Determining the Legal Validity of Notice in Respect of offence of cheque dishonour under Section 138 of Negotiable Instruments Act, 1881

Determining the Legal Validity of Notice in Respect of offence of cheque dishonour under Section 138 of Negotiable Instruments Act, 1881

More than 2 decades back, 2 Judges' Bench of Supreme Court had dealt with another significant issue affecting the cases related to cheque dishonour under Section 138 of N.I. Act, 1881. The appeal filed by accused was dismissed and the Judgment of Calcutta High Court was found valid. 

In the case of Suman Sethi v. Ajay K. Churiwal [2000] GCtR 6485 (SC),  accused had issued a cheque for Rs. 20,00.000 (Rupees Twenty Lacs) in favour of Complainant.  The cheque was presented to the banker which was returned on 2nd August, 1996 with the remarks "Insufficient Fund". Thereafter within 15 days of return of the cheque, Complainant gave a notice of demand as required under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881, as amended. 

As the accused failed to meet the demand, a complaint was filed before the Metropolitan Magistrate. On perusal of the notice, the Magistrate was of the view that the (demand made in the notice being higher than the amount of the cheque), notice was bad in view of an earlier decision of the High Court. Complainant approached the High Court by filing the revision petition which was allowed by the High Court and the order of the Metropolitan Magistrate was set aside. The High Court was of the view that the decision of the High Court on which reliance was placed by Magistrate was distinguishable. The High Court held that as in notice, Complainant clearly demanded the cheque amount, the notice was a valid one and accordingly set aside the order of the Metropolitan Magistrate. 

Apex Court has held that in Section 138 legislature clearly stated that for the dishonored cheque the drawer shall be liable for conviction if the demand is not met within 15 days of the receipt of notice but this is without prejudice to any other provision of the Act. If the cheque amount is paid within the above period or before the complaint is filed the legal liability under Section 138 will cease and for recovery of other demands as compensation, costs, interest etc., a civil proceeding will lie. Therefore, if in a notice any other sum is indicated in addition to the "said amount" the notice cannot be faulted, as stated above. 

It was argued that if in the notice in addition to ’’said amount" other demands are made the presumption as contemplated under Section 138 would operate. It was held that Section 139 has to be read with Section 138 and reading both the Sections together it would appear that presumption would arise only in respect of the "said amount". 

The case of Suman Sethi (supra) is an authority on the issue whether the notice in question issued under proviso (b) to Section 138 of the Act was valid or not. 

We have to ascertain the meaning of the words "said amount of money" occurring in clauses (b) and (c) to the proviso to Section 138. Reading the Section as a whole there is no hesitation in holding that the above expression refers to the words "payment of any amount of money" occurring in main Section 138 i.e. the cheque amount. So in notice, under clause (b) to the proviso, demand has to be made for the cheque amount. 

Court considered the rule of construction of a penal provision and quoted with approval the following passage of the decision of the Judicial Committee in Dyke v, Elliot, (1872) LR 4 AC 184 which was as follows : ’"No doubt all penal Statutes are to be construed strictly, that is to say, the Court must see that the thing charged as an offence is within the plain meaning of the words used, and must not strain the words on any notion that there has been a slip, that there has been a casus omissus, that the thing is so clearly within the mischief that it must have been intended to be included if thought of. On the other hand, the person charged has a right to say that he thing charged although within the words, is not within the spirit of the enactment. But where the thing is brought within the words and within the spirit, there a penal enactment is to be construed, like any other instrument, according to the fair commonsense meaning of the language used, and the Court is not to find or make any doubt or ambiguity in the language of a penal statute, where such doubt or ambiguity would clearly not be found or made in the same language in any other instrument." 

There is no ambiguity or doubt in the language of Section 138 of N.I. Act, 1881. Reading the entire Section 138 as a whole and applying commonsense, from the words, it is clear that the legislature intended that in notice under clause (b) to the proviso, the demand has to be made for the cheque amount. 

It is well settled principle of law that the notice has to he read as a whole. In the notice, demand has to be made for the "said amount" i.e. cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement Where in addition to "said amount" there is also a claim by way of interest, cost etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving the break up of the claim the cheque amount, interest, damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable  and will not invalidate the notice. If, however, in the notice an omnibus demand is made without specifying what was due under the dishonored cheque, notice might well fail to meet the legal requirement and may be regarded as bad.