138 NI Act | Demand Notice Clubbing Stale Or Premature Cheques With Valid Ones Is Legally Invalid: Calcutta High Court

"A failure in above regard, namely when the cheque amount is not mentioned in the Proviso (b) notice or the amount different than the actual cheque amount is mentioned, in the notice, such notice would stand invalid in eye of law." Calcutta High Court, in a significant ruling dated July 14, 2026, held that a statutory demand notice issued under Section 138 of the Negotiable Instruments Act is legally invalid if it clubs stale or prematurely presented cheques with valid ones to claim a consolidated amount.

A bench of Justice Chaitali Chatterjee Das observed that the notice must precisely reflect the amount of the dishonoured cheques that meet the statutory criteria, and any discrepancy in the claimed amount "poisons" the entire proceeding.

The appellant, Magma Leasing Limited, filed a criminal appeal against an order of acquittal passed by the Learned 6th Fast Track Judge, Calcutta. The Appellate Court had reversed the original order of conviction passed by the Metropolitan Magistrate against the respondent, Asim Mondal. The dispute arose from seven cheques issued by the respondent to discharge a liability under a hire-purchase agreement, all of which were returned unpaid.

The primary question before the court was whether a demand notice that claims a total amount inclusive of cheques presented after their validity period or before their maturity date is sustainable under Section 138 of the NI Act. The court was also called upon to determine whether a notice returned with the remark "not known" could be considered as valid service of notice upon the accused.

Court’s Observations on Premature and Stale Cheques

The Court meticulously examined the presentation dates of the seven cheques and found significant procedural lapses. It noted that Cheque No. 154064 was presented after the expiry of its validity period of six months, while Cheque No. 154070 was deposited on November 25, 2002, which was one day prior to the date mentioned on the cheque.

Invalidity of Notice Claiming Consolidated Amount

The Court observed that the appellant had clubbed the amounts of all seven cheques, including the stale and premature ones, into a single demand notice. Justice Das noted that when a cheque is presented after its validity or before maturity, no criminal proceeding can be instituted for its dishonour. Consequently, including these amounts in the statutory notice rendered the entire demand legally defective.

Notice Must Reflect Correct Amount Under Proviso (b)

The Court emphasized that the proviso (b) to Section 138 of the NI Act is a penal provision and must be strictly construed. It held that the notice must be precise regarding the amount of the cheque which is actually dishonoured in accordance with the law. If the correspondence fails to mention the correct amount or includes invalid claims, it fails to meet the statutory requirement.

"The notice in terms of Proviso (b) being a provision in penal statute and a condition for the offence, it has to be precise while mentioning of the amount of the cheque which is dishonoured."

Impact of Incorrect Amount on Criminal Proceedings

Relying on the precedent in Kaveri Plastics v Mahdoom Bawa Bahruden Noorul, the Court reiterated that mentioning an amount different from the actual valid cheque amount in the notice stands invalid in the eye of law. The bench found that the demand notice in this case, by claiming the entire amount for all seven cheques, lacked legal sanctity.

Service of Notice and Return Remark 'Not Known'

Regarding the service of the demand notice, which was returned with the remark "not known," the Court held that this cannot be automatically considered as good service. The bench observed that the appellant ought to have taken appropriate steps to send a further notice or ensure service once the initial attempt failed with such a remark.

"It is a settled law that ‘not known’ cannot be considered to be a good service and the appellant ought to have taken appropriate steps to send a further notice to the respondent."

The High Court concluded that the Learned Appellate Court was correct in reversing the conviction since the foundational notice was bad in law. The Court found no infirmity in the acquittal order, noting that an order of conviction cannot be sustained merely on the basis of "apprehension" of the complainant regarding the accused's motives.

The appeal was dismissed, and the judgment of the Learned Sessions Court acquitting the accused was affirmed. The Court directed the department to forward the Trial Court Records (TCR) to the concerned court for necessary action.

Date of Decision: 14 July 2026