Cheque Bounce Notice Format

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 Bizcruise Live Edit feature. Once the document is created, it can be printed on a plain white paper or letterhead of the business and delivered to the cheque issuer. 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.  One copy of the letter can be retained by the cheque’s beneficiary while the other copy is delivered to the cheque issuer through registered post.

When Cheque Bounce Notice Can Be Issued

To issue a cheque bounce notice and get legal recourse, the following conditions must be satisfied:

  • The cheque must have been provided towards a liability.
  • 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 payee makes a demand for the payment by giving a cheque bounce notice in writing, within 30 days of the receipt of information by him from the bank that funds are insufficient.
  • 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 accompanying advances must be followed to give a check skip notice and make a lawful move:

  1. Check skip notice must be given by the payee to the defaulter, inside 30 days of shame of check, by enrolled post (or Speed Post) affirmation due. The check skip notice must be legitimate organization, with data like nature of exchange, sum, date of check store, date of check ricochet, purpose behind check bob and solicitation to make installment inside 15 days.
  2. On the off chance that the check defaulter neglects to make installment inside 15 days of check ricochet notice, the payee should document a criminal case in a court inside 30 days from the expiry of notice time of 15 days. Cheque skip grumblings must be recorded in a court in the city where the check was introduced.
  3. When the case is documented, the court will hear the case and issue summons under Section 138 of the Negotiable Instruments Act.
  4. The check defaulter would then need to submit guarantee and show up under the watchful eye of the Court for goal of the issue.

Section 138 of Negotiable Instruments Act

138. Dishonour of cheque for insufficiency, etc., of funds in the account.

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid. either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice. to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless:

  • The cheque has been, presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
  • The payee or the holder in due course of the cheque as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
  • The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.-For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.

Explanation: For the purposes of Section 138 of Negotiable Instruments Act, “debt or other liability” means a legally enforceable debt or other liability.

Section 141 of Negotiable Instruments Act – For Companies

242. Offenses by organizations.

In the event that the individual submitting an offense under segment 138 is an organization, each individual who, at the time the offense was submitted, was accountable for, and was capable to, the organization for the lead of the matter of the organization, just as the organization, will be considered to be liable of the offense and will be obligated to be continued against and rebuffed appropriately: Provided that nothing contained in this sub-area will deliver any individual subject to discipline in the event that he demonstrates that the offense was submitted without his insight, or that he had practiced all due perseverance to forestall the commission of such offense.

Where any offense under this Act has been submitted by an organization and it is demonstrated that the offense has been submitted with the assent or intrigue of, or is owing to, any disregard with respect to, any chief, supervisor, secretary or other official of the organization, such chief, director, secretary or other official will likewise be considered to be liable of that offense and will be at risk to be continued against and rebuffed as needs be.

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