TaxTMI 
TaxTMI 
2025 (9) TMI 1264
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....ether a defence that such was a typographical error could be a ground which could be countenanced in law - are the questions falling for consideration in the present appeals. 2.1. The appeals arise out of the judgment and order dated 26.02.2024 in Crl. M.C. No.2164 of 2022 and Crl. M.A. No.9155 of 2022 passed by the High Court of Delhi whereby the High Court quashed the Criminal Complaint No.523804 of 2016 filed by the respondent herein under Sections 138, 141 and 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the NI Act'), on the ground that amount mentioned in the notice was not the same as per the cheque, which rendered the notice invalid. 3. Stated in brief, the facts in the background are inter alia that a complaint came to be filed by the appellant herein against the respondent-arraigned as accuse No.3, alleging that accused No. 1-M/s. Nafto Gaz India Private Limited entered into Memorandum of Understanding with the appellant-complainant on 30.04.2012 relating to sale of land. A cheque bearing number 876229 dated 12.05.2012 drawn on the Indian Overseas Bank, R.K. Puram, Delhi for Rs.1,00,00,000/- was issued by the accused No. 1 in favour of the....
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.... my clients, you the notices issued the following cheque: CHEQUE NO. DATE BANK & BRANCH AMOUNT 876229 30.04.2012 Indian Overseas Bank, B/o R.K. Puram 1 Crore 1,00,00,000/- 5. That you the noticees assured my client that the aforesaid cheque shall be honoured on presentation. 6. That believing you assurance, my client presented the aforesaid cheque to his banker, but was astonished to see the fate of the cheque as the same returned dishonoured vide memos dated 29.08.2012 for reason "FUNDS INSUFFICIENT". 7. That you have defrauded my client by issuing cheque from account maintained by you towards discharge of your legal liability towards my client and then not ensuring that the same is dishonoured thereafter, attracting penal action u/s 138 of the Negotiable Instruments Act, 1881 and also under Section 420 of the Indian Penal Code. I, hereby call upon you to make the payments of the aforesaid cheque of Rs.2,00,00,000/- (Rupees Two Crores) within the stipulated period of 15 days from the date of receipt of this legal notice failing which I have definite instructions from my client to initiate legal proceedings, against you wh....
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..... It was next submitted that other details of cheque were mentioned in the notice and that the court ought to have looked at the substance of the matter rather than becoming technical. 4.1 It was then submitted that the offence under Section 138 of the NI Act is essentially a civil wrong in the attire of criminal offence. In that view, it was submitted, the technicality should not be allowed to prevail. It was further submitted that purpose of Section 138 of the NI Act is to facilitate smooth business transactions. Learned counsel for the appellant submitted that the kind of view taken by the High Court, if allowed to be sustained, it would give a premium to the drawer of the cheque whose cheque is dishonoured and has remained unpaid. 4.2 It was submitted by relying on the decision of this Court in Suman Sethi vs. Ajay K. Churiwal & Anr. (2000) 2 SCC 380 that the notice was required to be read as a whole. By pressing into service another decision also of this Court in Central Bank of India & Anr. vs. Saxons Farms & Ors. (1999) 8 SCC 221 it was highlighted that the object of the notice under the Proviso (b) of Section 138 of the NI Act, was to give a chance to the drawer of th....
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....rding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. Explanation.-For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability." 5.1 The aforesaid provision 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. 5....
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....ning of the words the "said amount of money" occurring in clauses (b) and (c) to the proviso to Section 138. Reading the section as a whole we have no hesitation to hold that the above expression refers to the words "payment of any amount of money" occurring in the main Section 138 i.e. the cheque amount. So in a notice, under clause (b) to the proviso, demand has to be made for the cheque amount." (Para 6) 5.2.2. The Court proceeded to state further, "In the notice, demand has to be made for the "said amount" i.e. the cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement. Where in addition to the "said amount" there is also a claim by way of interest, cost etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving the break-up of the claim the cheque amount, interest, damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable and will not invalidate the notice." (Para 8) 5.2.3 The Court observed that the demand in the notice has to be made for the said amount which would be the 'c....
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....roviso. When the Proviso applies, the main section would not. Unless a notice is served in conformity with proviso (b) appended to Section 138 of the Act, the complaint petition would not be maintainable. Parliament while enacting the said provision consciously imposed certain conditions." (Para 10) 5.4 In more recent decision of this Court in Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel & Anr. (2023) 1 SCC 578 the dictum of law was reiterate in the following words, "The notice demanding the payment of the "said amount of money" has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138." (Para 34.5) 5.5 The different High Courts hold the view in unanimity. The High Court of Madhya Pradesh in Gokuldas vs. Atal Bihari & Anr. MCRC 5458/2013 observed that offence under Section 138 of the NI Act is a technical offence therefore every technical formality as required under the Section must be complied with strictly. In that case, the complaint was filed on the ground that cheque of Rs. 4,30,000/- ....
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....tice has to be treated as defective in law. The Delhi High Court in Sunglo Engineering India Pvt. Ltd. Vs. The State & Ors. MANU/DE/3805/2021 quashed the complaint where the amount demanded in the notice was double the amount of cheque which was issued for Rs.1,00,00,000/-, akin to the facts of the present case. 6. The interpretation of the words 'said amount' in Proviso (b) to Section 138 of the NI Act as above is based on the principle of statutory interpretation that penal statute would always be construed and applied strictly. This Court in M. Narayanan Nambiar vs. State of Kerala AIR 1963 SC 1116, spoke on the rule of construction of a penal provision in its true perspective by quoting from the English decision in Dyke vs. Elliott (1872) 4 PC 184 which was again referred to in a more recent decision of this Court in Balaji Traders vs. State of U.P. & Anr. 2025 SCC OnLine SC 1314. "A decision of the judicial Committee in Dyke v. Elliot, (1) cited by the learned counsel as an aid for construction neatly states the principle and therefore may be extracted:- Lord justice James speaking (1)(1872) L. R. 4 P.C. 184, 191, for the Board observes at P.191: "No doubt....
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....lying common sense, from the words, as stated above, it is clear that the legislature intended that in a notice under clause (b) to the proviso, the demand has to be made for the cheque amount." (Para 7) 6.4 The proposition that the penal provision has to be construed strictly was again asserted by this Court in K.K. Ahuja vs. V.K. Vora & Anr. (2009) 10 SCC 48 In the context of provision of Sections 141 and 138 of the NI Act it was observed in para 17 of the judgment that penal statutes are to be construed strictly and that if conditions are scraped, the courts will insist upon strict literal compliance. It was stated that there is no question of inferential or implied compliance. 7. When the Proviso (b) to Section 138 stipulates the service of notice as one of the conditions for constituting the offence, and when the words 'said amount' is incorporated in the language of the provision, it is the amount which is specifically referable to the amount recoverable under the cheque in question. Reading Section 138 of the Act in a composite manner, the word 'said amount' occurring in the Proviso (b) is connectible with and operates in conjunction with language in the parent part of....