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Ni Act Cheque Bounce Notice

  • Writer: Lead India
    Lead India
  • Aug 16, 2023
  • 3 min read

The Negotiable Instruments Act (NI Act) is a law that regulates the use of negotiable instruments like cheques, promissory notes, and bills of exchange. Among all the provisions Section 138 of the NI Act deals with the legal consequences of a dishonoured cheque. However, there are instances when the accused may not receive the legal notice, or the notice itself may be deemed defective, leading to complications in the 138 case proceedings.

Section 138 of the NI Act?

Section 138 of the NI Act addresses the issue of dishonoured cheques due to insufficient funds or other reasons. It mandates that the drawer of the dishonoured cheque can be held criminally liable if the following conditions are met:

  • The cheque was presented for payment within 6 months from the date it was drawn or within the validity period, whichever is earlier.

  • The payee issued a legal notice within 30 days of the dishonour demanding the payment of the cheque amount.

  • The drawer failed to make the payment within 15 days of receiving the notice.


Types Cheque bounce notice?

  • Pre-action cheque bounce notice: This is a notice that is served to the drawer of the cheque before filing a legal case for cheque bounce. The purpose of this notice is to give the drawer a chance to make good on the cheque and avoid legal action.

  • Post-action cheque bounce notice: This is a notice that is served to the drawer of the cheque after a legal case for cheque bounce has been filed. The purpose of this notice is to inform the drawer of the legal action that has been taken against them and to demand payment of the cheque amount.

Legal Notice Under Section 138:

Sending a legal notice under Section 138 is the initial step towards initiating legal proceedings against the drawer of the dishonoured cheque. This notice informs the drawer of the dishonoured cheque about the non-payment and provides them with an opportunity to rectify the situation within the stipulated time frame. The notice should clearly state the details of the cheque, the amount involved, the reason for dishonour, and the demand for payment.



There are some challenges that can arise in cheque bounce cases:

  1. If Accused Not Receiving the Legal Notice:

One challenge is that the accused may claim not to have received the legal notice. In this case, the payee must be able to prove that the notice was sent and received.This can be done by keeping records of the registered post receipts, courier receipts, or any other mode of delivery used to send the notice.

  1. Defective Legal Notice 138 NI act:

Another challenge is that the legal notice may be defective. This means that it does not meet the requirements of Section 138 of the NI Act. Some common defects in legal notices include:

  • Not providing the details of the dishonoured cheque, such as the date, amount, and bank details.

  • Not giving the drawer enough time to pay the amount due (less than 15 days).

  • Sending the notice to an incorrect or outdated address of the accused.

  • Drafting the notice in a language that the accused does not understand.

If the legal notice is defective, the case may be dismissed by the court. It is therefore important to ensure that the legal notice is properly drafted and complies with all the requirements of Section 138 of the NI Act.

Conclusion

Section 138 of the Negotiable Instruments Act serves as a crucial safeguard against dishonoured cheques, ensuring that parties involved in financial transactions are responsible for their commitments. With a focus on quick resolution and attention to legal procedures, this provision offers a systematic framework to resolve cases of cheque bounce due to not sufficient money or other reasons. It takes depth knowledge of the legal issues involved to navigate cheque bounce cases.


If you are facing a cheque bounce case, it is important to seek legal advice from a lawyer. For the best lawyer you can ask free questions online at Lead India, we have expertise in this type of cases so you can take free legal advice, Lead India providing its services all over the India. If you want to talk to a lawyer, contact us.


Call Us: +91–8800788535

Email: care@leadindia.law


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