Notice Must Be Read As A Whole | High Court Holds Defect In Amount Does Not Invalidate Cheque Demand | Petition Against Section 138 Proceedings Dismissed
Sanchayita Lahkar
The High Court of Jammu & Kashmir and Ladakh Division Bench of Justice Rajnesh Oswal held that a statutory notice under Section 138 of the Negotiable Instruments Act, 1881 must be read as a whole, and a typographical error in the amount demanded does not vitiate the demand if the overall tenor of the notice clearly shows a claim in respect of dishonoured cheques. The Court dismissed the petition seeking quashing of criminal proceedings and upheld the continuation of trial, holding that the plea of defective notice was without merit.
The respondent filed a complaint under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 before the trial court alleging dishonour of two cheques issued by the petitioner. The two cheques were bearing Nos. 909039 and 909040 dated 20.01.2021 and 26.01.2021 respectively, drawn for Rs. 10 lakhs and Rs. 11 lakhs. The trial court, on 10.09.2021, issued process against the petitioner for offence under Section 138 of the Act. This process issuance was later challenged unsuccessfully in revision before the Principal Sessions Judge, Kathua, who dismissed the revision on 15.09.2022.
Aggrieved by both the trial court and revisional orders, the petitioner approached the High Court assailing the issuance of process and continuation of proceedings. The principal ground raised was that the statutory notice dated 28.04.2021 issued by the respondent, which was relied upon for filing the complaint, contained a glaring defect. According to the petitioner, while the dishonoured cheques were for Rs. 21 lakhs in total, the formal demand in the last paragraph of the notice only mentioned Rs. 50,000 as the "cheque amount". It was contended that since the statutory notice did not demand the correct cheque amount, it was defective and incapable of giving rise to prosecution under Section 138 of the Act.
Learned counsel for the petitioner, Mr. Anil Khajuria, submitted that the demand in the notice was limited to Rs. 50,000, and therefore no valid notice for Rs. 21 lakhs existed. He relied upon the decisions of the Hon’ble Supreme Court in M/s Rahul Builders v M/s Arihant Fertilizers and Chemicals and Another, (2008) 2 SCC 321 and K. R. Indira v Dr. G. Adinarayana, (2003) 8 SCC 300. It was argued that if the demand is not made in accordance with law, the proceedings are vitiated at inception.
Opposing the petition, Mr. Ved Bhushan Gupta, learned counsel for the respondent, submitted that the error in mentioning Rs. 50,000 in the notice was purely typographical. He asserted that the entire notice, when read in conjunction with the facts and the reference to the dishonoured cheques amounting to Rs. 21 lakhs, clearly conveyed the intention to demand the cheque amount. Therefore, the notice satisfied the statutory requirement.
On facts, it was not disputed that cheque bearing No. 909039 was dishonoured due to "signatures of the drawer being illegible" and cheque bearing No. 909040 was dishonoured for "insufficient balance". The complaint, accordingly, had been filed for total dishonour amount of Rs. 21 lakhs.
The petitioner’s core contention remained that the defective demand invalidated the prosecution, while the respondent maintained that the notice must be read as a whole and technical errors cannot be fatal if the object and purpose of the notice are achieved.
The Court, after hearing the parties and examining the record, proceeded to consider the issue in depth.
It recorded in clear terms "It needs to be noted that the notice is required to be read as a whole, and one solitary word/figure, which ex facie is not in sync with the tone and tenor of contents of the notice, cannot be made use of, to negate the whole purport of the notice."
Referring to Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380, the Court quoted the Supreme Court’s observation: "It is a well-settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the 'said amount' i.e. the cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement."
The Court further noted the Supreme Court’s principle that additional claims or typographical errors, when severable and not affecting the substance of the demand, will not invalidate the notice. It recorded, "If, however, in the notice an omnibus demand is made without specifying what was due under the dishonoured cheque, the notice might well fail to meet the legal requirement and may be regarded as bad."
Dealing with another precedent relied upon by the respondent, Central Bank of India v. Saxons Farms, (1999) 8 SCC 221, the Court stated: "Kindly arrange to make the payment to avoid the unpleasant action of my client." The Court observed that the Supreme Court had held such wording to be a clear demand.
The Court thus concluded that in the present case, while the last paragraph of the notice contained the figure Rs. 50,000, it also specifically stated the words "cheque amount". It held, "This Court would have agreed with the petitioner, had there been no reference to the expression 'cheque amount' in the demand."
The Court rejected the argument that mentioning Rs. 50,000 in the demand paragraph limited the respondent's claim. It observed, "The demand made by the respondent from the petitioner in last para of the legal notice dated 28.04.2021... would reveal that he has demanded Rs. 50,000/- as cheque amount."
However, reading the notice as a whole, the Court held that the defect was curable and not fatal. "The notice is required to be read as a whole," it held.
The Court also held that the judgments relied upon by the petitioner were distinguishable on facts. It stated, "The judgments relied upon by the petitioner are not applicable to the present facts and circumstances of the case."
Ultimately, the Court concluded that the plea raised by the petitioner was devoid of merit. It held, "Viewed thus, the instant petition is devoid of any merit and is dismissed accordingly."
The Court issued a directive dismissing the petition. It held that the defect pointed out in the notice did not vitiate the prosecution and upheld the orders of the courts below.
The Court recorded that the demand in the notice, though mentioning Rs. 50,000, when read as a whole with reference to the dishonoured cheques amounting to Rs. 21 lakhs, fulfilled the statutory requirement. The Court stated that the petitioner’s argument, based on the defective notice, did not merit acceptance.
The Court concluded that no valid ground existed to quash the proceedings initiated by the trial court and affirmed by the revisional court. Accordingly, it ordered dismissal of the petition.
"Viewed thus, the instant petition is devoid of any merit and is dismissed accordingly."
Advocates Representing the Parties
For the Petitioners: Anil Khajuria, Advocate
For the Respondents: V Bhushan Gupta, Advocate
Case Title: Pawan Kumar v. Ranbir Singh
Case Number: CRM(M) No. 798/2022
Bench: Justice Rajnesh Oswal
[Read/Download order]
