Cheque Dishonour Notice

What this document contains

6 clauses every cheque dishonour notice carries, plus 4 you can add.

1. 01

   Who the notice is from and to

   The head of the notice: the place and date it bears, who it issues from, and everyone it is addressed to. Recipients are entered here rather than through the party picker — a notice is served on its recipients, not agreed with them, and the Sender is its only signatory.

2. 02

   Subject

   The one line a recipient reads first, and the line the notice is later found by in a file. Written by the Sender rather than composed from the facts — those live on other clauses, and a clause cannot read another clause's data.

3. 03

   What the cheque was given for

   The debt or liability the cheque was issued to discharge. Mandatory, and not padding: s. 138 bites only where the cheque was drawn for the discharge of a legally enforceable debt or other liability. A cheque given as a gift, as security in circumstances where nothing was yet owed, or for a debt already time-barred falls outside the section, and the Explanation to s. 138 says so in as many words.

4. 04

   The cheque

   The particulars of the cheque itself — its number, date, amount, the bank it was drawn on, and in whose favour. A s. 138 notice is about one identified instrument, and these are the particulars a complaint is later built on.

5. 05

   Presentation and dishonour

   When the cheque was presented, when it came back, what the bank's memo said, and when the Sender was told. The last of those is recited because the thirty-day window to give this notice runs from it, and stating it on the face of the notice is how the notice shows itself to be in time. Nothing computes a date from any of them.

6. 06

   Demand under s. 138

   The operative paragraph, and the one the statute prescribes. Proviso (c) to s. 138 gives the drawer fifteen days from receipt of the notice to pay, and a notice demanding any other period is not a s. 138 notice — so the period is fixed text here rather than a field. Nothing computes a date from it: receipt is unknowable at drafting.

Optional clauses

• How to pay

  Where and how the Recipient may pay within the fifteen days. Optional: a s. 138 notice is valid without it, and many are sent naming no account at all. Including it removes the excuse that there was nowhere to pay.

  Worth adding when: the sender wants to say how payment may be made

• What the Sender intends if this notice is not complied with

  The paragraph a notice conventionally ends with, in which the Sender says what they intend if it is not complied with. Optional, and never added automatically: whether to say anything at all is the Sender's decision. Where the Sender has words of their own they are used verbatim; where they have none, a neutral closing sentence is rendered that names no remedy and predicts no outcome.

  Worth adding when: the sender has said what they intend to do if the notice is not complied with

• Enclosures

  The documents sent with the notice. Optional, because many notices enclose nothing.

  Worth adding when: the sender is sending documents along with the notice

• Custom Clause

  A free-form clause for bespoke provisions not covered by standard clauses. Use clauseId 'custom-clause-1', 'custom-clause-2', etc. to add multiple. The LLM provides clauseTitle and clauseBody. Use the sequence parameter to control placement.

What the law requires

When a period begins to run

A period running from receipt and a period running from the date of the notice count different things. Where a document is sent by post, service is deemed to be effected at the time the letter would be delivered in the ordinary course of post, unless the contrary is proved.

General Clauses Act 1897, s. 27

Stamp duty

The Indian Stamp Act charges the instruments listed in its Schedule. A notice is not among them: it creates no right, transfers no property and records no bargain.

Indian Stamp Act 1899, s. 3 and Sch. I

This notice is a precondition, not a courtesy

No offence under s. 138 is made out unless the payee gives written notice demanding payment within thirty days of receiving information from the bank that the cheque has been returned unpaid, and the drawer fails to pay within fifteen days of receiving that notice. A demand sent outside the window, or demanding a different period, does not satisfy the section.

Negotiable Instruments Act 1881, s. 138, provisos (b) and (c)

Only a cheque for a legally enforceable debt

The section applies where the cheque was drawn for the discharge, in whole or in part, of a debt or other liability. A cheque given as a gift, or for a debt that was already time-barred when it was given, falls outside it. The Explanation to s. 138 states this limit.

Negotiable Instruments Act 1881, s. 138, Explanation

When the periods run

The thirty days to give notice runs from the payee receiving information of the dishonour from the bank, not from the date on the return memo and not from presentation. The fifteen days to pay runs from the drawer receiving the notice, not from its date. Where a notice is sent by post, service is deemed effected in the ordinary course of post unless the contrary is proved.

Negotiable Instruments Act 1881, s. 138, provisos (b) and (c); General Clauses Act 1897, s. 27

The cause of action, and the month that follows

The cause of action arises on the sixteenth day after the drawer receives the notice, if payment has not been made. A complaint must be made within one month of that date, by the payee or the holder in due course, before a Judicial Magistrate of the First Class or a Metropolitan Magistrate.

Negotiable Instruments Act 1881, s. 142

The civil claim is separate

A prosecution under s. 138 does not recover the money; it is a criminal proceeding against the drawer. The debt itself remains recoverable in a civil suit, governed by its own limitation period, and the two run independently.

Negotiable Instruments Act 1881, s. 138; Limitation Act 1963