NI Act: SC says discrepancy in amount mentioned on cheque and demand notice 'fatal'

The Supreme Court on Friday said the mismatch between the amount written on a cheque and the subsequent demand notice on its dishonour was "fatal" for a case under the Negotiable Instruments (NI) Act.

A bench of Chief Justice B R Gavai and Justice N V Anjaria said all proceedings under Section 138 of the Act would "fall flat as bad in law" if there was discrepancy in the amount of cheque and one mentioned in the demand notice.

Section 138 of the Act deals with dishonour of cheque for insufficiency etc. of funds in the account.

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"From the afore-stated reiterative pronouncements and the principles propounded by the courts, the position of law that emerges is that the notice demanding the payment of the amount covered by the dishonoured cheque is one of the main ingredients of the offence under Section 138 of the NI Act," the bench said.

The apex court said it was mandatory that the demand in the statutory notice ought to be the "very amount" of the dishonoured cheque.

"In the event of the main ingredient not being satisfied on account of discrepancy in the amount of cheque and one mentioned in the notice, all proceedings under Section 138 of the NI Act would fall flat as bad in law," it said.

The bench delivered its verdict on the appeals challenging an order of the Delhi High Court which quashed a criminal complaint under the NI Act on the ground that amount mentioned in the notice was not the same as per the cheque.

It noted the complaint pertained to dishonour of a Rs 1 crore cheque.

The bench said subsequently, in two notices, the complainant mentioned the amount as Rs 2 crore.

It was argued before the apex court that there was a clear "typographical error" on the complainant's part in mentioning a different amount in the notice.

The top court said notice to be issued under proviso (b) to Section 138 of the Act must mention the same amount for which the cheque was issued.

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"A failure in above regard, namely when the cheque amount is not mentioned in the Proviso (b) notice or the amount different than the actual cheque amount is mentioned, in the notice, such notice would stand invalid in eye of law," it said.

The bench said the condition of notice under proviso (b) was required to be complied with meticulously and even typographical error can be no defence.

"The error even if typographical, would be fatal to the legality of notice, given the need for strict mandatory compliance," it said and dismissed the appeals.

PTI