Legal Notice Under Section 138

Legal Notice Under Section 138 | Cheque Bounce Legal Notice

Legal Notice Under Section 138

Table Of Content

The Negotiable Instrument Act came into force on March 1,1881 by the Imperial Legislative Council to keep uniformity on all other government instruments in relation to the money matters of the people. This act was implemented in order to stop the fraudulent activities that were taking place now and then. 138 Negotiable Instrument focuses on ‘cheque bounce’. 

Bouncing Cheque has been elaborated in Section 6 under Negotiable Instrument Act,1881. Where if the drawee bank account doesn’t have sufficient amount mentioned on the cheque and gets rejected then it is known as Cheque Bounce. This course of action is punishable in the eyes of Law. The drawer can send a legal notice under section 138 of Negotiable Instrument Act to the other party.

What is Section 138 of the Negotiable Instruments Act?

Section 138 of the Negotiable Instruments Act entirely deals with the issue of Cheque Bounce. Cheque Bounce also noted as Dishonoured Cheque. When cheque is sent to bank for payment and comes back as ‘returning cheque’, means the amount is still unpaid.  There can be many reasons for the Cheque Bounce. Such as unmatchable signatures, insufficient funds, spelling mistakes on the cheque or a stale cheque. So the government provides solutions to the citizens if ever come across these check bounce situations. The solution is to send a legal  notice under section 138 to the issuer of the cheque.

NOTE: Drawer is the person who issues the cheque in the name of another party and Drawee is the person who receives the Cheque to withdraw the amount from the Bank.    

What is the limitation period for 138 notice?

A 30 days of limitation period is issued. In this period payee can issue legal notice to the drawer and file complaint. It is important to give a cheque bounce limitation period since sending a legal notice under section 138 is important before filing the complaint. If you are planning to file the case against the drawer then it is important that a Cheque Bounce Notice should be served as it will make your case stronger and valid in a court of Law.

If the drawer receives the demand notice under section138 then he/she is liable to pay the entire amount in the next 15 days also the limitation period starts from the day when the legal notice under section 138 is sent.

NOTE: In 30 days of limitation period the legal notice has to be sent to the payer before filing the complaint in the court after that you directly file the case.  

What are the important points to be included in the Cheque Bounce Notice?

The important points that should be kept in mind and included in the Cheque Bounce Notice are as follows:

points to included in a cheque bounce notice
  • The Purpose of the Cheque should be clarified in an elaborated form. As to what purpose the cheque was issued to the other party.
  • Details of the Cheque i.e Cheque Number, Issued Date of the Cheque, Bank Name and the Amount.
  • Details about the incident when the drawee approaches the drawer about the Cheque Bounce issue. NOTE : All relevant details regarding the discussion and the explanation should be briefly included to make the Notice more strong.
  • Importantly, the Time Limit should be mentioned in which the Drawer is liable to repay the amount back to Drawee or else a case shall be filed.

The charges for legal notice for cheque bounce notice under section 138 of Negotiable Instrument Act usually depend upon the Transaction amount; the starting price of the Notice is INR 2,000 and rest depends upon the Amount & on Advocate. The more complicated the case the higher the charges and vice versa.

Legal NoticeDemand Notice
Legal Notice is a written legal warning from an individual or a company to the other party in order to seek justice through court in case of civil dispute.   A Demand Notice is a written request from the creditor to the debtor for the repayment of the amount owed by the debtor.
A Legal Notice is sent in the cases of Civil Disputes.Demand Notice under section 138 is mainly sent incases of non-payment of the debts.
For example, Cheque Bounce, Money Fraud, Divorce cases, Employee/Employer Issue, Owner/Tenant Issue.For example, Loan

Also Read, Legal Notice vs Court Notice

What are the Consequences of Cheque’s Dishonour?

The consequences of Cheque’s Dishonour is way too strict and imposed certain serious Offences; the dishonor of cheque bounce states that an Offence has been committed stipulated under Section 138/ 142 of the Negotiable Instruments Act, 1881. The punishable Offence i.e imprisonment upto 2 years or fine which may extend upto twice the amount of the cheque.

What is the138 Ni Act Procedure?

Section 138 of negotiable instrument act procedure is as follow:

  • The Legal Notice is sent to the drawer through Registered post, Email & Whatsapp with all the important information within the next 15 days from the date of cheque bounce.
  • The payee/complainant is required to appear in court and present the case’s specifics. If the complainant’s testimony satisfies the magistrate, he will summon the drawer to appear before the court.
  • The drawer will show up and either confirm the complainant’s claimed facts. The court will move forward with the criminal trial of the case if the drawer rejects the complaint.
  • The drawer/accused will submit his statement, and the court will hear testimony and arguments from both sides.
  • If the court rules that the drawer committed the crime of cheque bounce, the court will issue a verdict of conviction against the drawer.

Go through our detailed blogs on Legal Notice for Divorce & Legal Notice For Defamation to know these topic in details.

To draft legal notice under section 138 follow the simple steps below:

How to create a cheque bounce legal notice
  1. Visit our website
  2. Then click on the ‘Services And choose ‘Legal Notice’.
  3. After that, register for Legal Notice service. 
  4. Our experienced Advocate will contact you for the details.
  5. Explain the entire case with all facts and figures which will help our Advocate to draft the Legal Notice in a brief manner.
  6. The advocate will mail you your Legal Notice draft for your review.
  7. Get the corrections done if any are needed. We provide unlimited corrections under the draft as Customer’s satisfaction is our top priority.
  8. After that once all the corrections are done, the Advocate will send the Legal Notice to the dispute party through all possible means and will advice you for further course of action.

Case Study – Legal Notice Under Section 138/142 of Negotiable Instruments Act, 1861

Dr. Prakash, one of our client, contacted consultant Mr. Biswas to find a residential property for him. They agreed on a price of INR 40,00,000 (Forty lakh), inclusive of GST and Registry charges, with no additional costs. However, after Dr. Prakash received the Agreement of Sale, he was shocked to find an increased amount i.e. INR 50,00,000 (Fifty Lakh). Despite assurances of a refund for the excess payment, when he received two cheques with different dates, the second cheque bounced, and Mr. Biswas became unresponsive. Dr. Prakash sent Legal Notice through our firm, invoking section 138/142 of the Negotiable Instruments Act of 1881, leading to Mr. Biswas being found guilty of an offense punishable by imprisonment for up to two years, and/or a fine double the amount of the cheque and also offenses under the Indian Penal Code, involving fraud and other criminal activities.
After getting our Legal Notice, Mr. Biswas within the time limit of 15 days refunded the entire amount to our client.

Legal Notice format for cheque bounce


Cheque bounce notice should be sent to the drawer is crucial. eDrafter is well equipped with Experienced Lawyers and can help you draft your Legal Notice with accuracy and at a reasonable price. If you take action on an immediate basis then financial loss and fraudulent activities can be curbed at the earliest.

Please go through our detailed blog on Legal Notice for Recovery of Money to know how you can send someone a legal notice to recover your notice.

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Adrika Mishra – Content Writer

Adrika Mishra is a Content Writer with a passion for writing crisps and well researched pieces. With a graduate degree in Mass Communication and over a year of hands-on experience in writing content for the web. Adrika is a person brimming with creative instincts. Constantly seeking to learn and grow, she uses writing as a medium to document her knowledge on topics she is passionate about. When not working, Adrika can be found grooving to music. Believing in the power of “The pen is mightier than the sword”, Adrika hopes to inspire and educate readers through her writing.