Service of NI Act Section 138(b) Notice Must Be Personal; Third-Person Service Without Accused's Knowledge Invalid

The HC held that service of a statutory notice under Section 138(b) of the NI Act on a third person, without evidence that the accused had knowledge of such service, is insufficient. The court relied on SC precedents establishing that notice must be served on the accused personally, and if the accused proves non-receipt and lack of knowledge of the notice, the prosecution fails. In the present case, the notice was served to a relative without proof that the accused was aware, leading to the conclusion that the notice was not validly served. Consequently, the conviction and sentence were set aside, and the accused was acquitted.

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ISSUES:

Whether service of statutory notice under Section 138(b) of the Negotiable Instruments Act (NI Act) on a third person (relative) without evidence that the accused had knowledge of such service amounts to valid service on the accused.Whether the principles laid down by the Apex Court in Vinod Shivappa, C.C. Alavi Haji, and M/s Indo Automobiles cases affect or overrule the dictum laid down by this Court in Saju's case regarding service of notice under Section 138(b) of the NI Act.What is the effect of the presumption of service under Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act on the burden of proof concerning service of notice under Section 138(b) of the NI Act.Whether the High Court can exercise its jurisdiction under Section 482 Cr.P.C. to quash proceedings on the ground of non-service of notice when the accused allegedly evaded service.Whether the accused's right to pay the cheque amount within 15 days of receipt of summons affects the requirement of prior service of notice under Section 138(b) of the NI Act, especially where the debt is disputed.

RULINGS / HOLDINGS:

Service of statutory notice under Section 138(b) of the NI Act on a relative or third person without evidence that the accused was aware of such service is not sufficient; it is to be presumed that the statutory notice was not served on the accused. This principle was upheld relying on the Apex Court's decision in Thomas M.D. v. P.S. Jaleel.The dictum laid down by this Court in Saju's case is not contrary to the Apex Court's decisions in Vinod Shivappa, C.C. Alavi Haji, and M/s Indo Automobiles cases, as those cases primarily address presumptions of service where notice is sent to the correct address or where the accused evades service, but do not deal with situations where notice is served on a third person without the accused's knowledge.Section 27 of the General Clauses Act creates a presumption that service of notice has been effected when sent by registered post to the correct address; however, this presumption can be rebutted if the accused proves non-receipt or lack of knowledge of the notice, especially where notice was served on a third person without the accused's awareness.The High Court should not exercise its jurisdiction under Section 482 Cr.P.C. to quash proceedings on the ground of non-service of notice if the accused is deliberately evading service; such issues are questions of fact to be decided at trial based on evidence.The provision allowing the accused to pay the cheque amount within 15 days of receipt of summons and thereby avoid prosecution applies primarily where the debt is admitted and does not negate the mandatory requirement of prior service of notice under Section 138(b) in cases where the debt or transaction is disputed.

RATIONALE:

The Court applied the statutory framework of Section 138 of the Negotiable Instruments Act, 1881, particularly the proviso clauses (b) and (c), which mandate prior written notice to the drawer before filing a complaint for dishonour of cheque.The Court relied on the precedent set by the Apex Court in Thomas M.D. v. P.S. Jaleel, which held that service of notice on a relative without evidence of the drawer's knowledge is insufficient, and on the principle that "giving notice" requires actual knowledge or constructive notice to the accused.The Court distinguished the facts and legal principles in Vinod Shivappa, C.C. Alavi Haji, and M/s Indo Automobiles cases, noting that those decisions concern presumptions of service when notice is sent to the correct address or where the accused evades service, but do not overrule the requirement of proof of knowledge of service when notice is served on a third person.The Court emphasized the mandatory nature of the notice requirement under Section 138(b) as reiterated in C.C. Alavi Haji's case, and that the burden shifts to the accused to rebut the presumption of service once notice is sent to the correct address, but if evidence shows notice was served to a third person without the accused's knowledge, the presumption fails.The Court noted that the question of whether the accused deliberately evaded service or whether service was fraudulently refused is a question of fact to be determined on evidence, and not suitable for summary quashing under Section 482 Cr.P.C.The Court clarified that the right of the accused to pay the cheque amount within 15 days of summons receipt, as per C.C. Alavi Haji, applies where the debt is admitted and does not dispense with the requirement of prior notice in disputed cases.The Court found that the complainant failed to prove that the accused had knowledge of the notice served on a third person and thus held that there was no valid service of notice, warranting setting aside of the conviction and sentence.

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