Section 138 NI Act | Cheque Bounce Complaint Cannot Be Dismissed At Threshold Merely For Non-Production Of Postal Track Report: Madhya Pradesh High Court

"Non-production of the service report or track report by itself cannot be a ground to dismiss a complaint under Section 138 of the Negotiable Instruments Act at the threshold, particularly when the complainant has asserted that the notice was duly dispatched on the correct address of the accused." Madhya Pradesh High Court, in a significant ruling, held that a cheque bounce complaint under Section 138 of the Negotiable Instruments Act cannot be dismissed at the threshold merely because the complainant failed to produce a postal track report.

A single-judge bench of Justice Himanshu Joshi observed that once a statutory notice is correctly addressed and dispatched via registered post, a presumption of service arises under Section 27 of the General Clauses Act, and the question of actual service is a "matter of evidence, which can appropriately be examined during trial."

BACKGROUND OF THE CASE

The dispute arose after the respondent's cheque for Rs. 5,00,000 was dishonoured for insufficient funds. The petitioner dispatched a statutory legal notice on August 12, 2020, but could not produce the postal track report before the trial court due to the administrative disruptions caused by the COVID-19 pandemic. The Judicial Magistrate First Class (JMFC) at Satna dismissed the complaint as premature for failing to disclose the exact date of service, a decision later affirmed by the Revisional Court, which held that a presumption of service could only be legally drawn after 30 days from the date of dispatch.

LEGAL ISSUES

The primary question before the court was whether a complaint under Section 138 of the Negotiable Instruments Act can be dismissed solely on the ground that the track report regarding the service of notice was not produced. The court was also called upon to determine whether the law mandates a rigid 30-day waiting period from the date of dispatch before a presumption of postal service can be drawn.

COURT'S OBSERVATIONS

The Court began by analysing the statutory framework, specifically Section 27 of the General Clauses Act, 1897, which creates a legal fiction of service when a document is properly addressed, prepaid, and posted by registered post. Relying on the Supreme Court's precedent in C.C. Alavi Haji v. Palapetty Muhammed, the High Court noted that once notice is sent to the correct address, the burden shifts to the accused to rebut the presumption of service. The bench emphasized that the inability to produce a track report or acknowledgment due card does not negate this statutory presumption. "The question whether the notice was actually served or not is essentially a matter of evidence, which can appropriately be examined during trial and the accused is always at liberty to rebut the statutory presumption of service."

Addressing the Revisional Court's finding that a 30-day period must elapse before service can be presumed, the High Court held this to be a fundamental misinterpretation of the Supreme Court's ruling in Ajeet Seeds Ltd. v. K. Gopala Krishnaiah. The bench clarified that neither of the apex court judgments prescribes a rigid 30-day waiting rule. Instead, the presumption operates on the ordinary course of postal business, which naturally varies depending on the geographical distance and the specific mode of dispatch. "Therefore, the revisional Court erred in interpreting the aforesaid judgments as mandating a fixed period of 30 days for drawing presumption of service."

To prevent similar erroneous dismissals in the future, the High Court laid down comprehensive geographical guidelines for presuming the service of statutory notices. The bench stated that if a complainant demonstrates proper dispatch, the Magistrate shall not dismiss the complaint solely for the absence of a track report. The Court detailed that for notices sent within the same city or district, service may ordinarily be presumed within three to five days from dispatch. For addresses in another district within the same State, the presumed period is five to seven days, extending to seven to ten days for out-of-state addresses. The bench further noted that reasonable additional time may be allowed for remote or rural areas, while maintaining that these presumptions remain entirely rebuttable. "The question of actual service and rebuttal of presumption can appropriately be examined during trial, and the complaint should not be rejected at the threshold."

Applying these principles to the facts at hand, the Court observed that both parties resided in the same city of Satna and the statutory notice was dispatched via registered post on August 12, 2020. Recognizing the unprecedented difficulties caused by the COVID-19 pandemic, the Court noted that the petitioner's inability to obtain a track report should not penalise them. Since the notice was sent within the same city, the Court presumed delivery on or about August 15, 2020. Consequently, the complaint filed on September 1, 2020, was well after the expiry of the statutory 15-day waiting period and was squarely within limitation. "In such circumstances, dismissal of the complaint at the threshold merely because the track report was not produced defeats the object of Section 138 of the Negotiable Instruments Act, which is intended to ensure credibility of commercial transactions."

The High Court allowed the petition under Section 482 of the CrPC, setting aside the orders of both the JMFC and the Sessions Court. The complaint under Section 138 of the Negotiable Instruments Act was restored to its original number, and the Magistrate at Satna was directed to proceed with the trial on its merits in accordance with the law.

Date of Decision: 06 February 2026