Receipt of section 138 cheque bounce notice can instantly put anyone into
panic mode. Especially since most notices are couched in harsh terms, most recipients start believing that the
complainant will immediately file a criminal case and they will be arrested. That is not how law works. Sending
a cheque bounce notice is the beginning of the legal process, not the end. It gives you a chance to reply, state
your version and protect your position without making unnecessary admissions. If you intend to send a reply to section 138 cheque bounce notice you have received, you need to understand the
timing, the facts, the cheque details and actual liability involved. You should never send a casual reply to
such notices. An incorrectly worded reply can damage your defence. When done properly, sending a cheque bounce
notice reply can put your side of the story on record and prevent the complainant from alleging that you did not
dispute his version when notice was received. Once notice is issued under Section 138 NI Act, the payee has 30 days from the date of receiving information
from his bank about cheque dishonour to send a statutory demand notice in writing to the drawer. Upon receipt of
notice, the drawer has 15 days to make the payment. If payment is not made within 15 days, complainant can file
a criminal complaint under section 138 NI Act provided limitation and other legal conditions are met. Above post
is shortened version of the draft sent under client request. CHEQUE BOUNCE NOTICE IS A NOTICE asking you to make payment of cheque amount along with penalty and interest,
before the payee initiates legal action by filing a cheque bounce complaint under Section 138 of NI Act. It is not a court summons, and it is not an intimation of immediate arrest. However, that does not mean that you take the notice lightly. You should read the notice carefully and verify
the facts stated therein. Some notices exaggerate the amount mentioned in the cheque, contain wrong
calculations, unjust interest, suppress part payments, wrong date and mention facts regarding a cheque that was
actually provided as security. Replying to cheque bounce notice is not mandatory under Section 138 NI Act, but in practice, it is almost
always necessary. Sending a well-drafted legal reply to cheque bounce notice helps you in recording your defence
and prevents the complainant from claiming that you accepted his allegations when he sent the notice. Your legal reply to cheque bounce notice can mention that you do not accept the alleged liability, that cheque
was provided as security, that the claimed amount is incorrect or that part payments were not adjusted. You can
even ask the complainant to provide account statements, invoices, loan documents, ledger or collection records
to support his claim. Gone are the days when people would casually write “Ok I will pay” “Pl give me some time” “Sorry I could not
get money”, on receiving such notices. Only purpose of sending such messages is to legally confess your guilt.
If you owe money to the complainant and are looking to settle the matter, your reply should be drafted very
cautiously. However, if you believe that the complainant has made a false claim, your reply should specifically
deny the incorrect allegations. Every case is different. Your section 138 notice reply lawyer will first examine the documents and then decide
whether the reply should reflect denial, willingness to settle or should be conditional. The language used
should always be firm and legally safe. Before drafting your reply to cheque bounce notice you should gather all documents related to cheque and
transaction under reference. Start with cheque details. Check the cheque number, cheque date, cheque amount,
bank name, account number and drawer name. Verify the details mentioned in notice and mention in your reply if
anything is incorrect. After this you should check the bank return memo. Mentioned reason for dishonour is very important. Some common
reasons include: Your cheque bounce notice reply should address the specific reason for dishonour mentioned in bank memo. Next thing to check would be whether there was any legally enforceable debt between you two. Absence of legally
enforceable debt is core of every cheque bounce case. If there was no loan, no transaction completed, no
delivery of goods/services, no outstanding amount, no final reconciliation or no legally enforceable liability,
you should clearly mention the same in your reply. Also mention the purpose for which the cheque was given if it
was given as security cheque or blank signed cheque. Furthermore you should mention why presentation of such
cheque was wrongful. You should also verify the limitation period. Cheque bounce complaint can be filed against you only when demand
notice is sent within 30 days from receiving information from bank regarding cheque dishonour. Upon receipt of
notice, drawer has 15 days to make the payment. If drawer fails to make payment within 15 days, cause of action
arises against him and he can file a complaint within limitation provided under section 138 NI Act. Also see if you had made any payments prior to receipt of notice. If complainant has wrongly demanded full
cheque amount without adjusting part payments against cheque, you should mention dates of payments, amount paid,
mode of payment and transaction references. Bank transactions, UPI transactions, receipts, WhatsApp chats,
emails and ledger account can help you prove your defence. If cheque belongs to a company, firm, LLP or proprietorship firm, extra care should be taken while replying.
Sometimes in company cases, every director’s name is mentioned in notice. But that does not make every director
liable. You reply should specifically mention whether the director receiving notice was responsible for
day-to-day operations of the company at relevant time, whether he signed that particular cheque or had anything
to do with underlying transaction. Section 138 notice reply should be factual, controlled and balanced. It should not contain unnecessary personal
allegations against the complainant. It should not be drafted in aggressive language. It should not accept guilt
unless you are really settling the matter and have decided to accept the alleged liability. Read notice twice. Note notice date, date of receipt, cheque number, cheque amount, cheque date, bank memo
date, dishonour reason, demanded amount and details of the transaction. Note when transaction took place, when cheque was issued, was cheque was security, what payments were made
till when, when dispute arose, when cheque was presented to bank and when notice was received. Are you denying the claim in full? Are you accepting part amount but denying rest of the amount? Did drawer
misuse your cheque? Was there no legally enforceable debt? Are you willing to settle but do not want to
admit full demand. Decide your stand and mention the same in your reply. Do not take contradictory
positions. Instead of saying “I failed to pay the amount”, mention “The alleged liability is denied and requires
reconciliation”. Instead of saying “Will pay the amount soon”, mention “Without accepting the allegations, my client is
willing to find an amicable solution subject to verification of accounts” If notice does not contain requisite details, ask for loan/document of deposit, ledger/account statement,
invoice/bill, interest calculation, delivery receipts, written acknowledgment or authority document. If cheque was misused by holder or his demand is false, mention in your reply that you reserve the right to
take legal action against him. Make sure the language used is professional and not threatening. You can send the reply by registered post, speed post or courier. If email is available, you can also send
a copy. Keep the postal receipts and courier tracking reports safe. Also keep copy of the reply sent and
delivery proof of email. Many borrowers give cheques while entering into loan documents, business deals, rent transactions or
supplying credit. But merely because a cheque was labelled as “security cheque” does not mean that holder can
present it at his whims and can initiate legal action. Mention in your reply why you gave cheque, whether
liability had crystallised at time of presenting cheque, whether you had pending final accounts or whether
holder had any authority to present cheque. It is not uncommon for persons to trust others and provide them signed blank cheques during routine
documentation. Such cheques are then misused by adding date and amount without your permission. Raise this
defence along with supportive messages, agreement or past conduct. Account records and part payment history
can help you prove your case. You can also mention that there was no legally enforceable debt between the parties. For example, if
complainant had never advanced loan, supplied goods, provided services, received full payment or the amount
was already paid, you can clearly deny his allegations by mentioning same in your reply. If cheque was for Rs. 5,00,000 and you had already paid Rs. 3,00,000 prior to receipt of notice, complainant
has no right to demand full cheque amount. If he still sends notice demanding full amount without adjusting
part payments, you should record all part payments along with dates, transaction references and bank proofs.
If notice is sent beyond 30 days from bank informing him about cheque dishonour or if notice is wrongly
addressed or if demanded amount is incorrect and complainant has failed to provide calculation or breakdown,
you can mention the same in your reply. However raising objections for minor issues will not help your case.
Focus on meaningful defences only. As mentioned above, complainant has 30 days from bank’s intimation to send notice. Drawer has 15 days from
receipt of notice to make payment. If drawer fails to make payment, cause of action arises against drawer
after 15 days. Complaint under section 138 NI Act must be filed within limitation provided under section 138
NI Act. If the cheque is issued by a company and you received notice as a director, you can deny liability by
mentioning that you were not actively involved in company’s business at relevant time. You can attach your
resignation letter if available. You can also mention that you did not sign the cheque or had any knowledge
about transaction. Let us look at a couple of examples where borrowers successfully replied to section 138 notice by raising some
defences mentioned above. X advances a friendly loan of Rs. 2,00,000 to Y and receives a cheque. Y later makes a bank payment of Rs.
1,20,000 to X. Upon receiving bank transfer, X still presents Y’s cheque for Rs. 2,00,000. He then sends a
cheque bounce notice demanding full amount of Rs. 2,00,000. What should Y do? Most people will quickly reply “Ok I will pay”. THIS IS THE BIGGEST MISTAKE. Y should first reply stating that he had already paid Rs. 1,20,000 prior to the notice. He should mention
dates of payment and bank details. He should clearly deny demand for full cheque amount. He can also request
complainant to reconcile the accounts. Most importantly he should mention that the complainant has suppressed
part payment from his notice. A trader supplies goods to B on credit and issues a sales invoice. B immediately gives his signed cheque as
security and asks A to supply goods. A supplies some goods but full quantity is never delivered. A later
presents B’s cheque for Rs. 5 lakhs and sends bounce notice demanding full amount. Can B reply to notice? YES, he can. B should reply to notice stating that cheque was provided as security.
Final accounts were never settled between parties. Further, goods were never supplied to him as per alleged
invoice. The entire claim is false/altered. Once the 15 day period is over, the complainant can straight away send you a lawyer’s letter. Following
this he can file complaint in court. You should avoid ignoring the notice altogether. Many people send apology messages on whatsapp. Do NOT do that. It will only work as evidence against you.
Before admitting the liability, you should check your records. If you are sure that you owe the money, you
should still consult a lawyer and reply cautiously. If you deny something which you actually owe, it will
seriously backfire later. Do NOT send emotional or threatening messages to the complainant. Even if you have settled the matter orally, get the terms in writing. Unless there is evidence, court will
not believe that you settled. Do NOT delete chat history with the complainant or create evidence with back dates. Do NOT copy paste some random reply format available on internet. The reply should be sent based on your
facts. Copy pasted replies can have unintentional admissions or unnecessary denials. This is legal matter,
do not take chances with one inappropriate sentence. While preparing your cheque bounce notice reply you will need following documents. You should try to get the
hands on all these documents as these will help your lawyer better understand the matter and draft accurate
reply. Legals365 along with Advocate BK Singh have helped numerous borrowers, individuals, professionals, traders
and business owners to file proper reply to cheque bounce notices. We can help you too in the following ways:
We will review the cheque bounce notice sent to you under Section 138 NI Act. We will first verify the
limitation, cheque details, actual liability on drawer and potential defences you have. Based on facts, we will
draft your legal notice and suggest you ways to settle if necessary without verbally admitting the demand. If
complainant still goes ahead and files complaint, we will further advise you on how to defend your case in
court. At Legals365, our goal is not to create more litigations. Our aim is to help you respond to the notice in a
better way. We aim to protect your rights without making unintentional admissions which can harm you later. No. It is not mandatory to send a reply under law. But it is advisable to send a reply so that you can
record your side of the story. Reply to cheque bounce notice should be sent within 15 days from notice. This is because drawer has 15 days
to make payment from receipt of notice. Once the 15 days are over, the complainant can initiate legal
proceedings against you. Yes. If the facts are in your favour, you can deny the liability. You can say that cheque was misused by
holder, that you had already paid the amount, that demanded amount is incorrect or that there was no legally
enforceable debt between the parties. Yes. If a security cheque is wrongfully presented, holder can initiate legal action against you. The main
factor would be whether any legally enforceable debt existed at the time of presentation of cheque. If you have made part payment prior to notice, you should definitely mention part payments alongwith dates,
amount and proof of payment. Complainant has no right to demand full cheque amount if you had already paid
something prior to sending notice. Yes. Settling a dispute is never frowned by law. However, your settlement communication should always be
drafted cautiously. Ideally you should not admit the allegations while settling. Hiring a lawyer becomes necessary when the amount involved is large, facts are disputed and there is risk
of the complainant filing a court case. Else you can also send a reply by yourself.How to Reply to Section 138 Cheque Bounce Notice in India
Don’t Panic On Receiving Cheque Bounce Notice Under Section 138
Replying to Section 138 Cheque Bounce Notice: Why and How
What All To Check Before Replying To Section 138 Notice?
Reply to Section 138 Cheque Bounce Notice
READ NOTICE FIRST:
MAKE A TIMELINE:
DECIDE YOUR LEGAL POSITION:
DON’T ADMIT:
ASK FOR DOCUMENTS:
RESERVE YOUR LEGAL RIGHTS:
SEND THE CHEQUE BOUNCE NOTICE REPLY:
Defences to Raise in Cheque Bounce Notice Reply
Cheque Given as Security
Misuse of Blank Cheque
No Legally Enforceable Debt
Part Payments
Invalid / Time barred Notice
Limitation
Deny Liability As Director
Samples
Example 1
Example 2
Mistakes To Avoid While Replying To Cheque Bounce Notice
Ignoring Notice:
Casual Apology:
Admitting Liability:
Emotional Communication:
Oral Settlement:
Deleting Evidence:
Copy-Pasting:
Documents You Will Need
How Can Legals365 Help You?
Frequently Asked Questions
Q1. Is it mandatory to send a reply to cheque bounce notice?
Q2. Within what time period should I send the reply to cheque bounce notice?
Q3. Can I deny liability in my reply to cheque bounce notice?
Q4. Can I be held liable for a security cheque?
Q5. What should I do if I have already paid part of the cheque amount?
Q6. Can I settle after receiving cheque bounce notice?
Q7. Should I hire a lawyer to send a cheque bounce notice reply?
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