Case Background
This case arose from a business dispute between the petitioner, a director associated with Harischandra Builder Private Limited, and Opposite Party No. 2, a person carrying on business from the same locality in Siwan district, Bihar.
According to the record, there was a partnership deed executed between the parties on 15.10.2019 in relation to construction and allied works. The petitioner’s side stated that this partnership agreement was not followed in its true spirit, and disputes arose between them in respect of their business dealings.
In the course of these dealings, a cheque allegedly issued by the petitioner’s side was dishonoured. The cheque in question was for Rs. 35 lakhs, drawn on Bank of Baroda, dated 11.05.2023, bearing cheque no. 00154. After this cheque was returned unpaid due to “Funds Insufficient”, Opposite Party No. 2 issued a legal notice dated 26.07.2023 to the petitioner.
On the basis of this legal notice and the alleged dishonour of the cheque, Complaint Case No. 1619 of 2023 was filed at Siwan. The learned Judicial Magistrate 1st Class, Siwan took cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881 by order dated 12.10.2023.
The petitioner then approached the Patna High Court by filing Criminal Miscellaneous No. 76684 of 2024, seeking quashing of this cognizance order and all consequential proceedings, mainly on the ground that the statutory notice under Section 138(b) was defective.
What the Court Examined and Decided
The Patna High Court, through Hon’ble Mr. Justice Chandra Shekhar Jha, heard learned counsel for the petitioner, the State, and Opposite Party No. 2.
The central question for the Court was whether the legal notice issued under Section 138(b) of the Negotiable Instruments Act, 1881 validly demanded the “said amount” of the dishonoured cheque, which is a mandatory requirement before filing a cheque bounce complaint.
The petitioner’s counsel argued that the entire cognizance order was bad in law because the demand notice did not comply with Section 138(b). It was pointed out that the “said amount” under this provision means the amount for which the cheque under dispute was drawn. Here, the cheque amount was Rs. 35 lakhs, but the notice did not specifically demand this amount as such.
Instead, the notice demanded Rs. 80,20,000/- along with interest and other reliefs. The petitioner’s side argued that this demand was not the cheque amount and therefore did not meet the statutory requirement that the payee must “make a demand for the payment of the said amount of money” within thirty days of receiving information from the bank about the cheque being returned unpaid.
The petitioner’s counsel further stated that the cheque in issue was issued by M/s Harishchandra Builders Pvt. Ltd., a company registered under the Companies Act, 2013, but the company itself had not been made an accused in the complaint. The notice was issued to the petitioner in his personal capacity. However, the High Court’s judgment primarily turned on the defect in the demand notice under Section 138(b), not on this separate contention.
To support the main argument, the petitioner relied upon the decision of the Hon’ble Supreme Court in Upasana Mishra v. Trek Technology India Pvt. Ltd., reported as 2023 SCC OnLine SC 1740. In that case, the Supreme Court had held that when a demand notice does not specifically demand the cheque amount, but instead makes an omnibus or mixed demand including other sums like interest, damages, and charges, the notice may be invalid under Section 138(b).
On the other hand, learned senior counsel for Opposite Party No. 2 submitted that the firm of Opposite Party No. 2 was a proprietorship concern, and therefore the notice was rightly issued in his personal capacity. He further argued that the petitioner’s firm was also a proprietorship firm. He tried to justify the amount of Rs. 35 lakhs mentioned in the dealings by saying that this was part of a larger outstanding of Rs. 80,20,000/-, and the demand of Rs. 35 lakhs was raised to protect the interest of Opposite Party No. 2, including in relation to any possible summary suit for recovery.
The Court then turned to the text of Section 138(b) of the Negotiable Instruments Act, which was reproduced in the judgment. The key requirement is that, after dishonour of the cheque, the payee or holder in due course must make a demand for payment of the “said amount of money” by giving a written notice to the drawer within the prescribed time.
To assess whether this requirement had been met, the Court closely examined the legal notice dated 26.07.2023, as issued by Opposite Party No. 2. The entire notice in Hindi was reproduced in the judgment. The notice explained the business relationship, the partnership arrangement, the work done, and various payments that had been made. It also referred to the overall liability of Rs. 80,20,000/- said to be outstanding from the petitioner’s side.
Critically, in paragraph 11 of the notice, Opposite Party No. 2 demanded the total amount of Rs. 80,20,000/- along with interest and threatened legal action in case of non-payment. However, the notice did not clearly demand the specific cheque amount of Rs. 35 lakhs as “the said amount” nor did it even describe the particular cheque (Bank of Baroda, dated 11.05.2023, bearing no. 00154) which had been dishonoured.
The Court noted that from a bare reading of the notice, it nowhere suggested that any demand was raised specifically for Rs. 35 lakhs, the amount of the dishonoured instrument. The notice was even silent regarding any description of the cheque that formed the subject matter of the complaint.
After reproducing and discussing the relevant portions of the Supreme Court’s decision in Upasana Mishra, the Court highlighted that, in that case, an omnibus demand was made which included an amount different from the cheque amount plus interest, damages, and notice charges. The Supreme Court treated such a notice as invalid because it did not make a clear and specific demand for the cheque amount as required under Section 138(b).
Applying this reasoning, the Patna High Court held that the present case was fully covered by the ratio in Upasana Mishra. Just as in that case, the notice here demanded an amount which was not the cheque amount and did not separately or specifically demand payment of the cheque amount.
Therefore, the statutory requirement under Section 138(b) was not complied with. Without a valid demand notice, the foundation for a prosecution under Section 138 of the Negotiable Instruments Act fails, and any cognizance taken on such a complaint cannot stand.
In view of this, the Court concluded that the impugned cognizance order dated 12.10.2023 passed by the learned Judicial Magistrate 1st Class, Siwan in Complaint Case No. 1619 of 2023 deserved to be set aside, at least as far as the petitioner was concerned.
Accordingly, the Court set aside and quashed the cognizance order “qua petitioner” along with all consequential proceedings against him. It also directed that a copy of the order be sent to the trial court without delay. The judgment was uploaded on 27.02.2025.
Why This Judgment Matters
This judgment is important for anyone involved in cheque bounce disputes, especially small business owners and individual traders in Bihar.
The Patna High Court has made it clear that before filing a cheque bounce case, the legal notice must specifically demand the cheque amount. If the notice only demands a larger total outstanding amount or mixes the cheque amount with other claims without clearly stating the cheque amount, then the notice may be invalid.
If the notice is invalid, then the entire cheque bounce complaint can fail at the threshold. This gives a strong ground for accused persons to challenge such cases and also serves as a warning to complainants and their lawyers to draft Section 138 notices very carefully.
The judgment also shows that the Patna High Court is closely following the Supreme Court’s guidance in cases like Upasana Mishra, ensuring that criminal liability under cheque bounce law is imposed strictly in line with statutory requirements.
Legal Issues and Answers
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Issue: Whether the legal notice issued under Section 138(b) of the Negotiable Instruments Act was valid when it demanded Rs. 80,20,000/- instead of specifically demanding the cheque amount of Rs. 35 lakhs and did not describe the dishonoured cheque.
Answer: No. The Patna High Court held that the notice did not demand the “said amount” as required by Section 138(b), and was therefore invalid. -
Issue: Whether the cognizance order dated 12.10.2023 in Complaint Case No. 1619 of 2023 under Section 138 of the Negotiable Instruments Act could stand in the absence of a valid statutory notice.
Answer: No. Since the notice was defective, the foundational requirement for a Section 138 prosecution was not met, so the cognizance order was set aside and quashed qua the petitioner.
Cases Cited by the Court
- The Court expressly relied upon the Supreme Court decision in Upasana Mishra v. Trek Technology India Pvt. Ltd., reported as 2023 SCC OnLine SC 1740.
- The Court also referred to the earlier Supreme Court decision in Suman Sethi (as discussed within the Upasana Mishra judgment), but the full citation is not provided in this judgment.
Case Details
Case Number: Criminal Miscellaneous No. 76684 of 2024, arising out of Complaint Case No. 1619 of 2023 (PS. Case No. 1619 of 2023, Siwan)
Case Title: Aniket Kumar v. The State of Bihar & Anr.
Coram: Hon’ble Mr. Justice Chandra Shekhar Jha
Citation: 2025 (2) PLJR 556
Date of Judgment: 25.02.2025
Advocates:
- For the Petitioner: Mr. Rakesh Mohan Singh, Advocate
- For the State / Opposite Party No. 1: Mr. Pramod Kumar Pandey, APP
- For Opposite Party No. 2: Mr. D.K. Sinha, Senior Advocate; Mr. Alexander Ashok, Advocate; Ms. Shyama Rani, Advocate
Nature of the Case: Criminal miscellaneous application seeking quashing of cognizance order in a cheque dishonour (Section 138, Negotiable Instruments Act) complaint.
Link to Judgment: Click here to read the full judgment of the Patna High Court
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