The Andhra Pradesh High Court has held that a demand notice under Section 138 of the Negotiable Instruments Act, 1881, need not repeat the cheque amount in its concluding paragraph if the notice, read as a whole, clearly specifies the amount demanded.

Section 138 of the NI Act deals with cheque dishonour for insufficiency of funds. Proviso (b) requires the payee to issue a written demand notice to the drawer seeking payment of the cheque amount.

Applying this requirement, the Court observed that the demand notice in the present case sufficiently complied with the statutory requirements, even though the cheque amount was not repeated in its concluding paragraph.

Addressing the alleged alteration of the cheque, the Court held that replacing the pre-printed “19” with “2004” did not amount to material alteration in the facts of the case.

A Single Judge Bench of Justice Subhendu Samanta made these observations while dismissing a criminal revision petition challenging the conviction of the accused under Section 138 of the NI Act.

The Court observed:

“A demand notice must be read as a whole. Mere omission to repeat the cheque amount in the concluding paragraph of the notice does not ipso facto render the notice invalid. In the present case, the demand notice, when read in its entirety, is very clearly conveys the amount demanded by the claimant from the accused, who is the drawer of the cheque. Thus, it cannot be said to be invalid.

On a comprehensive reading of the notice, the drawer is made aware of the amount demanded in respect of the dishonoured cheque. Consequently, the requirements of proviso (b) to Section 138 of NI Act has said to be sufficiently complied with. Hence, the argument of learned legal aid counsel appearing for the petitioner on that point appears to be not acceptable.”

The case arose from a complaint alleging that the accused had borrowed ₹45,000 from the complainant and issued a cheque for ₹40,000 towards part repayment. The cheque was dishonoured for insufficiency of funds. Despite receiving a demand notice, the accused failed to pay the amount.

The trial court convicted the accused under Section 138 and sentenced him to three months' simple imprisonment and a fine of ₹1,000, with one month's simple imprisonment in default of payment. The appellate court upheld the conviction.

Before the High Court, the accused challenged the validity of the demand notice on the ground that it did not specify the cheque amount in its concluding paragraph.

He also contended that the cheque had been materially altered. The cheque leaf had been printed before 2000, with the year pre-printed as “19”. These digits were struck off and “2004” was substituted when the cheque was used in 2004.

Rejecting the challenge to the demand notice, the Court noted that it specified the cheque number, date and amount, along with the reason for dishonour. The Court held that, read as a whole, the notice clearly conveyed the amount demanded.

Turning to the alleged material alteration, the Court referred to Section 87 of the NI Act, which provides that a material alteration renders a negotiable instrument void against a party who did not consent to it, subject to the statutory exceptions.

The Court noted that the accused had neither disputed his signature and issuance of the cheque nor established that the alteration was made without his knowledge or consent.

In this regard, the Court further observed:

“Admittedly, when a cheque printed prior to the year 2000, is used after the year 2000, it becomes necessary to strike off the printed digits "19" and mention the appropriate year.

On a further perusal of Ex.P.3, it appears that in reasons mentioned in cheque return memo, the United Bank of India has not mentioned that the cheque was returned “due to alteration in the date/ figures/ words requiring the drawer's specimen signature” (Reason No.18). Instead, the sole reason assigned for dishonour was "insufficient funds". Under Section 87 of the NI Act, a material alteration renders a negotiable instrument void unless such alteration is made with the consent of the party liable thereto.”

In these circumstances, the Court held that replacing the pre-printed digits “19” with “2004” did not amount to material alteration.

Accordingly, the High Court dismissed the revision petition and upheld the conviction and sentence.

It also vacated the suspension of sentence and directed the accused to appear before the trial court or jail authorities within six weeks to serve the remaining sentence.

If the petitioner fails to comply with the order within six weeks, the trial court shall issue a non-bailable warrant against him.

Counsel for the Petitioner: Aishwarya Nagula (Legal Aid)

Counsel for the State: Panini Somayaji, Assistant Public Prosecutor