MS Pharmaceuticals v. Nityam Pharma

SUBMISSIONS ON BEHALF OF THE PETITIONER

10. The learned counsel for the petitioner submitted that the learned Sessions Court failed to appreciate that the only ground raised by the respondent that the legal demand notice did not demand a legally enforceable debt was misconceived, as the notice dated 21.03.2020 demanded only the amount actually due and payable, i.e., Rs.6,52,410/-, after accounting for all part payments received.

11. It was submitted that the learned Sessions Court committed a grave error in returning a finding that legal liability was ‘not proved’ without relegating the parties to trial, particularly when the notice categorically specified the invoice value, the cheques issued, the part payments received, and the resultant outstanding liability.

12. It was further submitted that the notice was not an omnibus demand, since it clearly and separately specified each of these particulars, and therefore there was no defect in the notice as contemplated in Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380, wherein it was held that a notice is bad in law only where an omnibus demand is made without specifying what is due under the dishonored cheque, and not otherwise.

13. The learned counsel for the petitioner placed reliance on M/s Alliance Infrastructure Project Pvt. Ltd. & Ors. v. Vinay Mittal, 2010 SCC OnLine Del 182, to submit that a notice is invalid only where the principal amount demanded exceeds the principal amount actually payable, without indicating the basis for the excess; whereas in the present case, the demand was less than, and not more than, the cheque amount, and hence the notice was legal and valid.

14. It was further submitted that the judgment relied upon by the affirmed before the Sessions Court, namely Mahdoom Bawa Bahrudeen Noorul v. Kaveri Plastics (2024) 02 Del Chandhok 0095, was factually distinguishable, as it concerned a notice demanding double the cheque amount on account of a typographical error, whereas no such typographical error or excess demand existed in the present case.

15. The learned counsel also submitted that it is not the cheque amount but the legally recoverable debt which is required to be demanded in a notice under Section 138(b) NI Act, and since the petitioner had correctly demanded only the legally recoverable debt, the notice did not suffer from any infirmity.

16. The learned counsel places reliance on Union of India v. Major Bahadur Singh, (2005) 8 SCC 368, to submit that each case turns on its own facts, and that the learned Sessions Court erred in mechanically relying upon judgments dealing with notices demanding amounts in excess of the cheque amount, which were factually inapplicable to the present case where the demand was admittedly less than the cheque amount.

17. It is submitted that the impugned judgment dated 07.10.2024 is based on surmises and conjectures and is liable to be set aside, and that the petitioner has not filed any other petition challenging the said judgment before this Court or any other superior court.

SUBMISSIONS ON BEHALF OF THE RESPONDENT

18. Per contra, the learned counsel for the respondent submits that the complaint filed by the petitioner is not maintainable as it is based on cheques aggregating to ₹8,02,410/-, whereas the statutory demand notice sought payment of only ₹6,52,410/-. It is contended that the learned Sessions Court rightly noticed this material discrepancy, which is also reflected in the metadata form accompanying the complaint. Relying upon Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380 and Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (2025) 259 Comp Cas 658, learned counsel submitted that a complaint founded on a defective statutory notice demanding an amount different from the cheque amount is not maintainable and, therefore, the impugned revisional order warrants no interference.

19. Learned counsel for the respondent submitted that no offence under Section 138 of the NI Act is made out as the petitioner presented the cheques for their full amount despite having received part payments prior to their presentation, without making the mandatory endorsement under Section 56 of the Act. Consequently, the cheques did not represent a legally enforceable debt to the extent of their face value on the date of presentation. Reliance is placed on Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel,

20. Learned counsel for the respondent submitted that the complaint is founded upon an omnibus statutory demand notice which fails to specify the break-up of the principal amount, interest, and other charges claimed. It was contended that such a vague and indefinite notice does not satisfy the mandatory requirements of Section 138 of the NI Act and, therefore, the complaint is not maintainable and the present petition is liable to be dismissed.

21. Learned counsel for the respondent submitted that the complaint is not maintainable as it seeks prosecution in respect of eight dishonoured cheques pertaining to different dates of presentation and dishonour, each constituting a separate and distinct transaction. It was contended that in view of Sections 218 and 219 of the Code of Criminal Procedure, 1973, each distinct offence is required to be tried separately, and the joinder of all eight cheque dishonour allegations in a single complaint is impermissible.

22. Learned counsel for the respondent, in support of the aforesaid submissions, also placed reliance upon the following decisions:  Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (2025) 259 Comp Cas 658  Yankay Drugs and Pharmaceuticals Ltd. v. Citi Bank, (2001) 106 Comp Cas 662  Sunglo Engineering India Pvt. Ltd. v. State Criminal MC No. 3 of 2021, order dated 21-12-2021 (Del).  Gaurav Mittal v. State (NCT of Delhi), 2023 SCC OnLine Del 1528  Jay Hanuman Enterprises v. State of Gujarat (CRA. 1625/2023) decided on 9.10.2024.

ANALYSIS AND FINDINGS

23. I have considered the submissions made by the learned counsels for the parties.

24. The principal question that falls for consideration is whether the learned Session Court was justified in setting aside the summoning order by holding the statutory demand notice to be invalid merely because the amount demanded therein was less than the aggregate amount covered by the dishonoured cheques.

25. Section 138 of the NI Act reads as under:

26. A plain reading of Section 138 of the NI Act makes it evident that for constituting an offence under the said provision, the conditions stipulated in clauses (a), (b) and (c) of the proviso are mandatory. In the present case, the controversy centres around clause (b) of the proviso, namely, the requirement that the payee must make a demand for payment of the ‘said amount of money’ by issuing a statutory notice within the prescribed period.

27. Before adverting to the facts of the present case, this Court considers it apposite to examine the legal position governing the controversy in issue, as emerging from the judgments relied upon by the learned counsel appearing for the parties.

28. It is a pertinent to refer to the judgment of the Supreme Court in Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380, wherein the Court examined the scope of the expression ‘the said amount of money’ occurring in clauses (b) and (c) of the proviso to Section 138 of the NI Act. The Supreme Court held that the expression refers to the cheque amount and that a statutory notice must contain a demand for the cheque amount. At the same time, it was clarified that the notice has to be read as a whole. The relevant extract is reproduced hereinbelow:

7. There is no ambiguity or doubt in the language of Section 138. Reading the entire section as a whole and applying common sense, from the words, as stated above, it is clear that the legislature intended that in a notice under clause (b) to the proviso, the demand has to be made for the cheque amount. According to Dr Dhavan, the notice of demand should not contain anything more or less than what is due under the cheque.

8. It is a 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” i.e. the cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement. Where in addition to the “said amount” there is also a claim by way of interest, cost etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving the break-up of the claim the cheque amount, interest, damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable and will not invalidate the notice. If, however, in the notice an omnibus demand is made without specifying what was due under the dishonoured cheque, the notice might well fail to meet the legal requirement and may be regarded as bad.

13. In the notice in question the “said amount” i.e. the cheque amount has been clearly stated. Respondent 1 had claimed in addition to the cheque amount, incidental charges and notice charge. These two amounts are severable. In the notice it was clearly stated that on failure to comply with the demand necessary legal steps will be taken up. If Respondent 1 had paid the cheque amount he would have been absolved from the criminal liability under Section 138. Regarding other claims, a civil suit would be necessary.” (emphasis supplied)

29. The decision of this Court in Alliance Infrastructure Project (P) Ltd. v. Vinay Mittal, 2010 SCC OnLine Del 182, is also relevant to the issue involved in the present case. The relevant portion of the judgment reads as under: “The expression “amount of money” used in Section 138(b) of Negotiable Instrument Act, to my mind, in a case of this nature would mean the amount actually payable by the drawer of the cheque to the payee of the cheque. Of course, if the payee of the cheque makes some demands on account of interest, compensation, incidental expenses, etc. that would not invalidate the notice so long as the principal amount demanded by the payee of the cheque is correct and is clearly identified in the notice. When the principal amount claimed in the notice of demand is more than the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138(b) of Negotiable Instrument Act. In such a case, it is not open to the complainant to take the plea that the drawer of the cheque could have escaped liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid.

30. In Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (2025) 259 Comp Cas 658, the cheque in question was admittedly issued for Rs.1,00,00,000/-, whereas the statutory notice demanded Rs.2,00,00,000/-, i.e., double the cheque amount. The complainant attempted to justify the discrepancy by contending that it was merely a typographical error. The Supreme Court rejected this explanation and held: “3.3. The fact situation is that the cheque in question was issued for Rs. 1,00,00,000 whereas in both the aforesaid notices sent to the accuseddrawer of the cheque upon bouncing of the cheque, the complainant asked for the payment of Rs. 2,00,00,000. At that stage, the respondent accused filed an application seeking discharge contending that the notice of demand as aforementioned was not in terms of proviso (b) to section 138 of the Negotiable Instruments Act, therefore, the complaint was not maintainable. The plea for discharge was dismissed by the Metropolitan Magistrate on October 6, 2021. The respondent herein then filed a petition before the High Court, culminating into the impugned judgment and order whereby the High Court held that as the demand notice under proviso (b) of section 138 of the Negotiable Instruments Act, was at variance with the cheque amount, the same was invalid rendering the complaint liable to be quashed. xxx

10. Reverting to recollect the facts of this case, the cheque which was drawn by the respondent was for Rs. 1,00,000,00 whereas in the notice issued under proviso (b) to section 138 of the Negotiable Instruments Act against the respondent, the appellant mentions the amount of Rs. 2,00,000,00. The rigours of law on this score being strict, the defence would not hold good that the different amount mentioned in the notice was out of inadvertence. Even if the cheque number was mentioned in the notice, since the amount was different, it created an ambiguity and differentiation about the “said amount”. The notice stood invalid and bad in law. The order of quashment of notice was eminently proper and legal.”

31. The Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578 revisited the principles governing the validity of a statutory notice under Section 138 of the NI Act. The relevant paragraph is extracted hereinbelow:

32. The aforesaid decisions, relied upon by both the parties, lay down the general principles governing the validity of a statutory notice under Section 138 of the NI Act. They hold that the demand contemplated under clause (b) of the proviso to Section 138 must ordinarily relate to the amount covered by the dishonoured cheque and that the statutory notice must be read as a whole. They further hold that where, in addition to the cheque amount, the notice separately specifies claims towards interest, costs or other incidental charges, such claims are severable and do not invalidate the notice. Conversely, where the notice contains only an omnibus demand without specifying the amount due under the dishonoured cheque, it may fail to satisfy the statutory requirement.

33. However, the factual matrix of the present case is materially different, since the demand in the notice was reduced on account of admitted part payments and not because of an erroneous or inflated demand. The applicability of the aforesaid principles must, therefore, be examined in the peculiar facts of the present case. As aptly observed by Lord Denning: “… Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.”

34. At this juncture, this Court deems it appropriate to examine the demand notice in question. The relevant extracts thereof are reproduced hereinbelow:

35. On a plain reading of the statutory notice, it cannot be said that the notice is omnibus in nature. It specifically records the invoice value, the dishonoured cheques, the part payments received through NEFT on different dates and the manner in which the outstanding amount of Rs.6,52,410/- was arrived at before calling upon the respondent to make payment thereof. Whether, in view of the admitted part payments, the statutory requirement under Section 138 read with Section 56 of the NI Act stood satisfied, and whether the dishonoured cheques continued to represent a legally enforceable debt, are issues which depend upon the evidence led by the parties and the factual foundation established during trial. Such disputed questions could not have been conclusively determined while exercising revisional jurisdiction against a summoning order.

36. The learned Session Court, while setting aside the summoning order, has primarily relied upon the decision in Mahdoom Bawa Bahrudeen Noorul v. Kaveri Plastics, 2024 SCC OnLine Del 1302 which was affirmed by the Supreme Court in Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, (2025) 259 Comp Cas 658. The learned counsel for the respondent has also placed substantial reliance on the said decision. However, this Court is of the considered view that the said judgment is distinguishable on facts and does not govern the controversy involved in the present case. In the said case, the cheque amount was Rs.1,00,00,000/-, whereas the statutory notice demanded Rs.2,00,00,000/- solely on the ground of an alleged typographical error. The Supreme Court held that such a notice was invalid as the amount demanded was neither the cheque amount nor was there any legal basis disclosed for the excess demand.

37. The present case stands on a different footing. The statutory notice specifically sets out the invoice value, the particulars of all the dishonoured cheques, the part payments admittedly received from the respondent, and the manner in which the outstanding amount of Rs.6,52,410/- has been computed before calling upon the respondent to make payment thereof. On its face, the statutory notice cannot be characterised as an omnibus notice or as a notice making an arbitrary or inflated demand. The controversy here is not whether the notice ex facie demands an incorrect amount, but whether, in view of the admitted part payments, the dishonoured cheques continued to represent a legally enforceable debt and whether the provisions of Section 56 of the NI Act were attracted. Those issues cannot be conclusively determined while examining the validity of the summoning order in exercise of revisional jurisdiction.

38. Similarly, the reliance placed by the respondent on Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578 does not conclude the issue arising in the present case. In Dashrathbhai (supra), the Supreme Court was considering an appeal against acquittal after a fullfledged trial where the complainant had admitted receipt of part payments and the Courts below had returned findings of fact that the cheque no longer represented the legally enforceable debt on the date of its presentation. It was in those proved facts that the Court examined the effect of Section 56 of the NI Act and held that, in the absence of the requisite endorsement, the offence under Section 138 was not attracted.

39. The present case is factually distinguishable from the aforesaid decision. The challenge before this Court arises from an order passed in revision setting aside the summoning order. At this stage, there is no adjudication on whether the admitted part payments were made towards the very dishonoured cheques, whether Section 56 was attracted in the facts of the case, whether the cheques continued to represent a legally enforceable debt on the date of presentation, or what legal effect, if any, the alleged absence of endorsement would have. These are disputed questions which require appreciation of evidence and, therefore, could not have been conclusively determined while examining the legality and correctness of the summoning order in exercise of revisional jurisdiction.

40. The learned Session Court proceeded on the premise that since the amount demanded in the statutory notice was lower than the aggregate amount covered by the dishonoured cheques, the notice was necessarily invalid. In doing so, it did not examine that the statutory notice itself disclosed the invoice value, the dishonoured cheques, the admitted part payments received from the respondent and the manner in which the outstanding amount of Rs. 6,52,410/- had been computed. Whether such reduced demand correctly represented the legally enforceable debt in view of the admitted part payments, and the legal consequences flowing therefrom, are matters requiring appreciation of evidence and could not have been conclusively determined while exercising revisional jurisdiction against the summoning order.

41. At the stage of issuance of process, the Court is only required to examine whether a prima facie case is disclosed from the complaint and the material placed on record. It is not expected to adjudicate disputed questions of fact or return findings on issues which require evidence.

CONCLUSION

42. Therefore, the impugned judgment dated 07.10.2024 passed by the learned Session Court is hereby set aside. Consequently, the present petition is allowed, and the summoning order dated 15.03.2021 passed by the learned Metropolitan Magistrate in CC No. 198/2021 is restored.

43. The parties shall appear before the learned Trial Court on 08.08.2026. The learned Trial Court shall proceed with the complaint in accordance with law and decide the same on its own merits, uninfluenced by any observations contained in the impugned revisional order or the present judgment.

44. The petition is accordingly disposed of in the above terms. Pending application(s), if any, stand disposed of.

45. Copy of this order be communicated to the concerned learned Trial Court for necessary information and compliance.

JUDGE JULY 10, 2026/RM/b