Supreme Court reinstates Section 138 proceedings, emphasizes valid service of notice

The Supreme Court overturned the High Court's decision to quash proceedings under Section 138 of the Negotiable Instruments Act. The High Court had deemed the service of notice invalid due to lack of delivery to the respondents. However, the Supreme Court held that sending notice via registered post to the correct address constitutes effective service. Emphasizing a liberal interpretation of the Act, the Court found the High Court's ruling unjustified and reinstated the proceedings. The validity of the High Court's order was questioned, leading to its reversal and the restoration of the Section 138 proceedings.

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Issues involved:
The judgment involves the interpretation of service of notice u/s 138B of the Negotiable Instruments Act and the validity of the order passed by the High Court quashing the proceeding under Section 138 of the Act.

Interpretation of service of notice u/s 138B:
The Supreme Court heard the appeal against the High Court's order quashing a proceeding under Section 138 of the Negotiable Instruments Act. The High Court had ruled that the service of notice was invalid as no notice was served on the respondents. However, the Supreme Court disagreed with this reasoning. It was noted that notice under Section 138B was sent to the respondents through registered post and under a certificate of posting on their correct address. The Court referred to previous judgments emphasizing a liberal interpretation of the Act in favor of the person obligated to give notice. It was held that once notice is sent by registered post with acknowledgment due to the correct address, it is presumed to be effectively served. The Court found that the High Court erred in holding the service of notice as invalid based on the postal peon's endorsement without examining the peon. Therefore, the Supreme Court set aside the High Court's order and restored the proceeding under Section 138 of the Act.

Validity of the High Court's order:
The Supreme Court concluded that the High Court's judgment quashing the proceeding under Section 138 of the Negotiable Instruments Act was not sustainable. The Court emphasized the importance of a liberal interpretation of the Act in favor of the party obligated to give notice. The Court held that the High Court was unjustified in ruling the service of notice as invalid based on the endorsement of the postal peon without proper examination. The Supreme Court allowed the appeal, setting aside the High Court's order and restoring the proceeding under Section 138 of the Act. It was clarified that during the trial stage, the interpretation of the postal endorsement shall be considered based on the background facts of the case.

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