Does Demand Notice Sent Via 'Courier' Constitute A Valid Service In Cheque Dishonor Cases? Allahabad HC Answers

The court, however, made it clear that in cases of notice sent through courier, the presumption of service under Section 27 of the General Clauses Act cannot be invoked until an amendment is made under the said provision to include the courier service apart from the registered post.

For context, Section 27 of the General Clauses Act stipulates that where any Act authorises or requires any document to be served by post, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. [rebuttable presumption]

The Court also ruled that where the complaint under the NI Act has been dismissed for want of prosecution at the initial stage of issuing summons, the Court concerned has the authority to recall the same and the bar of Section 362 CrPC will not be applied.

Relying on the High Court ruling in the case of Rajendra vs. State of U.P. and Another 2024 LiveLaw (AB) 83, the Court also held that service of notice through WhatsApp under Section 138 NI Act will be deemed to be served as per the procedure of Section 13 of IT Act and no separate rule for prescribing the delivery of service is required.

The bench of Justice Arun Kumar Singh Deshwal made these observations while dismissing a plea seeking the quashing of a complaint case under Section 138 of the NI Act filed by the opposite party no. 2 (complainant).

Essentially, the applicant had moved the court with the following four arguments in support of his petition:

• Since the complaint was dismissed in default in October 2023 at the stage of taking steps itself, therefore, the concerned Court couldn't restore the same because it had no jurisdiction to recall the order of dismissing the complaint for want of prosecution.
• The cheque in question was a conditional cheque with the condition that before submitting the cheque, the complainant would inform the applicant. However, no information was given to the applicant before the submission of the same with the bank.
• The demand notice was admittedly served through courier; the same cannot be deemed service under Section 138 NI Act because, as per Section 138 NI Act, notice must be sent through registered post
• The service of notice through WhatsApp cannot be said to be effective unless rules are framed prescribing the service delivery procedure.

To deal with the applicant's contentions, the Court framed four questions around the submissions of the applicant's counsel and examined them one by one.

Regarding the first issue, the Court referred to the Supreme Court's ruling in Vishnu Agarwal vs. State of U.P. and another (2011) 14 SCC 813 to observe that the same Court can recall the dismissal order of the complaint if the order was not passed on merit.

Noting that Section 138 of the NI Act is quasi-civil in nature and that all the provisions of the CrPC are not strictly applied in proceedings under the N.I. Act, the Court emphasised that a bar of Section 362 CrPC will not apply if the complaint is dismissed for want of prosecution at the initial stage.

Dealing with the second contention of the applicant, the Court referred to the Top Court's ruling in the case of Sunil Todi vs State of Gujarat LL 2021 SC 706 even if there is a condition that the cheque is for security deposit and the cheque was to be deposited after getting confirmation, it will attract the ingredients of Section 138 N.I. Act on bouncing of the same and non-payment of the cheque amount after the expiry of 15 days from the date of receiving the notice.

So far as the third issue was concerned about whether the written notice through courier service is valid under Section 138 NI Act, the Court noted that the option of sending the written notice through courier service is not barred under Section 94 NI Act.

The Court said the basic purpose of sending a demand notice under Section 138 of the NI Act is to inform the drawer of the cheque's dishonouring and allow him to pay the cheque amount. Hence, excluding the courier service, which is faster than the registered post, will defeat the basic object of the NI Act.

However, the Court added that the only advantage of sending the notice through the post is provided in the second part of Section 94 of the N.I. Act, which means if the notice is sent through the post at the correct address, even if it does not reach the destination, it will not be deemed to be invalid.

Further, to gauge the meaning of the term "service through the post", the Court referred to Section 27 of the General Clauses Act, which provides, for getting the benefit of the presumption of service of notice, it should be sent through registered post.

Against this backdrop, while explaining the benefit of sending demand notice via registered post, observed thus:

“…it is clear that courier service has not been excluded under Section 94 N.I. Act, but to get the benefit under Section 27 of the General Clauses Act, a notice must be delivered through registered post, and courier service cannot be deemed registered post. Therefore, until the amendment is made under Section 27 of the General Clauses Act for including courier service apart from registered post, the presumption of service of registered post under Section 27 of the General Clauses Act cannot be invoked for the notice sent through courier service. Therefore, the presumption of delivery of service of notice under Section 27 of the General Clauses Act can be invoked only when the notice is sent through registered post and not through courier service.”

In other words, the Court held that while a notice sent through the courier service is valid service under Section 138 NI Act, however, for the purpose of getting the benefit of presumption of service under Section 27 of the General Clauses Act, notice must be sent through registered post.

Now, regarding the fourth issue as to whether service of notice through WhatsApp cannot be said to be effective unless rules for service are prescribed, the Court noted that the Central Government has already framed rules under 87 of the IT Act for the reliability of electronic signatures and electronic records and for security.

Therefore, there is no requirement to frame separate rules for service of notice under the IT Act.

In view of this, finding that the submissions of learned counsel for the applicant have no force, the Court dismissed the application while holding thus:

“(i) When the complaint under N.I. Act was dismissed for want of prosecution at the initial stage of issuing summons, then the Court concerned has the authority to recall the same and the bar of Section 362 Cr.P.C. will not be applied;
(ii) When a conditional cheque is presented before the bank without prior notice and dishonours, even then the liability under Section 138 N.I. Act will be attracted;
(iii) Notice of demand through courier service is valid service for Section 138 N.I. Act, but the presumption of service under Section 27 of the General Clauses Act cannot be invoked for the notice sent through courier till the amendment is made under Section 27 of General Clauses Act so as to include the courier service apart from registered post and;
(iv) Service of notice through WhatsApp under Section 138 N.I. Act will be deemed to be served as per the procedure of Section 13 of I.T. Act and no separate rule for prescribing the delivery of service is required.”

Case title - Rajiv Malhotra vs. State of U.P. and Another 2024 LiveLaw (AB) 343

Case citation: 2024 LiveLaw (AB) 343

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