Cheque Bounce Case-Notice u/S 138 of NI Act to be only for cheque amount-Supreme Court

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April 19, 2019

Case name: Vijay Gopala Lohar v. Pandurang Ramchandra Ghorpade & Anr.

In the case, the complainant/respondent alleged that the appellant had taken a loan from the respondent and later to repay the loan amount deposited cheques in the bank which were returned with an endorsement “funds insufficient”. Subsequently, the respondent filed complaint under Section 138 of the Negotiable Instrument Act, 1881. The Trial Court though acquitted the appellant, the High Court was of the opinion that there was no satisfactory evidence led by the appellant that the cheque in question were issued for the discharge of a legally enforceable debt.

One of the seminal issue that was raised in the case was that notice referred to the loan amount and not the cheque amount. The appellant contended that according to clause(b) of the proviso to Section 138 of the NI Act, the demand by the notice should be only the cheque amount and not the loan amount.

Bench’s Verdict

The Two-Judge Bench of the Supreme Court took the view that there was no dispute regarding the proposition that the notice issued under Section 138 of the NI Act has to be only for the cheque amount and not for any other amount more than the cheque amount.

Accordingly, the Supreme Court refused to interfere with the High Court’s judgment and dismissed the appeal.

The case can be accessed here.

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