Notices · Recovery
A demand notice under Section 138 starts a 15-day clock. Pay within it and there is no offence; let it run and the payee can file a criminal complaint.
Quick Statutory Answer
A cheque bounce notice is a demand under section 138 of the Negotiable Instruments Act. You have 15 days from receiving it to pay the cheque amount; if you do, no offence is committed. If you do not, the payee can file a criminal complaint within one month after those 15 days, and the court can order interim compensation of up to 20% while the case runs.
| What | For this notice |
|---|---|
| Sent by | The person your cheque was paid to, or their advocate |
| Under | Sections 138 to 147, Negotiable Instruments Act 1881 |
| Reply in | Payment, or a written reply by letter or through an advocate |
| Deadline | 15 days from the day you receive the notice |
| If ignored | A criminal complaint: up to two years’ imprisonment, a fine up to twice the cheque amount, or both |
A fill-in format: replace every [bracket] with your own facts and delete what does not apply. Copy it, or download it in Word, free.
From
[Your name] [Name of the business, if the cheque was issued for it] [Address]
Date: [DD/MM/YYYY] By Speed Post / Registered Post A.D. [and email, if the notice gave one]
To
[Name of the sender of the notice] [Address] [Through their advocate, [name], [address], if the notice came from an advocate]
Subject: Reply to your notice dated [date] under section 138 of the Negotiable Instruments Act, 1881, concerning cheque No. [number] dated [date] for Rs. [amount] drawn on [bank, branch]
Sir/Madam,
1. I received your notice on [date of receipt]. Its contents are denied except to the extent specifically admitted below.
The facts
2. [Why the cheque was given — the transaction, its date and amount.]
3. [Choose what applies, with dates and documents:] — The amount has already been paid on [date] by [mode], reference [ ]; nothing is due. — The cheque was given only as security for [transaction], and no legally enforceable debt or liability was due when it was presented, because [reasons]. — The goods / services for which the cheque was issued were [not delivered / defective], as recorded in [letter / email dated [ ]]. — Only Rs. [amount] is due, not Rs. [amount].
4. [If applicable: the notice is defective — it was not sent within thirty days of the bank's return memo / it does not clearly demand the cheque amount.]
Conclusion
5. As no legally enforceable debt or liability exists [for the amount of Rs. [amount]], no offence under section 138 is made out. [If any amount is admitted: I am willing to pay the admitted amount of Rs. [amount] on [terms].] I reserve all my rights and remedies.
[Your name / name of the authorised signatory] [Signature]
Fifteen days from the date you receive it, under clause (c) of the proviso to section 138. Paying the cheque amount within that time means no offence is committed.
The law does not require a reply. But where you dispute the debt, a reply sent within the 15 days records your defence at the earliest stage, and helps rebut the presumption under section 139 if a complaint follows.
It can, if a legally enforceable debt existed when the cheque was presented. Whether a security cheque was presented for such a debt is decided on the facts, so record your position in writing within the 15 days.
Imprisonment of up to two years, a fine of up to twice the cheque amount, or both, under section 138. The court can also order interim compensation of up to 20% under section 143A while the case is pending.
An explanation of the rules, not advice on your notice. The date printed on your notice governs, and a demand of any size deserves a CA or an advocate before you reply.