Complete Guide For Cheque Bounce Notice In India

In the world of transactions, cheques remain a prevalent mode of payment. However, situations arise where a cheque presented for encashment gets dishonored by the bank due to insufficient funds or other reasons. This is commonly referred to as a cheque bounce or dishonored cheque.

To recover the due amount in such scenarios, the payee (the person to whom the cheque is issued) can resort to legal action by issuing a cheque bounce notice (bounced cheque notification, dishonored cheque alert, non-payment notification, etc.). This blog guide will give you all the necessary information regarding cheque bounce notices in India.

A cheque bounce notice is a formal written demand sent by the payee to the issuer (drawer) of a bounced cheque. It is the first step towards initiating legal action under Section 138 of the Negotiable Instruments Act (NI Act) to recover the dishonored cheque amount.

This notice acts as a returned cheque warning (unsuccessful cheque notification, failed cheque payment notice) informing the drawer about the cheque dishonor notification (non-cleared cheque notice, payment failure alert) and requesting them to pay within a stipulated timeframe.

The timely issuance of a Cheque Bounce Notice is crucial for initiating legal proceedings against the drawer. Here’s a breakdown of the process:

1. Time Limit:

The notice must be sent within 30 days of receiving information from the bank about the cheque bounce.   

2. Mode of Communication:

The notice should be sent in writing through registered post (acknowledgment due). This ensures a record of delivery and serves as proof in court. While email or WhatsApp communication might be explored in the future (as discussed later), registered post remains the most reliable method.

3. Content of the Notice: The notice should mention the following details:

• • Payee’s name and address
  • Drawer’s name and address
  • Cheque details (cheque number, date, and amount)
  • The date on which the cheque was deposited and the date it bounced
  • Reason for the cheque bounce (as informed by the bank)
  • A clear demand for payment of the cheque amount within a stipulated timeframe (usually 15 days)
  • Reference to Section 138 of the Negotiable Instruments Act (NI Act) – the legal provision dealing with cheque bounce.

The legal framework governing cheque bounce notices in India is established by the Negotiable Instruments Act (NI Act), 1881. Specifically, Section 138 of the NI Act deals with the issuance of a cheque bounce notice and the consequences of cheque dishonor. The conditions under which a cheque can be considered dishonored, the process for filing a complaint, and the penalties for cheque bounce are outlined in this Act.

The procedure for issuing a cheque bounce notice in India is relatively simple. Here’s a summarized flow:

• Upon receiving intimation of the cheque bounce from the bank, the payee drafts a cheque bounce notice within 30 days.

• The notice includes all the necessary details and a demand for payment within 15 days.

• The notice is sent to the drawer via registered post with acknowledgment due.

• If payment is not received within 15 days of receiving the notice, the payee can file a legal complaint under Section 138 of the NI Act in the appropriate magistrate’s court.

While a formal format isn’t mandated, a cheque bounce notice should ideally contain the following information:

• Payee’s Name and Address
• Drawer’s Name and Address
• Cheque Details (Cheque number, date, and amount)
• Reason for Dishonor (as mentioned in the bank statement)
• Demand for Payment within 15 days
• Reference to Section 138 of the NI Act (optional).

There’s no specific format mandated by law for a cheque bounce notice (also known as an unsuccessful payment notification, payment reversal notice, etc.) in India. However, it’s recommended to include the following details for clarity and legal validity:

A cheque bounce notice in India, while a formal communication, serves as a warning to the drawer. Ignoring a cheque bounce notice (unsuccessful payment alert, payment reversal notification, Insufficient funds alert ) can lead to legal action against the drawer under Section 138 of the NI Act. This can result in:

• Imprisonment for a term of up to two years
• Fine
• Both imprisonment and fine

The severity of the punishment depends on the specific circumstances of the case.

Traditionally, cheque bounce notices were delivered physically. However, a recent landmark judgment by the Allahabad High Court has paved the way for a more modern approach. The court ruled that a demand notice sent electronically through email or WhatsApp can be considered valid in cheque dishonor cases. This ruling ( cheque dishonor advisory, non-payment advisory,  payment failure advisory) simplifies the process of issuing notices and makes it more convenient for payees.

• Ensure the email or WhatsApp message mentions the details of the bounced cheque and the demand for payment.

• Maintain a record of sending the electronic notice (screenshots, delivery confirmation, etc.) for future reference.

• While online notices are now considered valid, it’s still advisable to consult a lawyer for guidance on drafting a comprehensive notice.

Contact The Best Cheque Bounce Lawyer In Delhi And Gurugram, At M&M Law Partners. For Personalized advice on cheque bounce notices In India, it’s wise to consult legal professionals.

At M&M Law Partners, we have the best civil lawyers in Delhi and Gurugram who are experts in cheque bounce cases and offer comprehensive assistance, including drafting notices and representing clients in court, ensuring effective legal support.