Notice under Section 138 NI Act to be served on drawer of cheque, not his relative: Kerala High Court

The Kerala High Court recently acquitted a man convicted in a cheque bounce case, after finding that the mandatory statutory notice under Section 138(b) of the Negotiable Instruments Act, 1881 (NI Act) was not properly served on him. [Saju v Shalimar Hardware & anr]

Justice PV Kunhikrishnan observed that for a complaint to sustain under Section 138 of NI Act, there must be a valid service of the statutory notice to the drawer of the cheque (person who writes and signs the cheque). 

However, the judge observed that the notice in the present case was served on a relative of the accused without any proof that the accused himself was aware of such service.

"Therefore, the service of notice on the relative of the accused is not sufficient, especially when there is no evidence from the side of the complainant that the accused was aware of the service of notice on his relative. If there is no such evidence, it is to be presumed that the statutory notice under Section 138(b) of the Negotiable Instruments Act, 1881 is not served on the accused. The upshot of the above discussion is that the conviction and sentence imposed on the petitioner are to be set aside," the judge stated.

The accused, Saju, had issued a cheque for ₹92,500 in favour of the complainant, Shalimar Hardwares, towards payment for building materials.

However, when the cheque was presented to the bank, it was returned due to insufficient funds.

The complainant sent a legal notice dated April 27, 2019 to the accused, but during trial, the complainant's witness admitted that the notice was received not by Saju, but by one of his relatives.

Despite this, the Magistrate court convicted Saju and sentenced him to three months simple imprisonment along with a compensation order.

Although the appellate court reduced the sentence to one month, it upheld the conviction.

Aggrieved, Saju approached the High Court against the conviction.

Relying on the witness testimony, the Court pointed out that the complainant had neither alleged nor proved that the accused had actual or constructive knowledge of the notice being served on his relative.

Therefore, there was no valid compliance with the statutory condition laid down in Section 138(b) of the Act, which requires the payee to give a written notice to the drawer of the cheque within 30 days of receiving intimation of cheque bouncing.

The High Court cited the Supreme Court's 2009 decision in Thomas MD v PS Jaleel in which it was held that service of notice on a wife cannot be treated as valid service on the accused-husband.

Thus, strict compliance with Section 138(b) is mandatory, the High Court made it clear.

It held that the lack of proper notice vitiated the entire proceedings against the accused and set aside his conviction and sentence.

It also directed that any amount deposited by the accused during the proceedings be refunded.

Advocates Manjusha K, MT Sureshkumar and Sreelakshmi Sabu appeared for the petitioner-accused.

The State was represented by Senior Public Prosecutor Hrithwik CS.

[Read Order]