Service of notice - unclaimed

 SERVICE OF NOTICE: UNCLAIMED/REFUSED- IMPACT

The issue of whether a legal notice sent under Section 138 of the N.I. Act, 1881, is considered served when it is returned unclaimed but not refused has been addressed by various courts over time. This intriguing issue involves several factors, which can be understood as follows:

A. Clause (b) of the proviso to Section 138 of the Act indicates that the payee has a statutory obligation to ‘make a demand’ by giving notice. The emphasis is on the necessity to ‘make a demand,’ and the legislature has prescribed the mode for making such a demand. The payee fulfills their obligation by dispatching the notice. Once dispatched, the responsibility shifts to the recipient.

B. In the case of K. Bhaskaran vs. Sankaran Vaidhyan Balan and Anr (29 September 1999), the notice issued under Clause (b) was returned unclaimed, not refused. The Court questioned whether there is a significant difference between the two regarding the presumption of service. It was observed that although Section 138 does not mandate that the notice be given only by ‘post,’ if the sender dispatches the notice by post with the correct address, the principle in Section 27 of the General Clauses Act, 1897, can be applied. In such cases, service of notice is deemed to have been effected unless the sender proves it was not served and that they were not responsible for the non-service.

C. In the case of D. Vinod Shivappa vs. Nanda Belliappa (25 May 2006), the Court elaborated on situations where the notice could not be served due to reasons like the addressee’s non-availability or premises being locked. It was observed that if the law is interpreted to mean no service of notice in such cases, it would defeat the Act’s purpose. An unscrupulous drawer of a cheque could avoid prosecution by making themselves unavailable. Once the payee issues notice, the cause of action to file a complaint arises after the prescribed period for payment by the drawer. If the payee does not file a complaint within one month of the cause of action arising, the complaint is time-barred. Thus, a person who avoids the postman or gets a fake endorsement of non-availability can evade prosecution, as the payee must issue notice within 30 days of receiving information from the bank about the cheque’s return as unpaid.

This Court held: (SCC p.463, para 15)

“15. We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee At Present In Kalamba Jail vs Gautam Umed Parmar on 3 April, 2013 is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice.

If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof.

D. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. Therefore, it would be premature at the stage of issuance of process, to move the High Court for quashing of the proceeding under Section 482 of the Code of Criminal Procedure. The question as to whether the service of notice has been fraudulently refused by unscrupulous means is a question of fact to be decided on the basis of evidence. In such a case the High Court ought not to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.”

 It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address.

E.Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business.

This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement ‘refused’ or ‘not available in the house’ or ‘house locked’ or ‘shop closed’ or ‘addressee not in station’, due service has to be presumed. [Vide Jagdish Singh v. Natthu Singh, AIR 1992 SC 1604; State of M.P. v. Hiralal and Ors. At Present In Kalamba Jail vs Gautam Umed Parmar on 3 April, 2013 , [1996] 1 SCR 480 and V. Raja Kumari v. P. Subbarama Naidu and Anr., 2005 Cri.L.J. 127]. It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved.

F. In Kalamba Jail vs Gautam Umed Parmar At Present In Kalamba Jail vs Gautam Umed Parmar on 3 April, 2013 (indiankanoon.org), CRIMINAL REVISION APPLICATION NO.435 OF 2011 decided on 3 April, 2013, The Honourable High Court of Bombay laid down teh following ratio’s as below :

 

a. when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with.

b. It is needless to emphasize that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque.

c. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the Court is required to be prima facie satisfied that a case under the said Section is made out and the afore noted mandatory statutory procedural requirements have been complied with.

d.It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect.

e.In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends.

 

Further , the honourable court concluded  that In the facts of the present case, there is no dispute about service of the notice in terms of Section 27 of the General Clauses Act, 1897 and Section 28 of the Bombay General Clauses Act, 1904. The notice was issued and served, but the Applicant did not receive it personally. It was her husband who  received it. In these circumstances, both the Courts below did not commit any error in holding that the notice is duly served and received as well. Once it is duly served and received and there is no compliance with the requisitions contained therein, then, the offence is committed. Once the offence is committed, then, the conviction and sentence is valid, legal and proper. There is no evidence to rebut the presumption in favour of the Complainant of service of the notice and its receipt.

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