Mismatch Between Cheque and Demand Notice Amount Fatal to NI Act Case: Supreme Court

On Friday, the Supreme Court held that a difference between the amount written on the cheque and the amount written in the demand notice issued after it bounces is fatal for a case under the Negotiable Instruments Act. A bench led by Chief Justice BR Gavai and Justice NV Anjaria ruled that if there is a disparity between what is written on the cheque and what is stated in the demand notice, all the proceedings under Section 138 of the Act would be null and void in law. Section 138 of the Act provides for cheque bouncing because there are not enough funds in the account.

The bench stated that, from previous judgments and principles enunciated by the court, the legal position emerges that a notice demanding payment of the amount covered by a dishonored check is one of the main ingredients of an offense under Section 138 of the NI Act. The Supreme Court stated that it is mandatory that the demand in the statutory notice must be equal to the amount of the dishonored check.

The bench delivered its judgment on appeals challenging a Delhi High Court order dismissing a criminal complaint under the NI Act on the ground that the amount mentioned in the notice did not match the amount shown in the check. Dismissing the appeal, the bench stated that the complaint related to the dishonor of a check for Rs 1 crore. Later, in two notices, the complainant stated the amount as Rs 2 crore.

It was argued before the Supreme Court that the complainant had made a printing error in mentioning different amounts in the notices. The apex court held that a notice issued under proviso (b) of Section 138 of the Act must mention the same amount for which the check was issued. Failure to comply with the above will render such notice invalid in the eyes of the law.