Cheque Bounce Cases: Supreme Court Says Legal Notice Must Match Cheque Amount Exactly

The Supreme Court, on September 19, 2025, observed that in cheque bounce cases, the demand notice under Proviso (b) to Section 138 of the Negotiable Instruments Act sent to the person who issued the cheque must mention the exact amount written on the cheque. Even a small mistake, like a typo or asking for a different sum, will make the notice invalid and the case collapse.

A bench of Chief Justice of India B. R. Gavai and Justice N. V. Anjaria said it is mandatory that the demand in the statutory notice has to be the very amount of the cheque.

Section 138 is the law that allows criminal action against someone whose cheque bounces due to insufficient funds. For such a case to be valid, the payee (person who didn’t get their money) must send a legal notice to the cheque issuer demanding the amount within 15 days.

"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 for dishonour of which the notice is received, nor the mentioning of omnibus amount in the notice would fulfil the requirement,'' the bench said.

"Even if the cheque details are mentioned in the notice but corresponding amount of cheque is not correctly mentioned, it would not bring in law the validity for such notice. Here the principle of reading of notice as a whole is inapplicable and irrelevant. Any elasticity cannot be adopted in the interpretation. It has to be given technical interpretation,'' the bench added.

Court emphasised the rigours of law on this score being strict, the defence would not hold good that the different amount mentioned in the notice was out of inadvertence.

Dealing with an appeal filed by Kaveri Plastics, court examined the issue, when the amount mentioned and demanded in the notice sent under Proviso (b) to Section 138 of the NI Act, to the payee or the holder in due course of the cheque, is different from the amount for which the cheque was issued, whether the notice would stand valid in eye of law. Court also considered whether a defence that such was a typographical error could be a ground that could be countenanced in law.

The matter pertained to issuance of a cheque to the sum of Rs one crore in 2012, which was dishonoured on the ground ‘funds insufficient’. The appellant issued a demand notice on June 8, 2012, to make the payments of the cheques of Rs 2 crores within the stipulated period of 15 days. Another notice on September 14, 2012, was issued to accused No.1- M/s Nafto Gaz India Private Limited and its Directors, demanding the payments of the cheque of Rs two crores within the stipulated period of 15 days.

The respondent-accused filed an application seeking discharge, contending that the notice of demand was not in terms of Proviso (b) to Section 138 of the NI Act, therefore, the complaint was not maintainable. This was dismissed by the Metropolitan Magistrate on October 06, 2021.

On the respondent's plea, the High Court held that as the demand notice was at variance with the cheque amount, the same was invalid rendering the complaint liable to be quashed.

Before the apex court, the appellant contended that the court ought to have looked at the substance of the matter rather than becoming technical. It also submitted that there was a clear typographical error on the part of the complainant in mentioning in the notice a different amount.

The appellant also submitted that the offence under Section 138 of the NI Act is essentially a civil wrong in the attire of criminal offence, the technicality should not be allowed to prevail. The view taken by the High Court, if allowed to be sustained, would give a premium to the drawer of the cheque whose cheque was dishonoured and had remained unpaid, the appellant contended.

The respondent, on the contrary, argued that the appellant gave incorrect details demanding double the cheque amount. The issue was no longer res integra that the demand in the legal notice cannot be different from the cheque amount. The complainant took a false and a stock plea of typographical error in the notice, he stressed.

Court pointed out that the interpretation of the words ‘said amount’ in Proviso (b) to Section 138 of the NI Act in past cases is based on the principle of statutory interpretation that penal statute would always be construed and applied strictly.

''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. 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,'' the bench said.

Court asserted that the notice to be issued under Proviso (b) to Section 138 of the Act, must mention the same amount for which the cheque was issued.

"It is mandatory that the demand in the statutory notice has to be the very amount of the cheque. After mentioning the exact cheque amount, the sender of the service may claim in the notice amounts such as legal charges, notice charges, interest and such other additional amounts, provided the cheque amount is specified to be demanded for payment,'' the bench said.

Court pointed out that when the cheque amount is not mentioned in the Proviso (b) notice or the amount is different from the actual cheque amount, such notice would stand invalid in eye of law. The notice in terms of Proviso (b) being a provision in penal statute and a condition for the offence, it has to be precise while mentioning of the amount of the cheque which is dishonoured.

In the present case, court held that the explanation that mentioning of wrong amount in the cheque was in the nature of typographical or inadvertent error could hardly be accepted, for, the so called mistake occurred and recurred in both the notices on June 08, 2012, and September 14, 2012.

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. The order of quashment of notice was eminently proper and legal, the court held, dismissing the appeal, court held.

Case Title: Kaveri Plastics Vs Mahdoom Bawa Baharudeen Noorul

Judgment Date: September 19, 2025

Bench: Chief Justice of India B. R. Gavai and Justice N. V. Anjaria