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2025 (3) TMI 559 - HC - Indian LawsDishonour of Cheque - over writing in the date of cheque - discrepancy in mentioning of the amount in words and figures - invalid notice - what are the legal requirement for holding a legal Demand Notice issued under Section 138 B NI Act valid? - HELD THAT - In Central Bank of India Anr. v. M/s. Saxons Farms Ors. 1999 (10) TMI 718 - SUPREME COURT the Apex Court held that the object of the Notice is to give a chance to the drawer of the cheque to rectify his omission. Though in the Notice demand for compensation interest cost etc. is also made drawer will be absolved from his liability under Section if he makes the payment of the amount covered by the cheque of which he was aware within 15 days from the date of receipt of the Notice or before the Complaint is filed. Now coming to the facts of the present case the Legal Notice dated 28.09.2017 clearly mentioned about the dishonour of the cheque in the sum of Rs. 4, 65, 000/-. Legal Notice specifically and clearly specified the cheque amount. The problem has arisen because though figure in numerical has been clearly written as Rs. 4, 65, 000/- but unfortunately while writing in words it was written as Rs. Four lac sixty five . It is quite evident that though after word Sixty Five there has been inadvertence in not mentioning the word thousand . Prima facie the error appears to be inadvertence rather than depicting different amounts. Though it is correct that Section 18 of NI Act states that when there is a discrepancy in the amount of cheque as mentioned in figures and words the words shall prevail. However as has already been mentioned above such discrepancy did not weigh with the Bank which clearly stated in the Return Memo that the cheque amount was Rs. 4, 65, 000/-. Likewise overwriting of the date on the cheque has not been considered as a material interpolation meriting dishonour of the cheque. In these circumstances it would not be appropriate to dismiss the Complaint under Section 138 of the NI Act on technical ground without putting the parties to trial and without affording opportunity to prove their respective cases. Conclusion - The error in writing the correct figure in words would not at this stage make the cheque invalid especially when no Reply has been given by Respondent No. 2 to the Legal Notice to refute his liability and has not questioned the Notice making a demand. The Complaint is sought to be defeated on the technical ground of inadvertent error in mentioning the correct figure of the cheque in words which cannot be a justiciable ground for discharge but merits a Trial. The impugned order is set aside - petition disposed off.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment revolve around the validity of the legal proceedings under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) concerning the dishonor of a cheque. The core legal questions include:
ISSUE-WISE DETAILED ANALYSIS 1. Discrepancy in Cheque Amount (Figures vs. Words) - Relevant Legal Framework and Precedents: Section 18 of the NI Act specifies that in case of discrepancy between the amount in figures and words, the amount in words shall prevail. The Court also considered precedents such as Rangappa vs. Sri Mohan, which emphasizes the presumption of liability under Section 139 of the NI Act. - Court's Interpretation and Reasoning: The Court noted that the discrepancy appeared to be an inadvertent error rather than an intentional misrepresentation. The bank's return memo indicated the cheque amount as Rs. 4,65,000/-, suggesting that the bank did not consider the discrepancy significant. - Application of Law to Facts: The Court concluded that the error in writing the amount in words did not invalidate the cheque, especially since the bank processed it for Rs. 4,65,000/-. - Treatment of Competing Arguments: The Court dismissed the argument that the discrepancy invalidated the cheque, emphasizing that the legal notice and bank memo supported the higher amount. - Conclusions: The discrepancy did not justify the dismissal of the complaint under Section 138 of the NI Act. 2. Overwriting of the Date on the Cheque - Relevant Legal Framework and Precedents: Section 87 of the NI Act addresses material alterations, which can render a cheque void unless consented to by the parties involved. - Court's Interpretation and Reasoning: The Court observed that the overwriting of the date was not considered a material alteration by the bank, as it did not affect the cheque's processing. - Application of Law to Facts: The Court found that the overwriting did not impact the cheque's validity or the proceedings under Section 138. - Treatment of Competing Arguments: The argument that the overwriting voided the cheque was rejected, as the bank processed the cheque without issue. - Conclusions: The overwriting of the date did not merit the dismissal of the complaint. 3. Validity of the Legal Demand Notice - Relevant Legal Framework and Precedents: Section 138(b) of the NI Act mandates that the legal notice must demand the exact amount of the cheque. The Court also referenced cases like Suman Sethi vs. Ajay K. Churiwal, which discuss the requirements for a valid notice. - Court's Interpretation and Reasoning: The Court determined that the notice clearly demanded the cheque amount of Rs. 4,65,000/-, aligning with the bank's return memo. - Application of Law to Facts: Despite the discrepancy in the cheque's written amount, the notice was deemed valid as it specified the correct amount in figures. - Treatment of Competing Arguments: The argument that the notice was invalid due to the discrepancy was dismissed, as the notice's intent was clear. - Conclusions: The notice fulfilled the legal requirements under Section 138(b) and did not warrant dismissal of the complaint. SIGNIFICANT HOLDINGS - The Court emphasized the importance of interpreting penal statutes with common sense and not dismissing cases on technical grounds when the intent and context are clear. - The judgment reaffirmed the presumption of liability under Section 139 of the NI Act, placing the burden of proof on the accused to rebut this presumption. - The Court set aside the ASJ's order discharging the accused, directing the Metropolitan Magistrate to proceed with the trial. - The Court highlighted that technical errors, such as the discrepancy in amount or date overwriting, should not overshadow the substantive justice and intent behind the issuance of the cheque and legal notice. The parties were directed to appear before the Metropolitan Magistrate for further proceedings, ensuring the trial would address the substantive issues raised.
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