Can stop payment instructions attract liability under Section 138 NI Act?

Yes. The Supreme Court has repeatedly held that even if the drawer issues 'stop payment' instructions to the bank, it attracts criminal liability under Section 138 NI Act, unless the drawer can prove that there were sufficient funds in the account and the stop-payment order was justified due to other bona-fide reasons.

What is the punishment for cheque bounce under Section 138 NI Act?

Cheque bounce is a bailable, compoundable offence. If convicted, the offender can be punished with imprisonment for a term which may extend to **two years**, or with a fine which may extend to **twice the amount of the cheque**, or with both.

Can a notice be sent via WhatsApp or Email under Section 138 NI Act?

While courts have increasingly permitted the service of notices via instant messaging channels like WhatsApp and Email to prove delivery, it is highly recommended to send the physical notice via Registered Post AD or Speed Post to meet traditional statutory requirements, using digital channels as a secondary proof of service.

Legal Notice for Cheque Dishonour under Section...

Interactive Pleadings Preview

RAMESH KUMAR & ASSOCIATES, ADVOCATES
Off: 24, Law Chambers, Supreme Court of India, New Delhi - 110001
Ph: +91 98765 43210 | Email: ramesh.advocate@gmail.com

Ref. No. RA/138/2026/89 Date: 30th May 2026

To,
Mr. Vijay Singhania,
Proprietor, M/s Singhania Enterprises,
R/o Flat No. 302, Royal Residency, Sector-9, Dwarka, New Delhi-110075.

SUBJECT: LEGAL DEMAND NOTICE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 FOR DISHONOUR OF CHEQUE NO. 805432 AMOUNTING TO RS. 2,50,000/-

Dear Sir,

Under instructions from and on behalf of my client, Mr. Dinesh Gupta, S/o Shri R.P. Gupta, R/o H.No. 78, Lajpat Nagar-II, New Delhi-110024 (hereinafter referred to as "my Client"), I hereby serve you with the following Legal Demand Notice:

1. That you and my Client have been in commercial business relations for the past two years, during which my Client supplied industrial grade garments and raw fabrics to your firm, M/s Singhania Enterprises, on credit invoices from time to time.

2. That in discharge of your legally enforceable debt and liability towards the outstanding balance of ₹2,50,000/- due for the shipments delivered, you issued a post-dated cheque bearing No. 805432 dated 10th May 2026 for a sum of Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand Only) drawn on HDFC Bank, Dwarka Branch, New Delhi, assuring my Client that the same would be fully honored upon presentation.

3. That relying on your representations, my Client presented the said cheque for payment through his banker, ICICI Bank, Lajpat Nagar Branch on 12th May 2026.

4. That to the utter shock and dismay of my Client, the said cheque was returned unpaid/dishonoured by your banker HDFC Bank with the remark "FUNDS INSUFFICIENT" vide Bank Return Memo dated 14th May 2026. My Client received written information along with the original Bank Return Memo from his banker on 15th May 2026.

5. That you issued the said cheque with the full knowledge that there were insufficient funds in your bank account to clear the cheque, thereby committing deliberate fraud and breaching trust, resulting in unlawful loss to my Client.

6. That in terms of Section 138 of the Negotiable Instruments Act, 1881, you are hereby called upon by way of this Legal Notice to make the payment of the cheque amount of Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand Only) to my Client within 15 (Fifteen) days from the date of receipt of this Notice.

7. Please note that if you fail to pay the said cheque amount of Rs. 2,50,000/- to my Client within the stipulated period of 15 days, my Client shall be constrained to initiate criminal proceedings against you under Section 138 of the Negotiable Instruments Act, 1881 in the competent Court of Law, holding you liable for all legal costs, interest, and consequences thereof.

A copy of this notice is kept in my office for record.

Yours faithfully,

Ramesh Kumar, Advocate
For Ramesh Kumar & Associates

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Complete Legal Guide & Analysis

Statutory Conditions for Cheque Bounce Offence

For a cheque bounce to constitute a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, the following elements must be strictly fulfilled: 1. **Legally Enforceable Debt**: The cheque must be issued in discharge of a legally enforceable debt or liability (friendly loans, business invoice payments, etc.). Gifts or charity cheques are not covered. 2. **Validity Period**: The cheque must be presented to the bank within its validity period (usually 3 months from the date of the cheque). 3. **Dishonour Reason**: The cheque must be returned unpaid due to 'Funds Insufficient', 'Account Closed', 'Stop Payment' (if issued to evade liability), or 'Refer to Drawer'. 4. **Demand Notice Timeline**: The payee must issue a written Legal Notice to the drawer demanding the cheque amount within **30 days** of receiving the bank's return memo. 5. **15-Day Cure Period**: The Notice must grant the drawer **15 days** from the date of receipt to make the payment. If the payment is made, no offence is committed.

Crucial Elements of a Section 138 Demand Notice

A Section 138 notice is a strictly technical document. Failure to include key details can lead to the dismissal of your case. Ensure your notice details: * **Factual Transaction**: Clearly explain the background transaction (e.g. goods sold, loan provided) to establish a legally enforceable liability. * **Cheque Particulars**: Mention the exact Cheque Number, Cheque Date, Cheque Amount, Drawer Bank, and Payee Bank. * **Presentation & Dishonour Facts**: Detail the date of presentation, the date of bank return, and the exact reason specified in the Bank Memo. * **Clear Demand**: State a clear, unequivocal demand to pay the exact cheque amount within 15 days of receiving the notice. Do not add interest or penalty charges to the primary cheque demand in the main clause, as it might invalidate the technical claim.

Timelines & Legal Course after Notice

The timeline following the cheque bounce is critical for criminal prosecution: * **Day 1**: Payee receives the Bank Return Memo. * **Within 30 Days**: Payee must dispatch the Section 138 Legal Notice. * **Receipt of Notice + 15 Days**: The drawer has 15 days to pay the amount. Criminal liability only arises on the 16th day. * **Next 30 Days (Limitation Period)**: If the drawer fails to make the payment within the 15-day period, the payee must file a formal Criminal Complaint under Section 138/142 of the NI Act in the Magistrate Court within the next 30 days.

Step-by-Step Court Filing Procedure

Step 1

Collect Bank Documents: Obtain the original dishonoured cheque and the Bank Return Memo containing the banker's objection stamp.

Step 2

Draft the Legal Notice: Execute a professional demand notice, detailing transaction history and cheque particulars. Grant a clear 15-day payment period.

Step 3

Dispatch the Notice: Send the notice via Registered Post AD (Acknowledgement Due) or Speed Post to the drawer's correct address within 30 days of receiving the return memo. Keep the postal receipts and track consignment.

Step 4

Await the 15-day Period: Track the date of delivery. Allow 15 full days from the date the drawer received the notice for them to clear the debt.

Step 5

File Complaint in Court: If no payment is received, draft a Criminal Complaint under Section 138 of the NI Act. File the complaint along with the original cheque, return memo, postal receipt, and AD card before the Metropolitan Magistrate or Judicial Magistrate First Class having jurisdiction within 30 days.

Legal Notice for Cheque Dishonour under Section 138 NI Act