Notice Under S.138 NI Act Invalid If Omnibus Demand Is Made Without Specifying Cheque Amount : Supreme Court

The appellant-notice holder filed a petition before the Delhi High Court for quashing of summoning order passed by Magistrate taking a plea that the notice has made out an omnibus demand without specifying what was due under the dishonoured cheque. Hence, it was argued, the notice has failed to meet the legal requirement as per the dictum of the Supreme Court passed in Suman Sethi vs. Ajay K.Churiwal and Anr.

The Delhi High Court, which found no merit in the petition, in para 4 of the order observed that:

“The respondent in his notice did not ask for the total amount due but simply asked for the amount of cheque and compensation of same amount plus Rs.50,000/- for mental harassment. The amount of compensation and harassment are severable and to my mind would not invalidate the legal notice dated 02.12.2013.”

Assailing the order passed by the High Court, the Appellant-notice holder preferred a Criminal Appeal before the Supreme Court.

The Supreme Court bench comprising Justices CT Ravikumar and PV Sanjay Kumar while referring to the case Suman Sethi, in para 6 noted that:

“A bare perusal of the decision referred (supra) would reveal that a demand in addition to the cheque amount in a demand notice by itself would not make it invalid. In other words, as held therein, in the demand notice, demand has to be made for the 'cheque amount' and therefore, notice sans such demand would fall short of legal requirement. At the same time, we will reiterate the position that if in a notice while giving the break up of the claim the cheque amount interest, damages, etc. are separately specified and these additional claims would be severable, such demand would not invalidate the notice. In short, in a notice of demand made under the N.I. Act demand shall not be omnibus, there must be a clear demand for the cheque amount lest notice will be invalid. This law laid down as above has to be applied to decide the validity or otherwise of Annexure P-2-demand notice.”

Further, the Supreme Court, while examining the legality of the notice of demand served to the appellant found that an omnibus demand for Rs.6,50,000/- was made in addition to the demand for interest @12 per annum from the date of returning of the cheque, Rs.50,000/- towards damages and Rs.5,500/- as notice charge. According to the Supreme Court, the demand is omnibus as the amount of Rs.6,50,000/- admittedly is not the cheque amount.  

The Court held the demand notice to be invalid as per the law laid down in the case of Suman Sethi, and accordingly allowed the criminal appeal by setting aside the impugned summoning order passed by the learned Metropolitan Magistrate, Negotiable Instruments Act, Saket Court, New Delhi.

Case Title: UPASANA MISHRA v. TREK TECHNOLOGY INDIA PVT. LTD.

Case No: 2023 LiveLaw (SC) 1075

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