DECIDING AUTHORITY : Supreme Court
DATE OF JUDGMENT: 02/02/2000
BENCH: G.T. NANAVATI & S.N. PHUKAN
Facts : The appellant issued a cheque for Rs. 20,00.000 (Rupees Twenty Lacs) in favour of respondent No, 1 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, respondent No. 1 gave a notice of demand as required under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881, as amended, (for short the Act). As the appellant failed to meet the demand, a complaint was filed before the Metropolitan Magistrate. On perusal of the above 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. Respondent No. 1 approached the High Court by filing the revision petition which was allowed by the impugned order 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, respondent No. 1 clearly demanded the cheque amount, the notice was a valid one and accordingly set aside the order of the Metropolitan Magistrate.
Judgement : The only question for consideration is 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 we have no hesitation to hold 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. Dr. Dhawan, learned senior counsel has urged that Section 138 being a penal provision has to be construed strictly. We may refer the decision of this Court in M. Narayanan Nambiar v. State of Kerala, AIR (1963) SC 1116 = [1963] 2 Supp. SCR 724. There is no ambiguity or doubt in the language of Section 138. Reading the entire Section as a whole and applying commonsense, from the words, as stated above, 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 he severable- and will not invalidate the notice. If, however, in the notice the demand is made without specifying what was due under the dishonoured cheque, notice might well fail to meet the legal requirement and may be regarded as bad.
In Section 138 legislature clearly stated that for the dishonoured 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.
Drawing our attention to Section 139 of the Act, Mr. Dhawan has urged that if in the notice in addition to ’’said amount” other demands are made the presumption as contemplated under Section 138 would operate. We are unable to accept the submission of the learned senior counsel as 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”. In the notice in question the “said amount” i.e. the cheque amount has been clearly stated. Respondent No. 1 had claimed in additional to the cheque amount, incidental charges and notice charge. These two amounts are severable. In the notice it was clearly stated that on failure to comply with the demand necessary legal steps will be taken up. If respondent No. 1 had paid the cheque amount he would have been absolved from the criminal liability under Section 138. Regarding other claims, a civil suit would be necessary
Held : Appeal Dismissed .
By Tejasv Anand , IVth Year , AMITY LAW SCHOOL,DELHI.
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