Everything You Should Know About Legal Notice For Cheque Bounce

Legal notice can be sent related to many subjects, usually in Civil matters. People prefer to send a Legal Notice first in case of a civil dispute to avoid unnecessary lengthy fights of court. In a matter of cheque bounce, which may happen due to many reasons, the first thing anybody does is to send a Legal Notice to the opposite party. It usually occurs when a cheque presented at the bank is returned due to Insufficient funds in that account. And for the same, a legal notice for Cheque bounce can be sent to the person who has issued the cheque.  

A legal notice is a serious intimation to the cheque issuer for non-payment. A cheque bounce notice shall be sent under Section 138  of the Negotiable Instrument Act to the person who issued cheque. And cheque bounce is considered as a serious offense in India, and for which there is imprisonment and fine under the Negotiable Instruments Act. 

Reasons behind Cheque bounce

These are the main reasons behind Cheque bounce:

• Insufficient funds in the bank account of the person who issued the cheque.
• Due to the mismatch of signature also, a cheque can be bounced. The original signature of the person who has issued the cheque should match.
• If the cheque has expired as the validity of a cheque is up to 3 months from the date of issuance of a cheque. 
• If Post Dated Cheques deposited earlier than the due date, in this case, cheque bounce could happen.  
• If the amount mentioned in the word and number mismatch, , then also, there is a high chance for the cheque to bounce.
• If the cheque is damaged and not in good condition, torn or disfigured, or details are unclear, then in all these circumstances,  a cheque may bounce.
• Any kind of overwriting, scribbling,  correction etc. on a cheque shall be avoided as it gives reason for cheque bounce.  

Cheque Bounce Matter under section 138 of the Negotiable Instruments Act 

A Legal Notice for Cheque bounces deals under the Section 138 of the Negotiable Instruments Act.

According to Section 138  of the Negotiable Instruments Act, Dishonour of cheque  for insufficiency of funds in the account, etc., stating – Where any cheque drawn by a person from an account maintained by him for payment to another person from that account  against any debt or liability, is returned by the bank unpaid.  

According to this Act, a person may be punished with imprisonment or fine or both in matter of cheque bounce.

Nothing contained in this section shall apply unless:

• The cheque  must be  presented to the bank within six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
• The payee  shall demand for the payment from the drawer within fifteen days of the receipt of return cheque memo by sending a legal notice and
• The drawer  fails to make the payment of the said amount of money to the payee within fifteen days of the receipt of the said notice.

When Can Legal Notice for Cheque Bounce Be Issued?

Legal notice for cheque bounce shall be sent by an advocate on behalf of the client. Usually in Legal Notice, an advocate demands payment for the cheque and mention all the necessary action which can be taken, in case if the payment is not made.

These are the conditions which are necessary to issue a legal notice for dishonour of cheque:

• The cheque should be provided to Payee towards a liability.
• The cheque drawn by the Drawer is on the account maintained by him
• The cheque must be presented within six months by the beneficiary.
• The cheque should have been returned to the beneficiary by the bank due to insufficient funds.
• The payee makes a demand for the payment by giving a legal notice in writing, within 30 days of the receipt of information by him/her from the bank that funds are insufficient.
• In case if the cheque drawer fails to make payment of the said amount of money within 15 days of the receipt of the legal notice for cheque bounce, then further legal action can be initiated. 

Format for a Legal Notice for Cheque Bounce

LEGAL NOTICE

Date: 

To,

Mohd ………….

………………………………………………

Delhi Sadar Bazar, North Delhi-110006

SUBJECT: “Legal Notice under Section 138 of Negotiable Instrument Act, 1881 and Section 420 of Indian Penal Code 1860”

Under instructions from and on behalf of our Client named ………………, who is owner of a wholesaler shop named ………………………………………………New Delhi-110044, India,  without foregoing and without prejudice to the legal rights and remedies available to our Client, we hereby issue and serve upon you, the aforesaid Noticee the following Legal Notice for the cause stated as under:

1. That our Client is a citizen of India and being a person of repute; is also known for his patience, politeness and well behaviour amongst their family and friends. That being a dutiful and responsible citizen of this country, our Client with utmost hard work and perfection has attained a high degree of reputation and goodwill in the society.
2. That You, the Noticee contacted our client through India Mart for the purchasing of clothes and visited our client shop on ……………….. That you the noticee, presented yourself as a owner of ……………. , a clothing store based in New Delhi and for the same you, the noticee provided enough proofs. 
3. That our client after seeing your Aadhar card, pan card and your store visiting card got convinced and allowed you to purchase clothes on credit. You, the Noticee had purchased clothes worth Rs. 1, 18,600/ -( Rupees One Lakh Eighteen Thousand and Six hundred only) .  That for the same, You, the Noticee had paid our client Rs. 25,000( Rupees Twenty Five Thousand Only) in Cash and for the rest amount, you the Noticee had provided a post dated cheque to our client assuring that it will be cleared on the same date.  
4. That you the Noticee had even showed GST registration certificate of the same 
5. That you, the Noticee on account of the above transactions the amount of Rs 93,600/- (Rupees Ninty Three Thousand and Six Hundred Only) was due towards you, the Noticee. That the following cheque was issued by you, the Noticee, for the payment of the aforesaid liability of part amount with the assurance that the same would be honoured on its presentation.  

1. That however, the cheque no………….(annexed as Annexure 1), when presented in the Bank , dishonoured for the reason “Insufficient funds” on …….. ( annexed as Annexure 2 ) . our client again presented the  cheque  in the bank  but it again bounced with the same reason on …………. 

1. That our Client persistently approached you, the Noticee to pay the outstanding amount but you, the Noticee failed to refund the outstanding amount. That to requests and follow-ups of our Client, You, the Noticee was not responding appropriately as neither you, the Noticee has paid the accrued the outstanding amount nor responded to phone calls and reminders of our Client. You, the Noticee, even switched off all the numbers provided by you to our client.

1. That when our client visited on address given by you, it was utter shock for him that there was no such shop available. That you, the noticee had contacted with all the plans to cheat our client and the same is making you liable to be punishable under Indian Penal Code,1860. 

1. That you, the Noticee was aware of the entire transaction as stated above. That you, the Noticee was also aware and conscious that the dishonour of cheque issued in satisfaction of your aforesaid liability amounts to a criminal offence under section 138 of Negotiable Instruments Act, 1881, as amended upto date and is punishable with imprisonment, which may be extended upto two years, and fine, which may be extended upto twice the amount of the cheque. Therefore, you, the Noticee is liable to be prosecuted and punished for the offence committed by you, the Noticee. 

1. Under the above circumstances, we hereby call upon you, the Noticee to pay sum of Rs. 93,600/-(Rupees Ninty Three Thousand and Six Hundred Only) being the amount of the dishonoured cheques within a period of 15 days from the date of receipt of this Notice. Further you, the Noticee is also liable to pay 18 % interest on said amounts from the due date. Failing which, our Client shall be constrained to institute a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881, as well as under Section 420 of the Indian Penal Code, 1860 and/or civil suit entirely at your risk, cost and responsibility. 

1. That you, the Noticee approached our client with fraudulent intention and the same is making you liable to be punished under Indian Penal Code,1860 and You, the Noticee has not followed even a normal business ethics and you have committed crime for criminal breach of trust.  

1. That you, the Noticee is further called upon to pay our Client a sum of Rs, 5000 ( Rupees Five thousand only ) towards the cost of this Notice. Further, you, the Noticee shall ignore this notice at your own peril and cost. 

1. Please further note that this Notice is without prejudice to the right of our Client to initiate any other legal proceeding before the court of law to recover the aforesaid amount. 

1. You shall ignore this Notice at your costs, risks and consequences of which you please take notice.

          COPY RETAINED

Yours Sincerely,  

Advocate Name & Signature

Conclusion: