How to issue cheque bounce notice

By Team Legal Helpline India, December 28, 2014

A brief description of how to issue cheque bounce notice by our experts with important tips and format of suggested notice under Section 138 of the Negotiable Instruments Act.

The suggested format of the notice under Section 138 NI Act is given at the below link which can be download

https://www.legalhelplineindia.com/free-legal-formats

The provision of law related to bouncing of cheque is contained in Section 138 of Negotiable Instruments Act 1881 which is as under:

Section 138 in The Negotiable Instruments Act, 1881
Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for (a term which may be extended to two years), or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 (within thirty days) of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation. For the purposes of this section, debt or other liability means a legally enforceable debt or other liability.

Section 138 of the Negotiable Instruments Act contemplates that a cheque should be presented for encashment within six months of its issue. Once presented; if the cheque is returned due to insufficiency of funds or any other such grounds as mentioned under Section 138 of the Negotiable Instruments Act, a cheque bounce notice is to be issued within a period of 30 days from the date of information by the bank of the depositor.

There is no prescription about the format of the notice or the mode of service of the notice under the Negotiable Instruments Act. Under the  Indian laws,  the service of any notice is through any recorded process which is always through the registered post or Speed Post as the case may be. The courts have also started considering the service of notice through private courier, E-mail, SMS, Whatsapp etc in addition. It is safe to resort to the traditional mode of the service of notice which is duly recognized by the courts i.e. the service of notice under Section 138 of the Negotiable Instruments Act through registered post of the Indian Postal Department.

There is no mandate of issuing the cheque bounce notice through the lawyer or issuing a legal notice under Section 138 of Negotiable Instruments Act. Since the intricacies as involved are mainly legal and one has to keep in mind various legal consequences. It is always better to get a legal notice issued in the matter through a qualified lawyer.

TIPS FOR ISSUING CHEQUE BOUNCE NOTICE:

i) The cheque bounce notice should specifically mention the cheque details such as cheque number, amount, date alongwith the name and address of the branch of the bank where it has been drawn.

ii) The cheque bounce notice should also contain other relevant information like the nature of the liability against which it is was issued and the, date of transaction etc.

iii) The amount for which the cheque was issued should also be mentioned both in words as well as in numbers in the cheque bounce notice specifically.

iv) It should be specially stated in the cheque bounce notice that the said cheque was issued in discharge of the legally enforceable right or the purpose for which the cheque was issued.

v) It should also be specially mentioned that the said cheque has bounced due to insufficiency of funds or the reasons as stated by the bank in their bank return memo.

vi) The demand for the amount within 15 days should be made vide the notice and it should be supecifically mentioned in the notice in very clear terms.

vii) The date and place of issuance of notice should also be mentioned specifically.

viii) It should be specially mentioned that the notice is under Section 138 of the NI Act.

ix) The notice under Section 138 of Negotiable Instruments Act should contain the name and address of the person issuing the cheque. If the person has issued the said cheque in his personal capacity, then his name should be mentioned with clear address. If the person has signed the cheque as the authorized signatory of any organization, then his name with his designation be also specifically be mentioned and the organization which is liable to pay the amount should also be included as a party in the said notice.

x) The reasons for the default of cheque should be clearly mentioned in the notice.

ATTENTION:
For any services related to issuance of cheque bounce notice, mail us the copy of the cheque and the memo of bank through the contact us page of our website.
OUR SERVICES:
i) Quick and easy process of issuance of notice under NI Act by expert lawyers.
ii) Drafting and filing of complaint case under 138 NI Act case before courts.
iii) Lawyer for notice under 138 NI Act

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