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CASE NO.: Appeal (crl.)  887 of 1999

PETITIONER: V. Raja Kumari

RESPONDENT: P. Subbarama Naidu & Anr.

DATE OF JUDGMENT: 02/11/2004

BENCH: ARIJIT PASAYAT & C.K.THAKKER

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J.

       The appellant (hereinafter referred to as the ’accused’) calls in  question legality of judgment rendered by learned Single Judge of the  Andhra Pradesh High Court holding that the question whether notice as  required under Section 138 of the Negotiable Instruments Act, 1881 (in  short the ’Act’) has been served has to be decided during trial and the  complaint ought not to be dismissed at the threshold on the purported  ground that there was no proper service of notice.   

       Backgrounds facts in a nutshell are as follows:

       Complaint was filed by respondent no.1 alleging commission of  offence punishable under Section 138 read with Section 142 of the Act.   It was alleged that cheque dated 30.6.1997 bearing no. SB/A/31 839579  for an amount of Rs.80,000/- issued by the accused in discharge of the  advance amount paid by the complainant in respect of the sale  consideration was dishonoured by the drawee bank on account of  insufficiency of funds.  The complainant received this intimation on  2.8.1997. He got issued legal notice on 9.8.1997 through his advocate  to the correct address of the accused.  In the complaint, it is stated  that the said legal notice was returned with an endorsement that the  door of the house of the accused was locked. Subsequently, the amount  was not paid by the accused.  Hence, he filed the complaint.  The  learned Magistrate after going through the contents of the complaint  recorded the sworn statement of the complainant. Taking into  consideration of the contents of the sworn statement, he opined that  under Section 138 of the Act, the service of notice on the person,  whose cheque was dishonoured is mandatory and in the instant case the  notice was not served on the accused and mere sending of notice by the  complainant to the accused cannot be taken into consideration. Holding  thus, he dismissed the complaint. The said order was assailed before  the High Court. A revision petition in terms of Sections 397 and 401 of  the Code of Criminal Procedure, 1973 (in short the ’Code’) was filed  before High Court. The High Court by the impugned order held that the  procedure followed by the Magistrate is not correct. The complainant  complied with the requirement of law by sending registered legal  notice. Non-service of notice is not a ground for rejecting the  complaint, even before it is numbered.  What is the effect of non- service of the notice when the door of the house of the accused was  closed, will be considered after trial. Reference was made to a  decision of the High Court in V. Satyanarayana v. A.P. Travel & Tourism  Development Corporation Ltd. (1) (1997 (2) ALT (Crl.) 1 A.P.) where it

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was held that the complaint under Section 138 of the Act cannot be  quashed or dismissed merely because the notice was not served on the  accused or drawer, without enquiring into the circumstances leading to  the non-service of notice.

       In support of the appeal learned counsel for the appellant  submitted that basic requirement for initiation of proceeding is  service of notice. If the complaint itself does not show that notice  has been served, it is to be thrown out at the threshold as was rightly  done by the learned Magistrate and the High Court erroneously  interfered with it.

       Strong reliance was placed on Shakti Travel & Tours v. State of  Bihar and Another (2002 (9) SCC 415), stating that when the complainant  did not assert that demand notice has been served, the complaint was  not maintainable.

       Learned counsel for the respondent-complainant, on the other  hand, submitted that the complaint clearly indicated that the accused  managed to get an endorsement about the ’house been locked’. This was  clearly stated to be incorrect endorsement.  Therefore, as rightly held  by the High Court the effect of the endorsement has to be considered  during trial.

       The factual position in Shakti Travel (supra) as appears from the  short order of this Court was different.  There was no mention in the  complaint about service of notice.  In the instant case there is an  assertion about incorrect endorsement regarding locking of the house.   The effect of such endorsement has to be adjudged during trial.

The important point to be decided in this case is whether the  cause of action has arisen at all as the notice sent by the complainant  to the accused was returned with the endorsement "house been locked".  The conditions pertaining to the notice to be given to the drawer have  been formulated and incorporated in clauses (b) to (c) of the proviso  to Section 138 of the Act. The said clauses are extracted below:  "(b) the payee or the holder in due course of the  cheque, as the case may be, makes a demand for the  payment of the said amount of money by giving a notice  in writing, to the drawer of the cheque, within  fifteen days of the receipt of information by him from  the bank regarding the return of the cheque as unpaid;  and  (c) the drawer of such cheque fails, to make the  payment of the said amount of money to the payee ’or  as the’ case may be, to the holder in due course of  the cheque within fifteen days of the receipt of the  said notice."  On the part of the payee he has to make a demand by "giving a  notice" in writing. If that was the only requirement to complete the  offence on the failure of the drawer to pay the cheque amount within 15  days from the date of such "giving", the travails of the prosecution  would have been very much lessened. But the legislature says that  failure on the part of the drawer to pay the amount should be within 15  days "of the receipt" of the said notice. It is, therefore, clear that  "giving notice" in the context is not the same as receipt of notice.  Giving is a process of which receipt is the accomplishment. It is for  the payee to perform the former process by sending the notice to the  drawer at the correct address.  In Black’s Law Dictionary "giving of notice" is distinguished  from receiving of the notice" (vide p. 621) : "A person notifies or  gives notice to another by taking such steps as may be reasonably  required to inform the other in the ordinary course, whether or not  such other actually comes to know of it." A person "receives" a notice  when it is duly delivered to him or at the place of his business.

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If a strict interpretation is given that the drawer should have  actually received the notice for the period of 15 days to start running  no matter that the payee sent the notice on the correct address, a  trickster cheque drawer would get the premium to avoid receiving the  notice by different strategies and he could escape from the legal  consequences of Section 138 of the Act. It must be borne in mind that  the court should not adopt an interpretation which helps a dishonest  evader, and clips an honest payee as that would defeat the very  legislative measure  In Maxwell’s Interpretation of Statutes, the learned author has  emphasised that "provisions relating, to giving of notice often receive  liberal interpretation" (vide p. 99 of the 12th Edn.). The context  envisaged in Section 138 of the Act invites a liberal interpretation  for the person who has the statutory obligation to give notice because  he is presumed to be the loser in the transaction and it is for his  interest the very provision is made by the legislature. The words in  clause (b) of the proviso to Section 138 of the Act show that the payee  has the statutory obligation to "make a demand" by giving notice. The  thrust in the clause is on the need to "make a demand". It is only the  mode for making such demand which the legislature has prescribed. A  payee can send the notice for doing his part for giving the notice.  Once it is despatched his part is over and the next depends on what the  sendee does.  It is well settled that a notice refused to be accepted by the  addressee can be presumed to have been served on him (vide Harcharan  Singh v. Shivrani (1981 (2) SCC 535) and Jagdish Singh v. Natthu Singh  ((1992 (1) SCC 647).  Here the notice is returned as addressee being not found and not  as refused. Will there be any significant difference between the two so  far as the presumption of service is concerned? In this connection a  reference to Section 27 of the General Clauses Act, 1897 will be  useful. The section reads thus:  "27. Meaning of service by post.-Where any Central  Act or Regulation made after the commencement of  this Act authorises or requires any document to be  served by post, whether the expression ’serve’ or  either of a the expressions ’give’ or ’send’ or any  other expression is used, then, unless a different  intention appears, the service shall be deemed to be  effected by properly addressing, preparing and  posting by registered post, a letter containing the  document, and unless the contrary is proved, to have  been effected at the time at which the letter would  be delivered in the ordinary course of post."  

No doubt Section 138 of the Act does not require that the notice  should be given only by "post". Nonetheless the principle incorporated  in Section 27 (quoted above) can profitably be imported in a case where  the sender has despatched the notice by post with the correct address  written on it. Then it can be deemed to have been served on the sendee  unless he proves that it was not really served and that he was not  responsible for such non-service. Any other interpretation can lead to  a very tenuous position as the drawer of the cheque who is liable to  pay the amount would resort to the strategy of subterfuge by  successfully avoiding the notice.  This position was noted by this Court in K. Bhaskaran v. Sankaran  Vaidhyan Balan and Another (1999 (7) SCC 510).

The object of notice is to give a chance to the drawer of the  cheque to rectify his omission and also to protect an honest drawer.  Service of notice of demand in clause (b) of the proviso to Section 138  is a condition precedent for filing a complaint under Section 138 of  the Act. In the present appeal there is no dispute that notice was in  writing and this was sent within fifteen days of receipt of information  by the appellant-Bank regarding return of cheques as unpaid. Therefore,

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the only question to be examined is whether in the notice there was a  demand for payment.     (See Central Bank of India and Another v.  Saxons Farms and Others (1999 (8) SCC 221)

       At this juncture it is relevant to take note of order passed by  this Court in State of M.P. v. Hiralal and Others (1996 (7) 523). It  was, inter alia, noted as follows:

"In view of the office report, it would be clear  that the respondents obviously managed to have the  notice returned with postal remarks "not available  in the house", "house locked" and "shop closed"  respectively. In that view, it must be deemed that  the notices have been served on the respondents."

       In Madhu v. Omega Pipes Ltd. [1994 (1) ALT (Crl.) 603 (Kerala)]  the scope and ambit of Section 138 clauses (b) and (c) of the Act were  noted by the Kerala High Court and Justice K.T. Thomas (as His Lordship  was then) observed as follows:

"In Clause (c) of the proviso the drawer of the  cheque is given fifteen days from the date ’of  receipt of said notice’ for making payment.  This  affords clear indication that ’giving notice’ in the  context is not the same as receipt of notice.   Giving is the process of which receipt is the  accomplishment.  The payee has to perform the former  process by sending the notice to the drawer in his  correct address, if receipt or even tender of notice  is indispensable for giving the notice in the  context envisaged in Clause (b) an evader would  successfully keep the postal article at bay at least  till the period of fifteen days expires.  Law shall  not help the wrong doer to take advantage of his  tactics. Hence the realistic interpretation for the  expression ’giving notice’ in the present context is  that, if the payee has dispatched notice in the  correct address of drawer reasonably ahead of the  expiry of fifteen days, it can be regarded that he  made the demand by giving notice within the  statutory period.  Any other interpretation is  likely to frustrate the purpose for providing such a  notice."   

       Burden is on the complainant to show that the accused has managed  to get an incorrect postal endorsement made.  What is the effect of it  has to be considered during trial, as the statutory scheme unmistakably  shows the burden is on the complainant to show the service of notice.   Therefore, where material is brought to show that there was false  endorsement about the non-availability of noticee, the inference that  is to be drawn has to be judged on the background facts of each case.

       In view of the aforesaid, the inevitable conclusion is that the  High Court was justified in its view and no interference is called for  in this case.

       The appeal deserves to be dismissed which we direct.