Invalid instrument - cause of disho6

Yes, cheque returns due to any reason comes under the purview of sec 138 of N.I.Act. Initiate proceedings by issuing notice to drawee.

Invalid instrument presented for encashment / realization would be returned dishonoured by the Banker which do not attract provisions of Section 138 of the Negotiable Instruments Act, 1881. 

Keep the cheque safe and issue a legal notice informing the fact of the return of the cheque given and demand for a fresh cheque from the borrower within a week.  If the borrower fails, then contact a local advocate to proceed further.  Call information from the bank through court after filling suit whether borrower maintained such balance to satisfy the payment of the invalid cheque.  What is the date of the cheque ?  When was the procedure of the old cheque was discontinued?  What were the efforts of the lender in getting a fresh cheque after getting such knowledge are some of the points you have to discuss with your advocate.  It appears to me that some lending was given long back and the post-dated cheque was taken as security and the borrower might have not accepted to give fresh cheque..If I am mistaken, ignore my mistaken opinion.

It would be better to consult and engage a local prudent lawyer for appreciation of facts / documents, professional advise and necessary proceeding.