S.138 NI Act | Cheque Bouncing Offence Can't Be Invoked Unless Demand Notice Mentions Specific Dishonoured Amount: Kerala High Court

Justice A. Badharudeen delivered the judgment in an appeal challenging the acquittal of an accused in a cheque dishonour case involving a cheque for ₹95,000.

“The law emerges is that when there is demand for the actual amount covered by the cheque and consequential failure to pay the said amount within 15 days, then only an offence under Section 138 of the NI Act said to be committed by the drawer of the cheque and in the absence of demand for the actual/specific amount demanded in the notice, no offence would be completed, particularly, the 'deemed offence'. If so, without much ado, it has to be held that when the complainant fails to mention the amount in the demand notice contemplated under proviso (b) to Section 138 of the NI Act, the notice is incomplete and therefore, the recipient of the notice could not pay the amount to avoid the penal consequences. In such circumstances, there is no legal notice in the eye of law,” Court observed.

The complainant lodged a complaint before the Judicial First Class Magistrate Court - II, Peramabra alleging commission of offence punishable under Section 138 of the NI Act for dishonour of cheque for ₹95,000. The Trial Court, after appreciating the evidence, acquitted the accused noticing that there was no legal notice as mandated under proviso (b) to Section 138 of the NI Act.

The High Court thus examined whether a notice issued under proviso (b) to Section 138 of the NI Act satisfies the statutory requirement when it mentions only the cheque number and date, without expressly demanding payment of the cheque amount.

The Court examined the proviso (b) and (c ) to Section 138 which required the payee to make a demand of the said amount of money by giving a notice in writing and provide the drawer fifteen days to make payment after receipt of notice.

The Court observed that prosecution under Section 138 is a deemed offence and becomes complete only after fulfilment of several statutory stages, including issuance of a valid demand notice and failure to pay the demanded amount within the prescribed period.

The Court noted that the proviso (b) of Section 138 specifically indicates that the notice must specify the amount to be paid consequential to the dishonour of the cheque.

“In proviso (b) to Section 138 of the NI Act, it has been specifically stated that “makes a demand for the payment of the said amount of money”. This phraseology would indicate that the notice should specifically state the amount to be paid consequential to the dishonour of the cheque. Only when the notice is specific about the amount, it is possible for the recipient of the notice to pay the amount which was specifically asked for to avoid penal consequences.” Court noted.

The appellant argued that omission of the amount should not invalidate the notice because there was only one transaction between the parties and the accused would have known the amount involved. The Court rejected this contention, and that statutory compliance cannot be inferred from surrounding circumstances when the statute expressly requires a demand for the “said amount of money.”

“When the statute specifically mandates demand of the 'said amount of money', the amount demand must be specifically stated in the notice. Once the notice failed to mention the actual/specific amount due, the possibility to repay the actual/specific amount which failed to be asked for would become impossible.” Court added.

The Court thus held that in the absence of specific mentioning of the amount in the demand notice there is no demand for payment of the actual/ specific amount covered by the cheque in the eye of law.

The Court thus dismissed the appeal.

Case Title: Rajesh. K v Asokan P. K and Anr.

Case No: Crl.A 212/ 2013

Citation: 2026 LiveLaw (Ker) 304

Counsel for Appellant: E. Narayanan

Counsel for Respondents: Alex M Thombra (Sr. PP)