Notice Must Demand Exact Cheque Amount Under Section 138, Supreme Court Holds

A two-judge bench of Chief Justice B.R. Gavai and Justice N.V. Anjaria heard an appeal arising from a Delhi High Court order quashing a criminal complaint under Section 138 of the Negotiable Instruments Act. The appeals concerned whether a demand notice under Proviso (b) to Section 138 remained valid when the amount stated in the notice differed from the amount shown on the dishonoured cheque, and whether a claimed typographical error could excuse such discrepancy.

The Court dismissed the appeals and upheld the High Court's quashment of the complaint, holding that a notice under Proviso (b) must demand the exact amount covered by the dishonoured cheque and that even a typographical mistake could not validate a notice which named a different amount. The Court stated that the condition of notice in Proviso (b) was "mandatory" and required strict compliance. The Court, in its reasoning, observed: The Court added that "Even typographical error can be no defence" and concluded that the notice in the present case "stood invalid and bad in law."

Background The dispute arose from a Memorandum of Understanding relating to sale/lease of land and payment obligations. A cheque (No. 876229) dated 30.04.2012 drawn on Indian Overseas Bank in favour of the complainant was returned dishonoured for "funds insufficient." The cheque amount was Rs.1,00,00,000/-. The complainant issued demand notices dated 08.06.2012 and 14.09.2012 which, while referring to the chequebook details, called upon the drawer to pay Rs.2,00,00,000/- (two crores). The drawer challenged the complaint, arguing that the notices did not comply with Proviso (b) to Section 138 because they did not demand the "said amount" equal to the cheque amount.

The Metropolitan Magistrate dismissed a discharge application and the matter proceeded to the Delhi High Court, which quashed the criminal complaint on the ground that the notices were at variance with the cheque amount and thus invalid. The appellant petitioned to this Court.

The Supreme Court examined statutory text, settled precedents (including Suman Sethi v. Ajay K. Churiwal, Central Bank of India v. Saxons Farms, K.R. Indira v. Dr. G. Adinarayana, Rahul Builders v. Arihant Fertilizers and others) and the canon that penal provisions are to be construed strictly. Relying on those authorities and on the mandatory language of Proviso (b), the Court held that the demand in the notice must be for the cheque amount; other incidental claims (interest, costs) could be stated only after the exact cheque amount was specified. The Court found that the wrong amount recurred in both notices and that the appellant's plea of typographical mistake was not tenable. Consequently, the Court concluded there was failure of a statutory condition precedent and dismissed the appeals, leaving the High Court order intact. No interim directions were made; the appeals were dismissed and interlocutory applications disposed of.

Case Details: Case No.: 2025 INSC 1133 (Criminal Appeal Nos. @ SLP (Crl.) Nos. 11184-11185/2024) Case Title: Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul Appearances: For the Petitioner(s): Mr. Sanjay Kumar, Advocate For the Respondent(s): Mr. Siddharth Khattar, Advocate