TaxTMI 
TaxTMI 
2026 (7) TMI 756
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....payable within 60 days, with interest of 24% chargeable on default. 3. Towards the said invoice value, the respondent issued three cheques drawn upon Yes Bank amounting to Rs. 10,02,410/-, all of which were dishonoured with the remark 'payment stopped by drawer'. It is the case of the petitioner that upon the threat of legal action, the respondent made part payments of Rs. 2,00,000/- through NEFT. 4. Towards the balance invoice value of Rs. 8,02,410/-, the respondent issued 8 fresh cheques drawn upon HDFC Bank, Chandigarh. In the interregnum, the respondent made further part payments of Rs. 1,50,000/- through NEFT, leaving an outstanding balance of Rs. 6,52,410/-. 5. The said 8 cheques, upon presentation, were dishonoured with the remark 'funds insufficient'. A legal demand notice dated 21.03.2020 was issued by the petitioner, specifying the invoice value, the cheques issued, the part payments received, and demanding the outstanding amount of Rs. 6,52,410/-. 6. Upon failure of the respondent to make payment despite service of the legal demand notice, the petitioner filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as th....
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.... less than the total amount of the impugned cheques and prima facie, legal liability is not proved. It is settled law that for a claim to be made u/s 138 NI Act, the legal demand notice must reflect the exact amount of legal liability due. The Hon'ble Supreme Court has recently held that a notice of demand made under NI Act shall not be omnibus and there must be a clear demand for the cheque amount else the notice would be invalid1. It was further held that if in a notice while giving break-up of the claim, the cheque amount, interest, damages, etc. which are separately specified and are severable, such demand would not invalidate the notice. To quote, it was held that 6. .....In other words, as held therein, in the demand notice, demand has to be made for the "cheque amount" and therefore, notice sans such demand would fall short of legal requirement. 10. Thus in view of the above-mentioned Judgment, in the opinion of the Court, the legal demand notice in the present matter is invalid. There has been a specific demand of Rs. 6,52,410/- in the last para of the legal notice, which demand is not reflected from the impugned cheques. Further in the complaint in Para 1....
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....ttal, 2010 SCC OnLine Del 182, to submit that a notice is invalid only where the principal amount demanded exceeds the principal amount actually payable, without indicating the basis for the excess; whereas in the present case, the demand was less than, and not more than, the cheque amount, and hence the notice was legal and valid. 14. It was further submitted that the judgment relied upon by the affirmed before the Sessions Court, namely Mahdoom Bawa Bahrudeen Noorul v. Kaveri Plastics (2024) 02 Del Chandhok 0095, was factually distinguishable, as it concerned a notice demanding double the cheque amount on account of a typographical error, whereas no such typographical error or excess demand existed in the present case. 15. The learned counsel also submitted that it is not the cheque amount but the legally recoverable debt which is required to be demanded in a notice under Section 138(b) NI Act, and since the petitioner had correctly demanded only the legally recoverable debt, the notice did not suffer from any infirmity. 16. The learned counsel places reliance on Union of India v. Major Bahadur Singh, (2005) 8 SCC 368, to submit that each case turns on its own facts, and....
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....pondent submitted that the complaint is not maintainable as it seeks prosecution in respect of eight dishonoured cheques pertaining to different dates of presentation and dishonour, each constituting a separate and distinct transaction. It was contended that in view of Sections 218 and 219 of the Code of Criminal Procedure, 1973, each distinct offence is required to be tried separately, and the joinder of all eight cheque dishonour allegations in a single complaint is impermissible. 22. Learned counsel for the respondent, in support of the aforesaid submissions, also placed reliance upon the following decisions: • Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (2025) 259 Comp Cas 658 • Yankay Drugs and Pharmaceuticals Ltd. v. Citi Bank, (2001) 106 Comp Cas 662 • Sunglo Engineering India Pvt. Ltd. v. State Criminal MC No. 3 of 2021, order dated 21-12-2021 (Del). • Gaurav Mittal v. State (NCT of Delhi), 2023 SCC OnLine Del 1528 • Jay Hanuman Enterprises v. State of Gujarat (CRA. 1625/2023) decided on 9.10.2024. ANALYSIS AND FINDINGS 23. I have considered the submissions made by the learned counsels for the p....
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....the controversy centres around clause (b) of the proviso, namely, the requirement that the payee must make a demand for payment of the 'said amount of money' by issuing a statutory notice within the prescribed period. 27. Before adverting to the facts of the present case, this Court considers it apposite to examine the legal position governing the controversy in issue, as emerging from the judgments relied upon by the learned counsel appearing for the parties. 28. It is a pertinent to refer to the judgment of the Supreme Court in Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380, wherein the Court examined the scope of the expression 'the said amount of money' occurring in clauses (b) and (c) of the proviso to Section 138 of the NI Act. The Supreme Court held that the expression refers to the cheque amount and that a statutory notice must contain a demand for the cheque amount. At the same time, it was clarified that the notice has to be read as a whole. The relevant extract is reproduced hereinbelow: "6. We have to ascertain the meaning 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 wh....
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....egal 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. If, however, in the notice an omnibus demand is made without specifying what was due under the dishonoured cheque, the notice might well fail tomeet the legal requirement andmay be regarded as bad. 13. In the notice in question the "said amount" i.e. the cheque amount has been clearly stated. Respondent 1 had claimed in addition to the cheque amount, incidental charges and notice charge. These two amounts are severable. In the notice it was clearly stated that on failure to comply with the demand necessary legal steps will be taken up. If Respondent 1 had paid the cheque amount he would have been absolved from the criminal liability under Section 138. Regarding other claims, a civil suit would be necessary." (emphasis supplie....
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....tice of demand as aforementioned was not in terms of proviso (b) to section 138 of the Negotiable Instruments Act, therefore, the complaint was not maintainable. The plea for discharge was dismissed by the Metropolitan Magistrate on October 6, 2021. The respondent herein then filed a petition before the High Court, culminating into the impugned judgment and order whereby the High Court held that as the demand notice under proviso (b) of section 138 of the Negotiable Instruments Act, was at variance with the cheque amount, the same was invalid rendering the complaint liable to be quashed. xxx 10. Reverting to recollect the facts of this case, the cheque which was drawn by the respondent was for Rs. 1,00,000,00 whereas in the notice issued under proviso (b) to section 138 of the Negotiable Instruments Act against the respondent, the appellant mentions the amount of Rs. 2,00,000,00. 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 abou....
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....72,409. The noticee was to respond to the said demand. Pursuant thereto, it was to offer the entire sum of Rs 8,72,409. No demand was made upon it to pay the said sum of Rs 1,00,000 which was tendered to the complainant by cheque dated 30-4-2000. What was, therefore, demanded was the entire sum and not a part of it." 32. The aforesaid decisions, relied upon by both the parties, lay down the general principles governing the validity of a statutory notice under Section 138 of the NI Act. They hold that the demand contemplated under clause (b) of the proviso to Section 138 must ordinarily relate to the amount covered by the dishonoured cheque and that the statutory notice must be read as a whole. They further hold that where, in addition to the cheque amount, the notice separately specifies claims towards interest, costs or other incidental charges, such claims are severable and do not invalidate the notice. Conversely, where the notice contains only an omnibus demand without specifying the amount due under the dishonoured cheque, it may fail to satisfy the statutory requirement. 33. However, the factual matrix of the present case is materially different, since the demand in the....
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....ed our client that the said cheques would be honoured upon presentation. 16. That our above-named client presented the above-mentioned three cheques, namely Cheque Nos. 000132, 000133 and 000134, for encashment through its banker, Syndicate Bank, Mohan Garden, New Delhi. However, the said cheques were returned unpaid with the endorsement "Funds Insufficient", vide the Banker's Return Memos dated 27.02.2020. 17. That Cheque No. 000130 was also presented by our client for encashment through its banker, Syndicate Bank, Mohan Garden, New Delhi. However, the said cheque was returned unpaid with the endorsement "Funds Insufficient", vide the Banker's Return Memo dated 28.02.2020. 18. That thereafter, our above-named client presented the remaining four cheques, namely Cheque Nos. 000127, 000128, 000129 and 000131, for encashment through its banker, Syndicate Bank, Mohan Garden, New Delhi. However, the said cheques were returned unpaid with the endorsement "Funds Insufficient", vide the Banker's Return Memos dated 02.03.2020. 19. That you, Addressee Nos. 2 and 3, on behalf of Addressee No. 1, deposited the following amounts through IMPS/ECS/N....
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....re. It specifically records the invoice value, the dishonoured cheques, the part payments received through NEFT on different dates and the manner in which the outstanding amount of Rs. 6,52,410/- was arrived at before calling upon the respondent to make payment thereof. Whether, in view of the admitted part payments, the statutory requirement under Section 138 read with Section 56 of the NI Act stood satisfied, and whether the dishonoured cheques continued to represent a legally enforceable debt, are issues which depend upon the evidence led by the parties and the factual foundation established during trial. Such disputed questions could not have been conclusively determined while exercising revisional jurisdiction against a summoning order. 36. The learned Session Court, while setting aside the summoning order, has primarily relied upon the decision in Mahdoom Bawa Bahrudeen Noorul v. Kaveri Plastics, 2024 SCC OnLine Del 1302 which was affirmed by the Supreme Court in Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (2025) 259 Comp Cas 658. The learned counsel for the respondent has also placed substantial reliance on the said decision. However, this Court is of the considered....
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....honoured cheques, whether Section 56 was attracted in the facts of the case, whether the cheques continued to represent a legally enforceable debt on the date of presentation, or what legal effect, if any, the alleged absence of endorsement would have. These are disputed questions which require appreciation of evidence and, therefore, could not have been conclusively determined while examining the legality and correctness of the summoning order in exercise of revisional jurisdiction. 40. The learned Session Court proceeded on the premise that since the amount demanded in the statutory notice was lower than the aggregate amount covered by the dishonoured cheques, the notice was necessarily invalid. In doing so, it did not examine that the statutory notice itself disclosed the invoice value, the dishonoured cheques, the admitted part payments received from the respondent and the manner in which the outstanding amount of Rs. 6,52,410/- had been computed. Whether such reduced demand correctly represented the legally enforceable debt in view of the admitted part payments, and the legal consequences flowing therefrom, are matters requiring appreciation of evidence and could not have b....