Invalid Section 138 prosecution due to non-MICR cheques & faulty demand notice service. Conviction overturned.

The court found the prosecution under Section 138 of the Negotiable Instruments Act, 1881 invalid due to the non-MICR status of the cheques on their second presentation. The service of the demand notice under a certificate of posting was not proven, and the complaint was filed prematurely. Consequently, the conviction and sentence were set aside, and the petitioner was discharged from the liability of the bail bonds. The revision petition was allowed, and the lower court records were ordered to be sent back.

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Issues Involved:
1. Validity of prosecution under Section 138 of the Negotiable Instruments Act, 1881 for cheques bounced due to non-MICR status.
2. Validity and service of demand notice sent under certificate of posting.
3. Prematurity of the complaint filed under Section 138 of the Negotiable Instruments Act, 1881.

Issue-wise Detailed Analysis:

1. Validity of prosecution under Section 138 of the Negotiable Instruments Act, 1881 for cheques bounced due to non-MICR status:

The court examined whether the bouncing of cheques on the ground of being non-MICR could call for prosecution under Section 138 of the Negotiable Instruments Act, 1881. It was found that the cheques initially bounced due to "insufficiency of funds" on 11.06.2007. However, upon their second presentation on 10.07.2007, they were returned due to being non-MICR, which indicated that the cheques had lost their validity/acceptability by the bank. The court concluded that the second bouncing of cheques was not due to any act or omission of the petitioner but due to their non-MICR status. Therefore, the prosecution under Section 138 was not valid as the cheques were not valid on their second presentation.

2. Validity and service of demand notice sent under certificate of posting:

The court considered whether the dispatch of a demand notice under a certificate of posting is a valid mode of service under Section 138 of the Negotiable Instruments Act, 1881. It was determined that there is no prescribed mode of dispatch for the demand notice under the Act, and hence, a notice sent under a certificate of posting is permissible. However, the court noted that mere dispatch under a certificate of posting does not equate to proof of service. There must be additional facts and circumstances indicating that the party had notice. In this case, there was no evidence of service of the demand notice on the petitioner, and the courts below failed to consider this aspect, leading to a failure of justice.

3. Prematurity of the complaint filed under Section 138 of the Negotiable Instruments Act, 1881:

The court analyzed whether the complaint was filed prematurely. The legal notice was dispatched on 24.07.2007, and assuming deemed service after 30 days, the notice would be considered served by 24.08.2007. The petitioner had 15 days from this date to make the payment, i.e., until 08.09.2007. However, the complaint was filed on 06.09.2007, before the expiry of the 15-day period. The court held that the cause of action for filing the complaint had not crystallized, rendering the complaint premature and not maintainable. Consequently, the conviction under Section 138 could not be sustained.

Conclusion:

The court found that the prosecution under Section 138 of the Negotiable Instruments Act, 1881, was invalid due to the non-MICR status of the cheques on their second presentation. The service of the demand notice under a certificate of posting was not proven, and the complaint was filed prematurely. As a result, the conviction and sentence were set aside, and the petitioner was discharged from the liability of the bail bonds. The revision petition was allowed, and the lower court records were ordered to be sent back.

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