U/S 138 of NI Act – Legal Notice Of Demand Must Be Sent To The Correct Address – Is Mandatory: J&K&L HC
D.D:08-07-2022
The Jammu and Kashmir and Ladakh High Court ruled today that a drawer of a check can only be presumed to have received the statutory notice of demand as required by Section 138 of the Negotiable Instrument Act if the notice was sent to his correct address. The court emphasised that such an inference cannot be drawn if the notice was sent to the wrong address of the check’s drawer.
The remark was made by a bench composed of Justice Sanjay Dhar while dealing with a petition in which the petitioner had challenged the complaint filed by the respondent against him for an offence under Section 138 of the Negotiable Instruments Act (hereinafter “the NI Act”) before the Court of Judicial Magistrate in Srinagar. In his argument, the petitioner also contested an order in which the Magistrate issued process against him after taking jurisdiction over the offence.
The petitioner’s attorney argued vehemently that he had not been served with the statutory notice of demand because, to the respondent’s knowledge, the address on which the notice had been sent was incorrect. The counsel further argued that the petitioner is a resident of Delhi, but the notice of demand was sent to an incorrect address in Jammu by the respondent/complainant, and without service of statutory notice of demand upon him, it cannot be said that he has committed an offence under Section 138 of the NI Act. In addition, he argued that the presumption under Section 138 of the NI Act cannot arise against the drawer unless notice of demand is served on the drawer and he fails to pay the amount within the statutory period.
In opposition to the claims, the respondent’s attorney argued that the law requires the complainant to provide only a notice of demand and that service of notice is unnecessary. He also argued that there was an executed agreement between the parties, and that the petitioner’s address was the same in the agreement as it was in the notice of demand and the complaint.
Perusing the evidence before the court, the bench noted that the contested complaint indicates that the petitioner/accused is a resident of Jammu. When the process was issued by the learned trial Magistrate against the petitioner/accused, it was unable to be served on him due to an incorrect address, and the trial court record indicates that the respondent/complainant filed an application with the court providing updated information about the petitioner/accused.
“From the aforementioned record, it is evident that the respondent/complainant provided the incorrect address of the petitioner/accused in both the statutory notice of demand and the complaint, as Priyag Apartment, Vasundra Enclave-96 is located in Delhi and not in Jammu,” the court noted.
While considering whether law under section 138 of the NI Act requires the complainant to give only a notice of demand and that service of notice is not required, the bench found it worthwhile to record the observations made by the Supreme Court in C. C. Alavi Haji vs. Palapetty Muhammad and another (2007), wherein it was noted that when the notice is sent by registered mail to the correct address of the drawer of the cheque, the mandatory requirement of service is satisfied. The Supreme Court emphasised that the notification should have been sent to the correct address of the check’s drawer. The bench noted that only then can it be said that the drawer of the check has received notice.
During further consideration of the issue, the court cited Harman Electronics Private Limited and another v. National Panasonic India Private Ltd, 2009, in which the Supreme Court made the following observation:
“The proviso attached to section 138 of the Northern Ireland Act imposes additional conditions that must be met prior to taking cognizance of the offence. If the provisos (a), (b), and (c) appended to Section 138 of the Negotiable Instruments Act are intended to be applied in favour of the accused, there is no doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. As the accused may only refuse to pay the amount at his own peril after receiving notice. Therefore, clauses (b) and (c) of the Section 138 proviso must be read together. The issuance of notice alone would not give rise to a cause of action, but the notice’s communication would.”
Accepting the petition and dismissing the complaint, the bench noted that the evidence on file strongly suggests that the respondent/complainant sent the statutory notice of demand to an incorrect address, and thus the presumption of notice receipt by the petitioner/accused does not arise. Since the prerequisite for filing a complaint under Section 138 of the NI Act, sending a statutory notice, was not met in the present case, the court concluded that the respondent/complainant had no right to file the subject complaint.
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