The Offence of Cheque Dishonor Occurs After 15 Days of Demand Notice for Payment of Debt Amount

In Vishnoo Mittal v. Shakthi Trading Company [2025 INSC 346], the Supreme Court explained that the cause of action for S.138 of the Negotiable Instruments Act (NI Act) arises not on the dishonour of the cheque but when the amount remains unpaid after the expiry of fifteen days after the issue demand notice. The return of the dishonoured cheque does not create an offence under Section 138 NI Act.

In arriving at the above conclusion in the above case, the Supreme Court relied in Jugesh Sehgal v. Shamsher Singh Gogi (2009) 14 SCC 683 has explained the ingredients of Section 138 of NI Act offence, the following ingredients are required to be fulfilled:

1. a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
2. the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
3. that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
4. that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
5. the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
6. the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.

In means that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N I Act.

In other words, the cause of action arises only when the amount remains unpaid even after the expiry of fifteen days from the date of receipt of the demand notice.