Notice under Section 138 of the Negotiable Instruments Act, 1881

When the drawer draws a cheque in favour of the payee, and the bank returns the cheque due to insufficiency of funds, then it is known as dishonour of cheque.

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When the drawer draws a cheque in favour of the payee, and the bank returns the cheque due to insufficiency of funds, then it is known as dishonour of cheque. Bouncing of the cheque is referred to as dishonour. The reasons for returning the cheque are always stated in a memo which the bank gives along with the cheque.

Any person found guilty of the offence of dishonour of cheque Negotiable Instruments Act, 1881 shall be punished with imprisonment for a term of 2 years or with fine or both.


While drafting a legal notice for cheque bouncing, every ingredient of the offence as mentioned in section 138 must be assimilated within the facts being claimed in the notice. The sender of the notice must incorporate the following steps:

  • The route of delivering the notice such as Registered post, Speed Post, Fax, E-mails, Courier, etc.
  • All parties of the transaction should be addressed in the notice
  • The date of dispatch of the notice should be mentioned in the legal notice as it is essential to address the limitation to file a case
  • Mention the terms and conditions in brief regarding the transaction agreed by both the parties in an agreement
  • It is necessary to mention the date when the cheque was drawn along with the cheque number, also shall mention the date when the cheque was deposited and the date when it was returned
  • To mention the failure to comply with the relevant notice that would initiate the criminal proceedings against the drawer, which may also result in the imprisonment under the relevant provisions of the Negotiable Instruments Act, 1881 and Indian Penal Code, 1860
  • Mention the duration to call the cheque by the drawer, or to pay the amount due within the receipt of the legal notice. If the drawer fails to do so, then the payee shall take necessary action against him in the court of law
  • It should also have the cost for litigation without prejudice to the amount due which the payee has the right to claim an interest.

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