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2021 (7) TMI 847 - HC - Indian LawsDishonor of Cheque - service of legal notice - presentation of cheque second time - bouncing of cheques on the ground that the same were not-acceptable to the bank on account of its being non- MICR - applicability of prosecution under Section 138 of Negotiable Instruments Act 1881 - HELD THAT - Admittedly the second bouncing of cheques was not on account of any insufficiency of fund in the bank nor the same was on account of any act of stop payment etc. from the side of the petitioner. Thus by the time the second presentation of cheques was made in the bank the same had become not acceptable by the bank on account of being non-MICR cheques. Accordingly the petitioner had no role to play in return of cheques upon second presentation but the same were not acceptable by the bank itself on account of technical reasons. As per proviso (a) of section 138 of the Negotiable Instrument Act 1881 the cheque has to be presented within six months from the date it is drawn or within the period of its validity whichever is earlier - the said bouncing of cheques on second presentation cannot be a ground for prosecution under Section 138 of the Negotiable Instruments Act 1881 as one of the conditions precedent for prosecution i.e the cheque itself should be valid on the date of its presentation is not satisfied when the cheques are returned as not acceptable to the bank on account of being non-MICR cheques. Whether the cheques bounced upon their first presentation on 11.06.2007 on account of insufficiency of funds can still be taken as a trigger point for constituting offence under Section 138 of Negotiable Instruments Act 1881? - HELD THAT - In the instant case the legal notice was sent on 24.07.2007. Accordingly if the first dishonour is taken into consideration the dispatch of legal notice regarding bouncing of cheques is beyond the time period of 30 days as prescribed under proviso (b) to Section 138 of Negotiable Instruments Act 1881. Thus the first bouncing of cheques when read with the date of dispatch of legal notice also does not help the complainant in any manner whatsoever as one of the conditions precedent as prescribed under proviso (b) to Section 138 of Negotiable Instruments Act 1881 will still remain unsatisfied. Whether the dispatch of demand notice under certificate of posting can be said to a valid mode of service under the provisions of Section 138 of Negotiable Instruments Act 1881? - HELD THAT - In the instant case admittedly there is no service report regarding service of demand notice upon the petitioner and what is on record is only the dispatch proof under certificate of posting - This court finds that the learned trial court has not at all given any finding regarding service of demand notice upon the petitioner said to have been dispatched under certificate of posting and the petitioner has been convicted by holding that the case was filed within a period of 30 days after arising of cause of action which is after 15 days from the dispatch/service of notice. Before the appellate court a plea was raised by the defence that the demand notice was incorrectly addressed and there was non-service of demand notice but the said plea was rejected by recording that the complainant was thoroughly cross examined and there were no material contradiction in his evidence who was the sole witness of the case - Admittedly there is no service report regarding service of the demand notice. This Court also finds that there is no material circumstance on record to show service of demand notice much less any particular date of service of demand notice upon the petitioner. Both the learned courts below have failed to consider that there was no evidence regarding service of demand notice to the petitioner sent under certificate of posting. This court is of the considered view that no presumption in connection with such demand notice under Section 138 of Negotiable Instruments Act 1881 sent through certificate of posting can be drawn unless it is coupled with other facts and circumstances which go to show that the party had notice. This Court is of the considered view that presumption of deemed service of notice only by virtue of the same having been sent through registered post/speed post can be drawn by virtue of the provisions of Section 27 of the General Clauses Act which specifically refers to registered post but has no reference to letters sent under certificate of posting. Admittedly there is no service report of legal notice in the present case which was sent under certificate of posting and not by registered post. Even if it is assumed for the sake of arguments that legal notice sent under certificate of posting would draw a presumption of deemed service though under section 27 of the General Clauses Act 1887 the question of presumption of service of letter arises only when it is sent under registered post then also the complaint case filed by the complainant in the instant case is pre-mature when considered in the light of the time-lines prescribed under Section 138 of Negotiable Instruments Act 1881 - the condition precedent for filing the case under Section 138 of the Negotiable Instruments Act 1881 having not been satisfied the complaint itself was not maintainable on the day it was filed and accordingly the petitioner could not have been convicted under the said Section. The question of any presumption regarding existing debt under Section 139 of the Negotiable Instruments Act 1881 also could not arise as the complaint itself was not maintainable. The impugned judgements of conviction of the petitioner under Section 138 of Negotiable Instruments Act 1881 suffer from patent illegality and ignoring the mandatory provisions of Section 138 of Negotiable Instruments Act 1881 with regards to the cause of action as fully discussed above which calls for interference under revisional jurisdiction of this court. The present revision petition is hereby allowed. The impugned judgements and sentence passed by the learned courts below are hereby set aside.
Issues Involved:
1. Validity of prosecution under Section 138 of the Negotiable Instruments Act, 1881 for cheques bounced due to non-MICR status. 2. Validity and service of demand notice sent under certificate of posting. 3. Prematurity of the complaint filed under Section 138 of the Negotiable Instruments Act, 1881. Issue-wise Detailed Analysis: 1. Validity of prosecution under Section 138 of the Negotiable Instruments Act, 1881 for cheques bounced due to non-MICR status: The court examined whether the bouncing of cheques on the ground of being non-MICR could call for prosecution under Section 138 of the Negotiable Instruments Act, 1881. It was found that the cheques initially bounced due to "insufficiency of funds" on 11.06.2007. However, upon their second presentation on 10.07.2007, they were returned due to being non-MICR, which indicated that the cheques had lost their validity/acceptability by the bank. The court concluded that the second bouncing of cheques was not due to any act or omission of the petitioner but due to their non-MICR status. Therefore, the prosecution under Section 138 was not valid as the cheques were not valid on their second presentation. 2. Validity and service of demand notice sent under certificate of posting: The court considered whether the dispatch of a demand notice under a certificate of posting is a valid mode of service under Section 138 of the Negotiable Instruments Act, 1881. It was determined that there is no prescribed mode of dispatch for the demand notice under the Act, and hence, a notice sent under a certificate of posting is permissible. However, the court noted that mere dispatch under a certificate of posting does not equate to proof of service. There must be additional facts and circumstances indicating that the party had notice. In this case, there was no evidence of service of the demand notice on the petitioner, and the courts below failed to consider this aspect, leading to a failure of justice. 3. Prematurity of the complaint filed under Section 138 of the Negotiable Instruments Act, 1881: The court analyzed whether the complaint was filed prematurely. The legal notice was dispatched on 24.07.2007, and assuming deemed service after 30 days, the notice would be considered served by 24.08.2007. The petitioner had 15 days from this date to make the payment, i.e., until 08.09.2007. However, the complaint was filed on 06.09.2007, before the expiry of the 15-day period. The court held that the cause of action for filing the complaint had not crystallized, rendering the complaint premature and not maintainable. Consequently, the conviction under Section 138 could not be sustained. Conclusion: The court found that the prosecution under Section 138 of the Negotiable Instruments Act, 1881, was invalid due to the non-MICR status of the cheques on their second presentation. The service of the demand notice under a certificate of posting was not proven, and the complaint was filed prematurely. As a result, the conviction and sentence were set aside, and the petitioner was discharged from the liability of the bail bonds. The revision petition was allowed, and the lower court records were ordered to be sent back.
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