Introduction

This judgment addresses a recurring and practically significant question under Section 138 of the Negotiable Instruments Act, 1881 (NI Act): when a statutory demand notice (under proviso (b) to Section 138) demands an amount that differs from the amount of the dishonoured cheque, is the notice valid? The Supreme Court emphatically answers in the negative and lays down a bright-line rule: the “said amount of money” demanded in the notice must be the exact cheque amount; any variance—even if claimed to be a typographical or inadvertent error—renders the notice invalid and the prosecution unsustainable.

The litigation arises from a commercial transaction in which the drawer’s cheque for Rs. 1,00,00,000 (one crore) was dishonoured. The complainant’s notices, however, demanded Rs. 2,00,00,000 (two crores). After the Metropolitan Magistrate declined to discharge the accused, the Delhi High Court quashed the complaint for invalid notice. On further appeal, the Supreme Court has affirmed the High Court, crystallizing a strict compliance standard under Section 138’s notice requirement.

The decision consolidates earlier jurisprudence on the meaning of “said amount of money” and advances the law by (i) rejecting the “read the notice as a whole” argument to cure an incorrect demand, and (ii) expressly holding that “typographical error” is not a legally cognizable excuse in a penal provision that demands meticulous compliance.

Case Background and Key Facts

• A Memorandum of Understanding relating to sale/lease of property was executed on 30.04.2012.
• A cheque (No. 876229) drawn on Indian Overseas Bank, R.K. Puram, Delhi, for Rs. 1,00,00,000 was issued and dishonoured for “funds insufficient.”
• Two statutory notices followed:
  • Notice dated 08.06.2012 demanded Rs. 2,00,00,000 (two crores), though the cheque was for one crore.
  • Notice dated 14.09.2012 again demanded Rs. 2,00,00,000.
• The complainant argued the higher figure was a typographical/cut-and-paste mistake; the accused sought discharge for non-compliance with proviso (b) to Section 138.
• The Magistrate rejected discharge; the Delhi High Court quashed the complaint for invalid notice; the Supreme Court has now upheld the High Court.

Note: The judgment text contains minor infelicities in reciting dates/amounts in places, but the operative factual premise is clear and uncontested: the cheque amount was Rs. 1 crore; the statutory notices demanded Rs. 2 crores.

Issues

1. Whether a demand notice under proviso (b) to Section 138 NI Act is valid when it demands an amount different from the dishonoured cheque amount.
2. Whether a plea of “typographical error” in mentioning the amount in such notice can cure the defect.

Summary of the Judgment

The Supreme Court holds:

• “Said amount of money” in proviso (b) to Section 138 unequivocally refers to the cheque amount. The statutory notice must demand that exact figure.
• If the notice mentions any amount other than the cheque amount (higher or lower), the notice is invalid. A defective proviso (b) notice vitiates the prosecution; the complaint is not maintainable.
• “Typographical error” is not a defense. Given the penal nature and technical structure of the offense, strict and meticulous compliance is mandatory.
• The principle of reading a notice “as a whole” does not apply to cure an incorrect demand under proviso (b). The “elastic” or substantial-compliance approach is inapplicable to this condition.
• While the cheque amount must be the precise demand, additional claims (interest, legal charges, bank charges) may be included if and only if the cheque amount is separately and correctly demanded—those extras are severable.

Applying these principles, because both notices demanded Rs. 2 crores against a cheque of Rs. 1 crore, the notices were invalid and the complaint was rightly quashed. The appeals were dismissed.

Detailed Analysis

1) Precedents and Their Influence

The Court’s analysis is anchored in a consistent line of authority interpreting Section 138 and the phrase “said amount of money.”

• Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380: The Court read “said amount of money” as the cheque amount. It upheld notices that correctly demanded the cheque amount and, in addition, claimed severable incidentals (interest, charges). It cautioned that ambiguous or incorrect demands invalidate the notice. The present judgment reiterates this core holding but tightens the doctrine by declaring that the “read as a whole” approach cannot save a notice when the amount demanded differs from the cheque amount.
• Central Bank of India v. Saxons Farms, (1999) 8 SCC 221: Emphasized the object of the proviso (b) notice—to give the drawer an opportunity to rectify and pay within 15 days. The present Court invokes this to underscore why the drawer must be told precisely what to pay: the exact cheque amount.
• K.R. Indira v. Dr. G. Adinarayana, (2003) 8 SCC 300: Enumerated the concatenated ingredients of a Section 138 offense, including a specific demand for the cheque amount. This decision reinforces that an inaccurate or non-specific demand defeats the statutory fabric. The present Court applies that template rigorously.
• Rahul Builders v. Arihant Fertilizers, (2008) 2 SCC 321: Characterized service of a compliant proviso (b) notice as imperative; without it, the complaint is not maintainable. The present judgment leans on this “imperative” nature to reject curative or flexible approaches when the amount is wrong.
• Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 57: Reaffirmed that “said amount” means the cheque amount. The present decision follows this articulation and translates it into an exactitude requirement.
• Strict construction of penal statutes: The Court marshals classic authority—M. Narayanan Nambiar v. State of Kerala (AIR 1963 SC 1116) quoting the Privy Council in Dyke v. Elliott (1872) 4 PC 184, Craies on Statute Law, and K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48—to insist that penal provisions are construed strictly and compliance conditions must be literally satisfied. This doctrinal thread is the lynchpin for rejecting “typographical error” as a defense.
• High Court support: The Court notes consistent High Court views: incorrect amount in notice is fatal (M.P.: Gokuldas), demand must match cheque (A.P.: Yankay Drugs), typographical errors cannot substitute for compliance (P&H: Chhabra Fabrics; Kar.: K. Gopal), and a Delhi case quashing a notice demanding double the cheque amount (Sunglo Engineering).

Together, these precedents contour a tight and uniform rule: the proviso (b) notice must demand the precise cheque amount; only then can additional sums be optionally and severably appended.

2) The Court’s Legal Reasoning

The Court’s reasoning proceeds in three clear steps:

1. Textual linkage within Section 138: The phrase “said amount of money” in proviso (b) is expressly tied to “any amount of money” in the main charging clause—i.e., the amount for which the cheque was drawn. This internal cross-reference yields a precise demand: the cheque amount.
2. Strict construction of penal and technical offenses: Section 138 is a penal provision with technical, concatenated preconditions. Proviso (b)’s notice is a condition precedent. The Court underscores that in penal statutes, courts cannot “strain” words to cure slips or omissions. “Typographical error,” even if genuine, does not negate non-compliance with a mandatory statutory condition.
3. Rejection of curing by context or holistic reading: While Suman Sethi allows a notice to be read as a whole to sever additional claims from the cheque amount when the cheque amount is correctly demanded, the present Court clarifies that the “read as a whole” principle cannot rescue a notice that demands the wrong amount. Any elasticity is “inapplicable and irrelevant” at this compliance threshold.

On the facts, both notices demanded Rs. 2 crores against a Rs. 1-crore cheque. Even the repetition across notices undermined the plea that it was an inadvertent, one-off typographical mistake. Accordingly, the statutory notice requirement failed, and the complaint could not survive.

3) Impact and Forward-Looking Consequences

The decision is likely to have wide procedural and practical implications:

• Bright-line compliance standard: Drafting of Section 138 notices must now adhere to a strict identity rule. Even minor numerical slips in the demanded amount can sink a prosecution.
• Reduction of inflated/aggregated demands: Complainants must avoid stating only an aggregated figure that includes interest/charges. The cheque amount must be separately and accurately demanded; extras should be appended distinctly as severable claims.
• Increase in threshold challenges: Accused persons will likely press Section 482/Article 226 petitions to quash prosecutions where the notice amount mismatches the cheque amount. Courts now have a clear Supreme Court-led template to test such notices.
• Heightened diligence in practice: Legal teams must institute robust verification protocols before dispatching notices—especially in multi-cheque, multi-party transactions where “cut-and-paste” errors are common.
• Remedial strategies and limitations: If an error is discovered within the statutory windows (presentation validity period and 30-day notice window from intimation of dishonour), a corrected notice may be issued; if time has lapsed, re-presentation (within the cheque’s validity) may be explored to reset timelines where permissible. Otherwise, the criminal remedy under Section 138 may be lost, pushing the claimant towards civil recovery.
• Uniformity and certainty: The Court’s insistence on strict identity promises uniform application across jurisdictions and enhances certainty for both drawers and payees.

Normatively, while some may view this as a “hyper-technical” approach in an area intended to facilitate commerce, the Court’s rationale is twofold: (i) the penal character of Section 138 compels strict compliance; and (ii) precise notice protects honest drawers by clearly informing them of the exact liability that, if paid within 15 days, erases criminal exposure.

Complex Concepts Simplified

• Section 138 NI Act (Dishonour of Cheque): Criminalizes dishonour of a cheque for insufficiency of funds or exceeding arrangement. Punishable with imprisonment and/or fine up to twice the cheque amount. It is a “technical” offense: the complainant must strictly satisfy each statutory step.
• Key Preconditions (Proviso (a)–(c)):
  • Presentation of cheque within the statutory period/validity.
  • Notice (proviso (b)) within 30 days of bank intimation, demanding the “said amount of money.”
  • Non-payment within 15 days of receipt of notice (proviso (c)).
• “Said amount of money”: A statutory term in proviso (b) meaning the exact amount for which the cheque was drawn and dishonoured. Not “the entire debt,” not “an aggregated sum,” and not “a rounded/approximate” figure.
• Severability of extras: A notice may also claim interest, bank charges, or legal costs, but only after clearly and separately demanding the cheque amount. If the cheque amount is incorrectly stated, the notice fails even if other details (like cheque number) are correct.
• Strict construction of penal statutes: Courts must apply the statute’s words as written; they cannot cure slips or infer compliance. Because Section 138 is penal, its conditions are not amenable to “substantial compliance.”
• Casus omissus: A doctrine that courts should not fill a gap in legislation that the legislature did not address. Here, the Court refuses to treat “typographical error” as an implied exception to a condition the legislature framed precisely.

Practical Guidance for Drafting Section 138 Notices

• Identify the cheque(s) by number, date, bank, and branch.
• State the exact cheque amount and demand payment of that amount within 15 days.
• If claiming interest/charges, list them separately after the cheque amount, making clear they are additional and severable.
• Ensure numerals and words match (e.g., “Rs. 1,00,00,000 (Rupees One Crore only)”).
• Avoid aggregated or rounded figures that do not match the cheque.
• Double-check for copy-paste errors, especially in multi-notice or multi-cheque contexts.
• Dispatch within 30 days of bank intimation; preserve proof of service.
• If an error is discovered promptly, consider issuing a corrected notice within the statutory window or re-presenting the cheque within validity to reset timelines where permissible.

Key Takeaways and the New Rule

• The “said amount” in proviso (b), Section 138, means the cheque amount—no more, no less.
• Any mismatch between the cheque amount and the amount demanded in the notice invalidates the notice and the prosecution.
• “Typographical error” is not a valid defense; Section 138 demands strict, literal compliance.
• “Read the notice as a whole” cannot rescue an incorrect demand, though it still permits severing additional claims where the cheque amount is correctly demanded.
• Accurate, meticulous drafting is critical; extra claims (interest/charges) must be stated separately from the cheque amount.

Conclusion

In Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, the Supreme Court cements a stringent and unambiguous compliance rule for Section 138 NI Act prosecutions: the statutory demand notice must call upon the drawer to pay the exact cheque amount. Any deviation—even if attributed to typographical inadvertence—renders the notice invalid and the complaint non-maintainable. The Court’s approach is rooted in the penal character of the provision, the statutory text linking “said amount” to the cheque amount, and a long line of authority insisting on specific, accurate demands.

The ruling advances legal certainty, protects honest drawers, and imposes salutary discipline on complainants and counsel. It preserves the Suman Sethi principle that incidentals can be claimed in addition to the cheque amount, provided the cheque amount is clearly demanded. Most importantly, it establishes a clear drafting standard—the Strict Identity Rule—for proviso (b) notices. Going forward, Section 138 complaints will stand or fall on meticulous adherence to this rule, shaping prosecutorial strategy and notice practice across the country.