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2000(1) Supreme 405
SUPREME COURT OF INDIA
(From Calcutta High Court)
G.T. Nanavati & S.N. Phukan, JJ.
Suman Sethi -Appellant
versus
Ajay K. Churiwal & Anr. -Respondents
Criminal Appeal No. 113 of 2000
(Arising out of SlP (Crl.) No. 1074 of 1998
Decided on 2-2-2000
Counsel for the Parties :
For the Appearing Parties : S.S. Ray, Harish N. Salve, R.F. Nariman, and Dr. Rajeev Dhawan, Sr. Advocates, Sushil Kumar Jain, A.P. Dhamija, Ms. Madhurima Tatia, Ms. Anjali Dhoshi, Sanjiv Sen, Rajan Narain, (Dilip Sinha, J.R. Das) Advocates for M/s. Sinha & Das, Advocates, K.K. Mahalik, Ranjan Mukherjee, Pradeep Aggarwal, Kailash Vasdev, Satvik Varma, D. Mahanty, Umesh Kumar Bohre, M. Mishra, Prakash Srivastava, L.P. Singh, N.B. Khatiwada, Advocates.
We have to ascertain the meaning of the words "said amount of money" occurring in clause (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. 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. (Paras 6 & 7)
It is well settled principle of law that the notice has to be 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 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 up 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 be severable and will not invalidate the notice. If, however, in the notice an omnibus demand is made without specifying what was due under the dishonored cheque, notice might well fail to meet the legal requirement and my be regarded as bad. (Para 8)
In Section 138 legislature clearly stated that for the dishonored cheque the drawer shall be liable for conviction if the demand is not made 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. (Para 10)
Where in the demand notice in addition to the cheque amount Rs. 1500 towards incidental charges spent on presentation of cheque and also Rs. 340 towards notice charges were demanded; the Supreme Court held that the demand notice was valid in law.
Certainly. Based on the provided legal document, here are the key points:
A notice of demand issued under Section 138 of the Negotiable Instruments Act is not invalid solely because it requests additional amounts such as damages, costs, or interest alongside the cheque amount, provided these additional claims are severable from the cheque amount (!) (!) .
The words "said amount of money" in the proviso to Section 138(b) and (c) refer specifically to the cheque amount, not to any other amount claimed in the notice (!) (!) .
In a demand notice, the primary requirement is that the cheque amount must be explicitly demanded. If the notice also includes other claims such as damages or interest, these are considered severable if separately specified, and their inclusion does not necessarily invalidate the notice (!) (!) .
An omnibus demand without specifying what is due under the cheque may render the notice invalid, as it fails to meet the legal requirement of clarity and specificity (!) .
The object of the notice is to give the drawer an opportunity to rectify the omission. If the cheque amount is paid within the prescribed period, the liability under Section 138 ceases, and additional claims can be pursued through civil proceedings (!) .
Presumption under Section 139 applies only to the cheque amount, not to any other amounts claimed in the notice. Therefore, additional claims do not automatically invoke the presumption of liability under Section 138 (!) .
When a notice states the cheque amount explicitly and also specifies additional claims such as incidental charges and notice charges, these claims are severable. The validity of the notice depends on whether the primary demand (the cheque amount) is clearly made (!) .
The legal framework emphasizes that the notice should be read as a whole, and demands for amounts other than the cheque amount, if clearly specified and severable, do not invalidate the notice (!) .
If the cheque amount is paid within the statutory period, the legal consequences under Section 138 are avoided, regardless of other claims mentioned in the notice (!) .
The overall scheme of the law supports that claims for additional amounts such as damages, costs, or interest, which are severable from the cheque amount, do not invalidate the demand notice as long as the cheque amount is explicitly demanded (!) (!) .
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JUDGMENT
Phukan, J.-Leave granted.
2. This appeal is directed against the judgment and order dated 3.10.1997 passed by the Calcutta High Court in Criminal Revision No. 1611/97. By the impugned judgment, the High Court set aside the order of the Metropolitan Magistrate-16th, Calcutta passed in case No. C/1661/96.
3. Briefly stated the facts are as follows:
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.
4. We have heard Dr. Rajeev Dhawan, learned senior counsel for the appellant, Mr. Sanjiv Sen, learned counsel for respondent No. 1 and Mr. Dilip Sinha, learned counsel for respondent No. 2 - the State of West Bengal.
5. The only question for consideration by us is whether the notice in question issued under proviso (b) to Section 138 of the Act was valid or not. We extract below Section 138 and 139 of the Act :
"138. Dishonour of cheque for insufficiency, etc., funds in the account-Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punlished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this section shall apply unless-
(b) the payee or the holder in due course of the cheque, as the case, may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice."
(Emphasis supplied)
"139. Presumption in favour of holder.-It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole, or in part, of any debt or other liability."
6. We have to ascertain the meaning of the words "said amount of money" occurring in clause (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 o
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