Legal notice or Demand notice is the most important part to initiate legal steps against dishonored cheques U/S 138 of Negotiable Instrument Act 1881. There are some dos and don’ts in a legal notice or demand notices that have to follow. This article will answer all the questions in your mind to vet an outstanding legal notice.

1. What Is The Main Reason Issuing Legal Notice U/S 138 of N.I. Act?

The main reason for issuing Legal Notice or Demand Notice U/S 138 of N.I. Act. is to inform the drawer that his cheque has been dishonored, and if he has the money to pay the payee, he can pay, and if he fails to pay the money, the payee will go to after 30 days of receiving the notice.

There are many case laws about this matter, but the given below is most clear to realize the matter. In Majad Hossain v. The State [32 BLD(AD) 214, The Honorable Appellate Division of The Honorable Supreme Court Of Bangladesh verdicts ” It appears to us that the purpose of the notice as contemplated in clause (b) of the provision to sub-section (1) of section 138 of the Act, 1881 us to give the drawer of the cheque a chance to make the payment of the amount of money of such cheque.

In another case, The Central Bank of India V Saxon Farms [(1999) 8 SCC 221] case, The Honorable Supreme Court of India verdicts, “The object of notice is to give a cheque to the drawer of the cheque to rectify his omission and also to protect an honest drawer.”

2. Who Can Send Legal Notice U/S 138 of N.I. Act?

According to Section 138(1)(b) the payee or the holder of the cheque can send legal notice or demand notice to the drawer of the cheque.

Sec. 138 (1)(b) of The Negotiable Instrument Act, 1881 gives the power to send a legal notice. This section says ” the payee or the holder in due course of the cheque, as the case may be, make 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 f the receipt of information by him from the bank regarding the return of the cheque as unpaid, ”

3. If Legal Notice Returned Unclaim / Came Back Unserved / Address Not Found Or Not Available / Refused To Accept, What Is My Remedy?

Legal notice or demand notice came back unserved or addressed not found or not available or refused to accept, very good, and it is very natural for serving notice via mail. Don’t be afraid about those kinds of problems for making a case on the NI Act. If you face any of those kinds of problems, the honorable court will accept the notice as duly served. There are a lot of case decisions about those kinds of problems. Here are some groundbreaking decisions about those problems.

According to Harcharam Shing v Shivam 2 SCC 535, ” It is well settled that a notice refused to accepted by the addressee can be presumed to have been served on him.”

In another case, Subarta Kuman v Pradeep 2000 Cr. Lj 3614 ” Notice come back unserved. But the facts and circumstances revealed that the drawer left the residence in another to avoid service of the notice. Notice is deemed to have been served.”

In S. Prasanna V R. Viyaya (1992) Cr. Lj 1233 (Mad) case The Honorable High Court of Madras verdicts, ” The very purpose of the act cannot be thwarted by simply refusing the notice. Deliberate refusal would amount to constructive service of notice.”

4. Can Legal Notice be Send Via E-Mail, Fax, Or SMS?

Normally there is no option to send legal notice via e-mail, fax or SMS till now. In near future, those options may be include though amending related law.

In SIL Import V Exim Aides Silk Exports (4 SCC 567), The Honorable Supreme Court of India gave a very optimistic view ” When the legislature contemplated that notice in writing should be given to the drawer, it must be presumed to have been aware of modern devices and equipment already in vogue and also in store for future. As such, a demand notice can be sent by Fax, which is a way of sending handwritten of printed or typed material like a picture by wire or radio.”

5. What Will Happened When There Is No Cheque Number In The Legal Notice?

If you fail to insert the cheque number in the legal notice, it is not a big mistake. If you include some crucial information like who draws the cheque and address of the drawer, the name, and address of the holder, the amount of money, issuing date, dishonored date, and bank name, there is no problem if you do not write the cheque number in the legal notice.

6. Legal Notice Sent With the Wrong Cheque Number, Will the Case Fail?

The main purpose of sending the legal notice is to inform the drawer that the cheque he gave to the payee has been produced before the bank. The bang dishonored the cheque for certain reasons. Now, the drawer can give back the money to the payee; if he fails, the payee will file a case against the drawer 30 days after receiving the legal notice. So, legal notice sent with the wrong cheque number is not a fatal error for the case.

7. More Than One Legal Notice Sent; What is Effect In Eye Of Law?

Sec. 138(1)(b) and (c) of the N.I. Act, 1881 give a legal notice or demand notice to the drawer within 30 days after dishonored the cheque. After receiving the the legal notice the drawer will get more 30 days to give back the amount to the payee.

The section gives us the power to sent only one legal notice to the drawer. So, send only one legal information to the drawer.

This case law will clear your view about more than one legal notice you have sent. In Ahsan Habib V Multidrive Ltd. 14 BLC 66, “In the instant case, repeated notice was issued which is not permissible U/S 138 of the Act. “

8. If Notice Send To A Wrong Address; What Is The Remedy?

If you have collected NID or any other ID that proves the drawer’s real address, and you sent a legal notice to the address. But notice back with a note that the receiver was not living at the address or the wrong address. It is a delicious serving of legal notice. You can file a case with the notice.

In 2002 Cri.Lj 1926(Kant) case the problem solved and the honorable higher court verdicts ” ‘Left or not known’ – it will be deemed to have served contagion that there was no proper notice rejected.”

9. If Legal Notice Sent 30 Days After Dishonor; What Is The Legal Problem?

There is no room to make an error sending legal notice after dishonored the cheque. The legal notice must have to dispatch the legal notice within 30 days after dishonored the cheque. If the time exceeds, there is no option to condone the delay or limitation.

In S.V Mutheye V. State and Another 96 DLT 718, “In the matter of condoning the delay in issuing demand notice beyond statutory period U/S 138(1)(b) of Negotiable Instrument Act, neither section 473 Cr.P.C. nor Section 5 of the Limitation Act would apply, nor delay could not condone.

The is an option to condone delay if you are lucky. The trick is, if your cheque have 6 month time from issue then you can dishonor the cheque again and send the legal notice within 30 days.

10. Which Matters Must be Include In a Legal Notice?

Many small but crucial matters must be included in demand notice. Without those, the whole legal notice may in ineffective in the eye of law.

Here Are The Most Important Matters To Include In A Legal Notice U/S 138 Of Negotiable Instrument Act.

I) The name and address of the Advocate who is sending the demand notice on behalf of the payee.

II) The full name and address of the payee.

III) The full name and address of the drawer of the cheque.

IV) The main reason why the drawer of the cheque gave the cheque to the payee.

V) The amount of money that is written on the cheque.

VI) The date of the dishonore and name of the bank.

VII) Reason(s) why the cheque has been dishonored.

VIII) Give the drawer 30 days to give back the money to the payee. If not, the payee will file a case against the drawer.

IX) A true copy has been kept in your office for the next legal steps.

X) Signature of the concern Advocate with date and Sill.

Here Are Some Important Case Law On Legal Notice Or Demand Notice U/S 138 Of N.I. Act, 1881.

1. It appears to us that the purpose of the notice as contemplated in clause (b) of the provision to sub-section(1) of the section of the Act, 1881 us to give the drawer of the cheque (s) a change yo make the payment of the amount of the money of such cheque(s). | 32 BLD(AD) 214
2. The object of issuing notice indicating the factum of dishonor of the cheque is to give an opportunity to the drawer to make the payment within 15 days so that it will not be necessary for the payee to proceed against in any criminal action, even though the bank dishonored the cheque. |(2001) 10 SCC 631
3. The object of notice is to give a cheque to the drawer of the cheque to rectify his omission and also to protect an honest drawer. | (1999) 8 SCC 221
4. Notice comeback unserved. But the facts and circumstances revealed that the drawer left the residence in order to avoid service of notice. Notice is deemed to have been served. | 2000 CrLJ 3614(Ori)
5. It is quite common that a notice sent by registered post come back to the sender with postal peon’s endorsement “address not found” or “address not available” …. where it is proved that the notice is returned “unclaimed” due to evasion of service by the drawer when tendered at the correct address, that can be treated as service. | 1 KLT 629
6. When the legislature contemplated that notice in writing should be given to the drawers, it must be presumed to have been aware of modern devices and equipment already in vogue and also in store for the future. As such, a demand notice can be sent by Fax, which is a way of sending handwritten or printed or types material as a picture by wire or radio. | 4 SCC 567
7. No form is prescribed for the notice. But there must be demand for payment of the cheque amount in the notice. | 2BC 573 (MAD)
8. Notice of demand issued to the drawer of cheque — Notice returned with the endorsement, “left not known” — It will be deemed to have been served — a contention that there was no proper notice rejected. | 2002 Cri.LJ. 1926 (Kant)
9. `No form is prescribed for the notice. But there must be a demand for payment of the cheque in the notice. | 2 BC 573 (Mad)
10. Sec 138(b) of Negotiable Instruments Act does not prescribe any form or format for notice, and all that is required is the communication, which should be in writing sent within 15 days of receipt of information by payee regarding the return of the cheque as unpaid and payee must demand repayment of the amount of cheque. | 4 Crimes 311 (BOM)

Law Books And Case Law Related to the Legal Notice U/S 138 of N.I. Act, 1881.

Case Law PDF on Legal Notice U/S 138 of Negotiable Instrument Act.

Law Book Related to Negotiable Instrument Act, 1881.