In a significant ruling under the Negotiable Instruments Act, 1881, the Supreme Court held that a demand notice under Section 138 Proviso (b) must specify the exact cheque amount. Demanding a different sum, even due to a typographical error, renders the notice legally invalid and fatal to the complaint, as the provision mandates strict compliance.
Facts Of The Case:
The appellant, Kaveri Plastics, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, against the respondents. The case originated from a Memorandum of Understanding related to the sale of land. As part of this agreement, the accused company issued a cheque for Rs. 1,00,00,000/- in favour of the appellant. However, upon presentation, the cheque was dishonoured by the bank due to “insufficient funds.” Following the dishonour, the appellant issued statutory demand notices to the drawer of the cheque. Critically, in these legal notices, while the cheque details were correctly described, the amount demanded for payment was erroneously stated as Rs. 2,00,00,000/-—double the actual value of the cheque. The respondent accused sought discharge, arguing the notice was invalid for not demanding the “said amount of money” as required by the statute. The Metropolitan Magistrate dismissed this plea, but the Delhi High Court subsequently quashed the complaint, ruling the defective notice was fatal to the case. The appellant then appealed to the Supreme Court, contending the discrepancy was a mere typographical error and that the notice should be read as a whole.
Procedural History:
The procedural history of this case began with the filing of a criminal complaint by Kaveri Plastics under Sections 138, 141, and 142 of the Negotiable Instruments Act, 1881, before the Metropolitan Magistrate. The respondent accused filed an application for discharge, arguing the statutory demand notice was invalid, which was dismissed by the Magistrate on October 6, 2021. The respondent then successfully challenged this order before the High Court of Delhi, which quashed the complaint in its judgment dated February 26, 2024, holding the notice defective for demanding an incorrect amount. Aggrieved by this quashment, the appellant filed Special Leave Petitions before the Supreme Court, which granted leave and, after hearing the appeals, dismissed them, thereby upholding the High Court’s decision to quash the proceedings.
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Court Observation:
The Supreme Court made crucial observations on the mandatory nature of the statutory notice under Section 138 of the Negotiable Instruments Act. It authoritatively held that the phrase “said amount of money” in Proviso (b) unequivocally refers to the exact amount of the dishonoured cheque. The Court emphasized that this is a penal provision requiring strict construction, leaving no room for inferential or implied compliance. Consequently, a demand notice is legally invalid if it claims an amount different from the cheque, even if the discrepancy results from a typographical or inadvertent error. The principle of reading the notice as a whole is inapplicable in such a scenario, as the defect strikes at the very root of the condition precedent for initiating prosecution.
Final Decision & Judgement:
The Supreme Court dismissed the appeals and upheld the decision of the Delhi High Court. It ruled that the statutory demand notices issued by the appellant were invalid as they demanded an amount of Rs. 2,00,00,000/-, which was double the actual cheque amount of Rs. 1,00,00,000/-. The Court held that such a fundamental discrepancy, even if argued to be a typographical error, is fatal to a complaint under Section 138 of the Negotiable Instruments Act, as it fails to meet the strict, mandatory requirement of demanding the “said amount of money.” Consequently, the criminal complaint filed by the appellant was rightly quashed, and no case for interference was made out.
Case Details:
Case Title: Kaveri Plastics Versus Mahdoom Bawa Bahurdeen Noorul Citation: (@ Special Leave Petition (Crl.) Nos. 11184-11185 of 2024) Date of Judgement: September 19, 2025 Judges/Justice Name: Justice B.R. Gavai & Justice N.V. Anjaria
Download The Judgement Here