The Orissa High Court recently ruled that a proceeding under Section 138 of the Negotiable Instruments Act cannot be rendered invalid merely because the notice includes a claim for miscellaneous expenses in addition to the demand for the cheque amount. In its decision, the court referred to previous judgments of the Supreme Court, and Justice Radha Krishna Pattanaik, the presiding Single Judge, stated that "the defect in notice cannot invalidate the proceeding when the demand is only for the cheque amount with additional claim towards the miscellaneous expenses," affirming settled legal principles.
According to allegations, the petitioner issued three cheques to the opposite party worth a total of Rs. 14,00,000/-. However, when the cheques were presented to the bank, they bounced due to insufficient funds in the petitioner's account. In response, the opposite party sent a legal notice demanding payment of the cheque amount, along with interest, legal fees, and the cost of the proceedings if legal action were to be taken. Despite receiving the notice, the petitioner failed to make the payment, leading the opposite party to file a complaint under Section 138 of the Negotiable Instruments Act.
The petitioner filed a plea with the High Court, seeking to quash the proceedings initiated by the opposite party. The petitioner argued that the legal notice served upon them was defective since it demanded more money than what was actually due for the dishonour of the cheques.
In support of their claim, the petitioner cited the language of the notice, which demanded payment of Rs. 14,00,000/- for the cheque amount within fifteen days of receipt. Additionally, the notice stated that if legal action were taken, the petitioner would be liable to pay the entire cost of the proceedings, interest on the amount, and a legal fee of Rs. 3,000/-. The petitioner argued that this extra amount of Rs. 3,000/- was not legally recoverable and made the entire notice defective.
The petitioner argued that the notice was invalid and cannot be acted upon, citing various Supreme Court decisions that prohibited the inclusion of amounts beyond the dishonoured cheque amount in the notice.
However, the Court noted that the opposite party had indeed demanded payment of the cheque amount in the notice, as well as costs associated with the legal proceedings and other miscellaneous charges. The notice also threatened legal action if the payment was not made within the stipulated time frame.
The Court found that the notice served by the opposite party was not defective, as it did not demand an amount greater than the dishonoured cheque amount of Rs.14,00,000/-. The additional demand made in the notice was related to the costs of the proceedings, interest on the cheque amount, and other expenses, which did not render the notice invalid under Section 138 of the N.I. Act.
To support its conclusion, the Court referred to the decision in Vijay Gopala Lohar v. Panduram Ramachandra Ghorpade & Anr., where the Supreme Court had held that a notice demanding payment equal to the cheque amount and the loan amount is valid.
The Court also relied on K.R. Indira v. Dr. G. Adinarayana, where the Supreme Court had held that a notice is not invalidated even if it includes an indication of other amounts covered by the cheque, provided that the specific demand for the cheque amount is made in the notice.
The Court dismissed the criminal miscellaneous case, finding it lacking in merit.
Date of Judgment: March 23, 2023
Case No.: CRLMC No. 545 of 2022
Case Title: Hemalata Mohapatra v. Bijay Kumar Pradhani
Counsel for the Petitioner: Mr. A.P. Bose, Advocate
Counsel for the Opposite Party: Mr. S.K. Samantaray, Advocate
TAGS: Section 138 Negotiable Instruments Act Orissa High Court notice costs miscellaneous expenses dishonoured cheques legal action quash proceedings defective notice demand additional amount Supreme Court conformity with law loan amount Vijay Gopala Lohar K.R. Indira specific demand incidental claim criminal miscellaneous case dismissed. Supreme Court petitioner notice not permissible demand dishonoured amount opposite party calling upon pay legal action cost of proceeding miscellaneous charges. Petitioner High Court quash proceedings defective notice demanded more money dishonour cheques language legal action liable cost of proceedings interest legal fee additional amount legally recoverable. Orissa High Court Section 138 Negotiable Instruments Act invalidated notice miscellaneous expenses cheque amount. Three cheques petitioner opposite party amount dishonoured insufficiency of fund legal notice pay legal action cost of proceeding interest legal fees complaint Section 138.
