Section 138 of the Negotiable Instruments Act, 1881: A Comprehensive Analysis of Cheque Bounce Notice
By Sandeep Singh
Introduction: Section 138 of the Negotiable Instruments Act,a1881, deals with the criminal aspect of cheque dishonour due to insufficient funds. One crucial step in initiating legal proceedings under this section is the issuance of a cheque bounce notice. This article delves into the legal nuances, format, and essential considerations surrounding the cheque bounce notice.
Legal Provisions: Section 138(b) and (c) of the NI Act lay down the requirements for serving a legal notice for cheque bounce.
- Section 138(b):
- The payee or holder in due course must make a written demand for payment within 30 days of receiving information from the bank about the cheque being dishonoured.
- Section 138(c):
- The drawer must fail to make the payment within 15 days of receiving the notice.
Cheque Bounce Notice Format: While there’s no specific format mandated by law, the notice should include key details:
- Name and address of the drawer (person who wrote the cheque).
- Name and address of the payee (person in whose favor the cheque was drawn).
- Details of the cheque (number, date, amount).
- Date of cheque presentation and return.
- Reason for cheque bounce as per the Return Memo.
- Clear statement requesting immediate payment.
- Reference to Section 138 of the NI Act.
Important Points for Cheque Bounce Notice: Several critical considerations must be kept in mind when drafting and sending a cheque bounce notice:
- Document Preservation:
- Keep original copies of the cheque and Return Memo securely.
- Modes of Sending Notice:
- Send notice through Registered Post Acknowledgment Due (RPAD), email through an advocate, or on WhatsApp.
- Correct Complainant:
- The complainant must be the person in whose favor the cheque was drawn.
- Company Considerations:
- In the case of a company, address the notice to the company and responsible persons for administration and business affairs.
- Exact Amount Mention:
- Clearly state the exact amount for which the cheque was drawn; legal fees may be included.
- Purpose of Transaction:
- Specify the purpose for which the cheque was drawn, ensuring it complies with existing laws.
- Notice Period Mention:
- Although there’s a notice period defined by law, it’s advisable to mention it in the notice.
- Renewal of Limitation Period:
- If the cheque’s validity allows, present it again for encashment to renew the notice’s validity.
Case Law and Legal Points:
- Shakti Travel & Tours v. State of Bihar, (2002) 9 SCC 415:
- Established the necessity of a legal notice for maintainability of a cheque bounce case.
- Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129:
- Clarified the cause of action regarding cheque bounce notice, which arises after the drawer fails to pay within 15 days of notice receipt.
Frequently Asked Questions:
- Can notice under Section 138 of NI Act be sent after 30 days?
- Yes, if the cheque’s validity allows, it can be presented again for encashment, or an application for condonation of delay may be filed.
- What is the notice period for cheque bounce?
- The payee has 30 days after receiving a cheque bounce memo to serve the legal notice, and the drawer has 15 days to make the payment.
- How is a cheque bounce notice served?
- It can be sent through Registered Post, email with an advocate’s assistance, or on WhatsApp.
- Against whom can a cheque bounce case be initiated?
- It is specifically against the person who drew the cheque. In the case of companies, it includes the authorized signatory and management.
Conclusion: A meticulously drafted cheque bounce notice is a crucial step in the legal process under Section 138 of the NI Act. Understanding the legal provisions, following the correct format, and adhering to essential considerations can significantly impact the success of a case. The mentioned case laws and legal points provide a solid foundation for comprehending the intricacies of cheque bounce cases.
