The dishonour of cheques under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) remains one of the most frequently litigated areas in Indian criminal jurisprudence. While the legislative intent behind Section 138 is to safeguard the sanctity of commercial transactions and ensure financial discipline, its technical requirements have often resulted in divergent outcomes.
In the present case, the Supreme Court of India had to decide whether a statutory demand notice under proviso (b) to Section 138 of the NI Act remains valid if the amount mentioned in the notice differs from the actual cheque amount. Specifically, the issue revolved around a notice that demanded ₹2,00,00,000 when the dishonoured cheque was only for ₹1,00,00,000, with the complainant later attributing the discrepancy to a “typographical error.”
The Court’s decision reaffirms the principle of strict compliance in penal statutes, holding that even a typographical error in stating the cheque amount in the statutory notice renders the notice invalid. This judgment is significant as it emphasises that technical precision cannot be sacrificed under the garb of inadvertence when a penal liability is sought to be imposed.
Title of the Case: Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul
Citation: 2025 INSC 1133
Court: Supreme Court of India
Bench: Chief Justice B.R. Gavai and Justice N.V. Anjaria
Judgment Date: 19 September 2025
Facts of the Case
Background Transaction
- The dispute arose out of a Memorandum of Understanding (MoU) dated 30 April 2012 between the appellant (Kaveri Plastics) and M/s Nafto Gaz India Pvt. Ltd., represented by its directors, including the respondent (Mahdoom Bawa Bahrudeen Noorul).
- The MoU concerned the sale of land. Towards part liability under this arrangement, the accused company issued a cheque.
Issuance of Cheque
- A cheque bearing No. 876229 dated 12 May 2012, drawn on Indian Overseas Bank, R.K. Puram, Delhi, for an amount of ₹1,00,00,000 was issued in favour of the appellant.
- On presentation, the cheque was dishonoured for the reason “funds insufficient.”
First Legal Notice (8 June 2012)
- Following dishonour, the appellant issued a demand notice.
- Curiously, while the cheque details (number, bank, date, amount ₹1 crore) were correctly stated, the operative portion of the notice demanded payment of ₹2,00,00,000.
Second Legal Notice (14 September 2012)
- Another notice was issued reiterating the cheque details but again demanding ₹2,00,00,000 instead of ₹1 crore.
Complaint before Magistrate
- The appellant filed Criminal Complaint No. 523804/2016 under Sections 138, 141, and 142 NI Act.
- The accused sought discharge, arguing that the statutory notices were invalid as they did not demand the cheque amount but a different (and higher) sum.
- The Magistrate rejected this plea on 06 October 2021, holding the complaint maintainable.
High Court Proceedings
- On challenge, the Delhi High Court (26 February 2024, in Crl. M.C. No. 2164/2022 & Crl. M.A. No. 9155/2022) quashed the complaint.
- It held that since the statutory notice demanded double the cheque amount, it failed to meet the requirement of proviso (b) to Section 138, and therefore, the complaint was not maintainable.
Supreme Court Appeal
- Aggrieved, the complainant appealed to the Supreme Court, arguing that the discrepancy was a typographical error and should not invalidate the complaint.
Issue
The central issue before the Supreme Court was:
Whether a statutory notice under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881, remains valid when the amount demanded in the notice is different from the cheque amount, and whether such a discrepancy can be excused as a typographical error?
Judgment and Reasoning
Statutory Framework
The Court reproduced Section 138 NI Act, particularly proviso (b), which requires that:
“The payee or holder in due course makes a demand for the payment of the said amount of money by giving a notice in writing … within thirty days of the receipt of information from the bank regarding return of the cheque as unpaid.”
The phrase “said amount of money” is critical—it refers specifically to the cheque amount.
Precedents Considered
The Court extensively relied on earlier judgments:
- Suman Sethi v. Ajay K. Churiwal (2000) 2 SCC 380 – held that the notice must demand the cheque amount; additional claims (interest, charges) are permissible if separately stated.
- Central Bank of India v. Saxons Farms (1999) 8 SCC 221 – the purpose of the notice is to allow the drawer to pay the cheque amount.
- Rahul Builders v. Arihant Fertilisers (2008) 2 SCC 321 – service of proper notice demanding the cheque amount is a mandatory condition.
- Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (2023) 1 SCC 578 – reaffirmed that “said amount” means the cheque amount only.
Various High Court rulings (M.P., Andhra Pradesh, Karnataka, Delhi, Punjab & Haryana) were also cited, consistently holding that a notice mentioning an amount different from the cheque amount is invalid.
Arguments of the Parties
Appellant’s Contention
- The error was purely typographical, caused by copying and pasting while preparing multiple notices.
- Other cheque details (number, bank, date) were correctly mentioned; hence, the notice should be read as a whole.
- Section 138 is intended to uphold business efficacy, and technical errors should not defeat substantive justice.
Respondent’s Contention
- The discrepancy was deliberate or, at the very least, fatal.
- Both notices (June and September 2012) demanded ₹2 crores, undermining the claim of inadvertence.
- Strict compliance with proviso (b) is mandatory; otherwise, the complaint is not maintainable.
Supreme Court’s Analysis
- The Court emphasised that Section 138 is a penal provision and therefore must be construed strictly.
- The words “said amount” in proviso (b) are not flexible—they unequivocally refer to the exact cheque amount.
- A notice that demands a different sum, whether higher or lower, fails to satisfy statutory requirements.
- The plea of typographical error cannot be accepted, especially since the mistake recurred in both notices.
- Even if the cheque details were mentioned correctly, the operative demand was inconsistent, creating ambiguity.
- The principle of reading a notice “as a whole” cannot override the statutory mandate of demanding the cheque amount precisely.
Outcome of the Case
- The statutory notices were invalid as they demanded ₹2 crores instead of ₹1 crore.
- Since a valid notice is a condition precedent for maintaining a Section 138 complaint, the complaint was rightly quashed by the High Court.
- The Supreme Court dismissed the appeals, holding that:
“Even typographical error can be no defence. The error, even if inadvertent, is fatal to the legality of notice, given the need for strict compliance.”
Key Takeaways
Strict Construction of Penal Law
- Section 138 NI Act being penal in nature, its requirements must be strictly construed. Courts cannot dilute them in the name of equity or commercial convenience.
Mandatory Compliance with Proviso (b)
- The notice must demand the exact cheque amount. Any discrepancy renders it invalid.
- Additional claims (interest, costs, damages) are permissible, but only if the cheque amount is clearly specified.
Typographical Errors Not Excusable
- Even inadvertent or typographical errors in stating the cheque amount vitiate the notice.
- The complainant cannot rely on the surrounding details of the cheque to cure this defect.
Uniform Judicial Consensus
- The judgment consolidates and reaffirms earlier rulings of both the Supreme Court and High Courts.
- It eliminates ambiguity on whether courts can adopt a liberal approach in such cases—the answer is an emphatic no.
Conclusion
The Supreme Court’s decision in Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul underscores the importance of precision in statutory compliance under Section 138 NI Act. While the legislative intent is to punish cheque dishonour and deter unscrupulous drawers, the complainant must meticulously comply with procedural requirements.
This ruling serves as a cautionary tale for litigants and lawyers alike—a minor drafting error in the demand notice can defeat an otherwise meritorious case. It re-establishes the principle that in penal statutes, form and substance are inseparable.
Thus, while the appellant sought relief on equitable considerations, the Court rightly prioritised the rule of law and statutory precision over sympathetic reasoning. The dismissal of the appeal ensures consistency, predictability, and fairness in the application of Section 138, even if it occasionally operates harshly against complainants.