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IN THE HIGH COURT OF BOMBAY
Amit Borkar, J.
Arshad Abdul Wahid Qureshi - Appellant
Versus
Asif Abdul Wahid Qureshi & Anr. - Respondents
Writ Petition No. 558 of 2019
Decided On : 20-04-2023
NEGOTIABLE INSTRUMENTS - Dishonour of Cheques - Negotiable Instruments Act, 1881 - Section 138 - The court discussed the necessity of a valid statutory notice under Section 138 of the Negotiable Instruments Act, emphasizing that the demand must not exceed the cheque amount. The court interpreted the phrase 'said amount of money' to refer strictly to the cheque amount, and any demand exceeding this renders the notice invalid, thus affecting the maintainability of the complaint.
Fact of the Case:
The petitioner issued nine cheques, five of which were dishonoured. A statutory notice was sent demanding an amount exceeding the total of the dishonoured cheques, leading to the challenge of the issuance of process against the petitioner.
Finding of the Court:
The court found that the statutory notice was invalid as it demanded an amount greater than the total of the dishonoured cheques, which did not comply with the requirements of Section 138 of the Negotiable Instruments Act.
Issues: Whether a statutory notice under Section 138 of the Negotiable Instruments Act demanding an amount exceeding the cheque amount is valid.
Ratio Decidendi: The court held that the demand notice must strictly adhere to the cheque amount, as any excess demand invalidates the notice and thus the complaint cannot proceed.
Final Decision: The court ruled in favor of the petitioner, setting aside the order of issuance of process due to the invalidity of the statutory notice.
JUDGMENT
1. Rule. Rule made returnable forthwith.
2. Challenge in this petition is to the order dated 24 th July, 2017 issuing process against the petitioner/(accused) in a proceeding under Section 138 of the Negotiable Instruments Act, 1881.
3. The facts giving rise to the petition is as under :-
Out of partnership his dispute between the brothers, Nine cheques were issued by the Petitioner. Out of Nine cheques, Five cheques as specified in paragraph 16 of the complaint were dishonoured. The chart provides details of the cheques dishonoured as under :-
Cheque no.
Drawn on
Amount
Cheque date
Check ret.
447464
Oriental bank of commerce
25,00,000/-
15/07/2016
30/9/2016
447465
Oriental bank of commerce
50,00,000/-
31/7/2016
30/9/2016
447466
Oriental bank of commerce
50,00,000/-
31/07/2016
30/9/2016
447467
Oriental bank of commerce
50,00,000/-
31/07/2016
30/9/2016
447468
Oriental bank of commerce
13,99,000/-
31/07/2016
30/9/2016
4. The total amount of cheque as averred in the complaint is Rs.1,88,99,000/- .
5. The statutory notice issued by the complainant makes demand is as under :-
<WXY>"Under the above circumstances and fact as explained above, We are instructed by our client to demand from you through this Demand Notice that you immediately within the next 15 days from the date of receipt of this Demand Notice discharge your 'Legally Enforceable Liability' by paying to our client Rs.2,58,04,000/- (Rupees Two Crores Fifty Eight Lakhs Four Thousand Only), the amount for which, cheques issued by you will not be honoured by your banker, alongwith the interest accrued on the total amount due @ 21% as agreed between you and out client and you are also liable to pay a sum of Rs.10,000/- towards the charges for the present notice'.</WXY>
6. The petitioner has, therefore, challenged issuance of process interalia on the ground that the statutory demand notice makes demand in excess of the amount of the cheque and, therefore, it is invalid. In support of his submission he relied on the judgment in the case of M/s. Rahul Builders Vs. M/s Arihand Fertilizer & Chemicals and Anr, reported in 2008(1) SCC (Cri) 703 and K.R. Indira Vs. Dr. G Adinarayana, reported in 2003 (4) Mh.LJ 1081, Suman Sethi Vs. Ajay K. Churiwal, reported in 2000 (2) Mh.LJ 301.
7. Per contra, learned advocate for the complainant submitted that the stand of accused is dishonest. He precluded from raising such plea as does not lie in his mouth to raise such plea particularly when there is no dispute about amount of Rs.2,58,04,000/-. According to him, based on fiduciary relationship between the brothers the transaction was made and the accused is now raising technical plea which impermissible. According to him, the statutory notice is valid. The demand was based on Nine cheques which were issued by the accused. However, he presented only Five cheques and, therefore, the complaint was filed in relation to the dishonored cheques. To support his contentions he relied on the judgment in the case of Ramnarayan Vs. Proprietor, Daulat Enterprises and Ors, reported in MANU/MH/0893/2005.
8. I have considered the submissions made on behalf of both the sides. From the averments in the complaint and the material produced along with complaint following undisputed facts emerge.
<WXY>(i) The accused issued Nine cheques. Out of Nine, Five cheques were dishonored.
(ii) Total amount of Five dishonoured cheques is Rs.1,88,99,000/-.
(iii) The statutory notice demands amount of Rs.2,58,04,000/- along with 21% interest and 10,000/-towards charges for notice.</WXY>
9. Based on aforesaid undisputed fact, the question of law which arises for consideration is whether statutory notice under Section 138 of the Negotiable Instruments Act, 1881 demanding excess amount than cheque amount is valid. The said question is no longer res integra in view of Judgment in the case of Suman Sethi (supra) and M/s. Rahul Builders (supra).
10. In the case of Suman Sethi (supra), the Apex Court in paragraph 5, 6 and 7 as held as unde
A statutory notice under Section 138 of the Negotiable Instruments Act must demand only the cheque amount; any excess renders the notice invalid and the complaint non-maintainable.
Dishonour of cheque – When amount mentioned and demanded in notice sent under Proviso (b) to Section 138 of Negotiable Instruments Act, 1881, to payee or holder in due course of cheque, is different ....
Point of law : Negotiable instruments - Though in the notice, the demand for compensation, interest, cost, etc. is also made, the drawer will be absolved from his liability under Section 138 of the N....
Dishonour of cheque – By making a higher demand in a notice sent under Section 138(b) of N.I. Act, would not by itself invalidate notice provided, details of claim towards additional amounts are spec....
The legal notice under section 138 of the N.I. Act serves the purpose of intimating the drawer about the liability to remit the amount, and a literal interpretation of the law should be avoided to pr....
The demand notice under section 138 of NI Act should specifically ask for the payment of the cheque amount within the stipulated period.
A notice under Section 138 must clearly demand the cheque amount; ambiguity can invalidate proceedings, but if the demand is sufficiently clear, the notice is valid.
The legal notice must demand only the cheque amount for the maintainability of a complaint under Section 138 of the NI Act, as per the interpretation of Proviso (b) to Section 138 of the NI Act.
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