Legal Notice for Cheque Bounce — Section 138 NI Act Format

# Legal Notice for Cheque Bounce — Section 138 NI Act Format

When a cheque presented for payment is returned (dishonoured) by the bank with the remark "insufficient funds" or similar, the payee has a powerful legal remedy under Section 138 of the Negotiable Instruments Act, 1881. However, the law mandates a specific procedural step before a criminal complaint can be filed: the payee must send a formal demand notice to the drawer within 30 days of receiving the bank's dishonour memo.

This page provides an educational guide to the Section 138 demand notice format. This is for informational purposes only and does not constitute legal advice. Given the strict timelines and procedural requirements under the NI Act, always consult a qualified advocate for your specific matter.

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When to Use This Template

This notice format is used when:

- A cheque issued to you has been returned by the bank unpaid, with a dishonour memo (bank return memo) stating reasons such as "insufficient funds," "payment stopped by drawer," "account closed," "exceeds arrangement," or similar

- You want to issue the mandatory statutory notice that is a prerequisite to filing a complaint under Section 138 of the Negotiable Instruments Act, 1881

- The cheque was issued for a legally enforceable debt or liability (not a gift or security for a future obligation that has not yet arisen)

**Critical Timelines Under Section 138 NI Act:**

- The cheque must be presented for payment within 3 months of the date written on it (or within its validity period)

- After receiving the bank's dishonour memo, you must send this notice within **30 days**

- After the notice is served, the drawer has **15 days** to make payment

- If no payment is made within 15 days of service, you must file your complaint within **30 days** of the expiry of that 15-day period

Missing any of these deadlines can result in your complaint being dismissed. This notice is therefore extremely time-sensitive.

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Sample Format

```

[SENDER'S ADVOCATE NAME]

Advocate, [BAR COUNCIL ENROLLMENT NUMBER]

[OFFICE ADDRESS — COMPLETE]

[CITY, STATE, PIN CODE]

[PHONE NUMBER]

[EMAIL ADDRESS]

Date: [DATE OF NOTICE IN DD/MM/YYYY]

By Speed Post AD / Registered Post AD

To,

[DRAWER'S FULL NAME — WHO ISSUED THE CHEQUE]

[DRAWER'S COMPLETE ADDRESS]

[CITY, STATE, PIN CODE]

Subject: DEMAND NOTICE UNDER SECTION 138 READ WITH SECTION 142 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881

Dear Sir/Madam,

Under instructions from and on behalf of my client, [CLIENT'S FULL NAME], [Client's Address] (hereinafter referred to as "the Payee/Complainant"), I hereby serve upon you the following legal notice:

1. DETAILS OF THE CHEQUE AND TRANSACTION

a. My client, [CLIENT'S NAME], had advanced a sum of Rs. [AMOUNT IN FIGURES] (Rupees [AMOUNT IN WORDS] only) to you [OR: was owed a sum of Rs. X by you] on account of [nature of the legally enforceable debt — e.g., "a loan advanced on [DATE]" / "unpaid dues against invoice no. X dated [DATE]" / "security deposit payable as per agreement dated [DATE]"].

b. In discharge of the aforesaid legally enforceable liability, you issued a cheque bearing the following details:

- Cheque No.: [CHEQUE NUMBER]

- Dated: [DATE ON THE CHEQUE]

- Drawn on Bank: [BANK NAME], Branch: [BRANCH NAME & ADDRESS]

- Account No.: [ACCOUNT NUMBER OF DRAWER]

- Amount: Rs. [AMOUNT IN FIGURES] (Rupees [AMOUNT IN WORDS] only)

- In favour of: [NAME OF PAYEE — my client's name]

2. PRESENTATION AND DISHONOUR

a. The aforesaid cheque was presented by my client for encashment through [my client's bank — BANK NAME, BRANCH] on [DATE OF PRESENTATION].

b. The said cheque was returned dishonoured/unpaid by your banker vide return memo dated [DATE OF BANK'S DISHONOUR MEMO], with the remark "[EXACT REASON STATED ON BANK RETURN MEMO — e.g., 'Insufficient Funds' / 'Payment Stopped by Drawer' / 'Account Closed']."

c. My client received the said bank's return memo on [DATE CLIENT RECEIVED THE MEMO]. This notice is accordingly being issued within the mandatory period of 30 days as stipulated under Section 138 of the Negotiable Instruments Act, 1881.

3. DEMAND

You are hereby called upon to pay to my client the dishonoured cheque amount of Rs. [AMOUNT IN FIGURES] (Rupees [AMOUNT IN WORDS] only) together with interest and costs, within **15 (fifteen) days** from the date of receipt of this notice.

4. CONSEQUENCES OF NON-PAYMENT

Take notice that in the event you fail to make the payment of the aforesaid sum within the stipulated 15-day period from receipt hereof, my client shall be constrained to initiate criminal proceedings against you under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 before the competent Magistrate's Court, without any further reference to you. The offence under Section 138 is punishable with imprisonment up to 2 years or fine up to twice the amount of the cheque, or both.

My client also reserves the right to initiate civil proceedings for recovery of the amount with interest and costs.

Please treat this notice as final and act accordingly.

Sd/-

[ADVOCATE'S SIGNATURE]

[ADVOCATE'S NAME]

[ENROLLMENT NO.]

[DATE]

Enclosure:

- Copy of Cheque (Cheque No. [CHEQUE NUMBER])

- Copy of Bank Return Memo dated [DATE OF MEMO]

```

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Key Elements Explained

**Legally Enforceable Debt**

This is the most important element. Section 138 applies only when the cheque was issued "for the discharge, in whole or in part, of any debt or other liability." A cheque issued as a gift, donation, or for an illegal purpose is not covered. The nature of the underlying debt must be clearly stated in the notice.

**Cheque Details**

Include the complete cheque number, date, bank name, branch, account number, and exact amount. This prevents any dispute about which cheque is in question and forms part of the court record.

**Bank Return Memo**

The exact wording of the dishonour reason from the bank memo must be reproduced. Retain the original return memo as it is a crucial exhibit in the complaint case. The most legally significant reason is "insufficient funds" — a "payment stopped by drawer" remark can sometimes raise questions about the nature of the dispute.

**15-Day Demand Period**

The law mandates you give the drawer exactly 15 days after service of the notice to make payment. Do not demand payment in a shorter period. Undersection 138, the cause of action arises only after the expiry of this 15-day period without payment.

**Date of Service vs. Date of Issue**

The 15-day period runs from the date the notice is *received* (served), not the date it is sent. Courts generally presume service a few days after posting. Keep the AD card to prove when it was delivered.

**Mode of Sending**

Always send via Speed Post with Acknowledgement Due AND Registered Post AD. Send two copies simultaneously. Even if the drawer refuses to accept the notice or returns it unopened, service is deemed complete under Section 27 of the General Clauses Act.

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Important Notes

**Attachment of Enclosures**

Attach a photocopy of the cheque (front side showing all details) and a copy of the bank return memo to the notice. Retain originals for court proceedings.

**Verification of Cheque Validity**

Ensure the cheque was presented within its validity period (cheques are valid for 3 months from the date on the cheque). A stale cheque presented after validity cannot form the basis of a Section 138 complaint.

**Multiple Dishonoured Cheques**

If multiple cheques from the same drawer have bounced, each cheque requires a separate notice and potentially a separate complaint. Clubbing multiple cheques into one complaint may be permissible but requires careful legal advice.

**Territorial Jurisdiction**

Under the NI Act as amended in 2015 (the Supreme Court's ruling in Dashrath Rupsingh Rathod v. State of Maharashtra), complaints must be filed at the court within whose jurisdiction the bank branch where the cheque was presented for collection is located. Confirm jurisdiction before filing.

**Criminal vs. Civil Remedy**

A Section 138 complaint is a criminal proceeding. You may simultaneously file a civil suit for recovery of the amount — there is no bar on pursuing both remedies, though courts sometimes stay the civil suit pending the criminal matter.

**No Stamp Duty**

The demand notice itself does not require stamp duty. It is simply a communication.

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FAQ

**Q1. What if the drawer's address is not known or they have moved?**

Send the notice to the last known address and the address on the cheque/bank records. Courts have held that service by registered post to the last known address is sufficient, even if returned undelivered, provided the drawer was evasive. Document your attempts to trace the correct address.

**Q2. My notice period of 15 days has expired but I haven't filed the complaint yet. Is it too late?**

The complaint under Section 138 must be filed within 30 days of the expiry of the 15-day notice period. So from the date your notice is served, you have 15 + 30 = 45 days to file your complaint. Missing this deadline means the court may not take cognizance unless you get the delay condoned. Act promptly.

**Q3. Can the drawer still pay after the notice but before the complaint is filed?**

Yes. Even after the notice and before the complaint is filed (or sometimes even after filing), the drawer can pay the cheque amount and the parties may compound (settle) the offence. Under Section 147 of the NI Act, cheque bounce offences are compoundable. Courts encourage settlement at pre-trial stages.

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*This template is provided for educational and informational purposes only. It does not constitute legal advice. Section 138 NI Act cases have strict timelines — a single missed deadline can defeat your claim. Please consult a qualified advocate immediately upon receiving a dishonour memo.*