Cheque Bounce Notice u/s 138 (Drafting)

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Cheque Bounce Notice u/s 138 (Drafting)

A check bounce notice: What is it?

When a check bounces because the drawers' account does not have enough money to cover the check amount, a notice known as a "check bounce notice" is sent out in accordance with Section 138 of the Negotiable Instruments Act. The check bounce notice cannot be sent if the check bounces for any other reason than insufficient money, and the payee may request that the check be resubmitted.

What's Included in Our Service?

One-on-One Consultation to Understand the Transaction and Review Details
Professional Drafting of the Legal Notice under Section 138
Review of documents (cheque copy, bank memo, invoice/agreement, etc.).
Sending the Notice via registered or speed post.
Proof of Delivery and Follow-Up Support

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Frequently Asked Questions (FAQs)

When should I send a cheque bounce notice?

The notice must be sent within 30 days of receiving the bank’s return memo stating that the cheque has bounced. Timely action is crucial to keep your legal rights protected.

What actions must be taken to file a complaint with the authorities if a cheque bounces?

To commence a prosecution under Section 138, fulfill the three prerequisite precedents listed below:
• Return the cheque to the bank within three months after its issuance or within the period of validity. (Previously, the validity term of cheques was regarded to be six months; however, the Reserve Bank of India, via Notification No. RBI/2011-12/251DBOD.AML BC.No.47/14.01.001/2011-12, directed that the validity period of cheques be reduced from six months to three months with effect from April 1, 2012.).
• After the cheque is returned unpaid, the payee [person receiving the money] should have submitted a demand for payment to the Payor [person liable to pay the money] via registered notice.

• The Payor failed to pay the amount within 30 days of receiving notification. The prosecution for the offence under Section 138 can only be undertaken if both of the elements listed above are met.

What documents do I need to provide to Legal Vedas?

You'll need:

A copy of the bounced check.
Bank return memo
Invoice or agreement, if available.
Your contact information and transaction background

What are the other consequences of a cheque bounce?

In addition to the criminal offence, bounced checks can have an impact on creditworthiness or credit history. Bounced checks are not often reported on standard credit reports, although they do appear on bank account statements. Banks, both nationalized and non-banking financial institutions, now ask customers to provide bank statements for up to a year before any loan can be processed. A bank statement with a high number of cheque bounces might have an impact on loan eligibility and creditworthiness.

Can I send the notice on my own?

Yes, however a warning that is not correctly drafted or consistent with legal standards could undermine your case. It is recommended that it be drafted by a legal professional to ensure enforceability.