Introduction – Kaveri Plastics vs. Mahdoom Bawa: Supreme Court on Section 138 Cheque Bounce Cases
In a landmark judgment delivered on 19 September 2025, the Supreme Court of India in Kaveri Plastics vs. Mahdoom Bawa Bahrudeen Noorul (Criminal Appeal arising out of SLP (Crl.) Nos. 11184-11185/2024, 2025 INSC 1133) addressed an important issue under Section 138 of the Negotiable Instruments Act, 1881. The Court clarified the strict legal requirement that a legal notice under Section 138 NI Act must demand the exact cheque amount. This judgment is particularly significant for businesses, banks, and legal practitioners dealing with cheque dishonour and bounce cases.
Case Background in Kaveri Plastics vs. Mahdoom Bawa
Kaveri Plastics filed a complaint under Section 138 NI Act after a cheque of Rs.1,00,00,000/- issued by Mahdoom Bawa was dishonoured. The legal notice sent demanded Rs.2,00,00,000/-, double the cheque amount. The respondent challenged the notice, claiming it did not comply with Proviso (b) of Section 138, leading the Delhi High Court to quash the complaint.
Kaveri Plastics filed a Special Leave Petition (SLP) in the Supreme Court. The bench of Chief Justice B.R. Gavai and Justice N.V. Anjaria held that a Section 138 notice must demand the exact cheque amount; any discrepancy, even typographical, invalidates the notice, and the complaint cannot proceed.
Legal Issue – Validity of Section 138 NI Act notice when notice amount differs from the cheque (Kaveri Plastics vs. Mahdoom Bawa).
The Supreme Court considered two central questions:
Whether a notice demanding an amount different from the cheque amount is valid.
Whether a defence of typographical or inadvertent error in the notice can be legally accepted.
Statutory Provision in Focus: Section 138 NI Act
Section 138 of the Negotiable Instruments Act criminalizes the dishonour of cheques due to insufficient funds. The Proviso (b) requires the payee or holder to send a written notice demanding the “said amount of money” within 30 days of receiving information about dishonour.
The Court highlighted that “said amount” strictly refers to the cheque amount itself and cannot include a higher or lower sum. Compliance with this condition is mandatory to sustain a criminal complaint.
Supreme Court’s Interpretation and Key Holdings in Kaveri Plastics vs. Mahdoom Bawa Case
1. Strict Compliance Required
The Court emphasized that Section 138 is a penal statute and must be strictly construed. Even a typographical error in the demand notice concerning the cheque amount is fatal to the notice’s validity.
“It has to be held that in order to make a valid notice under the Proviso (b) to Section 138 of the NI Act, it is mandatory that ‘said amount’ to be mentioned therein is the very amount of cheque, and none other.”
2. Reading the Notice as a Whole Not Sufficient
The appellant argued that other details of the cheque were correctly mentioned and that the notice should be read in totality. The Court rejected this, stating that no elasticity or liberal interpretation is allowed in penal provisions like Section 138.
3. Typographical Errors Cannot Save the Notice
The Court made it clear that a defence of inadvertent error is not sufficient to cure the defect:
“The condition of notice under Proviso (b) is required to be complied with meticulously. Even typographical error can be no defence.”
4. Implications for Cheque Bounce Complaints
The Court held that any deviation in the amount mentioned in the notice from the cheque amount invalidates the notice, rendering the criminal complaint under Section 138 unsustainable.
Conclusion (Kaveri Plastics vs. Mahdoom Bawa Bahru)
The Kaveri Plastics vs. Mahdoom Bawa Bahru judgment reinforces the principle that strict compliance with Section 138 of the NI Act is mandatory. Even minor discrepancies, such as a typographical error in the cheque amount mentioned in the demand notice, can render the notice and the subsequent criminal complaint invalid. Legal practitioners and businesses must ensure that all details in the notice precisely match the cheque to avoid dismissal of their case. This ruling serves as a crucial reminder that in penal provisions like Section 138, precision and meticulous adherence to statutory requirements are non-negotiable.
Expert Guidance on Cheque Bounce Cases under Section 138 NI Act
Dealing with a cheque bounce can involve complex legal procedures and strict statutory timelines. Our team at BLJ Legal provides professional guidance on Section 138 NI Act complaints, helping you understand your rights, evaluate legal options, and navigate procedural requirements. Whether you are filing a complaint or defending against a time-barred or defective case, we offer strategic support to ensure your matter is handled efficiently and in accordance with the law.
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-Adv. Shasha Jain, BLJ Legal
