The Supreme Court has held that once the notice is dispatched to the correct address of the accused, the statutory requirement of ‘giving of notice’ under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881 stands satisfied. The Apex Court further held that the presumption would remain unrebutted even when the accused’s mother received the notice and the accused failed to prove either that the address was incorrect or his relationship with his mother was inimical.

The Apex Court was considering an appeal filed against the judgment passed by the Kerala High Court whereby the concurrent findings of the Trial Court and the Appellate Court convicting and sentencing the second respondent under Section 138 of the Negotiable Instruments Act, 1881, were set aside on the ground of non-compliance with proviso (b) to Section 138 inasmuch as the statutory demand notice had not been served upon the second respondent, but was served upon the mother of the second respondent.

The Division Bench of Justice Ahsanuddin Amanullah and Justice Manmohan held, “This Court is of the considered view that once the notice was dispatched to the correct address of respondent No.2, the statutory requirement of ‘giving of notice’ under proviso (b) to Section 138 of the Act, 1881 stood satisfied. Since respondent No.2 failed to prove either that the address was incorrect or that he was unaware of the notice being delivered to his address or that his relationship with his mother was inimical, the presumption remained unrebutted. The High Court erred in reversing the concurrent findings of the Trial Court solely on the ground that the notice was not personally delivered to respondent No.2.”

AOR Tom Joseph represented the Appellant while AOR Nishe Rajen Shonker represented the Respondent.

Factual Background

In the complaint under Section 138, it was alleged by the appellant-complainant that the second respondent had borrowed Rs 3 lakh from the appellant-complainant. Towards the repayment of the same, the second respondent accused had issued a cheque which was dishonoured upon presentation. The appellant-complainant issued a statutory demand notice through registered post at the correct address of the respondent, which was received by his mother. Despite receipt of notice at his address, the second respondent did not make any payment or file any reply to the legal notice.

Thereafter, the appellant-complainant instituted the complaint under Section 138 of the Act, 1881. When the respondent was examined under Section 313 of the Code of Criminal Procedure, he stated that he had altogether borrowed Rs 7 lakh from the complainant but had repaid the entire amount. He further stated that he had given a blank signed cheque while borrowing Rs 3,00,000. The Trial Court convicted the respondent, but the High Court allowed the Criminal Revision filed by the respondent on the ground that statutory demand notice under Section 138 of the Act, 1881 had not been served upon the respondent but had been served upon his mother.

Reasoning

The Bench reaffirmed the view that there exists a rebuttable presumption of valid service of a statutory notice under Section 138 of the Act, 1881, where such notice is dispatched by registered post to the correct address of the drawer. “This Court reiterates that the law requires only that the complainant dispatch the notice to the correct address of the drawer and the presumption in his favour cannot be defeated by circumstances beyond his control. Under Section 27 of the General Clauses Act, 1897, service is deemed to be effected, once the notice is properly addressed and sent by registered post”, it added.

The Bench noted that a Division Bench in M.D. Thomas vs. P.S. Jaleel (2009) without noticing the authoritative pronouncement of the larger three-Judge Bench in C.C. Alavi Haji vs. Palapetty Muhammed (2007) , set aside a conviction under Section 138 solely on the ground that the statutory notice had been served upon the wife of the drawer and not upon the drawer himself without examining whether the notice was correctly addressed or whether the wife resided with the husband-drawer. The Bench thus clarified that the judgment in M.D. Thomas (supra) is per incuriam and cannot be treated as binding precedent under Article 141 of the Constitution.

The Bench was of the view that once the notice was dispatched to the correct address, the presumption in terms of the judgment in C.C. Alavi Haji (supra) arose, and it was incumbent upon the drawer/accused to establish either that the address was incorrect or that he had no knowledge of the notice having been brought to his address.

Decision

Thus, allowing the appeal, the Bench set aside the impugned judgment of the High Court and restored the judgment passed by the Trial Court sentencing the respondent to undergo simple imprisonment for six months and to pay a fine of Rs 3 lakh with a default stipulation of further imprisonment.

Cause Title: Sainaba v. State of Kerala & Anr. (Neutral Citation: 2026 INSC 1069)

Appearance

Appellant: AOR Tom Joseph- 2953, Advocates Johnson Varikkappalli, Linto K.B.

Respondent: AOR Nishe Rajen Shonker- 1698

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