What to Do If You Receive a Legal Notice for Cheque Bounce under Section 138

A step-by-step guide to understanding and responding to a cheque bounce legal notice under Section 138 of the Negotiable Instruments Act.

Team Sachar Law Firm

8/11/20251 min read

Receiving a legal notice for cheque bounce can be stressful, but knowing the law helps you respond effectively. Section 138 of the Negotiable Instruments Act, 1881 deals with dishonour of cheques for insufficient funds or other reasons.

Steps to follow:

  1. Read the notice carefully – It must mention the cheque details, reason for dishonour, and demand for payment.

  2. Check the timelines – The payee must send the notice within 30 days of receiving the bank’s return memo. You have 15 days from receipt to make the payment.

  3. Verify the cheque details – Ensure the cheque number, amount, date, and payee name match your records.

  4. Decide your response – If the claim is genuine, settle within 15 days to avoid criminal proceedings. If you dispute it, prepare your defense with legal help.

  5. Preserve all evidence – Keep bank memos, correspondence, and proof of payment or dispute.

Key point: Ignoring the notice may lead to a criminal complaint under Section 138, which carries penalties including fines and imprisonment. Always consult an advocate before replying.