Essential for an Action under Section 138
1. Cheque Dishonor: A cheque dishonored for insufficient funds or for more than what is scheduled to be deposited into the drawer’s account is a violation of Section 138. The provisions here do not cover the dishonor of other negotiable instruments.
2. Notice: Within 30 days after the dishonor, the payee is required to demand payment of the full amount of the cheque in writing to the drawer.
3. Drawer’s Obligation: The drawer has fifteen days from the date of notice to make the payment. The payee may file an action if the money is not received within this time frame.
4. Criminal Liability: The action covered by Section 138 is illegal. If the person who wrote the cheque is found to be guilty, he could face a two-year prison sentence, a fine equal to twice the value of the cheque, or both.
5. Compounding: With the court’s approval and within the terms the court deems appropriate, the drawer may, before the prosecution’s establishment, compound the offense.