I have lost a Demand Draft which was issued from my ICICI NRE account in Andhra Pradesh. The manager at the bank where the DD was issued told me that, in order to cancel a Lost DD they have to issue a duplicate DD first and then cancel the duplicate DD. For that, I need Rs. 140 India Non Judicial Stamp Paper from the Revenue Office (the value defers state to state, please check with your branch directly) and that I have to write in a predefined template (attached below) of theirs for canceling the DD along with the signatures of 2 sureties on all the pages of the stamp Paper.
The predefined template consists of three pages as shown above, first one consist of two pages, it is called INDEMNITY BOND which basically says that you have lost the Demand Draft and you wont hold ICICI bank responsible for any loses they may incur and the second one is Beneficiary NOC, this part has to be filled by you or the company (receiving party) assuring the bank that they do not have the draft etc. All these templates has to be written/typed on the stamp paper.
Overall, I would say not to lose the DD in the first place and if it is lost, best resort is to contact the branch manager directly who issued the Demand Draft, since each branch has their own requirement and templates.
My refund got credited in a week. They deducted Rs.110 for reissuing the Duplicate Demand Draft and I was told by the branch manager that last time when they did the similar case, it took around 4 months for cancellation.