Supreme Court rules that a typographical error is no defence; cheque bounce complaint is invalid if the demand notice shows a wrong cheque amount, clarifying legal procedures and liabilities.
Thank you for reading this post, don't forget to subscribe!
NEW DELHI: The Supreme Court of India has delivered a landmark ruling on the validity of legal notices under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).
The Court held that if the amount mentioned in the statutory notice is different from the cheque amount, even if due to a typographical error, the notice is invalid in law.
This judgment reinforces the principle that criminal statutes must be interpreted strictly, leaving no scope for flexibility or “substantial compliance.”
Background of the case
The dispute arose from a Memorandum of Understanding entered into on 30 April 2012 between Kaveri Plastics and M/s Nafto Gaz India Pvt. Ltd. concerning the sale of land in Delhi. As part of this arrangement, a cheque bearing number 876229, dated 12 May 2012, for the amount of ₹1 crore was issued by Nafto Gaz India in favour of Kaveri Plastics. When the cheque was presented for encashment, it was returned dishonoured with the remark “funds insufficient.”
Following the dishonour, Kaveri Plastics issued statutory demand notices to the company and its directors, as required under Section 138 of the Negotiable Instruments Act, 1881. However, instead of demanding the cheque amount of ₹1 crore, the notices mistakenly demanded ₹2 crores. This discrepancy occurred in two separate notices, dated 8 June 2012 and 14 September 2012, where the complainant’s counsel referred to the dishonoured cheque but inserted a demand for double its value.
When the accused were called upon to face trial, they argued that the notices were defective and not in conformity with Section 138(b) of the NI Act, since the demand did not match the cheque amount. Initially, the trial court dismissed this objection, but the matter was carried to the Delhi High Court, which quashed the complaint on the ground that the statutory notice was invalid.
Kaveri Plastics then approached the Supreme Court of India, contending that the wrong figure was nothing more than a typographical mistake caused by a “cut-paste” error, and that the notices, when read as a whole, clearly indicated the cheque in question. The appeal squarely raised the issue of whether such an error could be overlooked in law, or whether it rendered the entire notice bad.
Issue before the Court
Whether a statutory demand notice issued under Proviso (b) to Section 138 of the Negotiable Instruments Act, 1881, remains valid if the amount mentioned in the notice is different from the amount for which the cheque was issued?
Whether a defence that such was a typographical error could be a ground that could be countenanced in law?
Arguments
Appellant:
On behalf of Kaveri Plastics, the complainant, it was argued that the Delhi High Court had taken an overly technical view in quashing the complaint. Their counsel maintained that the cheque in question was clearly identified in the notice, with its number, date, bank, and amount of ₹1 crore all correctly stated. The only mistake, according to them, was in the line demanding payment, where the amount was inadvertently typed as ₹2 crores.
This, they submitted, was nothing more than a typographical or copy-paste error arising from the fact that multiple notices were being prepared simultaneously for different transactions. They urged the Court to apply the principle of “reading the notice as a whole” rather than disqualifying it for a minor clerical lapse.
To support their case, reliance was placed on earlier Supreme Court rulings such as Suman Sethi v. Ajay Churiwal and Central Bank of India v. Saxons Farms, where the Court had emphasized that the object of the notice under Section 138(b) was to allow the drawer to make payment and avoid prosecution.
According to Kaveri Plastics, treating such an obvious clerical error as fatal would defeat the very purpose of the law and allow defaulting drawers to escape liability on mere technicalities.
ALSO READ: Next 8 Chief Justices Of India Till 2031
Respondent:
On the other hand, the respondent accused took a firm stand that the notices were fatally defective because they did not demand the cheque amount at all. They pointed out that in both notices, dated 8 June 2012 and 14 September 2012, the complainant consistently demanded ₹2 crores, which was double the cheque amount of ₹1 crore.
This, they argued, could not be set aside as a typographical error; rather, it showed a lack of compliance with the mandatory statutory requirement under Section 138(b). The respondent relied on a line of precedents where courts, including the Supreme Court and various High Courts, had categorically held that the demand notice must exactly reflect the cheque amount, neither more nor less.
They stressed that criminal statutes must be strictly construed, and if the statutory conditions are not met, the complaint cannot proceed. According to the accused, allowing such discrepancies under the guise of typographical mistakes would erode the safeguards built into Section 138.
Supreme Court’s Ruling
The Supreme Court sided with the respondent-accused and dismissed the appeal filed by Kaveri Plastics. The Court held that a demand notice under Section 138(b) of the Negotiable Instruments Act must strictly correspond to the amount of the dishonoured cheque. Any deviation, even due to a typographical error, renders the notice invalid in law.
Justice N.V. Anjaria, speaking for the Bench, emphasized that criminal statutes must be interpreted strictly and leave no scope for flexibility. The Court observed:
“It has to be held that in order to make a valid notice under the Proviso (b) to Section 138 of the NI Act, it is mandatory that ‘said amount’ to be mentioned therein is the very amount of cheque, and none other.”
The Court categorically rejected the complainant’s plea that the error was merely clerical. Noting that the inflated amount was repeated in two separate notices, the Court said:
“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.”
The judgment stressed that precision is non-negotiable in cheque dishonour proceedings. Even if the cheque number, date, and bank were correctly mentioned, a mismatch in the amount creates ambiguity and fails to satisfy the statutory requirement. As the Court explained:
“Even if the cheque number was mentioned in the notice, since the amount was different, it created an ambiguity and differentiation about the ‘said amount’. The notice stood invalid and bad in law.”
Finally, the Court underscored the broader principle of statutory interpretation in penal provisions:
“When the provision is penal and the offence is technical, there is no escape from holding that the ‘said amount’ in proviso (b) cannot be the amount other than mentioned in the cheque in question… Any elasticity cannot be adopted in the interpretation. It has to be given technical interpretation.”
Accordingly, the Court upheld the Delhi High Court’s decision to quash the complaint and dismissed the appeal by Kaveri Plastics.
ALSO READ: NEET PG Supreme Court Hearing Postponed: Students Await Next Date
What are Sections 138 and 142 of NI Act?
Section 138: Dishonour of Cheque
- Offence: Dishonour of a cheque due to insufficient funds or exceeding overdraft.
- Essential Elements:
- Cheque drawn for payment of money returned unpaid.
- Cheque presented within 6 months of its validity period.
- Payee issues a written demand notice within 30 days of dishonour.
- Drawer fails to pay within 15 days of notice.
- Penalty: Imprisonment up to 2 years, or fine up to twice the cheque amount, or both.
- Scope: Debt or liability must be legally enforceable.
Section 142: Cognizance & Procedure
- Complaint-Based: The Court acts only on a written complaint by the payee/holder.
- Limitation: File within 1 month of the 15-day notice period expiry.
- Condonation: Delay allowed if sufficient cause is shown.
- Jurisdiction: Only Metropolitan or First-Class Judicial Magistrates.
- Territorial: Court within the jurisdiction of payee’s or drawee’s bank branch.
Appearance:
Petitioner: Ms. Aditi Pancharia, Adv. Mr. Jitendra Pancharia, Adv. Mr. Arvind Rathaur, Adv. Mr. Rohan Rana, Adv. Mr. Sonu Kumar, Adv. Mr. Sanjay Kumar, AOR
Respondent: Mr. Siddharth Khattar, Adv. Mr. Kush Chaturvedi, AOR Mr. D. Andley, Adv. Mr. Sanket Kumar, Adv. Mr. Syed Faraz Alam, Adv. Mr. Atharva Gaur, Adv. Mr. Aayushman Aggarwal, Adv. Ms. Ayesh Choudhary, Adv.
Case Title:
KAVERI PLASTICS VERSUS MAHDOOM BAWA BAHRUDEEN NOORUL
@SPECIAL LEAVE PETITION (CRL.) NOS. 11184-11185/2024
Read Judgment: