Demand notice for a bounced cheque — the thirty-day notice under s.138 NI Act
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For a company's cheque, name the company and also the director who signed — s.141.
The address where he resides or carries on business. The notice has to be served there.
Exactly as it appears on your Aadhaar or ID.
Section 138 applies only to a legally enforceable debt or liability. A loan, an invoice, rent, the price of goods — say which, with dates.
Proviso (a) to s.138: it must be presented within six months of the date it is drawn, or within its validity, whichever is earlier. In practice that is three months — under an RBI circular, banks have not paid cheques presented more than three months after their date since 1 April 2012.
The thirty days are counted from this information — proviso (b) to s.138.
Copy it exactly as printed — 'funds insufficient', 'exceeds arrangement', and so on.
The document
To,
________________
________________
(By registered post with acknowledgement due — the date of dispatch and the proof of service have to be on record)
Subject: Statutory notice of demand under the proviso to Section 138 of the Negotiable Instruments Act, 1881 — dishonour of cheque no. ________________ dated ________________ for ₹________________.
Made under: clause (b) of the proviso to Section 138 of the Negotiable Instruments Act, 1881.
** THIS NOTICE HAS TO GO WITHIN THIRTY DAYS **
Clause (b) of the proviso to Section 138 requires the demand to be made within thirty days of the day the payee received the bank's information that the cheque had been returned unpaid — the date on the return memo below. Sent after that, no offence under Section 138 arises at all, and nothing later in the process can repair it.
Sir/Madam,
1. I am ________________, resident of ________________. I may be contacted on ________________ and at ________________.
2. You issued to me cheque no. ________________ dated ________________ for ₹________________, drawn on ________________, in discharge of the following legally enforceable debt or other liability:
________________
3. That cheque was presented for payment on ________________ and was returned unpaid by the bank. The bank's return memo dated ________________ records the reason for return as: ________________.
4. Section 138 of the Negotiable Instruments Act, 1881 provides that where a cheque drawn by a person on an account maintained by him, for the discharge in whole or in part of any debt or other liability, is returned by the bank unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque, or because it exceeds the amount arranged to be paid from that account, such person shall be deemed to have committed an offence, punishable with imprisonment which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both.
5. I therefore call upon you to pay me the said sum of ₹________________ within fifteen days of your receipt of this notice, as clause (c) of the proviso to Section 138 requires.
6. Take notice that if payment is not made within those fifteen days, I shall be constrained to file a complaint under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 before the competent Magistrate — which, under Section 142(1)(b), must be filed within one month of the date on which the cause of action arises — and to seek interim compensation under Section 143A, at your risk as to costs and consequences.
7. This notice is without prejudice to any other right or remedy available to me in law, including a civil suit for recovery of the said amount with interest.
Yours faithfully,
________________
________________
Place: ________________
Date: ________________
Enclosures: as per the list attached.What to attach
- A photocopy of the dishonoured cheque, both sides.
- The bank's return memo — keep the original, send a copy. Under s.146 that slip is prima facie evidence of the dishonour.
- Proof of the debt or liability the cheque was given for: the invoice, the agreement, the ledger, a bank statement. Section 138 reaches only a legally enforceable liability.
- The registered-post receipt and tracking, and a copy of the notice itself. That is what proves service with the complaint, and the fifteen days run from that receipt.
- If the notice comes back, keep the envelope unopened. A refused notice counts as served — do not throw it away.