Legal Notice Under Section 138 of the Negotiable Instruments Act, 1881
This is a statutory legal notice sent by a payee or holder in due course to the drawer of a dishonoured cheque. It demands payment of the exact cheque amount and serves as a mandatory prerequisite before a criminal complaint can be filed under Section 138 of the Negotiable Instruments Act, 1881.
The notice is issued after the cheque is returned unpaid by the bank. It must strictly comply with the timelines and content requirements prescribed in the Act, as any error in the amount demanded or the period of dispatch is fatal to a subsequent prosecution.
- Governing law
- Negotiable Instruments Act, 1881 — s.138 r/w s.142
- Sections
- s. 138s. 138(b)s. 138(c)s. 142
When this is the right filing
- When a cheque has been presented within its validity period and returned unpaid by the bank for reasons such as insufficient funds.
- When the payee intends to initiate criminal proceedings against the drawer under Section 138 of the NI Act.
- When you need to create a clear record of statutory demand and service, which starts the 15-day payment window for the drawer.
- Do not use this notice if the cheque was returned for a reason other than insufficient funds or exceeding arrangement, or if the debt itself is not legally enforceable.
What the court looks for
- Proof that the notice was dispatched within 30 days of the payee receiving the bank's cheque-return memo.
- A demand for the exact cheque amount, with any other costs or interest claimed as a separate and distinct head.
- Clear identification of the drawer and, in the case of a company or firm, specific notice to every person in charge of and responsible for its conduct of business.
- Evidence of service, such as a postal receipt and acknowledgment card, to establish the date from which the 15-day payment period runs.
The structure the court expects
The components of the filed format, in the order they appear. LexPilot fills every one of them from your facts and papers.
Under instructions from and on behalf of my client, [client name], [client so], R/o / having its office at [client address] (hereinafter "my client"), I hereby serve upon you the following legal notice:
Bracketed items are filled from your case.
Frequently asked questions
Can I demand interest and notice costs in the Section 138 legal notice?
Yes, but the demand for the cheque amount must be exact and separate. Any claim for interest, notice costs, or dishonour charges must be shown as a distinct head of claim and cannot be added to the principal cheque amount demanded under the statute.
What happens if the drawer refuses to accept delivery of the notice?
If the notice is dispatched to the correct address and the drawer evades or refuses delivery, service is deemed to be effected. The dispatch proof and the 'returned' or 'unclaimed' postal endorsement must be preserved and pleaded in the subsequent complaint.
Who must be named as an addressee when the drawer is a company?
The notice must be addressed to the company and, by name, to every person who was in charge of and was responsible for the conduct of its business at the time the offence was committed. This includes directors, partners, and the signatory of the cheque, to complete the vicarious liability notice under Section 141 of the NI Act.
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