How To Get Bail Under Section 138 Of The Negotiable Instruments Act?

Have you received a legal notice, summons, or even an arrest warrant for a bounced cheque? If yes, do not worry. Just be ready to understand your legal rights. The relevant law is Section 138 of the Negotiable Instruments Act, 1881, which deals with the dishonoring of a cheque for insufficient funds. This law is considered a serious offence and can lead to criminal prosecution if nothing is done. However, you may not panic just yet. One important item to remember is that the offence is considered bailable. This means you are able to seek bail and have a right to bail. This should provide you with some immediate comfort and legal security while proceedings occur. Personally, I suggest being proactive and seeking legal counsel. This will help you in finding out what your next steps are. Your understanding of this legal position at this time could change the outcome significantly. Always respond and do not ignore the legal notice. It costs nothing to respond.

In this article, you will get to know about:

• How to Get Bail Under Section 138 of the Negotiable Instruments Act?
• What is Section 138 of the Negotiable Instruments Act?
• Is Bail Allowed in a Section 138 Case?
• Types of Bail Applicable in Section 138 Cases.
• Key Case Laws.

What Is Section 138 Of The Negotiable Instruments Act?

Section 138 of the Negotiable Instruments Act, 1881, was made to build trust in cheques as a reliable way of payment. It ensures that cheque payments are honoured. If a cheque bounces, it means there is not enough money in the account of the person who issued it. The person who was supposed to receive the money has the right to take legal action against the issuer of the cheque.

Legal Definition of the Offence

According to Section 138, an offence happens when someone gives a cheque to pay a debt or dues, but the bank does not clear it because there is not enough money in the account or the amount is more than the bank allows. In such cases, it becomes a punishable offence under this section.

When Section 138 is Invoked?

The following describes the conditions under which Section 138 is applied:

• Cheque Issued for a Debt or Liability: The check must have been written to settle a debt or other obligation that is enforceable by law. This is an important component. In general, a check given as a gift or donation is exempt from Section 138.
• Dishonour Due to Insufficient Funds: The drawer's account having insufficient money or going over the agreed-upon overdraft limit must be the main cause of the check being returned unpaid.
• Demand Notice by Payee: Within 30 days of learning that the check was returned by the bank, the payee must send a written demand for payment of the specified sum to the drawer.
• Failure to Pay by Drawer: The drawer fails to make the payment of the cheque amount to the payee within 15 days of the receipt of the demand notice.

Penalties and Consequences under Section 138

If all the legal requirements are met, the payee has one month from the expiry of the 15-day period given in the demand notice to file a complaint against the drawer before a Magistrate’s Court.

If found guilty under Section 138, the drawer may face the following penalties:

• Imprisonment: Up to two years, or
• Fine: Up to twice the cheque amount, or
• Both: Imprisonment and fine.

In addition, a conviction under Section 138 can seriously affect the drawer’s creditworthiness and reputation.

Is Bail Allowed In A Section 138 Case?

Yes, absolutely. A violation under Section 138 of the Negotiable Instruments Act results in a bailable offense. The Code of Criminal Procedure (CrPC), 1973 [now replaced by Bharatiya Nagarik Suraksha Sanhita, 2023] schedule outlines two types of offenses, which are bailable and non-bailable.

Bail as a Matter of Right in Bailable Offences

When an individual faces bailable charges, they have a legal right to receive bail according to the legal framework. The law guarantees that any person facing bailable offences can obtain bail after completing the required bail process, even if the court demands sureties. The individual who arrests the accused person or the court that receives the case holds the responsibility to provide bail when the accused offers sufficient security.

When Can Bail Be Granted?

Bail in a Section 138 case can typically be granted at two primary stages:

By the Police Officer (Station Bail)

When the police arrest an individual, the station house officer possesses the power to release them on bail. The practice of releasing an accused person from custody at the police station is commonly known as "station bail." To secure release from custody, the accused must provide a personal bond with or without sureties to pledge court appearances as needed.

By the Magistrate's Court (Regular Bail)

When the police do not arrest the accused person or the accused is not granted station bail then they have the option to request bail from the Magistrate's court. This application typically occurs after the accused either goes to court or gets presented to the court.

Also Read : Cheque Bounce Under Section 138 Of Negotiable Instruments Act, 1881

Note: The BNS Act, 2023, has replaced the Indian Penal Code (IPC) and the Criminal Procedure Code (CrPC). However, the specific provisions related to bail in cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881, remain applicable. Therefore, the procedures for granting bail in such cases continue as given above.

Bail pathways under BNSS (478/480/482) in 138 cases

This is a simplified guide to the bail process for a Cheque Bounce Case (Section 138 of the Negotiable Instruments Act) under the new law, the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

Key Fact to Know First

• Section 138 is a "Bailable Offence": This is the most important fact. It means the law considers it a less severe offence, and getting bail is your right, not a favour from the judge or police.
• Case Type: It is usually a Summons Case, meaning the court calls you, not the police arresting you.

Because this is a summons case, an actual arrest is rare unless you ignore the court orders. The pathway depends on whether you have been arrested or are simply appearing in court.

Anticipatory Bail  - BNSS 482 (formerly CrPC 438)

Pre-arrest protection from the Sessions Court/High Court. Technically unnecessary in a bailable offence like Section 138, but sometimes used as a precaution (e.g., multiple complaints, NBW apprehension, prior non-appearance). Courts generally expect you to use regular/station bail unless there are special facts.

Station Bail - BNSS 478 (formerly CrPC  436)

If the police arrest you for a bailable offence, the Station House Officer can release you on bail against a personal bond and, where required, sureties. Use this for swift release without waiting to be produced before the Magistrate.

Regular Bail - BNSS 480 (formerly CrPC 437)

If you were not released at the station or you appear in court on summons, the Magistrate typically grants bail on execution of a bond (and sureties if asked). In Section 138 (bailable, largely documentary evidence), bail is ordinarily allowed unless there are specific risk factors (absconding, repeated non-appearance, etc.).

Step-by-Step Process Simple Bail Process

1. Go to Court: Go to the Magistrate's Court on the date mentioned in the Summons.
2. Request Bail: Your lawyer files a standard Regular Bail Application.
3. Bond Order: The Magistrate orders you to sign a Personal Bond and provide a Surety Bond (a guarantee from another person) for a specific amount.
4. Get Released: Once the documents are submitted and approved, the court issues your Release Order.

Note: Since it is a bailable offense, bail is generally granted quickly on your first court appearance.

Documents Required for Bail

The documents typically required for a bail application in a Section 138 case include:

• Case Copies: Summons/Warrant and Complaint.
• Accused ID: Your Aadhar, PAN, and Address proof.
• Bail Affidavit: Sworn statement for Bail Bond.
• Surety Papers: Surety ID and Financial Proof (if applicable).

Grounds On Which Bail May Be Denied Or Delayed

Understood. Let's make this simple and direct, like giving clear instructions to someone who is new to the process.

Here are the main reasons why the court might say "No" to bail (or delay it) in a Cheque Bounce Case (Section 138):

Simple Guide: Why You Might Not Get Bail?

Bail is usually granted easily in these cases, but the court can stop it if you violate their trust or the law.

1. The 20% Rule (The Biggest Problem):
2. • The Issue: The court orders you to deposit 20% of the bounced cheque amount as a temporary payment (called "Interim Compensation" under Section 143A).
   • Bail Block: If you refuse or fail to deposit this money, the court can delay your bail or even cancel it later.
2. Running Away (Flight Risk):
3. • The Issue: The court believes you will run away and not come back for the trial dates.
   • Bail Block: If you miss too many court dates, or if you do not have a stable address, the court might deny bail to ensure you face the trial.
3. Messing with the Case (Tampering):
4. • The Issue: You try to threaten the person who filed the complaint, or you try to destroy any documents related to the case.
   • Bail Block: If the court finds you are trying to cheat the system or scare people, they will deny bail immediately.
4. Habitual Offender:
5. • The Issue: You already have a long history of similar cheque-bounce cases or other criminal records.
   • Bail Block: The court decides you are a serial defaulter and cannot be trusted to follow the law while out on bail.

Can Bail Be Cancelled In Section 138 Cases?

Yes, even after bail has been granted in a Section 138 case, it can be cancelled by the court under specific circumstances. The grounds for cancellation of bail are generally similar to the grounds for denial of bail after it has been granted.

These include:

• Bail in a Section 138 case can be cancelled if the accused does not follow the court’s rules.
• Always attend all hearings and stay within the allowed area.
• Do not try to influence witnesses or change any evidence.
• Stay available and do not run away from the law.
• Do not commit any new offences while on bail.

Tips To Get Bail Easily In Section 138 Allegations

Given the bailable nature of the offence under Section 138, obtaining bail is usually not overly complicated. However, following these tips can help ensure a smoother process:

• Contact a lawyer immediately after receiving a notice or fearing arrest.
• Cooperate with the police and request station bail if arrested.
• Keep identity, address, and surety documents ready.
• Execute the bail bond as soon as it is granted.
• Choose trustworthy sureties if required.
• Promise to attend all court hearings and follow conditions.
• Be respectful in court and follow legal procedures.
• Follow your lawyer’s advice carefully.

Key Case Law: Bail, Compounding & Speedy Disposal in Section 138 NI Act

This section highlights important case laws on compounding and settlement under Section 147 of the Negotiable Instruments Act, 1881.
These cases illustrate how courts encourage early resolution, compensation, and summary disposal in Section 138 cheque bounce matters.

Damodar S. Prabhu v. Sayed Babalal H. (2010)

Facts: The parties were involved in a Section 138 cheque bounce case and reached a settlement after the litigation had progressed.
Held: The Supreme Court in Damodar S. Prabhu v. Sayed Babalal H. (2010) laid down a graded costs framework to encourage early compounding of Section 138 cases, emphasizing that settlement and compensation are preferred over incarceration.

Meters & Instruments (P) Ltd. v. Kanchan Mehta (2017)

Facts: A dispute under Section 138 where the accused sought compounding to avoid prolonged litigation.
Held: The Supreme Court in Meters & Instruments (P) Ltd. v. Kanchan Mehta (2017) reiterated that the NI Act has a compensatory objective, and courts should adopt a liberal approach to compounding, using summary procedures to expedite resolution.

Indian Bank Association & Ors. v. Union of India & Anr. (2014)

Facts: Several Section 138 complaints were pending, causing delays in resolution.
Held: The Supreme Court in Indian Bank Association & Ors. v. Union of India & Anr. (2014) directed speedy and summary disposal of Section 138 complaints, allowing affidavit evidence and aiming to conclude proceedings within six months under Section 143 NI Act.

Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. (2007)

Facts: The appellant challenged a conviction under Section 138 while seeking suspension of sentence and interim relief.
Held: The Supreme Court in Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. (2007) clarified appellate powers, allowing courts to require a reasonable deposit towards compensation without affecting the right to appeal, distinguishing between fine and compensation under CrPC/BNSS.

Additional Notes on Compounding/Settlement (Section 147 NI Act):

• Offences under Section 138 are compoundable; cases can be settled at any stage of trial, revision, appeal, or SLP, subject to court approval.
• Recent Supreme Court rulings (2024–2025) state that once a valid compromise under Section 147 is recorded, any conviction or sentence is set aside and proceedings closed.
• Courts may impose graded costs depending on the stage of settlement to encourage early resolution.
• Money directions accompanying compounding/appeals include:
• • Section 143A: Trial courts may direct up to 20% interim compensation during pendency.
  • Section 148: Appellate courts may direct deposit (typically 20%) after conviction, distinct from Section 143A.

Conclusion

Section 138 cheque bounce case can be stressful, but since it is a bailable offence, you have the right to secure bail promptly. By consulting a qualified lawyer, keeping all documents ready, and following court procedures carefully, you can safeguard your legal rights. Knowing your bail options, compounding under Section 147 NI Act, and relevant key case laws ensures a smooth and speedy resolution, helping you avoid penalties and legal complications. Early and informed action is the key to handling a cheque bounce case confidently.

Disclaimer: The information provided here is for general informational purposes only and should not be construed as legal advice.

For personalized legal guidance, please consult with a qualified civil lawyer.