2022 (2) TMI 352 - HC - Indian Laws

Dishonor of Cheque - complainant for an amount of ₹ 2,50,000/- in discharge of his liabilities which was subsequently dishonoured for closure of the bank account of the accused - complainant presented the same for encashment and that after receipt of appropriate legal notice, the accused failed to repay the amount within the stipulated period - Section 138 of the Negotiable Instruments Act - HELD THAT - On plain reading of Clause (b) of Section 138 of the NI Act, it becomes aptly clear that it mandates the payee or the holder in due course of the cheque to raise a demand for payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The Legislatures in their own wisdom employed the language in Clause (b) that the notice had to be served to the drawer of the cheque. Now, if I read Clause (b) of Section 138 of the NI Act with the expression used in Section 27 of the General Clauses Act, then, it comes to fore that where any Central Act made after the commencement of the General Clauses Act authorizes or requires any document to be served by post, whether the expression serve or either of 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 to the addressee unless the contrary is proved. Here the language employed by the Legislature that unless a different intention appears appears to be very significant. In the instant case, admittedly the wife, but, not the drawer of the cheque had received the notice issued by the holder of the cheque i.e. the complainant. Thus, the presumption of receipt of notice by the addressee as contemplated under Section 27 of the General Clauses Act cannot have any application in regard to presumption of service of notice and receipt of the same by the drawer of the cheque as contemplated in Clause (b) of Section 138 of the NI Act. Appeal dismissed.

Summary

Issues:
Appeal against judgment of acquittal under Section 138 of the Negotiable Instruments Act, 1881 regarding dishonored cheque and service of notice.

Analysis:
1. The appellant filed a complaint against the respondent under Section 138 of the NI Act, alleging non-repayment of borrowed amount leading to a dishonored cheque. The Chief Judicial Magistrate acquitted the respondent due to failure in proving the case beyond reasonable doubt.

2. The appeal challenged the acquittal judgment, focusing on the service of notice. The appellant argued that serving notice to the respondent's wife should be deemed as service to the respondent himself, citing Section 27 of the General Clauses Act.

3. The respondent contended that the notice was not served as per Section 138(b) of the NI Act, which requires notice to be served to the drawer of the cheque. The court agreed with the respondent, emphasizing the legislative intent behind the language of the Act.

4. The court analyzed Section 138 of the NI Act, emphasizing the requirement for the payee or holder to demand payment by serving notice to the drawer of the cheque within 30 days of receiving information about the dishonored cheque. The court highlighted that the notice must be served to the drawer as per the Act.

5. Referring to a Supreme Court case, the court reiterated that serving notice to someone other than the drawer of the cheque does not fulfill the requirements of Section 138(b) of the Act, leading to a lack of compliance.

6. Based on the legal position and the failure to comply with the notice requirements, the court upheld the acquittal judgment, concluding that the appeal failed. The respondent's acquittal was affirmed, and the appeal was dismissed.