Supreme Court: Demand Notice Must Match Cheque Amount for NI Act Complaint to Be Valid

The Supreme Court has ruled that a complaint under Section 138 of the Negotiable Instruments Act, 1881 is not maintainable if the statutory demand notice mentions an amount different from the cheque amount.

A complaint was filed that Nafto Gaz India Private Limited entered into Memorandum of Understanding with the 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 appellant, which returned dishonoured on the ground ‘funds insufficient’.

The case involved a cheque issued for ₹1 crore, which was dishonoured. However, in the statutory demand notice, the complainant demanded ₹2 crore. Although the cheque details were correctly mentioned, the Delhi High Court quashed the complaint on the ground that the notice did not reflect the exact cheque amount. The complainant approached the Supreme Court, arguing that it was only a typographical error.

Dismissing the appeal, a bench comprising Chief Justice of India BR Gavai and Justice NV Anjaria upheld the High Court’s decision. The Court held that under Proviso (b) to Section 138, the demand in the notice must be exactly the same as the cheque amount. Any discrepancy, even if due to a typographical error, makes the notice invalid in law.

The Court also referred to earlier rulings, including Suman Sethi vs. Ajay K. Churiwal (2000), which clarified that the demand in such notices must be confined strictly to the cheque amount. Additional claims such as interest or costs can be included only if they are clearly separable. The Court further relied on Rahul Builders vs. Arihant Fertilizers (2008) and Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel (2023) to reinforce its view.

The Supreme Court concluded that meticulous compliance with Section 138 requirements is mandatory, and even a typographical error in mentioning the cheque amount is fatal to the validity of the notice.

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