138 NI Act | Presumption Under Section 27 of General Clauses Act Not Invocable When Notice Is Delivered to Unidentified Minor or Scant Address: Bombay High Court at Goa Upholds Acquittal in Cheque Dishonour Case

"Unless and until it is proved that the recipient is a family member, the presumption of service under Section 27 of the General Clauses Act cannot arise" — Bombay High Court at Goa affirming the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). Justice Bharati Dangre held that the failure to validly prove service of statutory notice of dishonour of cheque was fatal to the prosecution’s case, rendering the conviction by the Magistrate unsustainable.

“Without Proving Receipt of Legal Notice, the Offence Under Section 138 of NI Act is Not Made Out”

The case revolved around two separate appeals (Criminal Appeal Nos. 55 and 56 of 2014) challenging the appellate acquittal of the accused, Mr. Jose Remedios Rodrigues, by the Additional Sessions Judge, Mapusa, in complaints filed under Section 138 of the N.I. Act. The complainant, Mr. Pierre Antonio Lobo, alleged dishonour of two post-dated cheques (Rs. 4 lakhs and Rs. 8 lakhs respectively) issued towards repayment of a loan. Both cheques were dishonoured for "insufficient funds", and legal notices demanding payment were issued, following which complaints were lodged before the Judicial Magistrate First Class (JMFC), Mapusa.

While the Magistrate convicted the accused, the Appellate Court reversed the convictions, holding that the essential ingredients under Section 138 had not been proved, particularly the receipt of statutory demand notice.

The High Court, while upholding the acquittals, emphasized that mere dispatch of the notice to an address, without proper proof of delivery to the drawer or a recognized family member, is not sufficient to attract the presumption of service.

The dispute originated from a management agreement dated 18.06.2008, under which the complainant Lobo allowed the accused Rodrigues to manage his restaurant “Don Hill Beach Resort” for a monthly consideration. As part of this arrangement and subsequent financial dealings, the accused allegedly took two personal loans of Rs. 4 lakhs and Rs. 8 lakhs and issued corresponding post-dated cheques.

Upon dishonour of the cheques, Lobo issued legal notices dated 18.07.2009 and 03.08.2010 and subsequently filed two complaints under Section 138 before the JMFC, which led to the accused being convicted and sentenced.

On appeal, the Additional Sessions Judge reversed the convictions on two primary grounds:

1. The legal notices were not shown to be received by the accused.

2. The cheques were not proved to have been issued towards a legally enforceable debt.

The core legal question before the High Court was whether the requirement under Section 138(c) of the N.I. Act — receipt of legal notice and failure to make payment within 15 days — was satisfied.

Justice Dangre meticulously analyzed the presumption under Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act, 1872, in the context of postal delivery of statutory notice. The Court distinguished the present case from precedents like C.C. Alavi Haji v. Palapetty Muhammed and Uttam Ram v. Devinder Singh Jhudan, holding that the presumptions available under these provisions are conditional and cannot be applied blindly.

On the Rs. 8 Lakh Cheque Notice: Delivered to a 15-year-old Girl — Not Proven to be Family

The prosecution relied on the acknowledgment card (Exhibit-E), which bore the name “Trella,” who was later revealed to be a 15-year-old girl. The postman (PW-4) admitted during cross-examination that he handed the notice over to this girl and was unaware of her relationship with the accused.

The Court held: "In absence of any evidence being brought on record that the girl was a member of the family of the accused and in any case, since PW-4 has deposed that she was aged 15 years, the acknowledgment signed by her is not a proof of the service being effected upon the accused."

Justice Dangre clarified that unlike service rules under the Civil Procedure Code (Order V Rule 15), which allow delivery to adult family members, service of notice under the N.I. Act requires actual or deemed receipt by the drawer or family member — not an unidentified minor.

On the Rs. 4 Lakh Cheque Notice: Address Too Vague to Attract Presumption

In the second case, although the notice was sent by registered post, the address on the A.D. card was incomplete — merely mentioning "Alto Porvorim, Bardez, Goa." The signature on the card was not identified or proven to be that of the accused.

The Court noted: “Porvorim is a big area and no letter can be served on such scanty address... The presumption under Section 27 shall operate when a letter is addressed to the noticee on a proper address... but it is not proof of receipt of the notice.”

The High Court observed that Section 138 requires a sequence of statutory conditions to be satisfied:

1. Cheque drawn for discharge of a legally enforceable debt.

2. Dishonour due to insufficient funds.

3. Service of legal notice within 30 days.

4. Failure to pay within 15 days of receipt of notice.

Justice Dangre held that step (3) — receipt of the notice — had not been validly proved in either case, and hence the complaints were premature or legally untenable.

The Court concluded: "In the wake of the aforesaid discussion... in absence of notice being received, the contingencies stipulated under Section 138(c)... has not arisen. The Appellate Court has therefore rightly appreciated the evidence... and has rightly acquitted the accused."

The judgment also affirms that while Section 27 GC Act raises a strong presumption, it is rebuttable, and such rebuttal does not always require the accused to step into the witness box. Here, the infirmities in the complainant’s evidence themselves were sufficient to defeat the presumption.

The Bombay High Court at Goa, in this judgment, reiterates that statutory presumptions under Section 27 of the General Clauses Act or Section 114 of the Indian Evidence Act cannot substitute for the essential requirement of proving service of notice under Section 138 N.I. Act.

The ruling highlights the fine balance between procedural presumptions and evidentiary standards in cheque dishonour cases, ensuring that accused persons are not wrongfully convicted merely on assumptions.

Both appeals were dismissed, and the acquittal of the accused in both cases under Section 138 of the N.I. Act stands confirmed.

Date of Decision: 26 September 2025