The facts were as follows: The appellant issued a cheque for Rs 20 lakh in favour of the respondent. The cheque was presented to the bankers and was returned with the remarks "insufficient funds." Thereafter, within 15 days of the return of cheque, the appellant gave notice of demand as required under Section 138 proviso (B) of the Negotiable Instrument Act.

On failure of the appellant to meet the demand, a complaint was filed before the metropolitan magistrate. The magistrate was of the view that since the amount mentioned in the notice was higher than the cheque amount, the notice was bad in view of an earlier decision of Calcutta high court. On appeal to high court, the order of metropolitan magistrate was set aside as high court was of the opinion that its earlier decision relied upon by metropolitan magistrate was distinguishable. The high court held that the notice sent by the respondent clearly demanded the cheque amount and hence the notice was valid and the order of metropolitan magistrate was set aside. Aggrieved by the high court decision the appeal was filed with the Supreme Court.

The Supreme Court examined in detail Section 138 & 139 of Negotiable Instrument Act and opined that the words "payment of any amount of money" occurring in main Section 138 refers to cheque amount. It was contended on behalf of the appellant that Section 138 being a penal provision has to be construed strictly and hence notice of demand should not contain anything more or less than what is due under the cheque. The Supreme Court considered the rule of construction of a penal provision and quoted with approval the following passage of the decision of Judicial Committee in Dyke vs Elliot (1872) LR4 AC 184. "No doubt all penal statues are to be considered strictly, that is to say, the court must see that the thing charged as an offence is within the plain meaning of the words used, and must not strain the words on any notion that there has been a slip, that there has been easus omissus, that the thing is so clearly within the mischief, that it must have been intended to be included if thought of.

On the other hand the person charged has a right to say that the thing charged although within the words, is not within the spirit of the enactment. But where the thing is brought within the words and within the spirit, there a penal enactment is to be construed like any other instrument according to the fair common sense meaning of the language used, and the court is not to find or make any doubt or ambiguity in the language of a penal statute, where such doubt or ambiguity would clearly not to be found or made in the same language in any other instrument".

The Supreme Court observed that it is well settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the "said amount" ie, the cheque amount. If no demand is made, the notice no doubt would fall short of its legal requirement where in addition to the "said amount", there is also claim by way of interest cost etc, whether the notice is bad would depend upon the language of the notice. If in the notice, while giving a break up of the claim, the cheque amount, interest, damages etc, are separately specified other such claims for interest, costs etc, would be superfluous and these additional claims would be severable and will not invalidate the notice. If however, in the notice, omnibus demand is made without specifying what was due under the dishonoured cheque, notice might well fail to meet the legal requirement and may be regarded as bad.

The Supreme Court relied upon its earlier decision in Central Bank of India vs Saxson Farms (1999) AIR SCW 3621. It was stated that the object of the notice is to give a chance to the drawer of cheque to rectify his omission. Though in the notice demand for compensation, interest etc is also made, drawer will be absolved of his liability under Section 138 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 notice, or before complaint is filed.

The Supreme Court opined that in Section 138, the legislature has clearly stated that for the dishonoured cheque the drawer shall be liable for conviction if the demand is not made within 15 days of the receipt of notice but this is without prejudice to any other provisions of the Act. If the cheque amount is paid within the above period or before the complaint is filed the legal liability under Section 138 will cease and for recovery of other demands as compensation, costs, interest etc, acivil proceedings will lie. Therefore, if in a notice any other sum is indicated in addition to the "said amount" the notice cannot be faulted as stated above.

The Supreme Court examined the relevant portion of the notice and stated that in the notice in question the "said amount" ie, cheque amount has been clearly stated. Respondents had claimed in addition to the cheque amount incidental and notice charge. These two amounts are severable. In the notice it was clearly stated that failure to comply with the demand legal steps will be taken up. If the cheque amount was paid there would not have been criminal liability under Section 138.

The appeal against the judgement of Calcutta high court in Criminal Revision No 611/97 was dismissed. u