S.138 NI Act | Cheque Holder Must Specifically Demand Payment Of 'Cheque Amount' In Legal Notice: Delhi High Court

The Delhi High Court has made it clear that the legal notice sent to a cheque drawer over dishonor of the instrument, must specifically demand the payment of 'cheque amount'.In the absence of such demand, the preconditions to institute proceedings under Section 138 of the Negotiable Instruments Act 1881 do not stand fulfilled.Justice Amit Mahajan held,“The language of Section 138(b) of the NI Act provides that the payee or the holder in due course ought to make a demand for the payment of “the said amount of money” by giving a notice in writing to the drawer of the cheque. The term “the said amount of money” as occurring in Section 138 of the NI Act refers to the cheque amount.”In the facts of the case, two cheques for a sum of ₹50,000/- each were dishonoured, thereby amounting to a total of ₹1,00,000/-. Accordingly as per the mandate of Section 138 of the NI Act, the Court held, the petitioner (cheque holder) was required to make a demand for a sum of ₹1,00,000/- from the respondents (cheque drawer).However, the legal demand notice failed to make a demand for the payment of the cheque amount. Rather, it stated “you are called upon to clear all the dues of my client within 15 days of this notice by way of demand draft failing which my client will be under constrained to file a civil suit as per the available position in each case to recover its dues.” “The same does not qualify as a demand for money as is stipulated under Section 138 of the NI Act…the legal demand notice failed to make a demand for the payment of cheque amount. The legal notice sent by the petitioner though mentions that the subject cheques were issued towards part payment of the total dues, however, the demand is made for the entire outstanding amount mentioned in the notice,” the Court held.It also noted that the Respondent had dislodged the presumption against it under Section 139, by raising a probable defence that— the Petitioner issued double bills for the same consignment.In view of the above, the Court upheld the Magistrate Court order dismissing the complaint filed by the Petitioner under Section 138.Appearance: For the Appellant : Mr. Anand Ranjan, Mr. Abhishek Kumar Singh & Mr. Alok Kumar, Advs. For the Respondents : Ms. Dharini Windlass, Adv. through V.CCase title: Barun Bhanot v. M/S Annie Impexpo Marketing Pvt Ltd & AnrCitation: 2025 LiveLaw (Del) 687Case no.: CRL.L.P. 45/2018Click here to read judgment

S.138 NI Act | Cheque Holder Must Specifically Demand Payment Of 'Cheque Amount' In Legal Notice: Delhi High Court

Kapil Dhyani

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