Introduction:

In a significant ruling concerning the procedural requirements governing cheque dishonour prosecutions, the Kerala High Court has reaffirmed that strict compliance with the statutory mandate under Section 138 of the Negotiable Instruments Act, 1881, is indispensable for the successful institution of criminal proceedings. The Court held that a demand notice issued under proviso (b) to Section 138 must expressly specify the amount demanded from the drawer of the cheque. Failure to mention the cheque amount in the statutory notice renders the notice legally defective and incapable of triggering the penal consequences contemplated under the Act.

The judgment was delivered by Justice A. Badharudeen in Rajesh K. v. Asokan P.K. and Another, reported as 2026 LiveLaw (Ker) 304. The case arose from an appeal filed against an order of acquittal passed by the Judicial First Class Magistrate Court-II, Perambra, in a prosecution initiated under Section 138 of the Negotiable Instruments Act.

The complainant had alleged that the accused issued a cheque for ₹95,000 towards discharge of a legally enforceable liability. Upon presentation, the cheque was dishonoured by the bank, prompting the complainant to initiate the statutory process prescribed under Section 138 of the Act. A demand notice was subsequently issued to the accused. However, although the notice referred to the cheque number and date, it failed to specifically mention the amount covered by the dishonoured cheque.

The accused did not make payment pursuant to the notice, following which the complainant instituted criminal proceedings alleging commission of the offence under Section 138. During the trial, the Magistrate examined the evidence and concluded that the notice issued by the complainant did not satisfy the mandatory requirements of proviso (b) to Section 138. On that basis, the accused was acquitted.

Aggrieved by the acquittal, the complainant approached the Kerala High Court, contending that the omission to mention the cheque amount was merely a technical defect that did not prejudice the accused, particularly when there was only one transaction between the parties. The appeal thus raised an important question regarding the nature and extent of compliance required under the statutory notice provisions of the Negotiable Instruments Act.

The case provided the High Court an opportunity to revisit the legal framework governing cheque dishonour prosecutions and to clarify whether a notice that omits the specific cheque amount can nevertheless be regarded as a valid demand notice in the eyes of law.

The judgment assumes significance because prosecutions under Section 138 constitute one of the most frequently litigated categories of criminal cases in India. The decision highlights the necessity of adhering to statutory requirements and reinforces the principle that procedural safeguards built into penal statutes cannot be diluted through assumptions or implied compliance.

Arguments of the Parties:

The appellant-complainant challenged the acquittal primarily on the ground that the trial court had adopted an unduly technical approach while assessing the validity of the demand notice.

It was argued that the notice issued to the accused contained sufficient particulars to enable the accused to understand the nature of the demand. According to the complainant, the notice specifically referred to the dishonoured cheque by mentioning its number and date. Therefore, the accused was fully aware of the transaction in question and could not legitimately claim ignorance regarding the amount involved.

The appellant contended that the omission of the cheque amount should not be treated as a fatal defect because the transaction between the parties was singular and unambiguous. In such circumstances, it was submitted that the accused could easily identify the cheque and ascertain the amount payable. The complainant urged the Court to adopt a practical and purposive interpretation of Section 138 rather than insisting upon rigid technical compliance.

The appellant further argued that the objective of the statutory notice is to provide an opportunity to the drawer of the cheque to make payment and avoid criminal prosecution. Since the accused was aware of the transaction and had sufficient information to understand the demand being made, the essential purpose of the notice stood fulfilled.

According to the complainant, invalidating the entire prosecution merely because the amount was not expressly mentioned in the notice would elevate form over substance and defeat the legislative objective underlying Section 138 of the Act.

On the other hand, the respondents supported the judgment of the trial court and contended that compliance with the statutory requirements prescribed under Section 138 is mandatory rather than directory.

The respondents argued that the offence under Section 138 is not an ordinary criminal offence but a statutory offence created by legal fiction. Consequently, every condition prescribed by the statute must be strictly fulfilled before criminal liability can arise.

It was submitted that proviso (b) to Section 138 expressly requires the payee to make a demand for payment of the “said amount of money.” The language employed by the legislature, according to the respondents, leaves no room for ambiguity and clearly mandates that the amount sought to be recovered must be specifically stated in the notice.

The respondents contended that unless the exact amount is mentioned, the recipient cannot be expected to make payment within the statutory period of fifteen days. A notice that merely refers to a cheque number without specifying the amount demanded does not provide a meaningful opportunity to comply with the demand and therefore fails to satisfy the statutory requirement.

The respondents further submitted that penal consequences under Section 138 arise only upon failure to comply with a valid demand notice. If the notice itself is defective, the offence remains incomplete and no criminal liability can be imposed upon the drawer.

The State, represented through the Public Prosecutor, supported the interpretation adopted by the trial court and emphasized the importance of strict adherence to statutory requirements in prosecutions involving deemed offences.

The rival submissions thus required the High Court to determine whether a notice that omits the cheque amount can still be regarded as a valid notice under proviso (b) to Section 138 of the Negotiable Instruments Act.

Court’s Judgment:

Justice A. Badharudeen commenced the analysis by examining the statutory scheme governing cheque dishonour prosecutions under Section 138 of the Negotiable Instruments Act.

The Court observed that Section 138 creates a deemed offence and prescribes a sequence of mandatory conditions that must be satisfied before criminal liability can arise. The dishonour of a cheque alone does not constitute the offence. Rather, the offence becomes complete only upon fulfilment of several statutory requirements, including issuance of a valid demand notice and the subsequent failure of the drawer to make payment within the prescribed period.

The Court specifically referred to provisos (b) and (c) to Section 138. Proviso (b) requires the payee or holder in due course to make a demand for payment of the “said amount of money” by issuing a notice in writing within the stipulated period. Proviso (c) grants the drawer fifteen days from receipt of the notice to make payment and thereby avoid criminal prosecution.

According to the Court, these provisions demonstrate that the notice serves a critical function within the statutory framework. It is through the notice that the drawer becomes aware of the precise demand and is afforded an opportunity to discharge the liability before criminal consequences are attracted.

The Court laid considerable emphasis on the phrase “said amount of money” employed in proviso (b). Justice Badharudeen observed that the legislative language unmistakably requires the notice to specify the amount demanded. The expression cannot be treated as surplusage or ignored while interpreting the provision.

The judgment held that the requirement of mentioning the amount is not a mere technical formality. Rather, it constitutes the very essence of the demand contemplated under the statute. Only when the amount is specifically stated can the recipient understand the exact sum required to be paid and take steps to avoid prosecution.

The Court rejected the appellant’s argument that the accused could infer the amount from surrounding circumstances or from the fact that there was only one transaction between the parties. The Court observed that statutory compliance cannot be based on assumptions or presumptions when the legislature has expressly prescribed a particular requirement.

Justice Badharudeen held that when the statute mandates a demand for payment of the “said amount of money,” the amount must be clearly and specifically mentioned in the notice itself. The Court emphasized that courts cannot substitute statutory requirements with inferred knowledge or presumed awareness on the part of the recipient.

The judgment further noted that a notice lacking the specific amount creates uncertainty and defeats the very purpose of the statutory opportunity provided to the drawer. If the exact amount is not demanded, the recipient cannot be expected to make payment of an unspecified sum. Consequently, the statutory opportunity to avoid penal consequences becomes illusory.

The Court explained that the offence under Section 138 is completed only when there is a valid demand followed by failure to comply within fifteen days. In the absence of a valid demand, one of the essential ingredients of the offence remains unfulfilled. Therefore, criminal liability cannot arise.

Justice Badharudeen categorically held that omission to mention the cheque amount renders the notice incomplete and legally ineffective. Such a notice cannot be regarded as a valid notice in the eyes of law because it fails to communicate the specific demand contemplated by the statute.

The Court observed that permitting prosecutions based on defective notices would undermine the safeguards incorporated by Parliament and dilute the strict conditions governing the creation of criminal liability under the Negotiable Instruments Act.

Applying these principles to the facts of the case, the Court found that the notice issued by the complainant merely referred to the cheque number and date without specifying the amount of ₹95,000 covered by the cheque. Consequently, the notice failed to satisfy the mandatory requirement under proviso (b) to Section 138.

Since the statutory demand notice itself was invalid, the offence under Section 138 never stood completed. The acquittal recorded by the trial court was therefore found to be legally justified.

Accordingly, the High Court dismissed the appeal and affirmed the acquittal of the accused.

The judgment serves as an important reminder that prosecutions under Section 138 of the Negotiable Instruments Act are founded upon strict statutory compliance. It reinforces the principle that the demand notice is not a procedural ritual but a substantive safeguard designed to provide the drawer with a genuine opportunity to make payment and avoid criminal prosecution. By insisting upon explicit mention of the cheque amount, the Kerala High Court has clarified that criminal liability under Section 138 cannot be triggered through incomplete or ambiguous notices, thereby ensuring fidelity to the legislative framework governing cheque dishonour cases.