Section 138 of the Negotiable Instruments Act, 1881 applies when a cheque is dishonoured by the drawee bank for one of the prescribed reasons (insufficient funds, account closed, exceeds arrangement, stop payment by drawer). You can send a Section 138 demand notice within 30 days of receiving the bank's cheque-return memo. The notice demands payment of the cheque amount within 15 days of receipt by the drawer. If payment is not made within 15 days, you can file a criminal complaint under Section 138 within the next 30 days.

The timelines are strict and missing them defeats the case. (1) Cheque must be presented within 3 months of date on the cheque (or its validity period). (2) Demand notice must be sent within 30 days of receiving the bank's return memo. (3) Drawer has 15 days from receipt of notice to make payment. (4) Complaint must be filed within 30 days of expiry of the 15-day payment period. Courts strictly enforce these timelines; even one day's delay can fatal the case. Verbatra's Section 138 notice generator calculates these dates from your inputs and prints them on the notice.

No. Section 138 applies only to cheques issued 'for the discharge, in whole or in part, of any debt or other liability.' A cheque issued as a gift, for security deposit, post-dated for future contingencies, or for an illegal consideration falls outside Section 138. The complainant must establish in the complaint that the cheque was issued for a legally enforceable debt or liability. The drawer can raise this as a defence.

Criminal, but with civil characteristics. Section 138 is technically a criminal offence punishable with imprisonment up to two years and/or a fine up to twice the cheque amount. However, it is treated as a quasi-criminal compensatory provision in practice: most cases are resolved by the drawer paying the cheque amount with interest and costs, leading to compounding under Section 147. Imprisonment is rare in practice; the dominant remedy is recovery of the cheque amount plus directions on payment. The case is filed in the magistrate's court of the jurisdiction where the cheque was presented or where the drawer maintains a bank account.

Yes. The notice itself can be drafted and sent by the payee directly. However, given the strict timeline requirements and the technical nature of the subsequent complaint filing (which requires drafting a complaint, producing supporting documents, examination of witnesses, etc.), most payees engage an advocate at least from the complaint stage onwards. Many engage an advocate to send the notice too, both for accuracy and to signal seriousness to the drawer. Verbatra's generator produces a notice that is statutorily compliant; you can then choose whether to have an advocate finalise and send it.

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