Skip to main content

Giving of notice under Section 138 of the Negotiable Act explained

In Nitai Majumder vs Tanmoy Krishna Das, appeal was filed before the Tripura High Court against the conviction order passed by the lower courts against the petitioner for having committed offence punishable under Section 138 of the NI Act.

One of the objections raised by the petitioner against the order of the lower court was that service of statutory notice on the accused petitioner after dishonor of the cheque from the bank was not also proved.

The High Court observed that after the cheque presented by the Respondent was returned by the bank due to insufficiency of funds, a demand notice was then issued by the respondent to the petitioner through his lawyer demanding payment within 15 days and such notice was sent to his known residential address through post registered with AD. The postman entrusted with the service of the notice visited the house of the petitioner several times. Every time the house inmates of the petitioner refused to receive the registered letter and told the postman that the addressee was out of station. The envelope containing the notice was returned to the respondent along with the AD card with a report that the addressee was out of station for long time.

The High Court referred to various decisions of the High Court where it was held that that the notice, duly directed, shall serve the purpose of law. Once the notice is dispatched, part of the payee is over and, the next depends on what the sendee does.

The High Court held that the payee has to make a demand by "giving a notice" in writing. The legislature says that failure on the part of the drawer to pay the amount should be within 15 days "of the receipt" of the said notice. It is, therefore, clear that giving notice" in the context is not the same as receipt of notice. Giving is a process of which receipt is the accomplishment. It is for the payee to perform the former process by sending the notice to the drawer at the correct address. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader, and clips an honest payee as that would defeat the very legislative measure.

In Maxwell's Interpretation of Statutes, the learned author has emphasised that "provisions relating, to giving of notice often receive liberal interpretation" (vide p. 99 of 12th Edn.). The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in clause (b) of the proviso to Section 138 of the Act show that the payee has the statutory obligation to "make a demand" by giving notice. The thrust in the clause is on the need to "make a demand". It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is dispatched his part is over and the next depends on what the sendee does.

It is well settled that a notice refused to be accepted by the addressee can be presumed to have been served on him (vide Harcharan Singh Vs. Smt. Shivrani and Others, and Jagdish Singh Vs. Natthu Singh) .

Here the notice is returned as addressee being not found and not as refused. As per Section 27 of the General Clauses Act, 1897, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. Section 138 of the Act does not require that the notice should be given only by "post". Nonetheless where the sender has dispatched the notice by post with the correct address written on it, it can be deemed to have been served on the sender unless he proves that it was not really served and that he was not responsible for such non-service. The object of notice is to give a chance to the drawer of the cheque to rectify his omission and also to protect an honest drawer. Service of notice of demand in clause (b) of the proviso to Section 138 is a condition precedent for filing a complaint under Section 138 of the Act. In the present appeal there is no dispute that notice was in writing and this was sent within fifteen days of receipt of information by the appellant Bank regarding return of cheques as unpaid. Therefore, the only question to be examined is whether in the notice there was a demand for payment. The complainant has led convincing evidence to prove that the postman visited the house of the accused at the known address on 4 dates. Every time the postman was told by the house inmates that he was out of station. The fact is proved by the report given by the postman. From the overall conduct of the accused, it is clear that he wanted to avoid the service of the notice. In view of the law decided by the Apex Court, the objection raised by the accused petitioner in this regard is not acceptable. Therefore, it cannot be said that the demand notice was not served on him.

Comments

Most viewed this month

Deposit Of Minimum 20% Fine/Compensation U/s 148 NI Act Mandatory

In OP(Crl.).No.348 OF 2019, T.K.SAJEEVAN vs FRANCIS T.CHACKO, the appeal was filed against the order of the lower court to deposit 25% of the fine before filling of appeal. The appellant argued that the deposit introduced through the Section 148 of the NI Act after amendment was directory in nature as it used the term 'may' while mentioning the issue of deposit. The Kerala High Court however disagreeing held that in view of the object of the Legislature while incorporating Section 148 into N.I. Act, the word 'may' will have to be read as 'shall'. The imposition of payment contemplated under Section 148 N.I. Act cannot be restricted to some prosecutions and evaded in other prosecutions. Since the amount directed to be deposited being compensation, undoubtedly, it is liable to be ordered to be deposited irrespective of the nature of the prosecution. Therefore, the word 'may' can only be taken to have the colour and meaning of 'shall' and there

NCLT - Mere admission of receipt of money does not qualify as a financial debt

Cause Title : Meghna Devang Juthani Vs Ambe Securities Private Limited, National Company Law Tribunal, Mumbai, CP (IB) No. 974/MB-VI/2020 Date of Judgment/Order : 18.12.2023 Corum : Hon’ble Shri K. R. Saji Kumar, Member (Judicial) Hon’ble Shri Sanjiv Dutt, Member (Technical) Citied:  Carnoustie Management India Pvt. Ltd. Vs. CBS International Projects Private Limited, NCLT Swiss Ribbons Pvt. Ltd. & Anr vs. Union of India & Ors. (2019) Sanjay Kewalramani vs Sunil Parmanand Kewalramani & Ors. (2018) Pawan Kumar vs. Utsav Securities Pvt Ltd 2021 Background Application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 alleging loan of Rs, 1.70 cr is due. The Applicate identified herself as the widow and heir of the lender but could not produce any documents proving financial contract between her Late husband and the CD but claimed that the CD has accepted that money was received from her husband. The applicant subsequently filed rejoinder claiming the debt t

Vanishing promoters and languishing shareholders

Over Rs 60,000 crore of shareholders’ wealth is stuck in 1,450 companies suspended by the stock exchanges. More importantly, near 100 per cent pledging of promoter holding appears to be common in many of these companies. This, almost rules out any chance of the companies bouncing back. The suspension is for non-compliance of the listing norms. Vanishing Companies - Definition As per the definition stipulated by SEBI, any listed company, which raised moneythrough initial public offer and, thereafter, stopped operations, did not file returnseither with the RoC or SEBI and did not exist on the registered premises wastermed as vanishing.There are provisions under Companies Act under which companies are termedvanishing companies on satisfying certain conditions. it is provided a companywould be deemed to be a vanishing company, if it satisfies all the conditions given below : a) Failed to file returns with Registrar of Companies (ROC) for a period of two years; b) Failed to fil