Cheque Bounce Demand Notice: Defects That Kill a Case

Proviso (b) to Section 138 of the Negotiable Instruments Act 1881 requires the payee or holder in due course to make a written demand for the cheque amount within thirty days of receiving information from the bank that the cheque has been returned unpaid, and proviso (c) then gives the drawer fifteen days from receipt of that notice to pay. Dishonour is not the offence. The offence crystallises only when the drawer fails to pay inside those fifteen days, and Section 142(1)(b) allows one month from that point to make the complaint.

Almost every Section 138 complaint that dies on a preliminary point dies somewhere in that sequence — a demand for the wrong sum, a notice issued before the cheque came back, a notice posted to an address that was never the drawer's, or a company cheque noticed only to the director who signed it. As an Advocate practising at the Delhi High Court and Senior Partner at Unified Chambers And Associates, I see the same handful of errors produce the same outcome: a genuine debt, good documents, and a complaint that cannot get past the notice. This note sets out what the statutory demand has to contain, how the three clocks are computed, how service is proved when the cover comes back unopened, and which defects are fatal.

What does proviso (b) actually require?

Every phrase in the proviso does work. It requires that the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. Five conditions sit inside that sentence.

• **Who demands.** Only the payee or a holder in due course. A group company, a collection agency or an assignee whose assignment is not established is none of those. A notice issued by counsel on instructions is good — the payee need not sign personally — provided it shows on its face that the demand is made for the payee.
• **That it is a demand.** A letter narrating the transaction, recording the dishonour and threatening proceedings is not a demand. The drawer's fifteen-day right to pay only makes sense against a stated sum.
• **The sum.** It must be "the said amount of money" — the amount of the dishonoured cheque.
• **The recipient.** The drawer. On a company cheque, the drawer is the company.
• **The thirty days.** The window runs from the payee's *receipt of information from the bank*, not from the date the drawee bank returned the instrument and not from the date typed on the memo. Those three dates are often different — the memo may be dated the 12th, reach the collecting branch on the 14th and reach the payee on the 16th — and it is the last of them that starts the clock. Plead it with the document that proves it.

Two points travel with this. Section 146 directs the court, on production of a bank's slip or memo bearing the official mark denoting dishonour, to presume the fact of dishonour unless it is disproved. And the cheque must have reached the bank in time: proviso (a) requires presentation within six months from the date on which it is drawn, or within its period of validity, whichever is earlier, and since 1 April 2012 the Reserve Bank of India has directed banks not to pay cheques, drafts, pay orders and banker's cheques presented beyond three months from the date of the instrument. The statutory six months is therefore academic — validity, being the earlier of the two, is what bites.

When does the cause of action actually arise?

Proviso (c) is engaged where the drawer fails to make payment of the said amount of money to the payee within fifteen days of receipt of the notice. That failure is the last ingredient of the offence.

Three consequences follow. Payment within fifteen days extinguishes the matter — no offence is committed and no complaint lies; but partial payment does not, because the proviso speaks of "the said amount of money", and a drawer who pays eighty per cent has failed to pay. The fifteen days run from receipt, not despatch, so a payee who counts from the date of posting files early. And a complaint presented before the fifteen days expire is premature: the cause of action has not arisen, there is nothing for the Magistrate to take cognizance of, and the defect is not cured by the period expiring while the complaint sits on the file.

On computation, Section 9 of the General Clauses Act 1897 provides that "from" excludes the first day in a series of days and "to" includes the last. Proviso (c) uses "of", and the conventional practice is to exclude the day of receipt. The discipline is not to argue about a day: let the full fifteen days run out and present on a date that is safe on either computation.

How is the one-month window under Section 142(1)(b) computed?

Section 142(1) opens with a non obstante clause and imposes three conditions on cognizance: under clause (a), no court may take cognizance except upon a complaint in writing made by the payee or the holder in due course; under clause (b), that complaint must be made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138; and under clause (c), no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try the offence.

Two points of currency on the text as enacted. The non obstante clause is expressed to operate notwithstanding the Code of Criminal Procedure 1973, which the Bharatiya Nagarik Suraksha Sanhita 2023 replaced with effect from 1 July 2024; on ordinary principles of repeal and re-enactment the reference is read as one to the corresponding provisions of the Sanhita. And clause (c) still names a Metropolitan Magistrate, a designation the Sanhita does not carry forward, so the operative floor is a Magistrate of the first class.

The period is one month, not thirty days. Section 3(35) of the General Clauses Act 1897 defines a month as a month reckoned according to the British calendar, so the window ends on the corresponding date of the next calendar month and varies between twenty-eight and thirty-one days. A diary entry set at "thirty days" is wrong in every month but one. The start point is the date the cause of action arises under clause (c). Whether the month runs from the day the fifteen-day period expires or from the day after is a question on which the safe course is obvious: compute both and file by the earlier date.

Can the delay be condoned?

Yes, but only on an application. The proviso to Section 142(1)(b), inserted by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act 2002 (55 of 2002), permits a court to take cognizance after the prescribed period if the complainant satisfies it that he had sufficient cause for not complaining in time.

Condonation is not administrative. It requires a separate application supported by an affidavit accounting for the delay date by date, rather than in general terms about illness, travel or the file being with counsel. The application must be made when the complaint is presented, not produced later when the accused takes the objection, and the sufficient cause must explain the whole of the delay rather than its opening days.

A worked timeline

Assume a cheque for INR 18,40,000 dated 3 March, deposited by the payee on 10 March.

Note what the table exposes. The payee had thirty days to issue the notice and used eight. The remaining twenty-two were never his to spend later — they simply lapsed. Where a drawer is likely to evade service, that unused margin is the only cushion available for a second attempt at delivery inside the window.

Which defects actually defeat a complaint?

Demanding a sum other than the cheque amount

A notice that demands a figure larger than the cheque, presented as the cheque amount, is defective, because the drawer cannot tell what he must pay to stop the prosecution. A notice that demands less is worse: it invites the argument that the payee himself did not treat the full cheque amount as due.

What is permissible is a notice that demands the cheque amount and separately claims interest, notice charges or the cost of the demand, provided the cheque amount is stated distinctly. The related trap is the running account: where the parties keep an ongoing ledger and the notice demands the outstanding balance rather than the amount of the dishonoured cheque, the demand is not the demand the proviso contemplates.

A notice issued before the cheque came back

Proviso (b) ties the notice to receipt of information from the bank about the return. A demand issued before that point — because the drawer telephoned to say the cheque would not clear, or because a standing notice went out with the invoice — does not satisfy the proviso: at the moment it was written there was no dishonour to demand payment upon. Such a notice cannot found a cause of action, and the answer is a fresh notice after the memo, within thirty days of receiving it.

Conversely, a notice that gives the drawer a period shorter than fifteen days is not invalid, but the statutory fifteen days operate regardless of what it says. A complainant who takes his own seven-day deadline at face value and files on the eighth day files a premature complaint.

A notice sent to an address that is not the drawer's

The presumption of service discussed below depends on the notice being "properly addressed". If the address used is not one the drawer can be tied to, the presumption never arises and the payee is left proving actual receipt.

The addresses that hold up are the one printed on the cheque or the return memo, the one the drawer gave in the underlying contract, loan document or invoice correspondence, the one used in his own recent communications, and — for a company — the registered office. Section 20 of the Companies Act 2013 provides for service of a document on a company by sending it to the registered office by registered post, speed post or courier, by leaving it there, or by such electronic mode as may be prescribed. Despatching to every available address at once removes an entire line of defence. A drawer who moved without telling the payee is in a weak position: a notice to the address he himself supplied is good, and he cannot take advantage of his own failure to communicate a change.

A company cheque with notice only to a director

This is the defect that destroys the most valuable complaints, because company cheques are usually the large ones.

Where a cheque is drawn on a company's account the drawer is the company, and proviso (b) requires the demand to be made on the drawer. A notice addressed only to the managing director or the signing director, in his personal name, is not a demand on the company. The complaint against the company then fails for want of notice, and Section 141 — which deems the company's officers guilty of the offence *committed by the company* — has nothing left to attach to. It is settled that the company must be arraigned as an accused before its officers can be held vicariously liable, and a company that was never validly noticed cannot be validly arraigned.

The converse is settled the other way: there is no requirement of a separate statutory notice to each director or signatory. Notice to the company is the notice the proviso requires; directors are noticed as good practice and to build the record of their knowledge. The pleading requirements against each officer are dealt with in the note on Section 141 director liability. The correct format is a single notice to the company at its registered office calling on it to pay, with copies separately addressed and despatched to the directors and the authorised signatory.

One notice covering several cheques

A consolidated notice for a batch of cheques is workable, but the thirty-day window runs separately for each, measured from receipt of information about *that* cheque's return. If four cheques were returned on different dates and the notice goes out inside thirty days for three of them and outside for the fourth, the fourth is lost — so draft the notice cheque by cheque, giving each its own row, and confine the loss rather than letting it infect the demand as a whole.

How is service proved when the cover comes back unopened?

Section 27 of the General Clauses Act 1897 does the heavy lifting. Where a Central Act authorises or requires a document to be served by post — and the expressions "serve", "give" and "send" are all covered — then unless a different intention appears, service is deemed to be effected by properly addressing, prepaying and posting by registered post a letter containing the document, and, unless the contrary is proved, to have been effected at the time the letter would be delivered in the ordinary course of post.

Proper addressing, prepayment and posting by registered post must all be established before the presumption operates. It is rebuttable, and the accused may lead evidence to displace it. What the accused cannot ordinarily do is have the complaint thrown out at the threshold on the strength of an unserved cover: the established position is that where the notice was correctly addressed and returned refused or unclaimed, service is presumed, the complaint is maintainable, and actual knowledge is an issue for trial. Deliberate evasion cannot be allowed to defeat the provision.

The date of deemed receipt matters as much as the fact of it, because the fifteen-day period runs from receipt. In practice the date of refusal, or of the postal return endorsement, is taken as the date of receipt; plead it expressly and annex the returned cover unopened. The evidentiary route into the file is Section 145(1) of the NI Act, under which the complainant's evidence may be given on affidavit exhibiting the cheque, the return memo, the notice, the postal receipts, the tracking record, the acknowledgement card and the returned cover. Section 145(2) then entitles the prosecution or the accused to apply to have the deponent summoned and examined as to the facts contained in the affidavit, so the affidavit shortens the complainant's evidence but does not insulate it from cross-examination on service.

Where does Section 94 of the NI Act fit?

Section 94 sits in the chapter on notice of dishonour to parties liable on an instrument and is not the source of the Section 138 demand. It is nonetheless the Act's own statement of how such a notice may be given: to a duly authorised agent of the person entitled to it, or to his legal representative where he has died, or to his assignee where he has been declared insolvent; orally or in writing; by post if written; and in any form — provided it informs the party, in express terms or by reasonable intendment, that the instrument has been dishonoured, in what way, and that he will be held liable on it. It must be given within a reasonable time after dishonour, at the party's place of business or, where he has none, at his residence. And where a notice is duly directed and sent by post, a miscarriage in the post does not render the notice invalid. Three contrasts matter: Section 94 permits an oral notice while proviso (b) requires writing, so nothing said on a telephone call will serve; Section 94 is generous about form while proviso (b) is exacting about content, because only proviso (b) requires a demand for the cheque amount; and Section 94 speaks of a reasonable time while proviso (b) fixes a hard thirty days.

Does an email or a WhatsApp message count?

Proviso (b) prescribes writing but not a mode. Section 4 of the Information Technology Act 2000 provides that where a law requires information to be in writing, the requirement is satisfied if it is rendered or made available in electronic form and is accessible so as to be usable for subsequent reference. Section 1(4) of that Act disapplies it to the documents listed in the First Schedule — which include a negotiable instrument other than a cheque, a power-of-attorney, a trust, a will and a conveyance of immovable property — but a demand notice is not among them, and Section 13 supplies rules on the time and place of despatch and receipt of an electronic record. The difficulty is not admissibility but proof. There is no equivalent of the Section 27 presumption for email, and a drawer who says the message went to an address he does not use creates a factual dispute that registered post would have avoided. Treat electronic transmission as a supplement, never a substitute.

Can a defective notice be cured?

That depends entirely on where the calendar stands. Inside the thirty-day window, a defective notice can simply be replaced: a corrected notice issued within thirty days of receipt of information about the same dishonour is a good notice, and the fifteen-day period then runs from receipt of the corrected one.

Outside the window, that route is closed for that dishonour and what remains is re-presentation. A cheque may be presented more than once during its period of validity, and it is settled that a payee who did not complain on an earlier dishonour is not barred from founding a complaint on a later one, provided provisos (a), (b) and (c) are freshly satisfied in relation to that later return. Two limits apply: the cheque must still be within validity, which after 1 April 2012 means three months from its date; and a second notice cannot be issued on the *same* dishonour to restart a lapsed filing window, because the cause of action arises once on a given dishonour and cannot be manufactured again.

Where the cheque has gone out of validity and the notice window has lapsed, Section 138 is spent and the claim reverts to civil recovery — usually a summary suit on the instrument under Order XXXVII of the Code of Civil Procedure 1908, which by Rule 1(2)(a) covers suits upon bills of exchange, hundies and promissory notes, and a cheque is a bill of exchange drawn on a specified banker within Section 6 of the Negotiable Instruments Act 1881. That option is set out in the note on the Order XXXVII summary suit.

A drafting checklist — and the mirror-image defence check

1. Record the date of receipt of information from the bank and keep the document that proves it. Everything is computed from that date.

2. Address the notice to the drawer — the company where the cheque is a company cheque — with copies despatched separately to the directors and the signatory.

3. Use every available address at once: the cheque, the return memo, the contract, the registered office, the last correspondence address.

4. Describe each cheque completely: number, date, amount in figures and words, drawee bank and branch, date of presentation, date of return, reason endorsed.

5. State the underlying legally enforceable debt or liability with its invoice, agreement or loan reference — the foundation on which the presumption under Section 139 later rests.

6. Make the demand for the cheque amount in its own sentence, and put any claim for interest, notice charges or damages in a separate paragraph expressed to be without prejudice to it.

7. Require payment within fifteen days of receipt, without substituting a shorter self-imposed deadline.

8. Despatch by registered post with acknowledgement due, speed post, courier and email on the same day, and retain every receipt.

9. Diarise three dates: the last day of the thirty-day window, the fifteenth day from expected receipt, and the last day of the one-month filing window.

Read in reverse, the same list is a defence checklist for a drawer or an accused director. Was the notice issued within thirty days of the payee's receipt of information from the bank? Does it demand the cheque amount, identifiably? Was it addressed to the drawer — and to the company, where the cheque is a company cheque? Was the complaint filed after the fifteen days and within the month, and where it is late, is there a condonation application on the file at all?

None of that touches the merits. Whether the debt existed, whether the cheque was security, and whether the complainant had the financial capacity he claims all belong to rebuttal of the statutory presumption, dealt with in the note on rebutting the Section 139 presumption. For a corporate drawer, one further interaction matters: where the company has been admitted into a corporate insolvency resolution process, the position of the complaint against the company differs from that of its directors, as explained in the note on the Section 14 moratorium.

For the wider framework of the offence — ingredients, jurisdiction, compounding and interim compensation — see the guide to Section 138 cheque bounce cases, and, where a dishonoured cheque is one element of a larger exposure, the debt recovery guide. Definitions are collected in the legal glossary, the forums on the courts and tribunals page, and documentation expectations for lenders running dishonour portfolios at volume are set out for banks, NBFCs and ARCs.

This article is general information on the law as it stands and is not legal advice; whether a particular notice satisfies proviso (b), and whether a particular complaint is in time, depends on the dates and documents in the individual file. Queries may be directed through the contact page.