YAGJ ASSOCIATES

2140, Solitaire Building, Near Jio Mall, BKC, Bandra (E) – 400051.

Date: 12th January 2025

BY REGISTERED POST A.D. / SPEED POST
To,
Mr. Rajeev Narayan
[Full Address]
Subject: Notice under Section 138 read with Sections 139, 142 & 146 of the
Negotiable Instruments Act, 1881, for dishonour of cheque No. ______ dated
05.01.2025

Sir,
Under instructions from and on behalf of my client, M/s. Zenith Technologies
Pvt. Ltd., a company incorporated under the provisions of the Companies Act,
2013, having its registered office at [address], hereinafter referred to as “my
Client”, I hereby issue you this statutory notice:

1. That my client is engaged in the lawful business of providing licensed

software to industrial clients, and you, the Noticee, entered into a Dealership
Agreement with my Client on 15th October 2024 for the purpose of
distributing software packages developed by my client.
2. That pursuant to the said Agreement, on 1st December 2024 you placed a
bulk software licence order amounting to ₹25,00,000/- (Rupees Twenty-Five
Lakhs only). The goods were duly delivered in full and to your satisfaction
on or before 10th December 2024, and you raised no dispute as to their
quality, functionality, or conformity with the Agreement.
3. In discharge of your lawful debt and liability towards the said supply, you
issued Cheque No. ______ dated 05.01.2025, drawn on __________ Bank,
__________ Branch, for ₹25,00,000/-, in favour of my client.
4. That the said cheque was presented for encashment through my Client’s
banker on 06.01.2025 and was returned unpaid on 07.01.2025, with the
Bank’s Return Memo stating “Insufficient Funds”.
5. That under Section 139 of the NI Act, there is a statutory presumption in
favour of the holder of the cheque that it was issued for the discharge, in
whole or in part, of any debt or other liability. This presumption is rebuttable
only by cogent evidence, which, at present, you have failed to produce. The
Hon’ble Supreme Court in Rangappa v. Sri Mohan (2010) 11 SCC 441 has
categorically held that the presumption under Section 139 includes the
existence of a legally enforceable debt. Mere denial is not sufficient to rebut
the presumption.
6. It is anticipated that you may claim the cheque was issued as “security”. The
Hon’ble Supreme Court in ICDS Ltd. v. Beena Shabeer (2002) 6 SCC 426
and Sripati Singh v. State of Jharkhand (2021) 3 SCC 572 has held that a
cheque issued for repayment of a liability, even if described as security, is
covered under Section 138 once the underlying liability has crystallised. In
the present case, the liability crystallised upon delivery of the goods on or
before 10th December 2024.
7. That the presence of an arbitration clause in the Dealership Agreement does
not oust the jurisdiction of criminal courts under the NI Act. This is settled
law as per Trisuns Chemical Industry v. Rajesh Agarwal (1999) 8 SCC 686
and P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. (2021) 6 SCC 258, where it
was held that criminal prosecution under Section 138 is independent of
arbitration proceedings.
8. That the dishonour of the said cheque constitutes an offence under Section
138 of the Negotiable Instruments Act, 1881 (“NI Act”), which reads, inter
alia, that where a cheque drawn for the discharge of any debt or liability is
returned unpaid for insufficiency of funds, the drawer shall be deemed to
have committed an offence punishable with imprisonment and/or fine.
9. In compliance with the mandatory requirement of Section 138(b), you are
hereby called upon to make payment of ₹25,00,000/- (Rupees Twenty-Five
Lakhs only) along with interest @ 18% p.a. from 07.01.2025 till the date of
actual payment, within fifteen (15) days from the date of receipt of this
notice.
10.Failure to do so will constrain my client to:
 (a) Initiate criminal prosecution against you under Sections 138, 139, 142,
and 146 of the NI Act before the Court of the Learned Metropolitan
Magistrate, Mumbai, which has territorial jurisdiction; and
(b) Initiate independent civil proceedings for recovery, damages, and loss of
business reputation, at your entire cost and risk.
(c) Be informed that upon conviction under Section 138 NI Act, you shall be
liable for:
 Imprisonment up to two years, or
 Fine up to twice the amount of the cheque, or both,
as per the statutory provision.
My Client will also seek interim compensation under Section 143A and deposit
orders under Section 148 of the NI Act, as applicable. This is the final statutory
demand notice as envisaged under the Negotiable Instruments Act, 1881. No
further intimation will be given. Your failure to act within the statutory period
will result in immediate legal action.
Kindly take notice accordingly.

Yours faithfully,
[Signature]
Advocate for M/s. Zenith Technologies Pvt. Ltd.
ARGUMENTS FOR MEMORIAL
1. INVALID NOTICE: That this notice issued through my advocate is in
valid Such an argument is untenable in view of A.C. Narayanan v. State
of Maharashtra (2014) 11 SCC 790, where the Supreme Court upheld the
validity of notices issued “by or on behalf of” the payee under Section
138(b).
2. COMPLAINT BY POWER OF ATTORNEY HOLDER: Further, the
filing of a complaint by a duly authorised Power of Attorney holder of my
Client is permissible under Section 142(a) of the NI Act and is supported
by MMTC Ltd. v. Medchl Chemicals & Pharma (P) Ltd. (2002) 1 SCC
234 and A.C. Narayanan (supra).