Kiran Raj

The Supreme Court, Division Bench of Chief Justice B.R. Gavai and Justice N.V. Anjaria has held that a complaint under Section 138 of the Negotiable Instruments Act, 1881 cannot be sustained if the statutory notice of demand mentions an amount different from the cheque amount. Clarifying the scope of proviso (b) to Section 138, the Court stated that the “said amount” in the notice must be identical to the value of the dishonoured cheque, and any discrepancy or omission will render the notice defective in law. In the present case, the complainant demanded twice the cheque value, which the Court found invalid. Strict compliance with the statutory requirement was deemed necessary, and the complaint was dismissed as legally untenable.

The matter originated from a complaint filed by Kaveri Plastics against Mahdoom Bawa Bahrudeen Noorul under Sections 138, 141, and 142 of the Negotiable Instruments Act, 1881. The dispute arose from a Memorandum of Understanding dated 30 April 2012 between the complainant and M/s Nafto Gaz India Private Limited regarding sale and lease of land. Pursuant to this arrangement, a cheque bearing number 876229 dated 12 May 2012 for ₹1,00,00,000, drawn on Indian Overseas Bank, R.K. Puram Branch, Delhi, was issued in favour of the complainant. On presentation, the cheque was dishonoured with the remark “funds insufficient.”

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The complainant thereafter issued a demand notice dated 8 June 2012 calling upon the accused to pay ₹2,00,00,000. A second notice dated 14 September 2012 also demanded ₹2,00,00,000, despite the dishonoured cheque being only for ₹1,00,00,000. The respondent argued that the variance between the cheque amount and the demand made in the statutory notices rendered the complaint defective under proviso (b) to Section 138.

The complainant contended that the difference was a typographical error resulting from inadvertent “cut paste” mistakes while preparing multiple notices, and stressed that the details of the cheque had otherwise been correctly mentioned. The defence argued that the statutory requirement under proviso (b) of Section 138 demanded precise mention of the cheque amount, and therefore the notices were invalid.

The Metropolitan Magistrate dismissed the discharge application filed by the respondent. However, the Delhi High Court later quashed the criminal complaint on the ground that the notices were not in accordance with the statutory requirement. This order was challenged before the Supreme Court. The statutory provisions directly invoked in the dispute were Sections 138, 141, and 142 of the Negotiable Instruments Act, particularly the condition under proviso (b) to Section 138 which mandates that the statutory notice must demand the exact amount of the dishonoured cheque.

The Bench examined Section 138 of the Negotiable Instruments Act, particularly proviso (b). It recorded: “The purport of group of words ‘makes a demand for the payment of said amount of money’ occurring in Proviso (b) to Section 138 of the Act, and in particular the connotation ‘the said amount of money’ therein, hold key to the answer to the issue posed.”

Referring to earlier authority, the Court cited Suman Sethi v. Ajay K. Churiwal, noting: “Reading the section as a whole we have no hesitation to hold that the above expression refers to the words ‘payment of any amount of money’ occurring in the main Section 138 i.e. the cheque amount. So in a notice, under clause (b) to the proviso, demand has to be made for the cheque amount.”

It further stated: “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. Where in addition to the ‘said amount’ there is also a claim by way of interest, cost etc. whether the notice is bad would depend on the language of the notice.”

The Court also referred to Rahul Builders v. Arihant Fertilizers, recording: “Service of a notice, it is trite, is imperative in character for maintaining a complaint. Unless a notice is served in conformity with proviso (b) appended to Section 138 of the Act, the complaint petition would not be maintainable.”

On the principle of strict construction, the judgment stated: “When the provision is penal and the offence is technical, there is no escape from holding that the ‘said amount’ in proviso (b) cannot be the amount other than mentioned in the cheque in question for dishonour of which the notice is received.”

The Bench concluded that the complainant’s explanation of typographical error was not acceptable, remarking: “Even 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.”

It stated: “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.”

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“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.”

“Even 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.” It further clarified: “The notice stood invalid and bad in law. The order of quashment of notice was eminently proper and legal.”

“No case is made out for interfering with the impugned order of the High Court. The appeals stand dismissed. In view of the disposal of the main appeals, all the interlocutory applications as may be pending stands disposed of.”

Advocates Representing the Parties

For the Petitioners: Mr. Sanjay Kumar, Advocate
For the Respondents: Mr. Kush Chaturvedi, Advocate

Case Title: Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul
Neutral Citation: 2025 INSC 1133
Case Number: Criminal Appeal Nos. ______ of 2025 (@SLP (Crl.) Nos. 11184-11185/2024)
Bench: Chief Justice B.R. Gavai, Justice N.V. Anjaria