Notice Under S.138 NI Act Invalid If Omnibus Demand Is Made Without Specifying Cheque Amount : Supreme Court

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Finding the demand raised in a notice issued under Section 138 of the Negotiable Instruments Act, 1881, to be omnibus in nature, the Supreme Court quashed a criminal case for the dishonour of a cheque. The appellant-notice holder filed a petition before the Delhi High Court for quashing of summoning order passed by the Magistrate taking a plea that the notice had made out an omnibus demand without specifying what was due under the dishonoured cheque. Hence, it was argued, that the notice has failed to meet the legal requirement as per the dictum of the Supreme Court passed in Suman Sethi vs. Ajay K.Churiwal and Anr.

The Delhi High Court, which found no merit in the petition, in para 4 of the order observed that: “The respondent in his notice did not ask for the total amount due but simply asked for the amount of cheque and compensation of same amount plus Rs.50,000/- for mental harassment. The amount of compensation and harassment are severable and to my mind would not invalidate the legal notice dated 02.12.2013.”

The Supreme Court bench comprising Justices CT Ravikumar and PV Sanjay Kumar while referring to the case Suman Sethi, in para 6 noted that: “A bare perusal of the decision referred (supra) would reveal that a demand in addition to the cheque amount in a demand notice by itself would not make it invalid. In other words, as held therein, in the demand notice, demand has to be made for the 'cheque amount' and therefore, notice sans such demand would fall short of legal requirement. At the same time, we will reiterate the position that if in a notice while giving the break up of the claim the cheque amount interest, damages, etc. are separately specified and these additional claims would be severable, such demand would not invalidate the notice. In short, in a notice of demand made under the N.I. Act demand shall not be omnibus, there must be a clear demand for the cheque amount lest notice will be invalid. This law laid down as above has to be applied to decide the validity or otherwise of Annexure P-2-demand notice.”