Pre-litigation Demand Notice under Section 138 of the Negotiable Instruments Act, 1881

The demand notice under Section 138 NI Act is the foundation for cheque dishonour proceedings. It creates cause of action, must be sent within 30 days of dishonour information, and gives the drawer 15 days to make payment. Proof of service is vital for sustaining prosecution. This section provides statutory requirements, best practices, and a model draft notice.

Purpose & Essentials

Purpose: To create cause of action; give drawer 15 days to make payment.
Timeline: Notice must be sent within 30 days of receiving information from the bank regarding dishonour.
Proof of service: Crucial — acceptable modes include AD post, courier, process server, speed post, email (where contractually provided).
Source: India Code

Recommended Method of Service

Primary mode:
- Speed-post / Registered AD (retain postal receipt & acknowledgement).
Secondary modes (to strengthen proof):
- Courier with POD (proof of delivery).
- Email and WhatsApp as supplementary evidence.
Record-keeping: Always keep copies of:
- Cheque
- Bank memo
- Postal/courier proofs
Source: DigiLawyer

Model — Demand Notice (Section 138)

(Fill in blanks as applicable)

[ON LETTERHEAD / LAWYER’S FIRM]
Date: ________

To,
[Name & Address of Drawer]
(Also at: [other addresses, if any])

Sub: Notice under Section 138, Negotiable Instruments Act, 1881 — Dishonour of Cheque No. ____, Dated ____, for Rs. ________ drawn on [Bank/Branch] — Demand for payment within 15 days

Sir/Madam,

1. We act for and on behalf of [Payee name] (hereinafter "the Payee"). The Payee is the holder of Cheque No. _____ dated _____ for Rs. _______ drawn on [Bank & Branch], issued by you in favour of the Payee towards [brief purpose: loan/consideration/sale invoice no. ___ dated ___].

2. On presentation of the said cheque for payment on [date], the bank returned the same unpaid with memo/remarks: “[state bank return memo text, e.g., 'Insufficient funds']”. Copy of the return memo/communication is enclosed as Annexure-A.

3. You are hereby demanded to make payment of Rs. ______ (Rupees ______ only) to the Payee within **15 days** from the receipt of this notice failing which the Payee will initiate criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 and other legal remedies without further notice; all consequential costs and interest will be claimed.

4. This notice is being sent within 30 days of receipt of information of dishonour from the bank.

Yours faithfully,
[Signature of Payee / Authorised Rep]
[Name, designation]
[Address, contact]

Enclosures:
- Cheque copy
- Bank return memo
- Invoice/Agreement (if any)

Why include contract/invoice? To show existence of legally enforceable debt (important when accused claims cheque issued as security).