Drafting a Section 138 cheque-bounce notice: mandatory contents

Section 138 of the Negotiable Instruments Act 1881 makes dishonour of a cheque for insufficiency of funds an offence — but only if a precise sequence of steps and time limits is followed. Missing any one of them usually defeats the complaint.

The sequence

• Presentation. The cheque must be presented to the bank within its validity period (currently three months from the date it bears).
• Dishonour. The bank returns it unpaid for insufficiency of funds or because it exceeds the arrangement — evidenced by the return memo.
• Demand notice. The payee must send a written notice demanding payment within 30 days of receiving information about the dishonour.
• Payment window. The drawer gets 15 days from receipt of the notice to pay. The offence is complete only if payment is not made within that window.
• Complaint. A complaint must be filed within one month of the date the 15-day window expires. A delay can be condoned only if sufficient cause is shown.

What the notice itself must contain

A clear demand for the specific cheque amount, identification of the cheque and the return memo, the underlying legally enforceable debt or liability, and a demand for payment within 15 days. A notice that demands more than the cheque amount, or is vague about the debt, can be challenged.

How FinRace AI helps

The legal-drafting workspace generates a Section 138 demand notice as an editable .docx from the cheque particulars, return-memo details and the underlying debt you supply, with the statutory timeline computed from the dates entered. An advocate reviews and signs it; FinRace AI does not send notices or file complaints, and it has no case-law database.