Cheque Bounce Notice (Sec 138)

Cheque Bounce Notice (Sec 138)    

Section 138 notice is also known as Cheque bounce notice. It is a legal notice sent to the defaulters who fail to pay through the Cheque. The beneficiary uses this notice when a cheque bounces or payment is not received. As per the Negotiable Instrument Act, the beneficiary should send Section 138 notice to the issuer within 30 days of cheque return. The cheque bounce notice is firm order for the cheque issuer. It is aware that if the payment is not processed, the beneficiary may proceed with further legal action. If any person/cheque issuer gets filed under section 138 notice, it may hold liable for punishment under the law.

If the issuer's bank determines that it is impossible to pay off the value due to insufficient balance, then the issuer's bank sends a cheque return memorandum to the bank of the payee. In the cheque return memo, the drawee bank mentions the reason for the non-payment. Then the payee's bank forwards this cheque return memo to inform the payee that the Cheque is dishonored.

The declaration that you send to the issuer must include an allusion to section 138 of the negotiable instrument Act. It should include information like:

1) The date when the Cheque was presented

2) The reasons for non-payment

3) Request to the issue to make payment through alternate modes

Cheque bounce notice should be sent to the issuer within 30 days of cheque return. The notice also includes the amount payable to the payee and other details, if any.

If the issuer still fails to pay the amount through any alternative mode, then the payee can take strict actions. The cheque bounce cases in India are ruled below section 138 of the Negotiable instrument Act. Failing to pay the amount is a criminal offense, and the proceedings in such cases are done according to the summary trial provisions of criminal procedure 1973.

To issue a cheque bounce notice, the following criteria must be satisfied:

1) Cheque should be filed towards a liability

2) The Cheque must be presented by the payee within six months of the validity of Cheque

3) Cheque must be returned back by the bank for insufficient funds

4) If the Cheque fails to make the payment of written amount within 15 days of receiving the section 18 notice

5) The legal action should be initiated within one month from the date of cause of action

6) The payee must make a demand for the payment sending a notice in writing

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