In a nuanced judgment that re-examines the procedural rigour expected under Section 138 of the Negotiable Instruments Act, the Kerala High Court has clarified that the mandatory demand notice must be addressed to the actual drawer of the dishonoured cheque—not to any of their relatives or alternate recipients. The order stems from the court’s wider jurisprudence on ensuring that legal formalities are strictly observed before criminal sanctions for cheque bounce can be imposed.
The matter before the bench centered on a petition challenging a complaint registered under Section 138 of the Act, which penalizes issuance of a cheque that is dishonoured due to insufficient funds. A critical issue raised was whether a notice served upon a person related to the drawer—presumably at their common address—constituted valid compliance with the statutory requirement. The petitioner argued that although a notice had been dispatched, it was addressed incorrectly to a relative rather than the actual drawer, and thus should be deemed invalid, leading to the complaint being quashed.
Drawing from well‑settled principles of law, the High Court held that Section 138(b) makes it mandatory that the notice must be “given” to the drawer of the cheque; service on a relative—even one residing at the same address—cannot satisfy this requirement. This interpretation was informed by Section 27 of the General Clauses Act and judicial precedents under Section 27 and Section 114 of the Evidence Act, which allow for presumption of service if a notice is correctly posted to an address. However, the presumption only extends to the intended recipient, and proper proof is required to establish valid receipt.
The court emphasized that the “drawer”—the person who signed the cheque and is criminally liable—must be the central focus. Greetings, gifts, or communications sent to third parties, including relatives or household members, are insufficient to fulfill the statutory mandate. This aligns with the Supreme Court’s rulings that while issuance at the correct address creates a presumption of notice, the burden lies on the complainee to rebut the inference of proper service. Crucially, if the accused drawer proves that they did not receive the notice and were not responsible for unsuccessful delivery, the court must infer that notice was not valid.
Kerala High Court decisions, such as in K. Basheer v. C.K. Usman Koya, had previously examined whether minor irregularities in the notice—such as omissions in purpose or language—could defeat the case. These rulings established that procedural shortcomings that do not mislead or prejudice the drawer might not be fatal. However, the current order tightens the issue of identity of recipient: it is not enough that a letter reaches the family or household; it must be delivered to the specific individual responsible for payment.
The judgment reinforces the strict sequence laid out in Section 138: cheque presentation, dishonour, thirty‑day demand notice to the drawer, fifteen‑day period to pay, and finally filing of complaint only if payment is not made. Non‑compliance at any step cannot be cured later. This principle resonates with established rulings, such as those in Madan & Co. v. Wazir Jaivir Chand and Raja Kumari v. Subbarama Naidu, that highlight the seriousness of notice service. Those precedents affirm that while post at the correct address supports a presumption, that presumption is rebuttable by evidence, particularly where notice is not addressed to the drawer.
Functionally, this judgment restrains potential harassment of cheque issuers under Section 138 and serves as a procedural safeguard against misuse. It prevents complainants from bypassing statutory requirements by directing notices to alternate recipients, ensuring that criminal liability cannot be imposed without guaranteeing that the drawer had actual knowledge of the demand.
Finally, by placing a clear emphasis on the statutory recipient and the burden of proof in establishing notice delivery, the Kerala High Court has drawn a clear line between mere technical compliance and substantive fairness. In cases of bounced cheques, it is no longer enough to show that a notice letter was posted somewhere in a household. Only genuine delivery to the drawer will sustain prosecution. This interpretation strengthens procedural fairness without compromising the Act’s objective of penalizing cheque‑bounce misuse, and may set a precedent for other courts to demand concrete evidence of proper notice delivery before permitting prosecutions under Section 138 to proceed.
0 Comments
Thank you for your response. It will help us to improve in the future.