TaxTMI 
TaxTMI 
2026 (10) TMI 104
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....r book shows that notice in the present matter was issued on 10th November 2025 and the same was served upon respondent No. 2 on 11th December 2025. Despite due service of notice, there is no appearance on behalf of respondent No. 2. Consequently, this Court had no option but to proceed with hearing of the matter. BRIEF FACTS 4. In the complaint under Section 138 of the Act 1881, it was alleged by the appellant-complainant that respondent No. 2 had borrowed a sum of Rs. 3,00,000/- from the appellant-complainant. Towards re-payment of the same, respondent No. 2-accused had issued a cheque bearing Cheque No. 479097 drawn on the Catholic Syrian Bank, Perumbavoor Branch, which was dishonoured upon presentation. 5. The appellant-complainant issued a statutory demand notice dated 31st August 2016 through registered post at the correct address of respondent No. 2, which was received by his mother. Despite receipt of notice at his address, respondent No. 2 did not make any payment or file any reply to the legal notice. 6. Thereafter, the appellant-complainant instituted the present complaint under Section 138 of the Act, 1881 being S.T. Case No. 114 of 2017. When respondent No.....
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.... to be noted that the mother of the accused has received the demand notice issued through registered post. In the above circumstance it can be safely concluded that the statutory demand notice was served to the accused." 9. Respondent No. 2 filed Criminal Revision Petition No. 865 of 2023 before the High Court of Kerala at Ernakulam. By the Impugned Judgment, High Court has allowed the Criminal Revision filed by respondent No. 2 on the ground that statutory demand notice under Section 138 of the Act, 1881 had not been served upon respondent No. 2-accused but had been served upon mother of respondent No. 2. The relevant portion of the impugned judgment is reproduced hereinbelow: "23. ...Unless there is evidence to show that the accused is aware of the notice sent by the complainant, this Court cannot conclude that notice is served to the accused. I can understand if PW1 deposed that even though notice is served to 'Amina', the accused is aware of the same, the burden shifts back to the accused to prove that he was not aware. But there is no such case to the complainant that the accused was aware of the receipt of notice by 'Amina'. It is proved beyond rea....
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....hich is not the case here. 16. Learned counsel for the respondent-State of Kerala states that the State of Kerala is not a contesting respondent as the present matter pertains to dishonour of cheque issued by the respondent No. 2 on account of insufficiency of funds. REASONING 17. Having heard learned counsel for the appellant and having perused the paper book, this Court is of the view that the impugned judgment passed by the High Court warrants interference. RELEVANT PROVISIONS 18. Under proviso (b) to Section 138 of the Act, 1881, it is incumbent upon the payee to make a demand for payment of the cheque amount by giving a notice in writing to the drawer of the cheque within thirty days from the date of receipt of information regarding the dishonour of the cheque. The cause of action for prosecuting the drawer arises only upon his failure to make payment within fifteen days of receipt of such notice. For ready reference, Section 138 of the Act, 1881 is reproduced hereinbelow:- "138. Dishonour of cheque for insufficiency, etc., of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of ....
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.... in the ordinary course of post." REBUTTABLE PRESUMPTION OF VALID SERVICE 20. In K. Bhaskaran vs. Sankaran Vaidhyan Balan & Anr., (1999) 7 SCC 510, the issue before this Court was whether any cause of action arises if the notice sent by the complainant to the accused is returned as unclaimed. This Court held that 'giving of notice' is different from 'receiving of notice'. It was further held that where the sender has dispatched the notice by registered post to the correct address, service may be deemed to have been effected upon the sendee, unless the sendee establishes that the notice was not, in fact, served and that such non-service was not attributable to him. The relevant portion of the judgment in K. Bhaskaran (supra) is reproduced hereinbelow: "24. No doubt Section 138 of the Act does not require that the notice should be given only by "post". Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not res....
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....ached this Court by special leave. This Court held in favour of the respondent on the question of territorial jurisdiction. On the question of notice this Court considered the scheme of Section 138 of the Act by particular reference to clauses (b) and (c) of the proviso thereof. In view of the legislative scheme it was held, the failure on the part of the drawer to pay the amount should be within 15 days "of the receipt" of the said notice. It was clear that the "giving of notice" in the context was not the same as the receipt of notice. "Giving" was the process of which the "receipt" was the accomplishment. This Court then observed: (SCC p. 519, para 20) "20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as ....
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....ided receipt of the notice or had knowledge thereof, in order to invoke such presumption. 23. The three-Judge Bench, however, affirmed the view taken in D. Vinod Shivappa (supra) and held that there is no distinction between Section 114 of the Evidence Act, 1872 and Section 27 of the General Clauses Act, 1897 both of which raise a presumption that service is effected when a notice is dispatched to the correct address by registered post. Consequently, it is unnecessary for the complainant to separately aver that the addressee deliberately avoided service. This Court further held that once the notice is correctly addressed to the drawer of the cheque, the mandatory requirement of statutory notice under proviso (b) to Section 138 of the Act, 1881 stands satisfied and it is for the drawer to rebut the presumption by demonstrating either that the notice was not sent to the correct address or that the postal endorsement is erroneous. The relevant portion of the judgment in C.C. Alavi Haji (supra) is reproduced hereinbelow: "15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, i....
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....resumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran case [(1999) 7 SCC 510 : 1999 SCC (Cri) 1284] if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act." (emphasis supplied) 24. Thus, it is evident that this Court has consistently held that there exists a rebuttable presumption of valid service of a statutory notice under Section 138 of the Act, 1881, where such notice is dispatched by registered post to the correct address of the drawer. Indeed, in C.C. Alavi Haji (supra), this Court categorically held that the requirement of 'giving of notice' stands complied with once the notice is dispatched to the correct address. It is thereafter incumbent upon the drawer to rebut the presumption by establishing either that he had no knowledge of the notice having been brought to his addres....
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....se notice is actually delivered but received by a family member residing at the same address would be denied the benefit of such presumption! 29. This Court reiterates that the law requires only that the complainant dispatch the notice to the correct address of the drawer and the presumption in his favour cannot be defeated by circumstances beyond his control. Under Section 27 of the General Clauses Act, 1897, service is deemed to be effected, once the notice is properly addressed and sent by registered post. 30. Consequently, this Court holds that the judgment in M.D. Thomas (supra) is per incuriam and cannot be treated as binding precedent under Article 141 of the Constitution. Furthermore, if allowed to stand as precedent, M.D. Thomas (supra) would enable unscrupulous drawers to evade liability on specious pleas, thereby frustrating the object of the statute. PRESUMPTION OF VALID SERVICE IN THE PRESENT CASE 31. In the present case, the statutory demand notice under proviso (b) to Section 138 of the Act, 1881 was dispatched by the appellant through registered post to the correct address of respondent No. 2. This is evident from the fact that respondent No. 2 had enter....