Introduction
Cheque bounce cases form a significant portion of litigation in India, and Section 138 of the Negotiable Instruments Act, 1881 (NI Act) ensures the credibility of commercial dealings by penalising dishonour of cheques & requiring a Legal demand Notice. Recently, the Hon’ble Supreme Court of India, in Kaveri Plastics v. Mahdoom Bawa Bahruden Noorul, Citation: 2025 LiveLaw (SC) 927, delivered a landmark judgment clarifying the importance of precision in demand notices under Section 138, particularly highlighting the necessity of a proper Legal Demand Notice.
The Court ruled that a complaint under Section 138 is not maintainable if the statutory demand notice does not specifically mention the exact cheque amount. Importantly, the Court rejected the argument that such a discrepancy could be excused as a typographical or clerical error, holding that strict compliance with the provision is mandatory.
Background of the Case
- In this case, the cheque issued by the accused was for ₹1,00,00,000.
- However, the complainant’s demand notice demanded ₹2,00,00,000.
- When questioned, the complainant contended that the higher figure was due to a typographical or “cut-and-paste” mistake, since all other details (cheque number, date, bank) were correct.
- Both the Trial Court and High Court upheld the complaint, but the matter reached the Supreme Court on the issue of the validity of the demand notice.
Key Issue Before the Court & Legal Demand Notice
The Apex Court had to decide on the Legal demand notice
- Whether a demand notice is valid under Section 138 if it fails to mention the exact cheque amount.
- Whether a typographical or clerical error in the amount stated can be overlooked.
Supreme Court’s Observations-Legal demand notice
- Exact cheque amount is mandatory: The demand notice must reflect the precise cheque amount. This is because Proviso (b) to Section 138 expressly requires the payee to “make a demand for the payment of the said amount”.
- No scope for excuses: The Court clarified that even if the wrong figure is due to inadvertence or typographical error, it cannot be excused.
- Penal nature of provision: Since Section 138 creates criminal liability, strict and precise compliance with statutory requirements is non-negotiable.
Court’s Ruling (Ratio Decidendi)
- A complaint under Section 138 NI Act is not maintainable if the demand notice fails to mention the exact cheque amount.
- The plea of “typographical error” is not a valid defence where there is a mismatch in the cheque amount and the notice amount.
- Thus, in Kaveri Plastics, the notice demanding ₹2 crore against a cheque of ₹1 crore was held invalid, and the complaint could not be sustained.
Significance of the Judgment/Legal Demand Notice
This ruling is a milestone for cheque dishonour cases:
- Reinforces mandatory compliance with Section 138(b).
- Clarifies that even inadvertent mistakes in mentioning the cheque amount render the notice invalid.
- Prevents uncertainty and sets a clear standard for both complainants and courts.
Impact on Future Cases
- For complainants: Legal notices must be drafted with utmost care. The exact cheque amount must be mentioned without error.
- For accused persons: They now have a clear defence if the notice amount mismatches with the cheque.
- For practitioners: This case is a precedent to be cited in any dispute involving defective notices under Section 138.
Comparison with Earlier Rulings
Earlier, courts stressed that notice requirements under Section 138 must be strictly complied with. However, there was some leeway in cases of minor defects. The Supreme Court has now drawn a firm line: when it comes to the cheque amount, there is no room for error.
Practical Takeaways/legal demand notice
- Double-check the cheque amount in the notice before sending.
- Do not assume that typographical mistakes in the amount can be excused.
- For accused persons, this judgment provides a clear defence where the notice amount differs from the cheque amount.
Conclusion
The ruling in Kaveri Plastics v. Mahdoom Bawa Bahruden Noorul (2025 (SC) 927) is a landmark precedent under Section 138 NI Act. The Supreme Court has made it clear that the statutory demand notice must mention the exact cheque amount, and that any mismatch—even explained as a “typographical error”—renders the notice invalid.
This decision strengthens precision in legal practice, avoids ambiguity in criminal proceedings, and ensures that both complainants and accused persons know the exact scope of their rights and obligations.
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FAQs
Q1. What is Section 138 NI Act?
It penalises dishonour of cheques for insufficiency of funds or other reasons.
Q2. Is a demand notice necessary before filing a complaint?
Yes, it is a statutory requirement under Section 138(b).
Q3. What if the demand notice mentions the wrong cheque amount?
As per this ruling, the notice is invalid and the complaint is not maintainable.
Q4. Can a typographical mistake in the cheque amount be excused?
No. The Supreme Court has held that even a typographical or clerical error in the cheque amount is fatal.
Q5. What if other details (like the cheque number or the bank) have errors?
The judgment directly dealt with a mismatch of amounts. Errors in other details would depend on facts, but when it comes to the amount, precision is mandatory.
Adv. Sanjay Sharma is a Practicing Advocate in India, handling matters relating to Civil Law, Criminal Law, Goods and Services Tax (GST), and Insolvency & Bankruptcy laws.
Through Samvidhan Se Samadhaan, he works towards enhancing public legal awareness by presenting legal principles, procedures, and judicial decisions in clear, structured, and easily understandable language, supported by authoritative Supreme Court judgments.
