Cheque Bounce Demand Notice Invalid If Amount Mentioned Is Different From Actual Cheque Amount: Supreme Court

The appeals before the Apex Court arose from a judgment of the Delhi High Court quashing the Criminal Complaint filed by the respondent under Sections 138, 141 and 142 of the Negotiable Instruments Act, 1881, on the ground that the amount mentioned in the notice was not the same as per the cheque, which rendered the notice invalid.

The Division Bench of Chief Justice Of India B.R. Gavai and Justice N.V. Anjaria stated, “A failure in above regard, namely when the cheque amount is not mentioned in the Proviso (b) notice or the amount different than the actual cheque amount is mentioned, in the notice, such notice would stand invalid in eye of law. The notice in terms of Proviso (b) being a provision in penal statute and a condition for the offence, it has to be precise while mentioning of the amount of the cheque which is dishonoured. Even if the cheque details are mentioned in the notice but corresponding amount of cheque is not correctly mentioned, it would not bring in law the validity for such notice. Here the principle of reading of notice as a whole is inapplicable and irrelevant. Any elasticity cannot be adopted in the interpretation. It has to be given technical interpretation.”

AOR Sanjay Kumar represented the Appellant, while Advocate Siddharth Khattar represented the Respondent.

Factual Background

A complaint was filed by the appellant against the respondent, who was arraigned as an accused, alleging that the first accused-M/s. Nafto Gaz India Private Limited entered into a Memorandum of Understanding with the appellant-complainant relating to the sale of land. A cheque for Rs 10 lakh was issued by the first accused in favour of the appellant, which returned dishonoured on the ground ‘funds insufficient’.In the notices sent to the accused, the complainant asked for the payment of Rs 20 lakh.

The respondent accused then filed an application seeking discharge, contending that the notice of demand as aforementioned was not in terms of Proviso (b) to Section 138 of the NI Act; therefore, the complaint was not maintainable. The plea for discharge was dismissed by the Metropolitan Magistrate. The respondent then filed a petition before the High Court, culminating into the impugned judgment and order whereby the High Court held that as the demand notice under Proviso (b) of Section 138 of the NI Act was at variance with the cheque amount, the same was invalid, rendering the complaint liable to be quashed.

Reasoning

Referring to the provisions of the Act, the Bench mentioned that when the Proviso (b) to Section 138 stipulates the service of notice as one of the conditions for constituting the offence, and when the words ‘said amount’ is incorporated in the language of the provision, it is the amount which is specifically referable to the amount recoverable under the cheque in question. “Reading Section 138 of the Act in a composite manner, the word ‘said amount’ occurring in the Proviso (b) is connectible with and operates in conjunction with language in the parent part of the Section ‘where any cheque drawn by a person ……of any amount of money”, it added.

The Bench further held, “The words ‘said amount’ and the phrase ‘any amount of money’ have the same purport signifying the cheque amount. They operate hand-in-hand for the purpose of applicability of the Section. The nexus or linkage between the two is enacted by the Legislature with a purpose of making the two to be the same and inseparable components, the former describing the offence and the latter denoting the condition to be fulfilled for constituting the offence.”

The Bench held, “From the afore-stated reiterative pronouncements and the principles propounded by the courts, the position of law that emerges is that the notice demanding the payment of the amount covered by the dishonoured cheque is one of the main ingredients of the offence under Section 138 of the NI Act. In the event of the main ingredient not being satisfied on account of discrepancy in the amount of cheque and one mentioned in the notice, all proceedings under Section 138 of the NI Act would fall flat as bad in law. The notice to be issued under Proviso (b) to Section 138 of the Act, must mention the same amount for which the cheque was issued. It is mandatory that the demand in the statutory notice has to be the very amount of the cheque. After mentioning the exact cheque amount, the sender of the service may claim in the notice amounts such as legal charges, notice charges, interest and such other additional amounts, provided the cheque amount is specified to be demanded for payment.”

The Bench observed that the condition of notice under Proviso (b) is required to be complied with meticulously. Even a typographical error can be no defence. The error even if typographical, would be fatal to the legality of notice, given the need for strict mandatory compliance. Coming to the facts of the case, the Bench noticed that the explanation that mentioning of wrong amount in the cheque was in the nature of typographical or inadvertent error could hardly be accepted, as the called mistake occurred and recurred in both the notices dated June 8, 2012 and September 14, 2012. “It has to be held that in order to make a valid notice under the Proviso (b) to Section 138 of the NI Act, it is mandatory that ‘said amount’ to be mentioned therein is the very amount of cheque, and none other”, it added.

The Bench further held that the defence would not hold good that the different amount mentioned in the notice was out of inadvertence. As per the Bench, even if the cheque number was mentioned in the notice, since the amount was different, it created an ambiguity and differentiation about the ‘said amount’. Holding the notice to be invalid and the order of quashment of notice to be proper, the Bench dismissed the appeals.

Cause Title: Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul (Neutral Citation: 2025 INSC 1133)

Appearance

Appellant: AOR Sanjay Kumar, Advocates Aditi Pancharia, Arvind Rathaur,Harsh Tiwari, Rohan Rana

Respondent: Advocate Siddharth Khattar, AOR Kush Chaturvedi, Advocates Prerna Priyadarshini,Divij Andley, Gaurav Raj Sharma, Sanket Kumar, Syed Faraz Alam, Atharva Gaur, Aayushman Aggarwal, Ayesha Choudhary

Click here to read/download Judgment