In India, cheque bounce cases are governed by Section 138 of the Negotiable Instruments Act, 1881, which prescribes specific timelines for issuing a legal notice and initiating legal action.
Key points:
- Cheque dishonour: If a cheque is returned unpaid by the bank due to insufficient funds or other reasons covered under the law, the payee may initiate legal proceedings.
- Notice period: The payee must send a written legal demand notice within 30 days from the date they receive information from the bank regarding the dishonour of the cheque.
- Time to make payment: After receiving the legal notice, the drawer of the cheque is given 15 days to pay the cheque amount.
- Filing the complaint: If the drawer fails to make the payment within those 15 days, the payee can file a complaint under Section 138 before the competent court within one month from the date the cause of action arises.
- Contents of the notice: The legal notice should mention the cheque details, the reason for dishonour, the amount due, and a demand for payment within the prescribed period.
