Case Note & Summary
The petitioners, M/s. Steel Rocks Inc. and its proprietor, filed a criminal petition under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) seeking to quash the order dated 16.02.2024 in C.C.No.1903/2017 pending before the IV Additional Civil Judge and JMFC, Anekal, for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The respondents, M/s. Bangalore Elevated Tollway Pvt. Ltd. (BETPL) and its authorized signatory, had filed a complaint alleging that the petitioners failed to commence construction work for which an advance of Rs. 25 lakhs was given, and a cheque issued by the petitioners was dishonoured. The trial court took cognizance and issued process. The petitioners challenged the order on the ground that the statutory demand notice under Section 138 NI Act was not properly served on them. The notice sent by registered post was returned with the endorsement 'not claimed'. The petitioners argued that there was no evidence of actual service or refusal, and therefore the complaint was not maintainable. The respondents contended that the notice was sent to the correct address and the endorsement 'not claimed' amounts to deemed service. The High Court examined the provisions of Section 138 NI Act and Section 27 of the General Clauses Act, 1897. It held that for a valid complaint under Section 138, the complainant must prove that the demand notice was served on the accused. The mere endorsement 'not claimed' does not constitute service unless the complainant shows that the notice was sent to the correct address and the addressee refused to accept it. The court relied on the principle that the burden is on the complainant to establish service. Since the respondents failed to produce any evidence of actual service or refusal, the complaint was not maintainable. Consequently, the High Court allowed the petition, set aside the order of the trial court, and quashed the complaint.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Service of Demand Notice - Requirement of Proper Service - The court considered whether the demand notice sent by registered post returned with endorsement 'not claimed' constitutes valid service under Section 138 of the Negotiable Instruments Act, 1881. Held that mere endorsement 'not claimed' does not prove service; the complainant must show that the notice was sent to the correct address and that the addressee refused to accept or that there is deemed service under Section 27 of the General Clauses Act, 1897. In the absence of such proof, the complaint is not maintainable and is liable to be quashed under Section 482 Cr.P.C. (Paras 5-10).
Issue of Consideration
Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 is maintainable when the demand notice was returned with endorsement 'not claimed' and there is no evidence of proper service?
Final Decision
The High Court allowed the petition, set aside the order dated 16.02.2024 in C.C.No.1903/2017, and quashed the complaint.
Law Points
- Service of demand notice under Section 138 NI Act must be proved by actual delivery or deemed service under Section 27 of General Clauses Act
- 1897
- 'not claimed' endorsement is not sufficient to prove service
- complaint liable to be quashed under Section 482 Cr.P.C.
