Pre-Condition Of Filing Complaint U/S 138 NI Act Not Fulfilled When Statutory Notice Of Demand Sent On Wrong Address: J&K&L High Court

The observation was made by a bench comprising Justice Sanjay Dhar while dealing with a plea wherein the petitioner had challenged the complaint filed by the respondent against him for offence under Section 138 of Negotiable Instruments Act (hereinafter for short "the NI Act") before the Court of Judicial Magistrate, Srinagar. In his plea the petitioner had also challenged an order, whereby the Magistrate had after taking cognizance of the offence, issued process against the petitioner.

The counsel for the petitioner vehemently pleaded that the statutory notice of demand had not been served upon him, inasmuch as the address on which the respondent has dispatched the said notice was incorrect to the knowledge of the respondent. The counsel further contended that the petitioner is a resident of Delhi but the notice of demand has been dispatched by the respondent/complainant on a wrong address at Jammu and hence without service of statutory notice of demand upon him, it cannot be stated that the offence under Section 138 of the NI Act is made out against him. He also argued that unless notice of demand is served upon the drawer of the cheque and he fails to pay the amount within the statutory period, the presumption in terms of Section 138 of the NI Act cannot arise against the drawer.

Contesting the claims the counsel for respondent submitted that the law requires the complainant only to give a notice of demand and service of notice is not necessary. He also contended that there was an agreement executed between the parties and in the said agreement, the address of the petitioner was shown in the same as shown in the notice of demand and the complaint.

Perusing the record before the court the bench recorded that the impugned complaint also shows that address of the petitioner/accused has been shown as resident of Jammu. When the process was issued by the learned trial Magistrate against the petitioner/accused, the same could not be served upon him because of the wrong address and the trial court record shows that the respondent/complainant moved an application before the said Court furnishing fresh particulars of the petitioner/accused.

"From the aforesaid record, it is clear that the respondent/complainant had mentioned wrong address of the petitioner/accused both in the statutory notice of demand as well as in the complaint because Priyag Apartment, Vasundra Enclave-96 is located in Delhi not in Jammu," the court observed.

While deliberating on the moot question as to whether law under sec 138 NI Act requires the complainant only to give a notice of demand and service of notice is not necessary, the bench made it worthwhile to record the observations made by Supreme Court in C. C. Alavi Haji vs. Palapetty Muhammad and another, (2007) wherein has been observed that when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. What the Supreme Court has emphasized is that the notice should have been sent on the correct address of drawer of the cheque. It is only then it can be said that notice has been received by the drawer of the cheque, the bench noted.

While further deliberating on the issue the court also placed reliance on Harman Electronics Private Limited and another vs. National Panasonic India Private Ltd, (2009) wherein Supreme court observed.

"The proviso appended to sec 138 NI Act, imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken. If the ingredients for constitution of the offence laid down in provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act are intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. As it is only on receipt of the notice that the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to Section 138 therefore must be read together. Issuance of notice would not by itself give rise to a cause of action but communication of the notice would."

Allowing the petition and while quashing the complaint the bench observed that the material on record clearly suggests that the statutory notice of demand was sent by the respondent/complainant on a wrong address and hence the presumption of receipt of notice by the petitioner/accused does not arise. Since the pre-condition of filing a complaint under Section 138 of the NI Act of sending a statutory notice has not been satisfied in the present case, no cause of action arose in favour of the respondent/complainant to file the subject complaint, the court concluded.

Case Title: ENGINEERING CONTROL Vs. BANDAY INFRATECH PVT. LTD

Citation: 2022 LiveLaw (JKL) 65 

Click Here To Read/Download Judgment