Home / Section 138 Notice
What is Section 138 Notice ?

Cheque bounce or cheque non-payment in a serious offence in India punishable with imprisonment or fine under Section 138 of the Negotiable Instruments Act. In case of cheque bounce, a cheque beneficiary must present the cheque issuer with a cheque bounce notice under section 138 within 30 days of return of the cheque to protect his/her rights under Section 138 of the Negotiable Instruments Act. Cheque bounce notice is a firm and serious intimation to the cheque issuer that the cheque beneficiary will proceed with legal action if payment for the cheque is not made immediately. For a cheque bounce notice to be valid, it must contain reference to Section 138 of the Negotiable Instruments Act, information about when the cheque was presented, the reason for non-realization of payment and a request to the cheque issuer to arrange for payment immediately through alternate means. A Section 138 Notice must be presented to the cheque issuer within 30 days of return of cheque due to be valid.

How to Issue Cheque Bounce Notice ?
  • Cheque bounce notice or Section 138 notice can be easily created using the Myfiling Live Edit feature.
  • The cheque bounce notice must contain the name of the cheque beneficiary, check issuer name and address, date of return of cheque, reason for return of cheque, request to make arrangement for alternate payment immediate and the words that the notice is issued under Section 138 of the Negotiable Instrument Act.
  • Its important to send the Cheque Bounce notice through registered post, so that the date of issuing notice can be recorded formally.
When Cheque Bounce Notice Can Be Issued?
  • The cheque should have been presented by the beneficiary within a period of 6 months of its validity.
  • The cheque must have been returned by the bank due to insufficient funds.
  • The cheque drawer fails to make payment of the said amount of money within 15 days of the receipt of the cheque bounce notice.
  • Legal action is initiated within one month of the date on which the cause-of-action arises.
Initiating Legal Action for Cheque Bounce
  • The cheque bounce notice must be proper format, with information like nature of transaction, amount, date of cheque deposit, date of cheque bounce, reason for cheque bounce and request to make payment within 15 days.
  • Once the case is filed, the court will hear the case and issue summons under Section 138 of the Negotiable Instruments Act.
  • If the cheque defaulter fails to make payment within 15 days of cheque bounce notice, the payee should file a criminal case in a court within 30 days from the expiry of notice period of 15 days. Cheque bounce complaints must be filed in a court in the city where the cheque was presented.
    ...No Content