The Supreme Court has restored the cheque-bounce conviction, ruling that dispatch of notice by registered post to the drawer’s correct address raises a rebuttable presumption of service, irrespective of whether the notice is received by the drawer personally or by a family member residing at the same address. The Court clarified that the statutory requirement of ‘giving of notice’ under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881 stands complied with once the notice is dispatched by registered post to the correct address of the drawer, and actual personal receipt by the drawer is not mandatory.
The Apex Court elaborated that a rebuttable presumption of valid service arises under Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act, 1872 upon dispatch of notice to the correct address by registered post. The burden then shifts to the drawer to establish that the address was incorrect, that he had no knowledge of the notice, or that the postal endorsement was erroneous. Where the notice is received by a family member residing at the drawer’s correct address, the presumption of valid service is not defeated, the identity of the recipient is immaterial so long as the notice reached the correct address.
A Two-Judge Bench comprising Justice Manmohan and Justice Ahsanuddin Amanullah noted that the statutory demand notice was dispatched by registered post to the correct address of respondent No. 2, which was evident from the fact that respondent No. 2 had entered appearance pursuant to summons delivered at the very same address, his Vakalatnama bore the identical address, and his appeal and revision petitions also contained the same address. Significantly, respondent No. 2 never disputed the correctness of his address in his statement under Section 313 CrPC, and it was not even his case that his relationship with his mother was inimical or that they resided separately.
The Court observed that the High Court had completely misread the decision in C.C. Alavi Haji vs. Palapetty Muhammed [(2007) 6 SCC 555], erroneously holding that unless there was evidence showing the accused was aware of the notice, service could not be presumed, and thereby wrongly shifting the burden from the accused-drawer to the complainant. Page 15 The Court further observed that the Division Bench decision in M.D. Thomas vs. P.S. Jaleel [(2009) 14 SCC 398], which had set aside a Section 138 conviction merely because notice was served upon the wife of the drawer, was rendered without noticing the binding three-Judge Bench decision in C.C. Alavi Haji and was therefore per incuriam.
The Court noted that if M.D. Thomas were treated as binding, it would lead to anomalous consequences where a complainant whose notice was never delivered at all would enjoy the presumption of valid service, but a complainant whose notice was actually delivered and received by a family member residing at the same address would be denied that benefit.
Briefly, the appellant-complainant, Sainaba, alleged that respondent No. 2 had borrowed a sum of Rs. 3 lakhs from her and, towards repayment, issued a cheque drawn on the Catholic Syrian Bank, Perumbavoor Branch, which was dishonoured upon presentation for insufficiency of funds. The appellant then issued a statutory demand notice dated 31st August 2016 through registered post at the correct address of respondent No. 2, which was received by his mother. Respondent No. 2 neither made any payment nor filed any reply to the legal notice, prompting the appellant to file a complaint under Section 138 of the Negotiable Instruments Act, 1881.
The Trial Court convicted respondent No. 2 and sentenced him to simple imprisonment for six months along with a fine of Rs. 3 lakhs, with a default stipulation of further imprisonment. The Appellate Court affirmed the Trial Court’s view that the statutory demand notice stood served since it was sent to the correct address and received by the mother of the accused. The High Court of Kerala allowed the revision solely on the ground that the statutory demand notice had been served upon the mother of respondent No. 2 and not upon him personally.
