2017 (4) TMI 1664 - HC - Indian Laws

Cheque dishonour notice demanding wrong amount under s 138(b) NI Act led to complaint quashed under s 482 CrPC

A prosecution under s 138 NI Act was challenged on the ground that the statutory demand notice under s 138(b) did not demand the 'said amount of money' ... Dishonour of Cheque - statutory notice issued under Section 138(b) of Negotiable Instruments Act was issued for the “said amount of money” (cheque amount) or not - HELD THAT:- In order to constitute a cause of action, it is necessary for the holder, in due course of the cheque, must make a demand for the payment of the “said amount of money” by giving a notice in writing to the drawer of the cheque. In the notice, it was the specific case of the complainant/respondent no.1 that the applicant had taken a loan of Rs.43,000/- and in lieu of repayment of the said loan, a cheque for an amount of Rs.43,000/- was issued - Merely by saying that the amount so mentioned in the statutory notice was incorrect because of typographical error, in the considered opinion of this Court, the complainant cannot get rid of the notice issued by him under Section 138(b) of Negotiable Instruments Act. The provisions of Section 138 of Negotiable Instruments Act are penal in nature and, therefore, the provisions are to be construed strictly. Thus, if the statutory notice issued under Section 138(b) of Negotiable Instruments Act is considered in the light of the provisions of Section 138 of Negotiable Instruments Act as well as the averments made in the complaint, it is clear that the complaint has been filed on the ground that a cheque of Rs.4,30,000/- was issued in lieu of repayment of loan of Rs.4,30,000/- which was taken by the complainant and as it stood bounced, therefore, the applicant has committed an offence under Section 138 of Negotiable Instruments Act. Whereas the notice under Section 138 of Negotiable Instruments Act was issued on the ground that a cheque of Rs.43,000/- was given in lieu of repayment of loan amount of Rs.43,000/- which was taken by the applicant and a demand for payment of Rs.43,000/- was made. Thus, this Court is of the considered opinion that as the notice under Section 138(b) of Negotiable Instruments Act was not issued for “said amount of money” i.e., the cheque amount, therefore, it cannot be said that the complaint filed by the respondent no.1 prima facie discloses the commission of an offence under Section 138 of Negotiable Instruments Act. As the offence under Section 138 of Negotiable Instruments Act is a technical offence, therefore, every technical formalities as required under Section of 138 of Negotiable Instruments Act must be complied with strictly. The application filed under Section 482 of CrPC is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the statutory notice issued under Section 138(b) of the Negotiable Instruments Act made a demand for the 'said amount of money' (i.e., the cheque amount forming the basis of the prosecution), and if not, whether the complaint for the offence under Section 138 was liable to be quashed for non-compliance with the mandatory precondition. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of the Section 138(b) notice vis-à-vis demand for the 'said amount of money' and maintainability of the Section 138 prosecution Legal framework (as discussed by the Court): The Court examined the statutory requirement under Section 138(b) that the payee/holder in due course must make a demand for payment of the 'said amount of money' by issuing a written notice to the drawer. The Court treated service of a legally compliant demand notice as a condition precedent to prosecution, and emphasised that Section 138 is penal and must be construed strictly. The Court applied the principle that the notice must specifically demand the cheque amount; absence of such a demand defeats the statutory ingredient necessary for the offence to arise. Interpretation and reasoning: The Court compared (i) the allegations in the complaint (loan and cheque amount of Rs.4,30,000/-) with (ii) the contents of the statutory notice (loan and cheque amount of Rs.43,000/-). The notice, on its own terms, asserted a different transaction amount and demanded payment of Rs.43,000/-, not the cheque amount alleged in the complaint. The Court rejected the submission that the discrepancy could be treated as a mere typographical error curable by evidence at trial, holding that the complainant cannot 'get rid of' the notice issued by him by later characterising the stated amount as mistaken. Since the statutory notice is the foundational step giving the drawer an opportunity to pay and avoid penal consequences, strict compliance with the requirement of demanding the 'said amount of money' is mandatory. Conclusions: The Court held that the notice was not issued for the 'said amount of money' corresponding to the cheque amount on which the complaint was founded. Consequently, the complaint did not prima facie disclose the offence under Section 138 due to non-fulfilment of the mandatory technical requirement, and the proceedings for the offence under Section 138 were quashed in exercise of inherent jurisdiction.