The Supreme Court has reaffirmed the strict and technical compliance required under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), particularly regarding the contents of a demand notice issued under Proviso (b) of the Section.
BACKGROUND FACTS
The case arose from a dispute involving a dishonoured cheque issued for Rs. 1 crore by the Respondent, drawn in favor of the Appellant. Following the cheque’s dishonour due to insufficient funds, the Appellant issued legal notices dated 08.06.2012 and 14.09.2012, demanding Rs. 2 Crore, double the cheque amount. The Respondent challenged the validity of the Complaint under Sections 138, 141 and 142 of the NI Act, contending that the notices did not comply with the statutory requirement, as the amount demanded exceeded the cheque amount.
The High Court of Delhi, in its Order dated 26.02.2024, quashed the Complaint, holding that the discrepancy between the cheque amount and the notice rendered makes the notice invalid.
KEY LEGAL ISSUE
The central issue was whether a demand notice under Proviso (b) of Section 138 could remain valid if it specifies an amount different from the cheque’s face value. The Appellant contended that the discrepancy was a typographical error and argued for a purposive approach, while the Respondent stressed strict statutory compliance.
SUPREME COURT OBSERVATIONS
Strict Compliance Mandated:
The Court, in its Judgment of Kaveri Plastics Vs Mahdoom Bawa Bahruden Nooru (Special Leave Petition (Crl.) Nos. 11184-11185/2024) dated 19.09.2025, delivered by Chief Justice B.R. Gavai and Justice N.V. Anjaria, emphasized that Section 138 is a penal provision and penal statutes must be construed strictly. The phrase “said amount of money” in Proviso (b) explicitly refers to the exact cheque amount and any variation renders the notice invalid.
Typographical Errors Not a Defence:
The Appellant’s claim that the difference arose due to inadvertent or typographical errors was rejected. The Court underscored that even minor discrepancies in a statutory notice could nullify it, particularly when the offence is technical in nature.
Precedents Cited:
Suman Sethi vs. Ajay K. Churiwal & Anr., (2000) 2 SCC 380, decided on 04.02.2000, held that incidental charges could be added but the cheque amount must be clearly demanded.
Central Bank of India vs. Saxons Farms & Ors., (1999) 8 SCC 221, decided on 10.03.1999, explained that the purpose of the notice is to give the drawer a chance to rectify the default.
K.R. Indira vs. Dr. G. Adinarayana, (2003) 8 SCC 300, decided on 10.12.2003, highlighted the need for specific demand of the cheque amount.
Rahul Builders vs. Arihant Fertilizers & Chemicals & Anr., (2008) 2 SCC 321, decided on 16.01.2008, reiterated that service of a correct notice is imperative.
Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel & Anr., (2023) 1 SCC 578, decided on 12.01.2023, emphasized that the statutory demand must strictly mention the cheque amount.
Sunglo Engineering India Pvt. Ltd. vs. The State & Ors., MANU/DE/3805/2021, decided on 15.06.2021, quashed a complaint where the notice demanded double the cheque amount.
High Court decisions like K. Gopal vs. Mr. T. Mukunda, Criminal Appeal No.1011 of 2010, decided on 25.02.2011, reinforced that typographical errors cannot excuse non-compliance with Section 138.
Interpretation Principle:
The Court reiterated that a penal statute should not be stretched or interpreted liberally to accommodate inadvertent mistakes. As noted in Dyke vs. Elliott, (1872) 4 PC 184, the Court cannot assume legislative intent beyond the plain language of the statute.
Implications of the Judgment
Mandatory Exactness: Legal notices under Section 138 must demand payment of the exact cheque amount; any deviation can invalidate the notice.
Technical Nature of Section 138: Courts will not overlook procedural lapses, highlighting the technicality of cheque dishonour offences.
Caution for Practitioners: Advocates must exercise extreme diligence in drafting notices under Proviso (b), ensuring that all statutory requirements, particularly the cheque amount, are accurately reflected.
CONCLUSION
The Supreme Court dismissed the Appeals, holding that the High Court’s quashing of the Complaint was correct and legally sound. The Judgment underscores the principle that compliance with Section 138 is strictly mandatory and even minor discrepancies in statutory notices cannot be excused. It serves as a crucial reminder for both litigants and legal practitioners that precision in legal documentation is a condition precedent to maintaining a valid criminal complaint under the NI Act.
This ruling reinforces the strict statutory framework of Section 138, protecting cheque drawers from ambiguous or incorrect notices while emphasizing the technical rigor expected from complainants in cheque dishonour cases.
SARTHAK KALRA
Senior Legal Associate
The Indian Lawyer & Allied Services
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