Importance of the Demand Notice in Section 138 Cases

The demand notice is a mandatory prerequisite for filing a complaint under Section 138 of the Negotiable Instruments Act. Without a properly drafted and timely served notice, the complaint becomes unmaintainable, regardless of how strong the underlying case may be. The Supreme Court has repeatedly emphasized the mandatory nature of this requirement in numerous judgments.

Essential Elements of a Valid Demand Notice

A legally valid demand notice under Section 138 must contain the following elements: full details of the complainant (payee or holder in due course) including name, address, and description; full details of the drawer (person who issued the cheque) including name and address; details of the cheque including cheque number, date, amount, name of the bank, and branch; the fact that the cheque was issued in discharge of a legally enforceable debt or liability; the fact of presentment and dishonour, including the date of dishonour and the reason for dishonour as mentioned in the return memo; a clear and unambiguous demand for payment of the cheque amount within 15 days of receipt of the notice; and consequences of failure to pay, including the intention to file criminal proceedings under Section 138.

Common Mistakes in Demand Notices

Several common mistakes can render a demand notice defective and potentially jeopardize the entire case. Failing to mention the specific debt or liability for which the cheque was issued, not including the exact cheque details as they appear on the instrument, addressing the notice to an incorrect address, sending the notice after the 30-day statutory period, and using vague or ambiguous language in the demand are all frequent errors.

Mode of Service

The notice should be sent by registered post with acknowledgment due (RPAD) and/or by speed post to the drawer’s address as mentioned on the cheque or as known to the complainant. It is advisable to send the notice to multiple known addresses of the drawer. Under Section 27 of the General Clauses Act, a notice sent by registered post is presumed to be served unless returned undelivered.

Legal Reference Under New Criminal Laws

While the substantive provisions of Section 138 remain under the NI Act, it is important to note that procedural aspects now fall under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which has replaced the Code of Criminal Procedure (CrPC). Additionally, any related allegations of cheating would now be governed by Section 318 of the Bharatiya Nyaya Sanhita (BNS), replacing IPC Section 420.