Dishonour of Cheque - Legal notice must demand the exact cheque amount, a discrepancy in the amount : Notice invalid.

Supreme Court Upholds High Court's Decision on Invalid Legal Notice in Cheque Bounce Case. Court dismisses appeal due to discrepancy in the cheque amount mentioned in the legal notice, reinforcing strict compliance with Section 138 of the Negotiable Instruments Act.

The Supreme Court of India, in a significant ruling, dismissed the appeal filed by Kaveri Plastics against the judgment of the Delhi High Court, which had quashed the criminal complaint under Sections 138, 141, and 142 of the Negotiable Instruments Act, 1881. The case centered around a dishonoured cheque for Rs.1,00,00,000/- issued by M/s. Nafto Gaz India Private Limited, which had returned due to insufficient funds. However, the legal notice demanding payment inaccurately mentioned Rs.2,00,00,000/-, leading to the High Court's decision to invalidate the proceedings.

The Supreme Court bench, comprising Chief Justice B.R. Gavai and Justice N.V. Anjaria, reiterated the necessity for strict compliance with statutory requirements in penal statutes. The ruling emphasized that a legal notice under Section 138 must demand the exact cheque amount to be valid. Any discrepancy, even if claimed as a typographical error, renders the notice invalid, as penal statutes require precise adherence to legal provisions.

The appellant, Kaveri Plastics, argued that the discrepancy in the amount was a typographical error and urged the court to consider the substance over technicality. However, the Supreme Court maintained that penal provisions must be construed strictly and that the legal notice must specify the same amount as mentioned in the dishonoured cheque, without ambiguity.

This decision reinforces the legal precedent set by previous judgments, including Suman Sethi v. Ajay K. Churiwal and Central Bank of India v. Saxons Farms, where the court held that the demand in the legal notice must conform to the cheque amount. The ruling highlights the importance of meticulous compliance with statutory requirements to uphold the integrity of business transactions and the legal process.

The Supreme Court's dismissal of the appeal underscores the judiciary's commitment to enforcing strict compliance with the Negotiable Instruments Act, ensuring that legal notices are clear and precise in demanding the cheque amount.

Bottom Line: 

Legal notice issued under Proviso (b) to Section 138 must demand the exact cheque amount to be valid; a discrepancy in the amount mentioned renders the notice invalid.

Statutory provision(s): Negotiable Instruments Act, 1881 - Section 138, Section 141, Section 142

Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (SC) : Law Finder Doc Id # 2781369