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Cheque Bounce Legal Notice Format Under Section 138 of the Negotiable Instruments Act

When a cheque issued towards a legally enforceable debt or liability is returned unpaid, the payee or holder in due course may issue a statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881. The notice is a necessary step before filing a cheque dishonour complaint, subject to the statutory conditions.

Important deadlines: The written demand must ordinarily be issued within 30 days of receiving information from the bank about dishonour. The drawer has 15 days from receipt of the notice to pay the cheque amount. If payment is not made, the complaint must ordinarily be filed within one month after the cause of action arises, subject to Section 142 and any permitted condonation of delay.

Legal provisions and their meaning

Section 138: Criminal liability for dishonour of a cheque drawn for discharge, in whole or in part, of a legally enforceable debt or other liability, when the statutory conditions are met. The punishment may extend to two years of imprisonment, a fine up to twice the cheque amount, or both.
Section 139: A rebuttable presumption that the holder received the cheque for discharge of a debt or liability.
Section 141: Addresses liability where the drawer committing the offence is a company, subject to the required legal conditions and role-specific allegations.
Section 142: Governs cognizance, complaint filing time and the competent court's territorial jurisdiction under Section 142(2).
Section 143A: Allows the court, in specified circumstances, to order interim compensation, subject to statutory limits.
Section 147: Makes offences under the Act compoundable.

The cheque must have been presented within its validity period (ordinarily three months under prevailing banking practice) or within six months from the date on which it was drawn, whichever is earlier under Section 138. For procedural guidance, see time limit and procedure for a Section 138 complaint.

Steps before issuing the notice

Keep the original cheque or admissible cheque records, the bank return memo and the underlying invoice, purchase order, agreement or other evidence of liability.
Confirm the exact cheque amount, cheque number, date, drawer bank, return reason and the date the payee received the dishonour information.
Address the written demand to the drawer and, where relevant, consider the company and persons sought to be prosecuted under Section 141.
Demand the cheque amount clearly and separately. Other claimed charges or interest may be stated distinctly; they should not obscure the statutory demand.
Send the notice using a provable method such as speed post or registered post, and retain dispatch, tracking and delivery records.

Sample legal notice for dishonour of cheque

By Registered Post / Speed Post

Date: __________________

To:
Mr./Ms./M/s. __________________________
Address: _____________________________
_____________________________________

Legal Notice Under Section 138 of the Negotiable Instruments Act, 1881

Subject: Statutory demand for payment of Rs. __________ against dishonoured Cheque No. __________ dated __________.

Sir/Madam,

Under instructions from and on behalf of our client, M/s. __________________________, having its office at __________________________, we hereby serve upon you the following legal notice:

Our client is a __________________________ [individual / partnership / company] engaged in __________________________ [nature of business].
In the year __________, you approached our client through __________________________ [including, if applicable, email communications by your employee] for the purchase of __________________________ [computers, laptops, computer parts, accessories or other goods/services]. You issued Purchase Order No. __________ dated __________ for Rs. __________.
You agreed to pay for the goods by cheque in accordance with the purchase order. Relying on your representation, our client delivered the goods to your office at __________________________ under Invoice No. __________ dated __________.
In discharge of the above legally enforceable liability, you issued Cheque No. __________ dated __________ for Rs. __________ (Rupees __________________________ only), drawn on __________________________ Bank, Branch __________________________, in favour of our client.
Our client presented the cheque through its banker, __________________________ Bank, on __________, within its validity period.
The cheque was returned unpaid, as intimated by bank return memo dated __________, stating the reason "Funds Insufficient" [insert the actual reason shown on the return memo]. Our client received information of the dishonour on __________.
Despite subsequent requests and reminders, including communications dated __________ [if applicable], you have failed to discharge the outstanding cheque liability.
Accordingly, through this notice, our client hereby calls upon you to pay the full cheque amount of Rs. __________ (Rupees __________________________ only) within 15 days from the date of receipt of this notice.
If you fail to make the said payment within the statutory period, our client shall be entitled to initiate proceedings under Section 138 read with the applicable provisions of the Negotiable Instruments Act, 1881, before the competent court, at your risk as to lawful costs and consequences.
Our client also reserves its rights to claim applicable interest, legal notice expenses of Rs. __________ and other recoverable amounts through appropriate proceedings. Such additional claims are separate from the statutory demand for the cheque amount.

This notice is issued without prejudice to all other rights and remedies available to our client in law. A copy is retained in our office for record and future reference.

Yours faithfully,

For __________________________, Advocates

__________________________
Name of Advocate: __________________
Designation / Partner: ______________
Address and contact: ________________

What happens after the legal notice?

If the drawer pays the cheque amount within 15 days of receipt of a valid notice, prosecution under Section 138 on that dishonour does not arise. If payment is not made, the cause of action arises on expiry of the 15-day period, and the payee or holder in due course may file a complaint within the period prescribed by Section 142. The court may condone delay where sufficient cause is shown.

For a complaint arising from a cheque deposited through an account, territorial jurisdiction is generally determined by the branch of the bank where the payee or holder in due course maintains the account, as provided in Section 142(2). Where the cheque is presented otherwise than through an account, the statutory rule differs.

Documents to retain

Cheque and bank return memo or equivalent admissible records.
Purchase order, invoice, delivery challan, account statement or other evidence of the legally enforceable debt.
Copy of the signed demand notice and proof of dispatch and delivery or attempted service.
Relevant correspondence, payment reminders and any reply to the notice.
Authority documents where the payee is a company or another legal entity.

Official legal references

Read the Negotiable Instruments Act, 1881 on India Code and consult the Reserve Bank of India for applicable cheque-validity directions. Court-specific filing practices and judicial interpretations should be checked before issuing the notice or commencing proceedings.

This sample is a general drafting aid, not a substitute for legal advice. The notice should reflect the actual transaction, bank memo, parties, service details and applicable law. Allegations of cheating should not be added merely because a cheque was dishonoured; they require their own factual and legal basis.