S.138 NI Act | Whether Demand Notice Issued To Correct Address Is Matter Of Evidence, Not Reason To Quash Complaint: Kerala High Court

The Kerala High Court on Tuesday refused to quash a complaint under Section 138 Negotiable Instruments Act, merely because the demand notice issued in local language was returned unserved.

Justice A. Badharudeen, observed that there is a presumption that service of notice has been effected when it is sent to the correct address by registered post. It further added,

"Issuance of notices in the correct address is a matter of evidence and, therefore, the same is not a reason to quash the complaints." 

The instant criminal miscellaneous petitions were filed under Section 482 CrPC seeking to quash the complaints filed before Magistrate, for want of proper legal notice mandated under Section 138(b) of the NI Act.

It was submitted by Advocate K.K. Satish on behalf of the petitioners that upon dishonour of the cheques alleged to be issued by KAYPEE Wire  Products, the 2nd respondent herein (the complainant) issued notice to a wrong address, due to which the same had been returned with the endorsement `no such addressee'. The counsel thus argued that the complaints suffered from want of notice, and were liable to be quashed on this ground.

The Counsel also brought the attention of the Court towards its decision in Preesa Foods and Spices (India) Private Limited v. State of Kerala & Ors. (2022), wherein the Court had identified 5 ingredients as being mandatorily to be complied with by the person launching a prosecution under NI Act for enabling a court to take cognizance. It was alleged that the said ingredients had not been complied with in the instant case - the company had not been arraigned as the first accused, but as the third accused.

Advocate K. Rakesh on behalf of the 2nd respondent placed reliance upon the Apex Court decision in Bhupesh Rathod v. Dayashankar Prasad Chaurasia & Anr (2021) in which the Court had observed that, "There could be a format where the Company's name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company".

The counsel added that in the instant case, notices were issued in Malayalam language and the address in the notices also were written in the same language, and that the notices were returned only due to the same. The counsel thus contended that , although the notices were returned, it could not be held that there were no proper legal notices in these matters since issuance of notices in the correct address alone would suffice the mandate of notice.

The Court in the instant case found that the argument of the petitioner's counsel that the company had only been arraigned as the 3rd accused, thus going against the holding in Preesa Foods and Spices (India) Private Limited (2022), was devoid of merit. It was reasoned by the Court that the said decision had to be understood in the sense that, once an accused, who must be in the party array, got arrayed, the status of the accused as first, second or third, would not have much significance. 

The Court further found that the photographs of the returned notices revealed that the notices had been issued in the name of the accused by showing the name of the firm in Malayalam language. The Court thus found that the issuance of notices in the correct address was a matter of evidence, and not a reason to quash the complaints.

"In these matters it is emphatically clear that notices were issued in Malayalam language as indicated herein above and, therefore, whether the same amount to proper notices is a matter of evidence. In such a case, the complaints cannot be quashed without giving an opportunity to the complainant to prove issuance of legal notice".

The petitions were thus dismissed. 

Case Title: K.P. Ramachandran Nair & Anr. v. State of Kerala & Anr. 

Citation: 2022 LiveLaw (Ker) 592

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