Deemed service of cheque dishonour notice and director liability can support summons where complaint has proper averments.

In Section 138 Negotiable Instruments Act proceedings, a statutory notice sent by post may be treated as duly served through the deeming rule in Section 27 of the General Clauses Act when it is properly addressed and no specific denial of receipt is pleaded. For vicarious liability of a company director under Section 141, the complaint must contain a clear averment that the accused was in charge of and responsible for the conduct of business; such an averment was found sufficient at the cognizance stage. The court also treated objections about sleeping-partner status and underlying liability as matters not fit for threshold adjudication, and upheld the summons.

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Issues: (i) Whether notice under Section 138 of the Negotiable Instruments Act could be treated as duly served by applying the deeming rule of service by post; (ii) Whether the complaint contained the necessary averments to proceed against the company director under Section 141 of the Negotiable Instruments Act; (iii) Whether the orders taking cognizance and issuing summons suffered from any illegality warranting quashing.

Issue (i): Whether notice under Section 138 of the Negotiable Instruments Act could be treated as duly served by applying the deeming rule of service by post.

Analysis: The absence of a specific pleading denying receipt of notice meant that service could be examined through the deeming fiction under Section 27 of the General Clauses Act. The complaint did not show that the notice had been improperly addressed, and the rule of deemed service was held applicable to statutory notice under Section 138. The Court relied on the principle that properly addressed and posted notice is presumed served unless the contrary is proved.

Conclusion: The notice was deemed to have been served; this contention failed.

Issue (ii): Whether the complaint contained the necessary averments to proceed against the company director under Section 141 of the Negotiable Instruments Act.

Analysis: For vicarious liability under Section 141, the complaint must contain a specific averment that the accused was in charge of and responsible for the conduct of the business. The complaint stated that the directors were responsible for and looking after the day to day affairs of the company. At the stage of cognizance and summoning, no unimpeachable material was produced to dislodge that assertion, and the plea that one accused was only a sleeping partner could not be finally examined at that stage. The signatory to the dishonoured cheques was also identified as one of the accused, strengthening the basis for proceeding.

Conclusion: The complaint disclosed the necessary averments and the director could be proceeded against; this contention failed.

Issue (iii): Whether the orders taking cognizance and issuing summons suffered from any illegality warranting quashing.

Analysis: The dishonoured cheques, the statutory notices, and the non-payment of the cheque amounts together disclosed a prima facie offence under Section 138 of the Negotiable Instruments Act. The plea that the underlying liability was not legally enforceable was treated as a defence not fit for adjudication at the threshold. Since the complaint made out the ingredients for proceeding and no patent illegality in the summoning orders was shown, interference was unwarranted.

Conclusion: The cognizance and summoning orders were upheld; quashing was refused.

Final Conclusion: The petitions failed on all material grounds and the criminal proceedings under Section 138 of the Negotiable Instruments Act were permitted to continue.

Ratio Decidendi: In proceedings under Section 138 of the Negotiable Instruments Act, properly addressed and posted notice may be presumed served in the absence of a denial of receipt, and a director may be proceeded against where the complaint contains a specific averment that he or she was in charge of and responsible for the company's business.

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