The Supreme Court of India, in a significant ruling on the interpretation of the Negotiable Instruments Act, 1881, has held that a demand notice issued under Section 138, Proviso (b) must be for the exact amount of the dishonoured cheque. The Court affirmed that any discrepancy in the amount renders the notice invalid and vitiates the subsequent criminal complaint, adding that even a “typographical error” cannot be used as a defence to cure such a fundamental defect.
A bench comprising CJI B.R. Gavai and Justice N.V. Anjaria delivered the judgment on September 19, 2025, dismissing an appeal filed by Kaveri Plastics against a Delhi High Court order. The High Court had quashed a criminal complaint for cheque dishonour on the grounds that the statutory notice demanded double the amount of the cheque in question.
Case Background
The case originated from a criminal complaint filed by the appellant, Kaveri Plastics, against the respondent, Mahdoom Bawa Bahrudeen Noorul, and others. According to the complaint, M/s. Nafto Gaz India Private Limited issued a cheque for Rs. 1,00,00,000/- (Rupees One Crore) to the appellant on May 12, 2012, as part of a Memorandum of Understanding for the sale of land. The cheque was dishonoured by the bank due to “funds insufficient.”
Following the dishonour, the appellant issued a legal notice on June 8, 2012. While the notice correctly described the cheque details, it concluded by demanding payment of “₹2,00,00,000/- (Rupees Two Crores).” A second notice was issued on September 14, 2012, which repeated the same error, demanding Rs. 2 Crores instead of the Rs. 1 Crore cheque amount.
The respondent filed an application for discharge before the Metropolitan Magistrate, arguing that the notice was invalid. The Magistrate dismissed the application. However, the respondent successfully challenged this order before the Delhi High Court, which quashed the criminal complaint, leading to the present appeal before the Supreme Court.
Arguments of the Parties
The appellant, represented by Advocate Mr. Sanjay Kumar, argued that the High Court had taken a “too technical” view. It was contended that the incorrect amount mentioned in the notice was a clear “typographical error” and that the notice should be read as a whole. The appellant emphasized that the purpose of Section 138 of the NI Act is to facilitate smooth business transactions and that such technicalities should not be allowed to prevail. Reliance was placed on the Supreme Court’s decisions in Suman Sethi vs. Ajay K. Churiwal & Anr. and Central Bank of India & Anr. vs. Saxons Farms & Ors. to argue that the object of the notice is simply to give the drawer a chance to rectify their omission.
Conversely, the respondent, through Advocate Mr. Kush Chaturvedi, submitted that the demand for double the cheque amount was made in two separate notices, belying the claim of a typographical error. It was argued that the law is settled that the demand in a statutory notice cannot be different from the cheque amount, and failure to comply with this mandatory requirement renders the complaint non-maintainable.
Court’s Analysis and Reasoning
The Supreme Court undertook a detailed analysis of Section 138 of the NI Act, focusing on the phrase “the said amount of money” in Proviso (b). The judgment, authored by Justice N.V. Anjaria, clarified that this phrase is directly linked to the “payment of any amount of money” mentioned in the main part of the section, meaning it refers exclusively to the cheque amount.
The Court referred to its previous decision in Suman Sethi (supra), where it was held, “in a notice, under clause (b) to the proviso, demand has to be made for the cheque amount.” While the Suman Sethi case permitted additional claims for costs and interest, it was on the condition that these claims were severable and the principal cheque amount was correctly specified.
The bench also cited Rahul Builders vs. Arihant Fertilizers & Chemicals & Anr., which established that the service of a notice in conformity with Proviso (b) is “imperative in character for maintaining a complaint.” The Court noted a consistent line of judgments from various High Courts holding that a notice is invalid if the amount demanded is different from the cheque amount.
A crucial aspect of the Court’s reasoning was the principle of strict construction for penal statutes. The judgment emphasized that Section 138 creates a technical, penal offence, and its conditions must be meticulously and strictly complied with. Quoting the Privy Council decision in Dyke vs. Elliott, the Court observed, “the Court must see that the thing charged as an offence is within the plain meaning of the words used, and must not strain the words on any notion that there has been a slip, that there has been a casus omissus…”
Rejecting the appellant’s “typographical error” defence, the Court held it to be unacceptable, especially since the error was repeated in the second notice. The judgment stated unequivocally: “The condition of notice under Proviso (b) is required to be complied with meticulously. 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.”
Final Decision
Concluding its analysis, the Supreme Court held that the notice under Proviso (b) must be precise and the amount demanded must be the “very amount of cheque, and none other.” The Court found that by demanding Rs. 2 Crores for a Rs. 1 Crore cheque, the appellant had created an “ambiguity and differentiation about the ‘said amount’,” rendering the notice “invalid and bad in law.”
Upholding the Delhi High Court’s decision, the Supreme Court ruled that the order quashing the criminal complaint was “eminently proper and legal” and accordingly dismissed the appeals.
