Section 138 NI Act Bangladesh: Complete Guide to Cheque Dishonour Cases

Section 138 of the Negotiable Instruments Act, 1881 creates a criminal offence for the dishonour of a cheque issued for the discharge of a legally enforceable debt or liability. The section was introduced to enhance the credibility of cheque transactions in commerce and protect payees from fraud.

The law applies when a cheque is returned by the bank unpaid because:

• The amount in the account is insufficient to honour the payment;
• The amount exceeds the arrangement made with the bank;
• The account has been closed;
• A stop-payment instruction was issued by the drawer fraudulently.

It is important to understand that Section 138 is a criminal provision, not merely a civil remedy. A conviction carries criminal penalties including imprisonment. This dual nature — civil debt recovery combined with criminal prosecution — makes it a powerful tool for creditors in Bangladesh.

However, the law also provides safeguards against misuse. The cheque must have been issued for a legally enforceable debt or liability. Cheques given as gifts, security deposits (in some interpretations), or post-dated cheques that do not represent an existing liability may not attract Section 138 liability.

For a Section 138 complaint to succeed, the complainant (payee) must establish all of the following essential elements:

1. The Cheque Was Drawn: The accused (drawer) must have actually drawn the cheque on their bank account.
2. The Cheque Was Presented: The payee must have presented the cheque to their bank within the period of its validity (generally 6 months from the date of issue).
3. The Cheque Was Dishonoured: The cheque must have been returned unpaid by the bank, evidenced by a dishonour memo or bank return memo.
4. The Cheque Was Issued for a Legally Enforceable Debt: The underlying transaction must be a legal one — a loan, sale of goods, services, or a recognised financial obligation.
5. A Demand Notice Was Sent: The payee must have sent a written demand notice to the drawer within 30 days of receiving the bank's dishonour memo.
6. Failure to Make Payment: The drawer must have failed to make the payment within 30 days of receiving the notice.
7. Complaint Filed Within Time: The complaint in court must be filed within 30 days of the expiry of the notice period.

Failure to establish even one of these elements can result in acquittal. Courts apply these requirements strictly, so both complainants and accused must pay careful attention to each step in the chain.

The legal demand notice is perhaps the most critical procedural step in a Section 138 case, and a vast number of cases fail because this step is not carried out correctly. Here is what the law requires:

• Timing: The notice must be sent within 30 days of the date of receipt of the bank's dishonour memo (also called the cheque return memo).
• Form: The notice must be in writing. Oral demands do not satisfy this requirement.
• Content: The notice must clearly state that the cheque was dishonoured, the amount due, the date of the cheque, and a specific demand for payment within 30 days of receipt of the notice.
• Mode of Service: The notice should be sent by registered post with acknowledgement due (AD) to the drawer's last known address. This creates a legal presumption of service. Sending by email alone is insufficient unless supplemented by postal notice.
• Proof of Sending: Keep the postal receipt, the registered post slip, and the returned acknowledgement card (even if the notice is refused).

What if the drawer refuses to accept the notice? If the drawer deliberately avoids receiving the notice, courts have held that this does not defeat the notice requirement. Service is deemed complete when the letter is tendered at the correct address, even if refused.

After the 30-day notice period expires without payment, the payee has another 30 days to file the criminal complaint in court. Missing this window extinguishes the right to file a Section 138 case. Consult a criminal lawyer in Bangladesh immediately upon receiving a dishonour memo to ensure these timelines are met.

Once the notice period has expired and the drawer has failed to pay, the payee can initiate criminal proceedings by filing a complaint. The process is as follows:

1. Engage a Lawyer: Retain a criminal or commercial lawyer with experience in NI Act cases to draft the complaint.
2. Prepare the Complaint: Draft a formal written complaint (ejahar) setting out all the facts — the original transaction, the cheque details, the dishonour, the notice, and the failure to pay.
3. Choose the Correct Court: In Bangladesh, Section 138 cases are filed before the Chief Metropolitan Magistrate (CMM) in city areas (Dhaka, Chattogram, etc.) or the Chief Judicial Magistrate (CJM) in other districts. Jurisdiction lies where the bank branch that dishonoured the cheque is located.
4. Attach Documents: File the complaint with the original dishonoured cheque, the bank's dishonour memo, copies of the demand notice, postal receipts, and proof of service.
5. Court Takes Cognisance: The Magistrate examines the complaint and, if satisfied that a prima facie case exists, takes cognisance of the offence and issues a summons to the accused drawer.
6. Trial Proceedings: The case is tried as a criminal case. The complainant presents evidence (witnesses and documents) and the accused is given the opportunity to cross-examine and present a defence.
7. Judgment: If convicted, the court imposes punishment. If acquitted, the accused is discharged.

Section 138 of the NI Act prescribes both imprisonment and fines as punishments, making cheque dishonour a cognisable criminal matter in Bangladesh:

• Imprisonment: The convicted drawer may be sentenced to imprisonment for a term which may extend to one (1) year.
• Fine: A fine which may extend to three times the amount of the cheque — this is a significant financial penalty designed to act as a deterrent and compensate the payee.
• Both: The court may impose both imprisonment and a fine simultaneously.

Courts in Bangladesh have increasingly leaned towards imposing fines rather than custodial sentences in commercial disputes, especially where the accused shows genuine willingness to settle. However, in cases involving repeated dishonour or deliberate fraud, imprisonment is not uncommon.

Beyond criminal penalties, the conviction also:

• Creates a criminal record for the drawer;
• Can affect the drawer's ability to obtain credit, business licences, and professional registrations;
• May trigger civil recovery proceedings simultaneously in a separate civil court for recovery of the cheque amount plus interest.

Given these consequences, accused persons should immediately consult a criminal lawyer in Dhaka upon receiving summons in a Section 138 case.

An accused drawer is not without recourse. Bangladesh courts recognise several valid defences that, if properly established, can result in acquittal:

• Cheque Not Issued for a Legally Enforceable Debt: If the cheque was issued as a security, a gift, or for an illegal transaction (such as gambling debt or usurious loan), it cannot found a Section 138 case.
• Notice Not Sent in Time: If the payee failed to send the demand notice within 30 days of receiving the dishonour memo, the complaint is barred.
• Notice Not Properly Served: A notice sent to the wrong address or without registered post may be challenged.
• Complaint Filed Out of Time: If the complaint was filed after the 30-day window following the notice period, it is time-barred and must be dismissed.
• Cheque Presented After Validity Period: A cheque presented to the bank after 6 months from its date is stale and dishonour of such a cheque does not attract Section 138.
• Cheque Was Stolen or Forged: If the cheque was issued under forgery, coercion, or was stolen without the drawer's knowledge, this is a complete defence.
• Payment Already Made: If the drawer can show that the debt was discharged before or after the notice period, and the complainant continues the case in bad faith, this can be raised as a defence.

Mounting a successful defence requires thorough preparation and documentation. An experienced criminal lawyer can evaluate which defences apply to your specific situation and prepare the evidence accordingly.

Whether you are the complainant trying to recover money or the accused trying to defend yourself, having a skilled criminal lawyer in Bangladesh by your side makes a decisive difference in Section 138 cases. Here is how:

• For Complainants: A lawyer ensures that the notice is sent correctly and on time, the complaint is drafted with all material particulars, the right court is approached, and evidence is presented effectively during trial.
• For Accused: A lawyer analyses the complaint for procedural defects (late notice, wrong court, time bar), negotiates a settlement or payment plan with the complainant to avoid conviction, and vigorously cross-examines the complainant's witnesses to expose weaknesses in their case.
• Mediation and Compromise: In many cases, a negotiated settlement — where the accused pays the cheque amount plus compensation — results in compounding of the offence and withdrawal of the complaint. This avoids a criminal conviction and saves both parties the cost and time of a full trial.
• Appeals: If convicted by the Magistrate, the accused can appeal to the Sessions Court, the High Court Division, and ultimately the Appellate Division. A lawyer experienced in Supreme Court proceedings is essential for higher appellate stages.

Yes. Filing a Section 138 criminal complaint does not bar you from simultaneously filing a civil suit for recovery of the cheque amount, interest, and damages. Both proceedings can run concurrently. Many creditors pursue both to maximise recovery and pressure.

This is a contested area of law in Bangladesh. Courts have held in some cases that a cheque given merely as security (not against an existing legally enforceable debt) may not attract Section 138 liability. The accused must raise this as a defence and produce evidence to show the cheque's purpose was security, not payment.

Paying the amount does not automatically close the case. However, if you reach a written compromise with the complainant and they file a petition for compounding and withdrawal, the court can allow withdrawal of the case. Consult a lawyer before making any payment to ensure you receive proper legal protection.

Yes. Section 138 is a compoundable offence under Bangladesh law, meaning the complainant can compound (settle) the matter and apply for withdrawal at any stage before conviction. A negotiated settlement is common and practical in commercial cheque disputes.

Depending on court workload, a Section 138 case can take anywhere from 6 months to 3–4 years at the trial court level. Cases involving multiple adjournments or complex defences take longer. An experienced lawyer can help expedite proceedings where possible.