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We combine decades of courtroom experience with a client-first approach to deliver clear, effective legal solutions.
A client's cheque for ₹2,40,000 is sitting in your bank, the tickets were issued three days ago, the PNR is live, and the client has stopped answering calls. The airline will debit your settlement account whether or not your customer pays. A cheque bounce for travel agency payments is not simply a bad debt; under the Negotiable Instruments Act, 1881 it is a criminal offence with a timetable measured in days. Miss the timetable and you are left with an ordinary civil claim against a company that may have no money. Here is how the route works, where it stops, and what to keep.
Section 138 of the Negotiable Instruments Act, 1881 applies when a cheque drawn on an account maintained by the drawer is returned unpaid because the funds are insufficient, or because the amount exceeds the arrangement with the bank. Six conditions must line up.
The cheque must have been presented within its validity period.
The court must see a legally enforceable debt or other liability, in whole or part, behind the cheque.
The bank must return it unpaid for want of funds or for exceeding the arrangement.
A written demand must reach the drawer within 30 days of your receiving the bank's return memo.
The drawer must fail to pay within 15 days of receiving that demand.
A complaint must be filed within one month of the day the cause of action arises.
For a travel agency, the "legally enforceable debt" is normally the tax invoice — ticket cost, hotel component and your service fee — backed by an accepted booking. That is why the booking confirmation e-mail matters as much as the cheque.
Two returns that look like technicalities still help you. Courts have read section 138 to cover a cheque returned because the drawer instructed "stop payment" or because the account was closed. A return that is purely technical, such as a mismatched signature on a cheque the drawer genuinely meant to honour, is weaker ground, and a civil suit may serve you better.
Section 138 is aimed at the drawer — the person who signed the cheque and whose account it is drawn on. That single fact decides more travel agency disputes than anything else in the file.
If the account belongs to one spouse but the booking was made in the other's name, your complaint lies against the account holder, not the traveller. For a sole proprietorship there is no separate legal person: the complaint names the proprietor, and the trade name is only a description.
A cheque signed by a partner in the firm's name binds the firm and, ordinarily, the other partners under the Indian Partnership Act, 1932. Name the firm and the signing partner. Section 141, which creates vicarious liability, is drafted for companies and does not apply to firms.
Section 141 extends liability to every person who, at the time the offence was committed, was in charge of and responsible to the company for the conduct of its business. Two settled rules follow. The company itself must be arraigned — the Supreme Court held in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd., (2012) 5 SCC 661, that proceeding against directors alone is not maintainable. And a bare statement that someone is a director is not enough; the complaint must say how that director was in charge, as laid down in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89.
A corporate travel desk that hands you a cheque drawn on the parent company's account has made the parent the drawer. Where a sub-agent passes on a cheque from a different entity, match the name printed on the cheque against your invoice and your KYC record before depositing it, and record in writing who is paying for whom.
A cheque given as security for a credit account is not outside the section. Once the liability crystallises and the cheque is presented and dishonoured, section 138 can be invoked, as the Supreme Court reasoned in Sripati Singh v. State of Jharkhand (2021).
Start the clock from the day your bank hands you the return memo, not from the date the cheque was deposited. That day is what the 30-day period in the proviso to section 138 runs from, and the memo is admissible evidence of dishonour under section 146.
Send the demand by registered post with acknowledgement due to the drawer's correct address — for a company, the registered office shown on MCA master data, with a copy by e-mail to the addresses used in the booking correspondence. Set out the cheque particulars, the invoice number and date, and a clear demand for the amount. Then wait. The drawer has 15 days from receipt to pay; the cause of action arises only when those 15 days end without payment, and the complaint must be filed within one month of that date. Delay can be condoned under the proviso to section 142(1)(b), but do not build a plan on it.
Jurisdiction is now straightforward. Under section 142(2), the complaint is filed where the branch of the bank in which you maintain the account is situated, not where the client banks.
A Pune travel agency booked 34 air tickets and a five-night Singapore package for a coaching institute's staff offsite. Invoice dated 12 January 2026: ₹11,84,000 including GST. The institute gave a cheque dated 20 January for the full amount, signed by one of its two directors. Tickets were issued on 21 January and the hotel advance paid the next day.
The cheque was deposited on 27 January and returned on 29 January with "funds insufficient". The memo reached the agency on 30 January. A demand notice dated 12 February went by Speed Post to the registered office and by e-mail, giving 15 days. It was delivered on 14 February, so the payment window closed on 1 March and the cause of action arose on 2 March. The institute offered ₹4,00,000 on 5 March; the agency recorded its refusal in writing rather than accept a part payment against a full invoice.
The complaint was filed on 25 March in the court covering the agency's own bank branch, naming the institute and both directors with specific averments about who handled its accounts. Along with it, the agency applied under section 143A for interim compensation of up to 20% of the cheque amount, here ₹2,36,800. Its liability to the airline ran on regardless; the settlement cycle did not pause.
Section 139 presumes that a dishonoured cheque was issued for consideration, but the presumption is rebuttable and a court will still want the underlying transaction proved. Build one indexed file.
Collect the original return memo from your bank in the same week.
Print the statement of account showing the cheque debit and its reversal.
Pull the quotation, the client's written acceptance and the payment terms.
Attach PNRs, hotel vouchers and proof that the airline or consolidator was paid.
Confirm the drawer's current address from MCA records or your KYC file.
Issue the section 138 demand within 30 days of the memo, by post and e-mail.
Diarise the 15th day and the one-month complaint deadline before you do anything else.
Documents to keep long-term. The cheque in original, the deposit slip, the return memo, the ledger extract showing the outstanding debit, the postal receipt and acknowledgement card, and every e-mail or message in which the client acknowledged the amount. A signed booking form with a payment and cancellation clause is worth more than a friendly WhatsApp thread.
Common mistakes. Handing the original cheque back against a verbal promise. Sending notice to an old office address. Filing the complaint before the 15 days expire. Accepting a fresh cheque from a different entity without recording the change in writing. In a company complaint, listing directors without saying what each of them did. And remember that the tax invoice you raised already carries GST under the CGST Act; a bounced cheque does not by itself cancel that liability, so settle the correct treatment with your accountant before issuing any credit note.
Section 138 is a criminal remedy. The punishment extends to imprisonment up to two years, or a fine up to twice the cheque amount, or both, and compensation to you depends on what the criminal court orders. The lever is strong: section 143A allows you to seek interim compensation during trial, and section 148 requires a deposit of at least 20% of the compensation if the drawer appeals a conviction. The trial is summary under section 143, with evidence by affidavit under section 145, yet these matters routinely run for years.
The civil route is for recovery. A cheque is a bill of exchange, so in courts whose original side rules permit it, a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 moves faster than an ordinary money suit. If your agency is registered on Udyam as a micro or small enterprise, Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006 gives you another option: reference to the MSME Facilitation Council, with interest under section 16 where payment is delayed beyond 45 days.
You can pursue both. The criminal complaint is not a substitute for a recovery suit, and a settlement recorded in one does not end the other unless it is documented. Most agencies use the section 138 complaint and the section 143A application as the pressure that brings a client to the table, and keep the civil claim ready for whatever remains unpaid.
For small tickets, weigh cost against recovery. A ₹35,000 bounce may not justify three years of hearings; a written notice, a summary suit and a Facilitation Council reference will usually cost less and move faster.
If a cheque has already bounced, the next action is a single one: collect the return memo from your bank today and diarise the 30th day from its receipt. Every other date in the section 138 timeline flows from that one.
This article is for general information only and is not legal advice. Consult a qualified professional for your specific facts.
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