Statutory Demand Notice under Section 138 NI Act

Introduction

The statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881 is deceptively short. Many practitioners treat it as a formality. That casual treatment is precisely why a large share of cheque-bounce complaints fail at the threshold: defective notice, defective service, defective cause of action.

This article walks through what the notice must contain, the 30-day clock that begins the moment the return memo is received, and the prompt that produces a notice the magistrate will not throw out on a preliminary objection.

When to Use This Prompt

• A cheque issued to your client has been returned unpaid by the drawee bank.
• You intend to keep open the option of filing a Section 138 complaint within the statutory window.
• The underlying liability is a legally enforceable debt — not a gift, advance for a void contract, or time-barred claim.
• Your client received the bank's return memo within the cheque's validity period.

Statutory & Case-Law Backdrop

Section 138 criminalises dishonour of a cheque issued in discharge of a legally enforceable debt or liability, subject to: (a) presentation within validity; (b) written demand notice within 30 days of receipt of return memo; and (c) failure to pay within 15 days of receipt of that notice. Section 142 prescribes the one-month cognizance window.

Leading authorities include K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510, and Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578, on what amounts to a legally enforceable debt on the date of cheque presentation.

The Prompt

Paste into ChatGPT, Claude or Gemini. Replace every bracketed placeholder with your specific facts before generating.

You are a commercial litigation advocate practising in India.

Draft a statutory demand notice under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 on behalf of my client [PAYEE NAME] addressed to [DRAWER NAME] of [DRAWER ADDRESS].

Cheque details:
- Cheque No.: [NUMBER], dated [DATE], drawn on [BANK & BRANCH]
- Amount: Rs. [AMOUNT]
- Issued towards: [LEGALLY ENFORCEABLE DEBT/LIABILITY]
- Date of presentation: [DATE]
- Date of bank return memo: [DATE]
- Reason for dishonour: [INSUFFICIENT FUNDS / ACCOUNT CLOSED / SIGNATURE MISMATCH]

Structure: addressee block, statement of facts, dishonour particulars, statutory demand for payment within 15 days, consequences under Section 138, reservation of rights and signature block.

Anatomy of the Draft

Why the prompt is built the way it is — section by section.

Common Mistakes to Avoid

• ×Demanding interest, costs and damages along with the cheque amount — Section 138 contemplates demand of the cheque amount alone.
• ×Issuing the notice after the 30-day window from receipt of return memo.
• ×Sending the notice to a stale address.
• ×Vague description of the underlying transaction that lets the drawer plead security cheque.
• ×Losing postal receipts and tracking — these are trial exhibits, not optional paperwork.

Frequently Asked Questions

Final Thoughts

A clean Section 138 notice identifies the cheque without ambiguity, asserts the underlying liability with specificity, and makes the statutory demand within the statutory window. Treat the notice as the first page of your eventual complaint — because, in effect, that is what the magistrate will read it as.