Cheque Bounce Complaint Can't Be Dismissed For Want Of Tracking Report: MP High Court Lays Guidelines On Presumption Of Service Of Notice
The Madhya Pradesh High Court has held that a complaint under Section 138 of the Negotiable Instruments Act shall not be dismissed merely because the tracking or service report of the statutory notice was not produced, as it defeats the objective of the Act, which is to ensure the credibility of commercial transactions. The bench of Justice Himanshu Joshi in his order said:"this Court is of...
The Madhya Pradesh High Court has held that a complaint under Section 138 of the Negotiable Instruments Act shall not be dismissed merely because the tracking or service report of the statutory notice was not produced, as it defeats the objective of the Act, which is to ensure the credibility of commercial transactions.
The bench of Justice Himanshu Joshi in his order said:
"this Court is of the considered opinion that non-production of the service report or track report by itself cannot be a ground to dismiss a complaint under Section 138 of the Negotiable Instruments Act at the threshold, particularly when the complainant has asserted that the notice was duly dispatched on the correct address of the accused. The question whether the notice was actually served or not is essentially a matter of evidence, which can appropriately be examined during trial and the accused is always at liberty to rebut the statutory presumption of service".
It further laid down guidelines to avoid similar situations in future:
1. Where a statutory notice under Section 138 of the Negotiable Instruments Act is sent by registered post or speed post on the correct address of the drawer, a presumption of service under Section 27 of the General Clauses Act, 1897 shall ordinarily arise.
2. The Magistrate shall not dismiss the complaint solely on the ground that the track report or acknowledgement due card has not been filed, if the complainant demonstrates that the notice was properly addressed, prepaid and dispatched. In such cases, the Court may presume that the notice would have been delivered within the ordinary course of postal business, unless the accused rebuts such presumption.
3. Where the notice is sent by registered post or speed post to an address within the same city or district, the Court may ordinarily presume service within 3 to 5 days from the date of dispatch.
4. Where the notice is sent to an address located in another district but within the same State, the Court may ordinarily presume service within 5 to 7 days from the date of dispatch.
5. Where the notice is sent to an address located in another State, the Court may ordinarily presume service within 7 to 10 days from the date of dispatch.
6. If the address is located in a remote or rural area, the Court may allow a reasonable additional time depending upon the ordinary postal transit period.
7. The above presumption shall remain rebuttable, and the accused shall always have the liberty to establish, by leading evidence, that the notice was not actually received. The question of actual service and rebuttal of presumption can appropriately be examined during trial, and the complaint should not be rejected at the threshold.
A petition was filed challenging the order of the Revisional Court affirming the order of the Trial Court dismissing the complaint filed by the petitioner under Section 138 of the Negotiable Instruments Act, on the ground that the complaint was premature due to the non-disclosure of the service report of the statutory notice.
Per the facts, the respondent had borrowed ₹5,00,000/- from the petitioner. In discharge of this liability, he initially issued two cheques for ₹2,00,000/- and ₹3,00,000/-, but both were dishonoured for insufficient funds. Subsequently, the respondent issued a fresh cheque for ₹5,00,000. The said cheque was also dishonoured.
Thereafter, the petitioner issued a statutory legal notice on August 11, 2020, sent on August 12, 2020, by registered post, demanding payment within the prescribed period. Since the respondent failed to make payment within 15 days, the petitioner filed a complaint on September 1, 2020.
During the proceedings, the Trial Court directed the petitioner to produce the track report regarding the service of notice. However, the petitioner was unable to receive the report due to circumstances arising from the Covid 19 pandemic.
Thus, the Trial Court dismissed the complaint on July 1, 2022, holding that the petitioner failed to disclose the date of service of notice upon the respondents and therefore the limitation period under Section 138 NI Act could not be calculated.
The counsel for the petitioner contended that the Trial Court dismissed the complaint only on the ground that the track report was not produced to show the exact date of service of notice. He argued that the Court failed to appreciate the provisions of Section 27 of the General Clauses Act, which clearly provides that once a notice is properly addressed, prepaid and sent by registered post, the service of the notice shall be deemed to have been effected in the ordinary course of postal business, unless the contrary is proved.
The bench noted that the issue which arose for consideration was - whether the complaint filed by the petitioner could have been dismissed solely on the ground that the track report regarding service of notice was not produced, despite the notice having been sent by registered post on the correct address of the respondent.
The bench examining Section 27 of the General Clauses Act, 1897, noted that it creates a statutory presumption of service when a notice is properly addressed, prepaid and dispatched by registered post.
Therefore, the bench held that the Revisional Court erred in interpreting Section 27 of the General Clauses Act. Relying on the case of Ajeet Seeds Ltd v K Gopal Krishnaiah [(2014) 12 SCC 685], the bench reiterated that the presumption of service arises only after 30 days from the dispatch of the notice. The bench noted that the presumption operates on the basis of the ordinary course of postal business, which ordinarily would be a few days, depending upon the distance and mode of dispatch.
The court observed that the non-production of the service report o track report by itself cannot be a ground to dismiss a complaint, particularly when the complainant asserted that the notice had been duly dispatched to the correct address of the accused.
The bench held, "Therefore, the learned Magistrate ought not to have dismissed the complaint at the threshold merely on the ground that the acknowledgment or track report was not produced. The revisional Court also erred in presuming the fixed period of 30 days for drawing presumption of service".
The bench noted that the petitioner's inability to produce the track report was due to circumstances arising during the COVID-19 pandemic. In such circumstances, the dismissal of the complaint merely because the track report was not produced defeats the objective of Section 138 of the NI Act, which is intended to ensure the credibility of commercial transactions.
Thus, the court noted that both the Trial Court and the Revisional Court erred in dismissing the complaint. Therefore, the bench set aside the impugned orders and restored the petitioner's complaint filed under the NI Act.
Case Title: Vinay Kuamr Mishra v Aditya Nayak [MCRC-11427-2023]
For Petitioner: Advocate Prateek Dubey
For Respondent: Advocate Sudhakar Singh