Section 138 of the Negotiable Instruments Act 

A Notice under section 138 of the Negotiable Instruments Act (1881) is a formal communication sent to a person or entity who has issued a dishonoured or bounced cheque due to insufficient funds in their bank account or other reasons.

Section 138 of the Indian Negotiable Instruments Act of 1881 provides a legal remedy to the payee (the person to whom the check is payable) to recover the amount mentioned in the dishonoured cheque along with additional penalties.

Bare Act PDFs

The notice serves as a precursor to legal action and must be issued within a specified timeframe after the check has been dishonoured. This notice informs the drawer (the person who wrote the cheque) about the dishonour of the cheque and provides them with an opportunity to make the payment within 15 days from the receipt of the notice to avoid legal consequences.

Related: What Is Cheque Bouncing, Its Reasons and Punishment?

Model Draft of Notice U/S 138 of The Negotiable Instruments Act

To,

XYZ,
S/o Sh ABC,
Address———————-

Subject: NOTICE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT READ WITH SECTION 420 IPC.

Bare Act PDFs

Under the instructions of my client Sh MN, S/o Sh OP, R/o House No. ——-, I hereby serve you the following legal notice:-

  1. That you approached my client for a friendly loan of Rs 7,00,000\- in the month of March 2022.
  2. That my client advanced you the friendly loan as you have been known to my client for some time.
  3. That in the discharge of your liability, you gave a cheque bearing no. ———— dated 31 July 2022.
  4. That my client presented the cheque given by you on the month of 5 August 2022, but the same was not honoured. My client informed you about the dishonour of the cheque, and you requested my client to present the same after three months. My client acted upon your assurances and presented the cheque to his bank, but the same was dishonoured and was returned by the bank vide memo dated 8 November 2022 with the remarks “Insufficient funds”.
  5. That cheque was handed over to my client by you in the discharge of your liability, but you have failed in your duty to see that the aforesaid cheque gets encashed.
  6. That dishonouring the above-said cheque entitles my client to prosecute you criminally and recover the amount in civil proceedings.
  7. That you are aware that under section 138 of the Negotiable Instruments Act, a drawee has to serve a notice of 30 days to the drawer (i.e. to you) to make the payment of the dishonoured cheques, and in case the drawer fails to make the payment within 15 days from the receipt of the notice, the offence is committed by the drawer.

I, therefore, on behalf of my client, call upon you to make the payment of the above-said cheque amounting to Rs 7,00,000\- within 15 days from the receipt of this legal notice; otherwise, my client will prosecute you criminally and recover the amount in civil proceedings.

Note: A copy of the notice has been retained in my office for record and further action.

Dated: 5 December 2022
(————)
EFG (name of the advocate)
Advocate

Dinesh Verma
Latest posts by Dinesh Verma (see all)
WritingLaw » Law Q&A » What Is Model Draft of Notice Under Section 138 of the Negotiable Instruments Act? Law Study Material
If you are a regular reader, please consider buying the Law PDFs and MCQ Tests. You will love them. You may also support us with any amount you like. Thank You.