'Advice' To Pay Cheque Amount Is Legally A Demand If Notice Clearly Seeks Payment: Gauhati High Court
The Gauhati High Court has held that a statutory notice issued under Section 138 of the Negotiable Instruments Act, 1881 need not expressly use the word "demand" to satisfy the legal requirement. A notice advising or requesting the drawer to pay the cheque amount would be sufficient if, read as a whole, it clearly conveys the requirement to make payment.Justice Sanjeev Kumar Sharma made...
The Gauhati High Court has held that a statutory notice issued under Section 138 of the Negotiable Instruments Act, 1881 need not expressly use the word "demand" to satisfy the legal requirement. A notice advising or requesting the drawer to pay the cheque amount would be sufficient if, read as a whole, it clearly conveys the requirement to make payment.
Justice Sanjeev Kumar Sharma made the observation while dismissing a criminal revision petition challenging the petitioner's conviction under Section 138 of the NI Act.
The Court observed,
"The requirement imposed by Proviso (b) to Section 138 of the N.I. Act is that, upon dishonor of a cheque, the payee or holder in due course is required to clearly communicate the necessity to make good the cheque amount to the drawer, and the said requirement to pay must be discernible after considering the notice as a whole. The word 'advice' is merely a polite use of language, just like 'request', but the same must legally be treated as a demand for the purpose of Section 138 of the N.I. Act if the notice as a whole conveys the requirement on the part of the drawer to make good the cheque amount."
The case arose from a cheque bounce prosecution in which the complainant had advanced ₹1.30 lakh to the accused for her son's marriage. Towards repayment of the debt, the accused issued a cheque, which was dishonoured for insufficiency of funds. The trial court convicted the accused under Section 138 of the NI Act, and the Sessions Court partly modified the sentence by reducing the term of imprisonment to six months and directing payment of compensation of ₹2.60 lakh.
Before the High Court, the revisionist first argued that the complainant had failed to mention the exact date on which the loan was advanced.
Rejecting the contention, the Court noted that the accused had never disputed her signature on the cheque. It held that once the execution of the cheque is admitted, the statutory presumption under Section 139 of the NI Act comes into operation and cannot be rebutted merely because the complaint does not specify the exact date on which the money changed hands. The Court further observed that the accused had failed to rebut the presumption either through cross-examination or by leading evidence.
The principal contention of the revisionist was that the statutory notice dated January 9, 2017 merely "advised" her to pay the cheque amount and did not contain a formal demand as required under Proviso (b) to Section 138 of the NI Act.
Rejecting the argument, the Court held that the statutory requirement is not the use of any particular word but that the notice, read as a whole, must clearly communicate the necessity of paying the cheque amount. A polite expression such as "advice" or "request" would satisfy the requirement if it effectively calls upon the drawer to make payment.
The Court relied on the Supreme Court's decision in Central Bank of India v. Saxons Farms (1999), wherein it was held that no particular form of notice is prescribed under Section 138 and that an expression such as "Kindly arrange to make the payment to avoid unpleasant action" constitutes a valid demand notice.
Finding no merit in either of the grounds urged by the revisionist, the High Court dismissed the criminal revision petition and upheld the conviction under Section 138 of the NI Act.
Case Title: Protima Dutta Kalita v. Smti Rina Borgohain
Case No.: Crl.Rev.P./412/2025