Difference Between Amount in Cheque and Demand Notice Considered Fatal: Supreme Court

The Supreme Court has ruled that if there is a difference between the amount written on a cheque and the amount mentioned in the demand notice issued after the cheque bounces, all legal proceedings under Section 138 of the Negotiable Instruments Act will be rendered invalid.

 

A bench comprising Justice A.S. Oka and Justice Pankaj Mithal stated that for any prosecution under Section 138, the amount mentioned in the demand notice must exactly match the amount stated on the dishonoured cheque. Any discrepancy in the figures would invalidate the notice and, consequently, the entire legal action based on it.

 

The court observed that mentioning a different amount in the demand notice creates confusion and goes against the very spirit of Section 138. This section requires that the demand notice should clearly demand payment of the exact amount for which the cheque was issued. Any deviation from this requirement will make the notice defective and legally untenable.

 

In the case under review, the cheque was issued for a certain amount, but the demand notice cited a different figure. The Supreme Court held that such an inconsistency cannot be overlooked and struck down the legal proceedings initiated under Section 138.

 

The ruling serves as a significant clarification for cheque bounce cases, underscoring that precise compliance with procedural requirements is essential. Even a minor difference in the stated amount can render the notice invalid and nullify the prosecution.