Top
Begin typing your search above and press return to search.
News Updates

Presumption Of Service Of Notice U/ S 27 Of General Clauses Act Applicable On Service Of Demand Notice U/S 138 Of NI Act: Tripura High Court

LIVELAW NEWS NETWORK
23 Nov 2020 4:01 AM GMT
Presumption Of Service Of Notice U/ S 27 Of General Clauses Act Applicable On Service Of Demand Notice U/S 138 Of NI Act: Tripura High Court
x

The Tripura High Court has held that once a demand notice, issued under the Negotiable Instruments Act, 1881 in case of dishonour of cheque is dispatched by post to the correct address, the part of the payee is over and the notice is deemed served on the defaulter as per the presumption under Section 27 of the General Clauses Act, 1897, unless proved to the contrary. A Bench of Justice...

Your free access to Live Law has expired
To read the article, get a premium account.
    Your Subscription Supports Independent Journalism
Subscription starts from
599+GST
(For 6 Months)
Premium account gives you:
  • Unlimited access to Live Law Archives, Weekly/Monthly Digest, Exclusive Notifications, Comments.
  • Reading experience of Ad Free Version, Petition Copies, Judgement/Order Copies.
Already a subscriber?

The Tripura High Court has held that once a demand notice, issued under the Negotiable Instruments Act, 1881 in case of dishonour of cheque is dispatched by post to the correct address, the part of the payee is over and the notice is deemed served on the defaulter as per the presumption under Section 27 of the General Clauses Act, 1897, unless proved to the contrary.

A Bench of Justice SG Chattopadhyay relied on the High Court's decision in Keshab Banik vs. Shekhar Banik, (2013) 1 TLR 528, where it was held that where the sender has dispatched the notice by post with the correct address written on it, then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service.

The High Court reiterated that the presumption of service of notice under Section 27 of the General Clauses Act will be applicable in case of dishonour of cheque, as "any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice."

[Section 27 of the General Clauses Act stipulates that where any Act authorizes 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.]

In Keshab Banik (supra) the High Court had held that even though Section 138 of the Act does not require that the notice should be given only by "post", nonetheless the principle incorporated in Section 27 can profitably be imported in a case where the sender has dispatched the notice by post with the correct address written on it.

The present case pertained to a revision petition filed by one Nitai Majumder, against an order of the Sessions Judge, upholding the order of conviction passed against him by the CJM.

Background

The Petitioner was convicted under Section 138 of the NI Act, for dishonour of cheque. As per the facts of the case, the Petitioner-accused took a loan of Rs.3,50,000/- from the Respondent. The money not being repaid in time, the Respondent approached the petitioner and requested him for an early repayment of the same pursuant to which, the Petitioner issued Cheque in the name of the Respondent. When the cheque was presented for collection at the Bank, it was returned with an endorsement "insufficient funds".

The Respondent then issued a demand notice to the Petitioner via registered post with AD, sent to his known residential address. It was alleged that the postman entrusted with the service of the notice visited the Petitioner's house on four occasions but every time, the house inmates refused to receive the registered letter and told the postman that the addressee was out of station. Consequently, the demand notice was returned to the Respondent.

The question which arose for consideration of the Court was whether the Petitioner-accused deliberately did not receive the demand notice?

Submissions as to service of notice

The submission on behalf of the Petitioner- accused was that the Trial Court failed to appreciate the fact that the service of statutory after dishonor of the cheque was not proved.

The Respondent on the other hand contended that law has been settled that in a case under NI Act, once the notice is dispatched to the correct address of the accused, the onus on the part of the complainant is discharged and the rest depends on the accused.

Findings

The Court, concurring with the stand taken by the Respondent, observed,

"The object of statutory notice is to protect an honest drawer of the cheque by providing him a chance to make the fund sufficient in his bank account and correct his mistake. The accused petitioner could have availed this opportunity by accepting the demand notice instead of repeatedly avoiding its service. He could have accepted the notice and projected his case that he already made the repayment of the loan, had this case of him been true. Therefore, it can be safely held that the prosecution successfully discharged its burden in proving the case against the petitioner with the help of the statutory presumptions under the NI Act, and the accused has failed to rebut those presumptions and prove the contrary by offering provable explanation founded on proof."

The Court was of the opinion that the Complainant-Respondent has led "convincing evidence" to prove that the postman visited the house of the accused at the known address on 4 dates. Every time the postman was told by the house inmates that he was out of station. The fact is proved by the report given by the postman. Thus, it concluded that from the overall conduct of the Petitioner-accused, it is clear that he wanted to avoid the service of the notice.

Submissions as to existence of debt

Inter alia, the Petitioner-accused denied the existence of any debt/ liability. He submitted that the cheque in question was never issued by him in discharge of any debt or liability, but only a blank cheque was issued as a security for the loan which was borrowed by him from the Complainant and after the loan was repaid, the Complainant, instead of returning the cheque to the him, mis-utilized it.

The Respondent on the other hand submitted that the presumption under Section 139 read with the Rule of Evidence as provided under Section 118, NI Act with regard to the existence of debt or liability is not a discretionary presumption, it is a statutory presumption which is obligatory on the part of the court. Therefore, a heavy burden is cast on the accused to rebut such presumption by adducing convincing evidence. Such presumption cannot be rebutted by merely offering an explanation.

Findings

The Court observed that the Petitioner-accused did not lead any evidence in rebuttal of such statutory presumptions. It said, "He has also failed to bring on record such facts and circumstances which would lead the courts below to believe that the liability, attributed to the accused petitioner was improbable or doubtful."

The Bench relied on the Apex Court's verdict in Kishan Rao v. Shankargouda, (2018) 8 SCC 165, where it was succinctly held that mere denial of existence of debt shall not serve any purpose in a proceeding under Section 138, NI Act. Something which is provable has to be brought on record for getting the burden of proof shifted to the complainant.

"It is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist...," the Top Court had held.

Case Title: Nitai Majumder v. Tanmoy Krishna Das

Click Here To Download Order

Read Order


Next Story
Share it