Sainaba v. State of Kerala & Anr.
The Supreme Court held that the requirement of “giving notice” under Section 138 of the Negotiable Instruments Act stands satisfied once the statutory demand notice is properly addressed and dispatched by registered post to the drawer’s correct address. Receipt of the notice by a family member residing at that address does not invalidate service; the statutory presumption remains operative unless rebutted by the drawer.
Legal Issue
Whether the statutory requirement under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881 is satisfied when the demand notice is sent by registered post to the drawer’s correct address but is received by a family member rather than personally by the drawer.
Brief Facts
The appellant-complainant alleged that the accused had borrowed ₹3 lakh and issued a cheque towards repayment. Upon presentation, the cheque was dishonoured.
The complainant issued a statutory demand notice dated 31 August 2016 by registered post to the accused’s correct residential address. The notice was received by the accused’s mother. The accused neither replied to the notice nor made payment within the statutory period.
The Trial Court convicted the accused under Section 138 NI Act and sentenced him to six months’ simple imprisonment with a fine of ₹3 lakh. The conviction was affirmed in appeal.
However, the Kerala High Court set aside the conviction on the ground that the statutory demand notice had not been personally served upon the accused and had instead been received by his mother.
The complainant challenged that decision before the Supreme Court.
Held / Decision
The Supreme Court allowed the appeal and set aside the Kerala High Court’s judgment.
It held that under proviso (b) to Section 138, the requirement is of “giving notice”, and not necessarily proof of actual personal receipt by the drawer.
Where a notice is:
- properly addressed to the drawer;
- sent by registered post; and
- dispatched to the correct address,
a rebuttable presumption of service arises under Section 27 of the General Clauses Act, 1897 and the corresponding evidentiary principles governing ordinary course of postal delivery.
Once such notice is dispatched to the correct address, the burden shifts to the drawer to rebut the presumption by showing, for instance, that:
- the address was incorrect;
- the notice was never tendered;
- the postal endorsement was incorrect; or
- the drawer had no knowledge of its delivery at the address.
In the present case, the accused did not dispute the correctness of the address and failed to rebut the presumption arising from delivery of the notice at his residence.
Accordingly, the Court held that service upon the accused’s mother at his correct residential address did not invalidate the statutory notice. The Trial Court’s conviction and sentence were restored.
Important Observations
Full Headnote
Legal Significance
The judgment provides important clarity on one of the most frequently litigated procedural requirements under Section 138 of the NI Act.
It confirms that a complainant is not required to establish actual personal delivery of the statutory notice once the notice has been correctly addressed and sent through registered post. The burden thereafter lies on the accused to rebut the statutory presumption of service.
The ruling is particularly significant because it prevents cheque drawers from defeating Section 138 proceedings through technical objections based solely on the fact that the notice was received by a spouse, parent or other family member residing at the same address.
The declaration of M.D. Thomas as per incuriam also resolves inconsistency in precedent and reinforces the larger Bench ruling in C.C. Alavi Haji concerning deemed service of statutory notices.