The Supreme Court recently nullified a criminal case involving the dishonor of a cheque by finding the demand in the notice issued under Section 138 of the Negotiable Instruments Act, 1881, to be overly broad or "omnibus" in nature. The appellant, who held the notice, approached the Delhi High Court seeking the quashing of the summoning order issued by a Magistrate. The appellant argued that the notice made a generic demand without specifying the exact amount owed under the dishonored cheque. The appellant contended that this failure to specify the due amount violated the legal requirement established by a prior Supreme Court decision.
In the notice, the respondent did not seek the total amount due but instead requested the amount of the cheque and an additional Rs. 50,000 for mental harassment. The appellant argued that the amount of compensation and harassment were separate and should not invalidate the legal notice issued on December 2, 2013.
Dissatisfied with the High Court's decision, the appellant escalated the matter by filing a Criminal Appeal before the Supreme Court. The bench, consisting of Justices CT Ravikumar and PV Sanjay Kumar, referred to a specific case to highlight that a demand notice's inclusion of additional claims beyond the cheque amount would not inherently render it invalid. However, the court emphasized that the demand notice must clearly articulate the demand for the "cheque amount" to meet the legal requirements.
The court reiterated that while additional claims such as interest, damages, etc., can be specified separately in the notice, they should be treated as severable from the cheque amount. In essence, the demand in a notice under the Negotiable Instruments Act should not be generic or all-encompassing; rather, it must distinctly specify the amount related to the dishonored cheque.
Examining the legality of the notice served to the appellant, the Supreme Court found that it contained an omnibus demand of Rs. 6,50,000, in addition to claims for interest at 12% per annum from the date of cheque return, Rs. 50,000 for damages, and Rs. 5,500 as notice charges. The court concluded that the demand was omnibus since the amount of Rs. 6,50,000 did not represent the cheque amount.
In summary, the Supreme Court underscored the importance of clarity and specificity in demand notices under the Negotiable Instruments Act. A demand notice must expressly state the amount related to the dishonored cheque and avoid being generic or all-encompassing. While additional claims can be included, they should be clearly separated from the cheque amount and treated as severable. This legal principle was applied to determine the validity of the specific demand notice in question, leading to the quashing of the criminal case.
TAGS: Interest Damages Notice Charges Clarity in Notice Specificity Cheque Amount Validity Determination
