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Supreme Court: Cheque Bounce Notice Invalid if Amount Differs — Typo Error No Excuse

Court says demand notice must match cheque amount exactly under Section 138 of NI Act

Even a clerical mistake can cancel the case, rules bench in Kaveri Plastics dispute

By Our Legal Correspondent

New Delhi: Sept 20, 2025: In a landmark judgment that will have far-reaching consequences for cheque bounce cases across India, the Supreme Court has ruled that a statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) is invalid if the amount mentioned in it is different from the amount on the dishonoured cheque — even if the difference is due to a typographical error.

The ruling came in the case of Kaveri Plastics vs Mahdoom Bawa Bahrudeen Noorul, where the complainant argued that the mismatch in the amount was a mere clerical mistake. The apex court, however, dismissed the appeal, upholding the Delhi High Court’s decision to quash the complaint.

Background of the Case

The dispute began with a Memorandum of Understanding (MoU) signed on 30 April 2012 between Kaveri Plastics and M/s Nafto Gaz India Pvt. Ltd. for the sale of land in Delhi. As part of the deal, Nafto Gaz issued a cheque for ₹1 crore, dated 12 May 2012.

When the cheque was presented for payment, it was dishonoured with the remark “funds insufficient”. Following this, Kaveri Plastics issued two statutory demand notices — one on 8 June 2012 and another on 14 September 2012 — to the company and its directors.

However, instead of demanding the cheque amount of ₹1 crore, both notices mistakenly demanded ₹2 crore. The complainant later claimed this was a “cut paste” typographical error made while preparing multiple notices for different transactions.

Legal Challenge and High Court Ruling

The accused challenged the validity of the notices, arguing that they failed to comply with Section 138(b) of the NI Act, which requires the demand notice to state the exact cheque amount.

While the trial court initially dismissed this objection, the Delhi High Court quashed the complaint, holding that the statutory notice was defective because the amount demanded did not match the cheque amount.

Supreme Court’s Decision

The complainant appealed to the Supreme Court, arguing that the error was minor and should not invalidate the notice. They relied on earlier rulings such as Suman Sethi v. Ajay Churiwal and Central Bank of India v. Saxons Farms, which emphasised that notices should be read as a whole.

However, the Supreme Court bench, comprising Justice N.V. Anjaria and Chief Justice B.R. Gavai, rejected this argument.

The Court held that:

“It is mandatory that the demand in the statutory notice has to be the very amount of the cheque. Even typographical error can be no defence. The error, even if typographical, would be fatal to the legality of the notice, given the need for strict mandatory compliance.”

The Court stressed that criminal statutes must be interpreted strictly, and there is no scope for flexibility or “substantial compliance” in such cases.

Key Legal Principle: ‘Said Amount’ Must Match Exactly

The judgment turned on the interpretation of the words “said amount of money” in Proviso (b) to Section 138 of the NI Act. The Court ruled that this phrase refers specifically to the cheque amount, and any deviation — whether more or less — makes the notice invalid.

The bench explained that even if the cheque number, date, and bank details are correct, a mismatch in the amount creates ambiguity and fails to meet the statutory requirement.

Why This Matters for Businesses and Individuals

This ruling sends a strong message to businesses, lawyers, and individuals involved in cheque transactions: precision in legal notices is non-negotiable.

For complainants, it means that even a small clerical error in the amount can destroy their case, no matter how strong the underlying claim. For accused persons, it reinforces a clear procedural safeguard against defective notices.

Sections 138 and 142 of the NI Act — At a Glance

Section 138: Dishonour of Cheque

Applies when a cheque is dishonoured due to insufficient funds or exceeding overdraft limits.
Requires the payee to send a written demand notice within 30 days of dishonour.
The drawer has 15 days to make payment after receiving the notice.
Punishment: Up to 2 years in jail, or fine up to twice the cheque amount, or both.

Section 142: Cognizance and Procedure

Complaint must be filed within one month after the 15-day notice period ends.
Only Metropolitan or First-Class Judicial Magistrates can take cognizance.
Delay can be condoned if sufficient cause is shown.

Impact on Future Cases

Legal experts say this ruling will likely lead to stricter scrutiny of demand notices in cheque bounce cases. Lawyers will need to double-check every detail before sending notices, as even a minor error could result in dismissal.

It also means that accused persons have a stronger defence if the notice amount does not match the cheque amount exactly.