Receiving a cheque bounce legal notice can be stressful, particularly when the notice threatens criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881.
If you have received such a notice in Ahmedabad or elsewhere in Gujarat, do not ignore it. The law provides specific timelines, and the steps taken immediately after receiving the notice can be important for your defence.
What is a Cheque Bounce Notice?
A cheque bounce notice is a legal notice generally issued by the cheque holder when a cheque has been dishonoured by the bank.
Section 138 of the Negotiable Instruments Act provides a statutory remedy in certain cases of cheque dishonour, subject to fulfilment of the prescribed conditions.
The notice generally demands payment of the cheque amount within 15 days from the date of receipt of the notice.
What Should You Do After Receiving the Notice?
1. Do Not Ignore the Notice
Ignoring the notice does not make the matter disappear. If the payment is not made within the statutory period, the complainant may proceed with a complaint under Section 138, subject to the requirements of law.
2. Check the Cheque and Transaction
Immediately verify:
- Whether the cheque was actually issued by you;
- The amount and date mentioned on the cheque;
- The reason for dishonour;
- Whether there was an actual legally enforceable liability;
- Whether the cheque was issued as a security cheque;
- Whether the amount has already been paid;
- Whether there is any dispute regarding the underlying transaction.
These facts can materially affect the appropriate legal response.
3. Check the Legal Notice Carefully
The notice should be examined for the cheque details, dishonour information, demand for payment and relevant dates.
The date on which you actually received the notice is also important because statutory timelines may run from receipt.
4. Consider Sending a Proper Reply
Depending upon the facts, you may respond to the notice through an advocate.
A reply can place your defence and factual position on record and may also help in preventing misunderstandings regarding the transaction.
However, the reply should be prepared after examining the actual documents and circumstances. A careless or contradictory reply may create unnecessary difficulties later.
5. Consider Settlement Where Appropriate
In suitable cases, the dispute may be resolved through negotiation or settlement rather than prolonged litigation.
Whether settlement is advisable depends upon the amount involved, the underlying transaction, available evidence and your overall legal position.
What If You Believe You Do Not Owe the Money?
Receiving a cheque bounce notice does not automatically mean that you are liable to pay the amount claimed.
If there is a genuine dispute regarding the underlying transaction or liability, the facts and supporting documents should be examined before deciding how to respond.
For example, disputes may arise regarding:
- Security cheques;
- Goods or services not supplied;
- Payment already made;
- Incorrect cheque amount;
- Business or partnership disputes;
- Loan or financial transactions;
- Disputed accounts;
- Misuse of a cheque.
The appropriate defence depends upon the facts and evidence of each case.
What Happens If You Ignore the Notice?
If the statutory requirements are satisfied and payment is not made within the prescribed period after receipt of the notice, the complainant may initiate proceedings under Section 138 of the Negotiable Instruments Act.
Therefore, taking legal advice immediately after receiving the notice is generally preferable to waiting until a court summons is received.
Looking for a Cheque Bounce Lawyer in Ahmedabad?
If you have received a Section 138 cheque bounce notice in Ahmedabad or Gandhinagar, the notice, cheque, bank return memo and documents relating to the underlying transaction should be examined before deciding your response.
I handle cheque bounce and Negotiable Instruments Act matters before the appropriate courts in Ahmedabad and Gujarat, including legal notice replies, Section 138 proceedings, defence and settlement-related matters.
Advocate Ayush S. Jain
B.B.A. LL.B., LL.M. (Business Laws)
Advocate & Trademark Attorney
High Court of Gujarat & District Courts, Ahmedabad/Gandhinagar
Office: Office No. 206, 2nd Floor, “B” Wing, Wall Street-2, Opp. Orient Club, Near Gujarat College, Ellisbridge, Ahmedabad – 380006
Contact: +91 7440772911
Frequently Asked Questions
Can I ignore a cheque bounce notice?
It is generally advisable not to ignore it because statutory timelines can become important in subsequent Section 138 proceedings.
How much time do I get after receiving a cheque bounce notice?
Section 138 provides a statutory period of 15 days from receipt of the notice for payment of the demanded cheque amount.
Can I reply to a cheque bounce notice through an advocate?
Yes. Depending on the circumstances, a lawyer can examine the documents and prepare an appropriate reply on your behalf.
Can a cheque bounce case be settled?
Yes, cheque bounce disputes can be settled in appropriate circumstances. The terms and stage of settlement should be carefully considered.
What if the cheque was given as a security cheque?
The fact that a cheque was issued as security does not, by itself, automatically decide the case. The underlying transaction and legally enforceable liability need to be examined.