Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul 2025 INSC 1133- S.138 NI Act - Demand Notice - Cheque Amount

Case Name and Neutral Citation

• Case Name: Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul
• Neutral Citation: 2025 INSC 1133

Coram

• Coram: N.V. Anjaria, J. and B.R. Gavai, CJI.

Judgment Date

• Date of Judgment: 19 September 2025

Caselaws and Citations Referred

1. Suman Sethi v. Ajay K. Churiwal & Anr.Citation: (2000) 2 SCC 380
2. Central Bank of India & Anr. v. Saxons Farms & Ors.Citation: (1999) 8 SCC 221
3. K.R. Indira v. Dr. G. AdinarayanaCitation: (2003) 8 SCC 300
4. Rahul Builders v. Arihant Fertilizers & Chemicals & Anr.Citation: (2008) 2 SCC 321
5. Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel & Anr.Citation: (2023) 1 SCC 578
6. Gokuldas v. Atal Bihari & Anr.Citation: MCRC 5458/2013 (Madhya Pradesh High Court)
7. M/s. Yankay Drugs and Pharmaceuticals Ltd. v. CITI bankCitation: 2001 DCR 609 (Andhra Pradesh High Court)
8. Chhabra Fabrics Private Limited v. Bhagwan DassCitation: Crl. Appeal No.1772-SB of 2002 (Punjab and Haryana High Court)
9. K. Gopal v. Mr. T. MukundaCitation: Criminal Appeal No.1011 of 2010 (Karnataka High Court)
10. Sunglo Engineering India Pvt. Ltd. v. The State & Ors.Citation: MANU/DE/3805/2021 (Delhi High Court)
11. M. Narayanan Nambiar v. State of KeralaCitation: AIR 1963 SC 1116
12. Balaji Traders v. State of U.P. & Anr.Citation: 2025 SCC OnLine SC 1314
13. Dyke v. ElliottCitation: (1872) 4 PC 184 (Privy Council)
14. U.S. v. WiltbergerCitation: 18 US 76 (1820)
15. K.K. Ahuja v. V.K. Vora & Anr.Citation: (2009) 10 SCC 48

Statutes/Laws Referred

• Negotiable Instruments Act, 1881
• • Section 138 (Dishonour of cheque for insufficiency, etc., of funds in the account)
  • Section 141
  • Section 142
• Indian Penal Code
• • Section 420 (Cheating and dishonestly inducing delivery of property)
• Indian Companies Act, 1956 (for company registration context)

What was the central legal question before the Supreme Court?

• Whether a demand notice under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881 (NI Act) is valid when the amount demanded in the notice differs from the cheque amount; and whether a plea of “typographical error” can save such a notice. (Paras 2, 8.2–9)

What were the material facts leading to the controversy?

• A cheque for Rs. 1,00,00,000 (No. 876229) was issued and dishonoured for “funds insufficient.” Two statutory demand notices (08.06.2012 and 14.09.2012) demanded Rs. 2,00,00,000 instead of Rs. 1,00,00,000. The accused sought discharge; the Magistrate rejected it; the High Court quashed the complaint because the notice amount varied from the cheque amount. (Paras 3–3.3, 10–11)

Which statutory provision governed the dispute?

• Section 138 NI Act, particularly proviso (b), which requires the payee/holder in due course to “make a demand for the payment of the said amount of money” by notice after dishonour. The Court focused on the phrase “said amount of money.” (Paras 5–5.2)

How did the Court interpret “the said amount of money” in proviso (b) to Section 138?

• “Said amount of money” strictly means the cheque amount. Therefore, the statutory notice must demand the exact cheque amount—no more and no less. (Paras 5.2, 5.2.1–5.2.4, 7–7.1, 8)

Why is strict compliance required for the notice under proviso (b)?

• Section 138 creates penal consequences with technical ingredients; penal statutes are construed strictly. The notice requirement is a condition precedent that must be “meticulously” complied with. The Court cited principles from Dyke v. Elliott and U.S. v. Wiltberger and reiterated Indian precedents emphasizing strict construction. (Paras 5.3.1, 6–6.4, 8.2)

What was the appellant’s main defense and how was it treated?

• The appellant argued the wrong amount in the notice was a “typographical/inadvertent” error (including due to copy-paste). The Court rejected this, holding that even typographical error is fatal because strict compliance is mandatory; the error appearing in two notices further undermined the plea. (Paras 3.4, 8.2)

Does correctly stating other cheque particulars cure a wrong amount in the notice?

• No. Even if cheque number/date/bank and other details are correctly stated, a mismatched amount creates ambiguity as to the “said amount” and invalidates the notice. (Para 11)

Can a notice demand amounts other than the cheque amount (e.g., interest, legal charges)?

• Yes, but only if the notice clearly and separately specifies the cheque amount as the demanded “said amount,” and lists other sums like interest or legal/notice charges as additional, severable claims. Otherwise, the notice fails. The Court reaffirmed Suman Sethi v. Ajay K. Churiwal. (Paras 5.2.1–5.2.3, 8, 8.1)

What happens if the notice demands a total different from the cheque amount (higher or lower)?

• The notice is invalid. Whether greater or lesser than the cheque amount, any variance violates proviso (b) because the “said amount” must be exactly the cheque amount. High Court decisions cited by the Supreme Court confirm invalidity for both over- and under-demands. (Paras 5.5–5.5.2, 9)

Is the “read the notice as a whole” approach applicable to save a wrong-amount notice?

• No. While severability applies to additional claims (interest/costs), the “read as a whole” approach cannot relax the mandatory requirement to demand the exact cheque amount. “Any elasticity cannot be adopted.” (Paras 5.2.2–5.2.4, 8.1)

What did the Court say about the nature of Section 138 offences and notice compliance?

• The offence is “technical,” and the proviso (b) notice is a condition in a penal statute. It must be “precise” in mentioning the cheque amount; technical interpretation applies; typographical errors are no defense. (Paras 5.5, 8–8.2, 9)

What is the legal consequence of an invalid proviso (b) notice?

• The complaint under Section 138 is not maintainable; proceedings fail because a core ingredient—demand for the “said amount”—is not satisfied. The High Court’s quashing of the complaint was affirmed. (Paras 3.3, 8, 8.1, 11)

Which Supreme Court precedents did the Court rely upon for interpretation?

• Suman Sethi v. Ajay K. Churiwal (2000) 2 SCC 380 (meaning of “said amount,” severability of additional claims); Central Bank of India v. Saxons Farms (1999) 8 SCC 221 (purpose of notice); K.R. Indira v. Dr. G. Adinarayana (2003) 8 SCC 300 (specific demand required); Rahul Builders v. Arihant Fertilizers (2008) 2 SCC 321 (notice as condition precedent); Dashrathbhai Trikambhai Patel (2023) 1 SCC 578 (cheque amount interpretation); K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48 (strict construction of penal statutes). (Paras 4.2, 5.1.1, 5.2–5.4, 6.4)

What persuasive High Court authorities did the Court reference?

• MP HC (Gokuldas v. Atal Bihari) – mismatch in amounts invalid; AP HC (Yankay Drugs) – higher/lower demand invalid; P&H HC (Chhabra Fabrics) – typographical error in cheque particulars does not meet mandatory compliance; Karnataka HC (K. Gopal v. T. Mukunda) – wrong amount (even much lower) invalid; Delhi HC (Sunglo Engineering) – double amount in notice invalid. (Paras 5.5–5.5.3)

What interpretive canons did the Court emphasize?

• Penal statutes must be strictly construed; courts must ensure the offence falls within the “plain meaning” and not fill gaps on notions of slips or casus omissus. Where within both words and spirit, apply the fair, commonsense meaning. (Dyke v. Elliott; U.S. v. Wiltberger; Craies) (Paras 6–6.3)

How did the Court link the main body of Section 138 with proviso (b)?

• The phrase “any amount of money” in the main section and “said amount” in proviso (b) are “connectible,” operating “hand-in-hand,” signifying the same cheque amount and forming inseparable components of the offence and its condition. (Paras 7–7.1)

What precise drafting rule did the Court lay down for statutory notices?

• “It is mandatory that the demand in the statutory notice has to be the very amount of the cheque.” After correctly specifying the cheque amount, additional claims (legal charges, interest, etc.) may be added as separate, severable items. (Paras 8–8.1)

What factual features undermined the typographical error claim here?

• The wrong (double) amount appeared in both notices dated 08.06.2012 and 14.09.2012, indicating recurrence and making the typographical/inadvertent explanation unacceptable. (Para 8.2)

What was the final outcome of the appeals?

• Appeals dismissed. The Supreme Court upheld the High Court’s quashing of the complaint due to invalid notices that demanded Rs. 2,00,00,000 against a cheque of Rs. 1,00,00,000. (Paras 10–11)

What is the single controlling legal takeaway from this judgment?

• Under proviso (b) to Section 138 NI Act, the statutory notice must demand the exact cheque amount—any variance (even a typographical error) renders the notice invalid and the prosecution unsustainable. (Paras 8–9, 11)