Holding

A notice that demands the cheque amount and separately specifies additional incidental charges is valid; the extra claims are severable and do not defeat the statutory requirement.

Summary

The appellant, Suman Sethi, issued a cheque of Rs.20,00,000 to the respondent, Ajay K. Churiwal, which was returned for insufficient funds. Within 15 days, the respondent served a notice demanding the cheque amount plus incidental and notice charges. The magistrate held the notice invalid because the demand exceeded the cheque amount, but the Calcutta High Court set aside that order, finding the notice valid. On appeal, the Supreme Court examined the meaning of "said amount" in Section 138 of the Negotiable Instruments Act and held that the notice correctly demanded the cheque amount; the additional charges are severable and do not invalidate the notice. Consequently, payment of the cheque amount would discharge criminal liability under Section 138, while any other claims must be pursued in civil court. The appeal was dismissed.

Issues considered

Whether a notice of demand under proviso (b) to Section 138 of the Negotiable Instruments Act is invalid if it includes claims for amounts other than the cheque amount.
Interpretation of the term "said amount of money" in the proviso to Section 138.

Legislation cited

Negotiable Instruments Act, 1881s. 138, s. 139

Subjects

Negotiable Instruments ActSection 138cheque bouncenotice of demandcriminal liabilityseverabilitycivil suitstatutory interpretation

Judgment

'> SUMAN SETHI A
~
v.
AJAY K. CHURIWAL

FEBRUARY 2, 2000

[G.T. NANAVATI AND S.N. PHUKAN, JJ.] B

Negotiable Instruments Act 1881, Ss.138 (b) and (c), 139--Cheque is-
sued by appellant infavour of respondent when presented for payment returned
with remarks ''insufficient fu.nds''-Magistrate holding that notice for demand
bad in law since amount demanded was higher than cheque amount-High c
Court allowing revision filed by respondent complainant-Held, on facts,
notice clearly specified the "said amount" and the additional amounts claimed
were clearly severable; notice was valid-/nterpretation of Statutes.

The appellant issued a cheque in favour of respondent No.I. The
cheque when presented for payment was returned with the remarks "insuf- D
ficient fund". Thereafter within 15 days of the return of the cheque,
respondent No. 1 gave a notice of demand as required under proviso (b)
to Section 138 of The Negotiable Instruments Act, 1881, ('Act') Claiming
~ ,..,,. the cheque amount and certain additional amounts in the form or inciden-
tal charges and notice charge. The appellant failed to meet the demand, E
and a complaint was filed by Respondent No. 1 before the Metropolitan
·~ Magistrate.
'
The Magistrate was of the view that the demand made in the notice
being higher than the amount of the cheque, the notice was bad in law. The
revision petition filed by Respondent No. 1 was allowed by the High Court F
and the order of the Magistrate was set aside.

Dismissing the appeal, this Court
.·1

HELD : 1.1. In the notice in question the "said amount" i.e. the
cheque amount had been clearly stated. Respondent No. 1 had claimed in G
. i

\
addition to the cheque amounts, incidental charges and notice charge.
These two amounts were severable. If respondent No. 1 had paid the
:;-
cheque amount he would have been absolved from the criminal liability
under S.138. Regarding other claims, a civil suit would be necessary.
[606-E·G] H
601
602 SUPREME COURT REPORTS (2000) 1 S.C.R.

A 1.2. The notice has to be read as a whole. In the notice, demand has
to be made for the "said amonnt" i.e. cheque amount. If no such demand
was made the notice no doubt would fall short of its legal requirement.
Where in addition to ''said amount' there were also specific claims towards
interest, costs etc. such claims would be severable and would not invalidate
B the notice. If, however, in the notice an omnibus demand was made without
specifying what was due under the dishonoured cheque, the notice might
well fail to meet the legal requirement and may be regarded as bad.
[605-D-E]
M. Narayanan Nambair v. State of Kerala, [1963) 2 Supp. SCR 724;
C Duke v. Elliot, (1872) LR 4 AC 1.'~4 and Central Bank of India v. !vf.!s. Saxons
Farms, JT (1999) 8 SC 58, referred to.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
113 of 2000.

From the Judgment and Order dated 3.10.97 of the Calcutta High
D Court in Crl. R. No. 1611 of 1997.

S.S. Ray, Harish N. Salve, R.F. Nariman, Dr. Rajeev Dhawan, Sushi!
Kumar Jain, A.P. Dharnija, Ms Madhurirna Tatia, Ms. Anjali Dhoshi,
Sanjiv Sen, Rajan Narain, (Dilip Sinha, J.R. Das,) for M/s. Sinha & Das,
E K.K. Mahalik, Ranjan Mukhe:rjee, Pradeep Aggarwal, Kailash Vasdev,
Satvik Varma, D. Mahanty, lJmesh Kumar Bohre, A. Mishra, Prakash
Srivastava, L.P. Singh and N.B. Khatiwada for the appearing parties.

The Judgment of the Court was delivered by

F PHCKA.1'1, J. Leave granted.

This appeal is directed against the judgment and order dated
3.10.1997 passed by the Calcutta Hlgh Court in Criminal Revision No.
161L'97. By the impugned judgment, the High Court set aside the order of
the Metropolitan Magistrate - 16th, Calcutta passed in case No. C/1661)96.
G
Brid1y stated the facts are as follows :

The appellant issued ;;, cheqm; for Rs. 20,00.000 (Rupees Twenty
Lacs) in favour of respondent No. 1 The cheque was presented to the
banker which was returned on 2nd August, 1996 with the remarks "Insuf-
H ficient Fund". Thereafter within 15 days of return of the cheque, respon-
SUMANSElHL v. AJAYK. CHURIWAL[PHUKUN,J.J 603

dent No. 1 gave a notice of demand as required under proviso (b) to A
Section 138 of the Negotiable Instruments Act, 1881, as amended, (for
short the Act). As the appellant failed to meet the demand, a complaint
was filed before the Metropolitan Magistrate. On perusal of the above
notice, the Magistrat.: was of the view that the (demand made in the notice
being higher than the amount of the cheque), notice was bad in vfow of an
earlier decision of the High Court. Respondent No. 1 approached the High
B
Court by filing the revision petition which was allowed by the impugm:d
order and the order of the Metropolitan Magistrate was set aside. The
High Court was of the view that the decision of the High Court on which
reliance was placed by Magistrate was distinguishable. The High Court
held that as in notice, respondent No. 1 clearly demanded the cheque c
amount, the notice was a valid one and accordingly set aside the order of
the Metropolitan Magistrate.

We have heard Dr. Rajeev Dhawan, learned senior counsel for the
appellant, Mr. Sanjiv Sen, learned counsel for respondent No. 1 and Mr.
Dilip Sinha, learned counsel for respondent No. 2 - the State of West D
Bengal.

The only question for consideration by us is whether the notice in
question issued undrr proviso (b) to Section 138 of the Act was valid or
not. We extract bdow Sections 138 and 139 of the Act :
E
''138 - Dishonour of cheque for insufficiency, etc., of funds in the
account - Where any cheque drawn by a person on an account
maintained by him wtth a banker for payment of any amount of
money to another person from out of that account for the
discharge, in who1e or in part, of any debt or other liability, is F
returned by the bank unpaid, either because of the amount of
money standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount arranged to
be paid from that account by an agreement made with that bank,
such person shall be deemed to have committed an offence and G
shall, without prejudice to any other provision of this Act, be
punished with imprisonment for a term which may extend to one
year, or with fine which may extend to twice the amount of the
cheque, or both :

Provided that nothing containt:d m this section shall apply H
604 SUPREME COURT REPORTS (2()(){)] 1 S.C.R.

A unless -

(b) the payee or the holder in due course of the cheque, as the
case may be, makes a demand for the payment of the said amount
of money by giving a notice in writing, to the drawi::r of tht: cheque,
within fifteen days of the receipt of information by him from the
B bank regarding the return of the chi::que as unpaid; and

( c) the drawer of such cheq uc fails to make the paymt:nt of the
said amount of money to the payee or as the case may be, to the
holdt:r in due course of the cht:qm: within fifteen days of tht: receipt
of the said notice". (Emphasis supplied)
c
"139 · Presumption in favour of holder. - It shall be presumed,
unless the contrary is proved, that the holder of a cheque received
the cheque, of the nature referred to in Section 138 for the
discharge, in whole or in part, of any debt or other liability."
D
We have to ascertain the mt:aning of the words ''said amount of
money'' occurring in clauses (b) and ( c) to the proviso to Section 138.
Reading the Section as a whole we have no hesitation to hold that the above
expression refers to the words "payment of any amount of money" occurring .....
E in main Section 138 i.e. the cheque amount. So in notice, under clause (b)
to the proviso, di::mand has to be made for the cheque amount. Dr.
Dhawan, learned senior counsel has urged that Section l38 being a penal
provision has to be construed strictly. We may refer the decision of this
Court in M. Narayanan Nambiar v. State of Kera/a, AIR (1963) SC 1116
-
= (1963] 2 Supp. SCR 724. This Court considered the rule of construction
F of a penal provision and quoted with approval the following passage of the
decision of the Judicial Committee in Dyke v. Elliot, (1872) LR 4 AC 184.
The passage runs as follows :

"No doubt all penal Statutes are to be construed strictly, that is to
say, the Court must see that the thing charged as an offence is
G within the plain meaning of the words used, and must not strain
the words on any notion that there has been a slip, that there has
been a casus omissus, that tlte thing is so clearly within the mischief
that it must have been intended to be included if thought of. On
the other hand, the person charged has a right to say that he thing
H charged although within. the words, is not within the spirit of the
SUMA.~ ~ETHI. v. AJAY K. CHURIWAL [PHUKUN, J.] 605

enactment. But where the thing is brought within the words and A
within the spirit, there a penal enactment is to be construed, like
any other instrumtnt, according to the fair commonsense meaning
of the language used, and the Court is not to find or make any
doubt or ambiguity in the language of a penal statute, where such
doubt or ambiguity would clearly not be found or made in the same
language in any other instrument.''
B

There is no ambiguity or doubt in the language of Section 138.
Rtading the entire Section as a whole and applying commonsense, from
the words, as stated abow, it is clear that the legislature intt:nded that in
notice under clause (b) to the proviso, the demand has to be made for the C
cheque amount. According to Dr. Dhawan, the notice of demand should
not contain anything more or less than what is due under the cheque.

It is well settled principle of law that the notice has to be read as a
whole. In the notice, demand has to bc made for the "said amounf i.e.
cheque amount. If no such demand is made the notice no doubt would fall D
short of its legal requirement. Where in addition to "said amounf there is
also a claim by way of interest, cost etc. whether the notice is bad would
depend on the language of the notice. If in a notice while giving the break
up of the claim the cheque amount, intt:rest, damages ttc. are scparatdy
specified, other such claims for interest, cost etc. would be superfluous and
these additional claim' would he scvr"abk and will not invalidate th<: E
notice. If, howevc1, in th<.: ll( •tice an ilmm: "" Q(mo.ml is made without
spt:cifying what was due undL:r the <lishonon::d chtoqUl', notice might wdl
fail to meet the legal rcquin:ment and may bt: n:garded as bad.

This Court had occasion to deal with Section 138 of the Act in
Central Bank of India & Anr. v. M/s. Saxons Fanns & Ors., JT (1999) 8 SC F
58 and hdd that the object of the notice is to give a chance to the drawer
of the cheque to rectify his omission. Though in the notice demand for
compensation, interest, cost etc. is also made drawer will be absolved from
his liability under Section 138 if he makes the payment of the amount
covered by the cheque of which he was aware within 15 days from the date G
of receipt of the notice or before complaint is filed.

In Section 138 legislature clearly stated that for the dishonored
cheque the drawer shall be liable for conviction if the demand is not met
within 15 days of the receipt of notice but this is without prejudice to any
other provision of the Act. If the cheque amount is paid within the above H
606 SUPREME COURT REPORTS (2C00] 1 S.C.R.

A period or before the complaint is filed the legal liability under Section 138
will cease and for recovery of other demands as compensation, costs,
interest etc., a civil proceeding will lie. Therefore, if in a notice any other
sum is indicated in addition to th,~ ''said amount" the notice cannot be
faulted, as stated above.

B Drawing our attention to Section 139 of the Act, Mr. Dhawan has
urged that if in the notice in addition to "said amount" other demands are
made the presumption as contemplated under Section 138 would opt:rate.
We are unable to accept the submission of the learned senior counsel as
Section 139 has to be read with Section L38 and reading both the Sections
C together it would appear that presumption would arise only in rt:spect of
the "said amount".

We extract below the relevant portion of notice :

"I, therefore, by means of this notice call upon you to pay the
D amount of Rs. 20,00,000 along with the incidental charges of
Rs. 1,SCO spent on the cheque on its presentation and also Rs. 340
as notice charges within a period of 15 days from the date of receipt
thereof, failing which my clients shall take necessary legal steps
against you holding you liable for all costs and consequences thereof,
E which please note."

In the notice in question the "said amount' i.e. tht: cheque amount
has been clearly stated. Respondent No. 1 had claimed in additional. to the
cheque amount, incidental charges and notice charge . These two amounts
are severable. In the notice it was clearly stated that on failure to comply
F with the demand necessary legal steps will be taken up. If respondent No.
1 had paid the cheque amount he would have been absolved from the
criminal liability under Section 138. Regarding other claims, a civil suit
would be necessary

G We, therefore, do not find any merit in the present appeal and
accordingly it is dismissed.

S.M. Appeal dismissed.