Received a cheque bounce notice in Ghaziabad: the 15-day reply

The clock

15 days from the day you receive the notice. Payment inside that window means no offence.

After that

The payee has one month to file a complaint under Section 138 before the Magistrate in Ghaziabad.

The reply

Not compulsory, but it is the first document of your defence and the court reads it at trial.

Where to bring it

Chamber 817, District Court Complex, Raj Nagar District Centre (RDC), Ghaziabad, Uttar Pradesh 201002. Monday to Saturday, 9 am to 9 pm.

A cheque bounce notice is the payee's statutory demand under Section 138 of the Negotiable Instruments Act. It tells you that a cheque you drew was returned unpaid and asks for the amount within 15 days. The cheque bounce page covers the case from the payee's side and the trial that follows. This article is for the person who has just opened the envelope.

What a valid notice contains

Before deciding anything, read the notice against the section. To support a complaint the notice has to be in writing, sent within 30 days of the payee learning from the bank that the cheque was returned, and it has to demand payment of the cheque amount. Check four things on the first reading:

• The cheque number, date, amount and the bank it was drawn on, and whether they match a cheque you actually signed.
• The date of the bank's return memo and the date of the notice. More than 30 days between them is a defect the court cannot cure.
• Whether the cheque was presented within three months of the date written on it. A cheque presented after that is not a Section 138 cheque at all.
• What is being demanded. The demand must be for the cheque amount. Interest, legal costs or other sums can be claimed alongside, but a notice that asks only for some other figure is open to challenge.

Also read the reason on the return memo. "Funds insufficient", "exceeds arrangement", "payment stopped by drawer" and "account closed" all bring the cheque within the section. The reason does not make the defence; it tells the chamber which defences are worth running.

Counting the 15 days

The 15 days run from receipt of the notice, not from its date. A notice sent by registered post or speed post to your correct address is presumed served when it would arrive in the ordinary course, and a notice that comes back marked refused or unclaimed is treated as served on the date of refusal. Keep the envelope and note the date you received it. Write it on the envelope the same day. That date decides when the payee's one-month window to file the complaint opens and closes, and the Section 138 deadline calculator works both windows out from it.

If the notice reached you late because it went to an old address, do not assume that helps. The question the court asks is whether the address was the one you gave the payee or the one on record. A changed address that was never communicated does not stop service.

Pay, reply, or both

There are three honest positions a drawer can be in, and each calls for a different letter.

The money is owed and you can pay. Pay the full cheque amount within the 15 days by bank transfer, and send a letter recording the payment, the reference number and a request for the return of the original cheque. Payment within the window means the offence is never committed, and the complaint, if one is filed anyway, is dismissed on that ground. A part payment does not do this; the balance still bounced.

The money is owed and you cannot pay now. Reply anyway, acknowledging receipt and proposing a schedule, but understand that a schedule is not a defence. The payee can still file after the fifteenth day and often does. What the reply does is create the record that makes compounding later cheaper and quicker, because the court sees that you came forward.

The money is not owed, or not in this form. Reply with the defence stated plainly and the documents that support it. This is the reply that matters most, and the one most often botched by being written in haste.

The defences a reply must keep alive

Section 139 presumes that a cheque was issued for a legally enforceable debt. The drawer has to rebut that presumption, and the rebuttal begins with the reply. Four defences come up again and again in the Ghaziabad courts.

• Security cheque. The cheque was handed over as security for a loan, a supply arrangement or a tenancy, not for a sum then due. The reply should say when it was given, for what, and refer to the agreement, the ledger or the messages that show it. A blank or undated cheque handed over years earlier fits here.
• No legally enforceable debt. The amount claimed was never agreed, has already been paid, was adjusted against goods returned, or is a time-barred claim. The reply should attach the proof of payment or adjustment and state the account as you understand it.
• Defects in the notice or presentation. Sent after 30 days, cheque presented after three months, a demand that does not identify the cheque amount, a notice sent to someone who did not draw the cheque. These are stated in the reply but not argued at length; they are for the court.
• Alteration or misuse. The amount or date was filled in or altered after the cheque left your hands, the cheque was lost or stolen and a report was made, or the payee named is not the person the cheque was given to. Say so, and attach the police complaint or the stop-payment instruction if there is one.

Two cautions. First, the reply is read by the Magistrate at trial, so every sentence in it is either evidence for you or evidence against you. "I will pay when I can" is an admission of the debt. "I do not know anything about this cheque" when the cheque bears your signature is a lie the court will remember. Second, the reply should not try the case. It states the defence and the documents; the argument comes later.

Cheques drawn by a company or firm

Where the cheque was drawn on a company's account, the notice should go to the company, and the complaint under Section 141 can name the directors or partners who were in charge of and responsible for the conduct of its business when the cheque bounced. A director who had resigned before the cheque was drawn, or who was never in charge of day-to-day affairs, should say so in the reply and attach the Registrar of Companies record. That reply is often the whole defence for that person.

What to bring to the chamber

The notice and its envelope, the cheque details, the bank statement for the period, the agreement or correspondence behind the cheque, and anything that shows payment or adjustment. The documents checklist has the full list for both sides of a Section 138 case. The reply goes by registered post or speed post, with a copy by email where there is an email address, and the chamber keeps the proof of dispatch on the file; if a complaint follows, the reply is the first annexure of the defence, and the rest of the case is on the cheque bounce page.

Read next

• Missed the cheque bounce deadline: what happens to the payee and the drawer
• Cheque bounce case timeline in the Ghaziabad court
• Section 143A interim compensation: the 20% order

Questions people ask