Delhi HC: Lower Demand in NI Act Notice Due to Part Payments Does Not Vitiate Complaint

The Delhi High Court has held that a statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881 is not invalid merely because the amount demanded is less than the aggregate cheque value, especially when the reduction accounts for admitted part payments. This ruling clarifies that such notices cannot be labelled 'omnibus' if they transparently disclose the invoice value, dishonoured cheques, and part payments received.

Justice Madhu Jain, presiding over the matter, set aside a Sessions Court order that had quashed a summoning order. The Bench emphasized that disputed questions of fact, such as whether a cheque continues to represent a legally enforceable debt after part payments or whether a mandatory endorsement under Section 56 of the Negotiable Instruments Act, 1881 was required, are matters for trial and cannot be summarily decided in revisional jurisdiction.

Validity of Demand Notice and Legally Enforceable Debt

The High Court addressed the respondent's contention that the demand notice was invalid as it sought Rs. 6,52,410/- against eight cheques totaling Rs. 8,02,410/-. The Court observed that unlike cases where excess or arbitrary amounts are demanded, a reduced demand reflecting actual outstanding liability does not ex-facie invalidate the notice. The Court noted that the petitioner had correctly accounted for NEFT payments made by the respondent before issuing the notice.

Distinction from Precedents Involving Excess Demands

While the respondent relied heavily on Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul ( "(2025) 259 Comp Cas 658": 2025 CaseBase(SC) 852), the Court distinguished it, noting that Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul ( "(2025) 259 Comp Cas 658": 2025 CaseBase(SC) 852) involved a demand for double the cheque amount due to a typographical error. Similarly, the Court found the reliance on Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel ( "(2023) 1 SCC 578": 2022 CaseBase(SC) 171) misplaced at the summoning stage, as that case involved an acquittal after a full trial where the effect of Section 56 was proved factually.

The Court, in its reasoning, observed: "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 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."

Directions Issued to the Trial Court

The Court has the following directions:

"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. 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."

Key Takeaways:

Impact on Partial Payment Scenarios

Payees who receive partial payments after the issuance of cheques but before legal action can safely demand the actual outstanding balance in their Negotiable Instruments Act, 1881 notice without fearing technical dismissal for 'mismatch'. 

Trial over Revision

Determining whether a cheque represents a 'legally enforceable debt' after part payments is a mixed question of fact and law that must be decided at trial, not at the revisional stage. 

Endorsement Requirements

Questions regarding the lack of endorsement under Section 56 for part-payments received are matters of evidence and do not automatically render a summoning order illegal. 

Ratio Decidendi:

A statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881 is valid if it clearly specifies the cheque amount, credits part-payments, and demands the actual balance due. Such a notice is not 'omnibus' and the discrepancy between the total cheque value and the lower demanded amount does not constitute a legal infirmity warranting the quashing of a summoning order, as the final determination of the 'legally enforceable debt' is a subject matter for trial.

Background:

MS Pharmaceuticals (Petitioner) supplied goods to Nityam Pharma (Respondent) and received cheques for the invoice value. Some cheques were replaced, and the respondent made partial payments via NEFT totaling Rs. 3,50,000/-. When the final eight cheques were dishonored, the Petitioner issued a notice demanding the remaining balance of Rs. 6,52,410/-. The Magistrate summoned the respondent, but the Sessions Court set it aside, citing Mahdoom Bawa Bahrudeen Noorul vs. Kaveri Plastics ( "(2024) 02 Del CK 0095": 2024 CaseBase(DEL) 5540) and Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul ( "(2025) 259 Comp Cas 658": 2025 CaseBase(SC) 852), holding that demanding an amount different from the cheque total invalidated the notice. The High Court reversed this, citing Suman Sethi v. Ajay K. Churiwal ( "(2000) 2 SCC 380": 2000 CaseBase(SC) 731) and Alliance Infrastructure Project (P) Ltd. v. Vinay Mittal to emphasize that severable demands or reduced demands reflecting actual debt are legally permissible.

Case Details:
Case No.: CRL.M.C. 1676/2025
Case Title: MS Pharmaceuticals v. Nityam Pharma
Appearances:
For the Petitioner(s): Mr. Vipin Nandwani and Mr. Ajay Chaudhary, Advs.
For the Respondent(s): Ms. Shweta Garg, Adv.

Source: 2026 CaseBase(DEL) 494