Cheque Bounced? Criminal Case and Civil Recovery Together

Yes, both cases can run at the same time

When a cheque bounces, the payee gets two remedies that stand on their own, and the law lets you use both. The criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 (the NI Act) punishes the drawer for a cheque that bounced and wasn't made good after notice. The civil suit gets back the money owed. Filing one doesn't stop you filing the other. Courts have allowed them to run side by side for years.

So whether you can file both isn't really the question for a business. Whether you should, and in what order, is. The criminal deadlines are short. They don't forgive. The civil suit gives you three years, but it moves quicker if you file it early as a summary suit. Where the sum is large and the drawer has assets, most payees do better running both.

Below we explain how the two fit. For the criminal case itself, from drafting the notice to the complaint and the trial, see chequebouncelawyer.com.

Why each case does a different job

A Section 138 case is a prosecution, and what it's after is punishment. Up to two years in jail, a fine of up to twice the cheque amount, or both. Plenty of these cases end with the drawer paying up, sometimes under pressure, sometimes because the court orders compensation out of the fine. During trial, Section 143A lets the court order interim compensation of up to 20 percent of the cheque amount. In appeal, Section 148 lets the appellate court require a deposit of at least 20 percent of the fine or compensation. Drawers feel that.

Still, a criminal court isn't a recovery court. It looks at the cheque and nothing else, not the rest of the account. It can't attach the drawer's property before judgment. A drawer who's happy to fight for years, or who simply has nothing, may never pay because of the criminal case alone. And NI Act courts are crowded. Trials drag.

The civil suit is about money, full stop. It can cover the entire debt, not just the cheque, with interest on top. If the debtor is shifting assets, you can back it with attachment before judgment, and the decree gets enforced against bank accounts, receivables and property. Cheque matters often reach Advocate B.K. Singh after the criminal case has been going for a year or two. The regret we hear most is the same each time. Nobody filed a civil suit at the start, while the papers were fresh and the drawer still owned something.

Criminal complaint and civil suit compared

The law that gives you both remedies

From return memo to decree, with both cases running

The criminal clock starts the day the return memo from your bank reaches you. We plan everything below around that one date.

1. Day 0: the return memo arrives

   Get the original cheque and the return memo from your bank and write down the date you received them. Check the cheque date, the amount, the signature and the reason for return. A cheque presented more than three months after its date can't support a Section 138 case. The civil claim is still there.

2. Within 30 days: the legal notice

   Send the drawer a written demand for the cheque amount, by post and email, inside 30 days of receiving the memo. We draft it so that it also demands the full outstanding under the invoices or loan, with interest, as a separate figure. Keep proof of dispatch and delivery.

3. The drawer's 15 days

   From receiving the notice, the drawer gets 15 days to pay the cheque amount. If it pays, that's the end of the criminal route. Whatever else is owed can still be chased in the civil court.

4. The month after: the criminal complaint

   If the drawer doesn't pay, file the Section 138 complaint within one month of the 15 days running out, before the magistrate with jurisdiction over your bank branch. Courts can condone delay for sufficient cause. Don't plan around that.

5. Side by side: pre-institution mediation

   For a commercial claim of Rs 3 lakh or more, apply to the Legal Services Authority under Section 12A of the Commercial Courts Act, 2015. This runs next to the criminal complaint, and the two aren't connected. If the drawer stays away, you get a non-starter report.

6. File the summary suit

   File under Order XXXVII on the cheque, or on the cheque plus the debt behind it, with the mediation report, your documents and court fee. If the drawer is disposing of assets, apply for attachment before judgment along with the suit.

7. Leave to defend, and interim compensation

   On the civil side, the drawer has to seek leave to defend. Bare denials seldom earn unconditional leave. On the criminal side, ask for interim compensation under Section 143A once the accused pleads not guilty.

8. Decree, conviction, or a deal

   Whichever case moves faster puts pressure on the other one. Once you hold a decree, enforce it against the drawer's assets through execution of decree. If the drawer wants to settle, sign one settlement that covers both cases.

One notice doing two jobs

The Section 138 notice is a demand the statute requires, for the cheque amount, and it has to go on time and ask for that amount clearly, because a padded or confused figure is exactly what the drawer's lawyer will attack in the criminal case. Yet the same letter is also your first civil demand. Two jobs, one page.

So how do you square that? We put the cheque amount in as its own clearly stated figure. Then, separately, we set out the rest of the balance under the invoices or loan, with interest. The criminal demand stays clean, and you also get the written notice of interest the Interest Act, 1978 wants on the civil side. Our page on the legal notice for recovery covers what goes into a civil demand.

Advocate B.K. Singh's first question on any cheque notice is when the payee actually got the return memo in hand. The 30 days run from then. A notice sent on day 31 can't be fixed afterwards. Nothing fixes it.

The civil side: a summary suit on the cheque

Order XXXVII was written with documents like a bounced cheque in mind. You file the suit with the cheque, the return memo and the papers behind the transaction. Once served, the defendant has 10 days to enter appearance. You then serve a summons for judgment, and the defendant gets 10 days to ask for leave to defend, on an affidavit that has to disclose a real defence.

From there the court has three choices. It can refuse leave where the defence is frivolous or vexatious, grant leave on condition that the amount or some of it is deposited, or, where a genuine triable issue is raised, grant leave without conditions. A drawer who says the cheque was 'only security' and nothing was owed needs documents. Words won't do. The presumptions in Sections 118 and 139 of the NI Act work for you here as well, and for how this stage looks from the defendant's chair, see our page on leave to defend.

If you want the entire debt, and not just the cheque amount, you can sue on the written contract behind it, as long as you're claiming a fixed sum payable under it. That choice is explained on our pages on the summary suit and on summary suit vs regular suit.

Mediation is for the suit, not the complaint

Section 12A of the Commercial Courts Act says that before a commercial suit of Rs 3 lakh or more is filed, you try pre-institution mediation, unless the suit seeks urgent interim relief. A summary suit on a business cheque counts as a commercial suit. So it needs mediation. The criminal complaint isn't a suit at all. It isn't touched by Section 12A, and you should never hold it back for mediation.

In practice the two cases feed each other. A drawer holding a fresh Section 138 notice often comes to mediation precisely to keep things out of the criminal court. A settlement struck in pre-institution mediation carries the status of an arbitral award, so you can enforce it directly. It can also record that the criminal complaint will be compounded once the last payment is made.

If the drawer doesn't show, the authority issues a non-starter report, usually within a few weeks, and you file. Time spent in mediation doesn't count against limitation for the suit. Our page on pre-institution mediation takes you through it.

Which court hears which case

The criminal complaint goes to the magistrate who has jurisdiction over the bank branch where the payee keeps the account the cheque was presented through, under Section 142(2) of the NI Act as amended in 2015. In Delhi, that means the NI Act courts in whichever district court complex covers your branch. Some cheque cases go to Delhi's digital courts. In Ghaziabad, Gautam Buddh Nagar, Gurugram and Faridabad, magistrates at the district courts hear them.

The civil suit is governed by Section 20 of the Code of Civil Procedure. You sue where the drawer lives or does business, or where the cause of action arose. Often that's a different city. Take a Noida supplier who banks in Noida and is owed money by a Delhi buyer. It may file the complaint at Surajpur and the civil suit in Delhi, or in Noida if delivery or the contract gives Noida courts jurisdiction. A valid exclusive jurisdiction clause binds the civil suit. It makes no difference to where the criminal complaint goes.

The level of civil court depends on value. In Delhi, commercial suits up to Rs 2 crore go to the District Judge (Commercial Court) and bigger ones to the Commercial Division of the Delhi High Court. A proposal to raise the district limit has been under consideration since late 2025, so check the current figure. In UP and Haryana, the suit goes to the court designated as the district's Commercial Court. Below Rs 3 lakh, it's the ordinary civil court.

How long each stage takes, and costs apart from our fee

Papers you'll need for both cases

Company cheques: who gets sued and who gets prosecuted

When a company's cheque bounces, Section 141 of the NI Act makes the company liable to prosecution, along with everyone who was in charge of and responsible for its business at the time. Usually the complaint names the company, the signatory and the directors who ran things day to day. Each needs specific averments. Directors with no part in daily management, many independent directors for instance, often get dropped unless the complaint shows how they were involved.

Civil liability doesn't work like that. The debt belongs to the company, so it's the company you sue. Signing the cheque doesn't make a director personally liable for the company's debts. You can add an individual to the civil suit only if they gave a personal guarantee, signed a promissory note in their own name, or are liable in some other way in their own right. A sole proprietor is personally liable. Partners are jointly liable for a firm's debts.

That difference is one of the best reasons to run both. The criminal case gets at the people who control the company. The civil case gets at what the company owns.

Security cheques, and cheques for part of the debt

A lot of business cheques start life as security. Undated or post-dated, handed over when a supply arrangement or a loan begins. The Supreme Court has held that a security cheque can still found a Section 138 case, if a debt equal to the cheque amount was actually due on the day it was presented. If nothing was due that day, expect the criminal case to fail.

So reconcile the account before you present a security cheque. Fill in only what's actually due on that date, and have a statement of account ready to back it. Put in more than the debt and you've handed the drawer a 'misuse of cheque' defence. That defence won't stay in the criminal court, either. It follows you into the civil suit.

If the cheque covers only part of what's owed, file the criminal complaint on the cheque and the civil suit on the whole balance. Both can go ahead. The civil decree will give credit for anything you recover through the criminal case.

No double recovery: how payments are adjusted

You can't collect the same money twice. If the criminal court orders compensation and the drawer pays it, the civil court counts that amount when it passes the decree. Interim compensation under Section 143A is treated the same way. And if the drawer pays the cheque amount after your notice, credit it in the civil claim.

Keep a running list of every payment that comes in through either case, with the date, the amount and the order it was paid under, because when the civil court works out the decree, or the executing court works out what's left, that list saves weeks of argument. Keep it current.

A civil decree doesn't wipe out the offence, though. The criminal case is about the act of issuing a cheque that bounced and wasn't made good. Different thing. In practice, once they've been paid in full, most payees agree to compound the offence under Section 147.

Settling both cases at once

Most cheque disputes between businesses end in a settlement, and quite often it's the two parallel cases that get the drawer to the table. When that happens, put both cases into one settlement deed. It should give the total amount, the instalments and what follows a default. It should also fix the order of events. For example, the civil suit is decreed on the settlement terms on the next date, and the criminal complaint is compounded only after the final payment clears.

Don't withdraw the criminal complaint when the first instalment arrives. Cheque settlements break down often. And once a complaint is withdrawn, it usually can't be brought back. In the civil suit, get the compromise recorded under Order XXIII Rule 3, so a default lets you execute straight away without starting fresh. You can reach a settlement in pre-institution mediation, in court-annexed mediation, or before a Lok Adalat. How compromises get recorded is on our page on settling a case midway.

When running both isn't worth it, and mistakes we see

• Small amounts. If the cheque is for, say, Rs 50,000, the criminal case on its own may be enough. A civil suit adds cost. And under Rs 3 lakh it isn't a commercial suit anyway.
• The drawer goes into insolvency. Once the NCLT admits a company into insolvency, the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 halts civil suits against it, and you lodge your claim with the resolution professional instead. The criminal case is split. In P. Mohanraj v. Shah Brothers Ispat (2021), the Supreme Court held that the moratorium stops a Section 138 case against the company itself, but the case against its directors and signatories can carry on.
• You missed the 30-day notice deadline. On that cheque, the criminal remedy is usually gone. The civil claim lasts three years, though. Our guide on the time limit to recover unpaid dues explains how that's counted.
• The cheque was stale when presented. Present it more than three months after its date and Section 138 isn't available. Again, the civil claim survives.
• Two different stories. Tell the criminal court the cheque was for a loan and the civil court that it was for goods, and you've given the drawer a defence in both. Get the facts settled before you draft either one.
• The original cheque goes missing. The criminal court needs the original. Use certified copies in the civil suit, and write down which court has the original.

Suppliers, lenders, landlords and MSMEs across Delhi, UP and Haryana

Suppliers and traders are the payees we see most. For them the cheque is usually one part payment on a running account, so the civil suit should take in the whole account. Lenders holding repayment cheques for a business loan can sue on the cheque and the loan together, and the loan side is on our page on recovering business loans and advances. Landlords too. A shop or office landlord sitting on bounced rent cheques can pair a Section 138 complaint with a suit for the arrears, since a lease of property used exclusively in trade or commerce is itself a commercial dispute.

Micro and small enterprises registered under the MSMED Act, 2006 get a third option for unpaid supplies. They can make a reference to the MSME Facilitation Council under Section 18, and claim interest at three times the RBI bank rate under Sections 15 to 17. A bounced cheque can still found a Section 138 complaint alongside that reference. Many big companies run both remedies as a matter of course, because the criminal case brings the drawer's management to court while the civil decree reaches the assets.

In Delhi, cheque complaints are heard by dedicated NI Act courts in each district complex, and commercial suits go to the district commercial courts or the High Court. In Uttar Pradesh and Haryana, magistrates at the district courts in Ghaziabad, Surajpur, Gurugram and Faridabad take the complaints, and suits go to the court designated as the district's Commercial Court. Court fee for suits, and in some states for complaints, is set by state law. Check the current figure before you file.

What to do this week

Find the date the return memo reached you and count 30 days from it. That's your deadline for the notice. Miss it, and the criminal route on that cheque is usually closed. Next, pull together the invoices or loan papers behind the cheque and work out the full balance with interest, so the same notice can carry the civil demand too.

Make an early call on whether the drawer has assets worth going after. If it does, plan the civil suit together with the complaint, not after it. If you'd like the cheque, the return memo and the account checked before the notice goes out, share them with Advocate B.K. Singh's team through our contact page.