2019 (10) TMI 806 - HC - Indian Laws

Service of notice - Dishonor of Cheque - offence punishable under Section 138 of N.I.Act - whether the cause of action has arisen as the notice sent by the respondent/accused to the accused/applicant was returned due to his unavailability? - HELD THAT - Admittedly, the notice under Section 138 of N.I. Act was sent to the applicant/accused through registered post on his correct address. It is well settled that once notice has been sent by registered post with acknowledgment, it must be presumed that the service is made effective. In the case of V. Raja Kumari vs P. Subbarama Naidu Anr, 2004 (11) TMI 515 - SUPREME COURT , the Hon'ble Apex Court has held that statutory notice under Section 138 of the Act sent to the correct address of the drawer 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. It has been further argued on behalf of the applicant that the cheque had got dishonored for reason Kindly contact drawer/drawee bank and pleasen. and not for the fund insufficient. Now the onus to prove this was upon the applicant and he can summon the bank record to show that at the relevant time period when the cheque in question was presented, he had sufficient balance in his account and therefore, the reason for dishonour of cheque in question is to be adjudicated after recording the evidence of the parties - It is also pertinent to note that in the instant case, the complainant has already discharged his burden by producing the impugned cheques, which he alleges to have been issued by the applicant/accused in his favour bearing a signature, hence, initial presumption of the said cheque having been issued in favour of the complainant is already there which needs to be rebutted by the accused. The Court finds that the impugned order which is being challenged by the learned counsel for the applicant does not suffer from any lacuna at this stage and, therefore, this Court does not find any force in the arguments of the learned counsel for the applicant - petition dismissed.

Summary

Issues:
1. Maintainability of complaint under Section 138 of N.I. Act without proper service of notice.
2. Validity of the cheques returned with the remark "Kindly contact drawer/drawee bank and pleasen."
3. Prima facie case against the applicant for offence under Section 138 of N.I. Act.
4. Interpretation of statutory notice requirements for filing a complaint under Section 138 of N.I. Act.

Issue 1: Maintainability of complaint under Section 138 of N.I. Act without proper service of notice

The applicant challenged the maintainability of the complaint due to the lack of proper service of notice as required under Section 138 of N.I. Act. The notice sent by the respondent through registered post was returned unserved, and the court below took cognizance despite this. The court noted that the notice was sent to the correct address, and the law presumes effective service when sent by registered post. Precedents established that the effectiveness of service should be decided during trial, and non-service cannot be a ground for dismissal at the threshold. The burden to prove non-service lies on the accused, and this issue can only be determined after recording evidence.

Issue 2: Validity of the cheques returned with the remark "Kindly contact drawer/drawee bank and pleasen"

The applicant argued that the cheques were not dishonored under Section 138 of N.I. Act as they were returned with the remark to contact the bank, not for insufficient funds. The onus to prove this rested on the applicant, who could present bank records to show sufficient balance. However, the complainant had already produced the impugned cheques bearing the accused's signature, creating a presumption that they were issued in his favor. The court emphasized that the determination of this issue would require evidence and could only be made during trial.

Issue 3: Prima facie case against the applicant for offence under Section 138 of N.I. Act

The respondent contended that there was a prima facie case against the applicant for the offence under Section 138 of N.I. Act. The court noted the allegations that the applicant took a loan and issued cheques for repayment, which were returned dishonored. The court found that the complaint reflected the elements of the offence, and the respondent had dispatched the notice correctly. The court held that the impugned order did not suffer from any lacuna at this stage, and the arguments against it lacked merit.

Issue 4: Interpretation of statutory notice requirements for filing a complaint under Section 138 of N.I. Act

The court analyzed the statutory notice requirements for filing a complaint under Section 138 of N.I. Act. It highlighted the need for a demand notice sent in writing to the drawer, followed by failure to pay within 15 days of receipt. Precedents emphasized that if the notice was sent to the correct address and returned unserved, the presumption of effective service exists. The court underscored that the burden to show non-service lies on the accused and that such questions should be decided after recording evidence during trial.

In conclusion, the High Court dismissed the petition challenging the order taking cognizance against the applicant for the offence under Section 138 of N.I. Act. The court found that the issues raised regarding notice service and cheque dishonor required evidence and could not be decided at the initial stage. The judgment emphasized the need for a trial to determine these crucial aspects of the case.