Section 138 demand notice remains valid despite disputed part-payment; factual defences cannot be decided in quashing proceedings.

A demand notice under Section 138 of the Negotiable Instruments Act is not vitiated merely because an alleged part-payment was not adjusted, where the notice clearly demands the cheque amount and conveys the liability sought to be enforced. The omission to reflect a disputed part-payment does not, by itself, render the notice defective. Alleged part-payment and related factual disputes raise contested questions of fact requiring evidence and cannot be decided in quashing proceedings under inherent jurisdiction. Such defences are to be examined by the trial court on evidence and applicable statutory presumptions. The complaint proceedings were therefore allowed to continue.

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Issues: (i) Whether the legal demand notice under Section 138 of the Negotiable Instruments Act, 1881 was vitiated for not adjusting the alleged part-payment made by the petitioners. (ii) Whether the alleged part-payment and related factual disputes could be examined in proceedings for quashing.

Issue (i): Whether the legal demand notice under Section 138 of the Negotiable Instruments Act, 1881 was vitiated for not adjusting the alleged part-payment made by the petitioners.

Analysis: The notice specifically demanded the cheque amount corresponding to the dishonoured cheque. A notice under Section 138 must clearly convey the liability sought to be enforced, but it is not invalid merely because collateral disputes or other amounts are not adjusted in the manner suggested by the accused. The omission to reflect an alleged part-payment did not make the notice omnibus or defective on the record before the Court.

Conclusion: The notice was not held to be defective on this ground and the objection was rejected.

Issue (ii): Whether the alleged part-payment and related factual disputes could be examined in proceedings for quashing.

Analysis: The alleged part-payment raised a disputed question of fact requiring appreciation of evidence. Inherent jurisdiction is not to be used to assess a probable defence or to short-circuit the trial by determining contested factual matters. Such issues are to be decided by the trial Court on the basis of evidence and statutory presumptions, if any.

Conclusion: The factual defence based on part-payment was left to trial and could not justify quashing.

Final Conclusion: The petition for quashing failed, and the complaint proceedings were permitted to continue before the trial Court in accordance with law.

Ratio Decidendi: A demand notice under Section 138 is sufficient if it clearly demands the cheque amount, and disputed questions of part-payment or defence cannot be adjudicated in quashing proceedings under inherent jurisdiction.

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