Section 138 of NIA : Section 138: Dishonour Of Cheque For Insufficiency, Etc, Of Funds In The Account

Explanation using Example

Imagine John issues a cheque to Mike for INR 50,000, which is a partial repayment of a loan. Mike deposits the cheque into his bank, but it gets returned due to insufficient funds in John's account. Mike then sends a written notice to John demanding payment within 30 days of receiving the bank's notice of the returned cheque. If John still doesn't pay Mike the owed amount within 15 days after receiving the notice, he could be prosecuted under Section 138 of the Negotiable Instruments Act, 1881 for cheque dishonor, facing potential penalties including a fine or imprisonment.