What should be included in a demand notice?

Answer

A:

A demand notice (also called a legal notice) under Section 138 of the Negotiable Instruments Act, 1881 is a mandatory step before filing a cheque bounce case. It must be sent to the drawer within 30 days of receiving the cheque return memo. To be legally valid, the notice should include specific details that establish the liability and give the drawer an opportunity to pay within 15 days.

1. Details of the Cheque

   • Cheque number

   • Date of issue

   • Amount mentioned

   • Name of the bank and branch

   • Date of dishonour (as per bank return memo)

2. Reason for Dishonour

   • As mentioned in the cheque return memo, e.g., “insufficient funds,” “account closed,” “signature mismatch,” etc.

3. Details of the Transaction

   • Brief description of why the cheque was issued: loan repayment, payment for goods, services rendered, or any other legally enforceable liability.

4. Outstanding Amount

   • The exact amount due from the drawer.

5. Legal Reference

   • Mention that dishonour of the cheque attracts liability under Section 138 of the Negotiable Instruments Act, 1881.

6. Demand for Payment

   • A clear demand that the drawer should make the payment of the cheque amount within 15 days of receipt of the notice.

7. Consequences of Non-Payment

   • State that failure to pay within 15 days will compel the complainant to initiate legal proceedings under Section 138 NI Act, at the drawer’s cost and risk.

8. Sender’s Details

   • Full name, address, and signature of the complainant or their advocate.

• Always send the notice through Registered Post Acknowledgment Due (RPAD), Speed Post, or any mode with delivery proof.

• Keep a copy of the notice and postal receipts for court purposes.

• The language should be formal, factual, and precise, avoiding unnecessary accusations.

A valid cheque bounce demand notice must clearly mention cheque details, transaction purpose, reason for dishonour, demand for payment, legal consequences, and sender’s details. If any essential element is missing, the notice may be considered defective, and the complaint under Section 138 NI Act can be dismissed.