Case Note & Summary
The case involves criminal applications filed by Gatrod Agro Bio-Fuels Private Ltd. and its directors (applicants) seeking quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 initiated by Garg Distilleries Private Ltd. (respondent No.1). The dispute arose from a dishonoured cheque issued by the applicants. The applicants contended that the demand notice under Section 138 was not served upon them, as the postal endorsements showed 'not claimed' or 'refused' without proper proof. The court examined the requirement of service of notice under Section 138 of the NI Act. The court held that the complainant must prove that the notice was sent by registered post and that the accused refused to accept it or that it was returned unclaimed. Mere endorsement by postal authorities is not sufficient; the complainant must lead evidence to show that the notice was properly addressed and that the accused had knowledge of it. In this case, the court found that the complainant failed to prove service of notice, and therefore, the criminal proceedings were liable to be quashed. The court allowed the applications and quashed the proceedings.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Service of Notice - Section 138 - The complainant must prove service of demand notice; mere endorsement of 'not claimed' or 'refused' by postal authorities is insufficient to establish service. The court held that the proceedings were liable to be quashed as the notice was not properly served. (Paras 1-10)
Issue of Consideration
Whether the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 can be sustained when the demand notice was not properly served on the accused?
Final Decision
The court allowed the criminal applications and quashed the criminal proceedings against the applicants.
Law Points
- Service of notice under Section 138 of Negotiable Instruments Act
- 1881 must be proved by complainant
- Endorsement of 'not claimed' or 'refused' insufficient without further evidence
- Dishonour of cheque
- Criminal proceedings quashed
