S.138 NI Act | Clarity In Making 'Demand' An Essential Legal Requirement For Cheque Bounce Notices: Himachal Pradesh High Court

The Himachal Pradesh High Court has recently ruled that the statutory provisions in the form of Section 138 Negotiable Instrument Act indicate in unmistakable terms as to what should be clearly indicated in the notice and what manner of demand it should make. Clarity in making the demand is an essential prerequisite for cheque bouncing cases, it emphasised.

The observations were made by Justice Ajay Mohan Goel while hearing an appeal in terms of which the appellant had challenged the judgment passed by the Court of SubDivisional Judicial Magistrate, District Mandi, H.P, in terms whereof, a complaint filed under Section 138 of the Negotiable Instruments Act by the present appellant was dismissed.

The complainant of the appellant petitioner had been rejected by Trial Court primarily on the ground that the notice issued after the cheque was returned back as dishonoured, was no notice as contemplated under the provisions of Negotiable Instruments Act, as no demand of money was made therein.

Assailing the dismissal order the appellant submitted that the trial court had erred in not appreciating that in the notice which was issued by the appellant after dishonouring of the cheque, all the ingredients of the provisions of the Negotiable Instruments Act were complied with and simply because one line was not written therein qua demand of money this does not means that the same did not amount to statutory compliance of the provisions of the Negotiable Instruments Act.

Appellants further contended that the notice that was issued was not a general notice but it was in terms of the Negotiable Instruments Act and issued after the cheque in issue stood dishonoured, but this extremely important aspect of the matter had been ignored by Trial Court by adopting a hyper technical view in the matter.

Adjudicating upon the matter Justice Goel observed that Proviso (b) to Section 138 of the Negotiable Instruments have used the words "makes a demand for the payment of money by giving a notice in writing”, however the notice that has been served by the appellant demonstrates that though there was a mention of the dishonouring of the cheque, but in terms of the language of the proviso, no demand for the payment of the said amount of money was raised in the said notice by the appellant.

Observing that Section 138 of the Negotiable Instruments, the statutory provisions indicate in unmistakable terms as to what should be clearly indicated in the notice and what manner of demand it should make, the bench pointed that in the instant case the notice which was issued after the bouncing of the cheque carried no demand of the amount of the bounced cheque, in this background, the findings returned by the Trial Court that the notice was no notice in the eyes of law, as is envisaged under the provisions of the Negotiable Instruments Act, were correct findings.

In view of the the same the bench found the petition devoid of any merit and dismissed the same.

Case Title: Dolma Devi Vs Roshan Lal

Citation: 2023 LiveLaw (HP) 24

For the appellant: Mr. Vir Bahadur Verma.

For the respondent: Advocate. Mr. Varun Rana, Advocate.

Click Here To Read/Download Judgement