filed before the Magistrate within one month of the expiry of that 15-day period.
Where the drawer is a company, Section 141 extends liability to directors and officers who were in charge of and responsible for the conduct of its business at the relevant time — a provision that requires careful pleading on both sides.
Cheating and Criminal Breach of Trust
Banking fraud allegations are typically framed as cheating — Section 420 of the Indian Penal Code, now Section 318 of the Bharatiya Nyaya Sanhita, 2023 — or criminal breach of trust, earlier Section 406 IPC and now Section 316 BNS. The distinction matters: cheating requires dishonest inducement from the outset, whereas breach of trust concerns dishonest misappropriation of property already entrusted. An earlier version of this website described these offences with an incorrect section reference; the correct provisions are those stated here.
Complaints Against Banks — RBI Integrated Ombudsman
Where the grievance is against the bank itself — an unauthorised debit, a wrongly honoured instrument, or deficiency in service — the customer should first complain to the bank and, if unresolved within the prescribed period or rejected, escalate to the RBI Ombudsman under the Reserve Bank – Integrated Ombudsman Scheme, 2021 through the RBI's complaint portal.
The chamber also advises on related matters such as online payment fraud, ATM and card fraud and statutory demand notices.
Frequently Asked Questions
What is the time limit for a cheque bounce notice?
The demand notice under Section 138 of the Negotiable Instruments Act must be sent within 30 days of the payee receiving the bank's cheque-return memo. The drawer then has 15 days from receiving the notice to pay. If payment does not come, the complaint must be filed within one month after that window closes.
Can directors be prosecuted for a company's cheque?
Yes. Section 141 of the NI Act makes persons who were in charge of and responsible to the company for its business liable along with the company. However, liability is not automatic for every director; the complaint must specifically aver their role, and directors can seek discharge or quashing where the averments are absent.
Is cheating still Section 420?
For offences committed on or after 1 July 2024, cheating is punishable under Section 318 of the Bharatiya Nyaya Sanhita, 2023, which replaced Section 420 IPC. Criminal breach of trust, earlier Section 406 IPC, is now Section 316 BNS. Older pending cases continue under the IPC provisions.
What if my complaint against a bank is ignored?
First lodge a written complaint with the bank and keep the acknowledgment. If the bank rejects it or fails to resolve it within the prescribed period, you may escalate to the RBI Ombudsman under the Integrated Ombudsman Scheme, 2021, free of cost, through the RBI complaint management portal or by post.