2025 (9) TMI 1264 - SC - Indian Laws

Section 138: Notice invalid where demand differed from cheque amount; typographical error claim rejected; ambiguity fatal to notice

Kaveri Plastics Versus Mahdoom Bawa Bahrudeen Noorul

SC held that where a cheque for a specified sum was dishonoured but the Proviso (b) notice demanded a different amount, the notice was invalid. A claim ... Dishonour of Cheque - validity of notice when the amount mentioned and demanded in the notice sent under Proviso (b) to Section 138 of the Negotiable Instruments Act, 1881, to the payee or the holder in due course of the cheque, is different from the amount for which the cheque was issued - whether a defence that such was a typographical error could be a ground which could be countenanced in law? - HELD THAT:- The provisions of Section 138 of the NI Act contemplates that where any cheque drawn by a person in the account maintained by him is returned dishonoured and unpaid, it amounts to a punishable offence. The ingredients of this penal provision are inter alia that the cheque should have been drawn by a person on an account maintained by him with a banker, for payment of any amount of money to another person from out of that account. Such cheque should be returned by the bank for the reason of money in the credit of the account being insufficient, etc. In order to make out the offence under Section 138 of the NI Act complete, conditions stated in sub-clauses (a),(b) and (c) of the Proviso should stand complied with. In the present case, it is the condition (b) to the Proviso which is in focus. The effect and application of this phrase was dealt with by this Court in Suman Sethi vs. Ajay K. Churiwal & Anr. [2000 (2) TMI 822 - SUPREME COURT]. The context of facts was that the appellant in that case issued a cheque of Rs. 20,00,000/- which was returned dishonoured. In the notice issued under the Proviso (b), the complainant called upon the drawer of the cheque to pay cheque amount of Rs. 20,00,000/- along with incidental charges of Rs. 1500/- spent on the cheque and also Rs.340/- as notice charges. It was stated that failing to pay would entail legal steps holding the drawer liable for all costs and consequences thereof. The contention was that since the incidental amount was demanded in the notice along with the cheque amount, the notice was rendered bad. This Court in K.R. Indira [2003 (10) TMI 385 - SUPREME COURT], again held that specific demand for the payment of the sum covered by the dishonoured cheque is required to be made in the notice. In that case, there was a loan transaction in the backdrop and the cheques were issued towards that payment. In absence of specific demand for the cheque amounts, the notice was held to be invalid. The Privy Council decision in Dyke vs. Elliott quoted by this Court with approval stated that 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, that the thing is so clearly within the mischief that it must have been intended to be included if thought of. It was thereafter observed that where the thing is brought within the words and within the spirit, there a penal enactment is to be construed, like any other instrument, according to the fair commonsense meaning of the language used, and the court is not to find or make any doubt or ambiguity in the language of a penal statute. Reverting to recollect the facts of this case, the cheque which was drawn by the respondent was for Rs. 1,00,000/- whereas in the notice issued under Proviso (b) to Section 138 of the NI Act against the respondent, appellant mentions the amount of Rs. 2,00,000/-. The rigours of law on this score being strict, the defence would not hold good that the different amount mentioned in the notice was out of inadvertence. Even if the cheque number was mentioned in the notice, since the amount was different, it created an ambiguity and differentiation about the ‘said amount’. The notice stood invalid and bad in law. The order of quashment of notice was eminently proper and legal. No case is made out for interfering with the impugned order of the High Court - The appeals stand dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a notice under proviso (b) to Section 138 of the Negotiable Instruments Act is valid when the amount demanded in the notice differs from the amount stated on the dishonoured cheque. 2. Whether a plea that the discrepancy in the amount stated in the statutory notice is a typographical or inadvertent error can cure the non-compliance and render the notice valid. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of notice when amount demanded differs from cheque amount Legal framework: Section 138 creates a penal offence for dishonour of cheque and makes the proviso conditions (a), (b) and (c) mandatory preconditions for prosecuting the offence; proviso (b) requires that the payee 'makes a demand for the payment of the said amount of money' within the prescribed period. Precedent treatment: The Court relied on established jurisprudence holding that the phrase 'said amount' in proviso (b) refers to the cheque amount and that a statutory notice must specifically demand the sum covered by the dishonoured cheque. Prior decisions have consistently required strict and literal compliance with the proviso, while allowing that separately stated additional claims (interest, costs) may be severable only if the cheque amount is expressly demanded. Interpretation and reasoning: Reading Section 138 as a whole, the words 'said amount' link to 'any amount of money' in the substantive portion; thus the proviso's demand must be for the exact cheque amount. The provision being penal and technical mandates strict construction; the statutory scheme shows the legislature intended the demand in the notice to be identical to the cheque amount so as to give the drawer a clear, specific opportunity to remedy the exact liability covered by the cheque. Ratio vs. Obiter: Ratio - A valid notice under proviso (b) must demand the very amount of the dishonoured cheque; divergence in amount is fatal. Obiter - Clarification that separately claimed incidental charges may be severable only when the cheque amount itself is correctly and expressly demanded. Conclusions: If the amount stated in the demand notice is different from the cheque amount, the notice does not satisfy proviso (b) and is invalid; non-compliance with this mandatory ingredient renders proceedings under Section 138 unsustainable. Issue 2 - Role of typographical/inadvertent error plea in curing discrepancy Legal framework: Penal statutes are to be construed strictly; conditions in provisos to Section 138 are mandatory and not susceptible to implied compliance. The integrity of the notice requirement is essential to the statutory scheme; thus, errors affecting the demanded amount engage strict technical scrutiny. Precedent treatment: Prior authorities have repeatedly refused to permit typographical mistakes or asserted inadvertence to validate notices where the demanded amount did not correspond to the cheque amount. Courts have distinguished cases where the cheque amount is correctly specified and incidental demands are separately itemised from those where the primary demanded amount is incorrect or ambiguous. Interpretation and reasoning: The strictness of penal construction means courts cannot rewrite the notice or supply missing or corrected figures on the basis of an asserted slip. Even where cheque particulars are otherwise described, an incorrect stated amount creates ambiguity as to the 'said amount' and therefore defeats the statutory requirement. Repetition of the same erroneous amount in multiple notices strengthens the conclusion that the discrepancy is not a one-off slip but a defect in the notice. Ratio vs. Obiter: Ratio - A claim of typographical or inadvertent error cannot validate a notice where the demanded amount differs from the cheque amount; such error is fatal to proviso (b) compliance. Obiter - Emphasis that errors limited to non-material particulars (e.g., peripheral typographical errors not affecting the cheque amount) are distinct but must not be conflated with errors in the demanded sum. Conclusions: A plea of typographical or inadvertent error cannot cure a notice that demands an amount different from the cheque amount; the notice remains invalid and proceedings under Section 138 cannot be sustained on that basis. Ancillary points and applied principles 1. The requirement to make demand for the 'said amount' is an essential ingredient of the offence and not a mere formality; compliance must be literal and precise. 2. The doctrine of reading a notice 'as a whole' does not permit relaxation of the mandatory requirement that the cheque amount be specifically demanded; general references to cheque particulars do not substitute for an explicit demand of the cheque sum. 3. The strict construction canon for penal statutes governs interpretation here: courts must ensure that the offence charged falls within the plain and literal meaning of the statutory language and cannot expand the provision to cover mistakes or omissions inconsistent with the text. Cross-reference: Issues 1 and 2 operate conjunctively - invalidity of a notice for wrong amount (Issue 1) is not remedied by an asserted typographical error (Issue 2); both lead to the inescapable consequence that prosecution under Section 138 must fail when the statutory demand is defective. Final conclusion Given the mandatory and technical nature of proviso (b) to Section 138 and the requirement that the demand be for the exact cheque amount, a notice demanding an amount different from the cheque amount is invalid; a contention that the discrepancy arose from typographical inadvertence does not cure the defect. Consequently, proceedings predicated on such defective notice cannot be maintained.