–Report by Monishka Allahbadi
The Jammu and Kashmir and Ladakh High Court ruled in ENGINEERING CONTROL VERSUS BANDAY INFRATECH PVT.LTD. that only when the notice of demand under section 138 of the Negotiable Instruments act is delivered to the correct address, can it be said that the drawer of a cheque has received the legal notice. The judge emphasized that no such inference could be drawn if the notice was delivered to the incorrect address.
The bench, which also included Justice Sanjay Dhar, made the observation in a case where the petitioner had refuted the respondent’s complaint against him for a violation of Section 138 of the Negotiable Instruments Act (hereinafter referred to as “the NI Act”) before the Court of Judicial Magistrate, Srinagar. The petitioner also disputed a ruling that the Magistrate had made against him in light of the offense. The petitioner’s attorney claimed that the respondent was unaware that the address where the statutory notice of demand was sent is incorrect as a result of which the petitioner had not received it. The legal representative went on to claim that despite the petitioner being a Delhi resident, the respondent/complainant delivered the notice of demand to the wrong location in Jammu. Therefore it cannot be claimed that a violation of Section 138 of the NI Act has been established against the petitioner without first providing him with a statutory notice of demand. He further added that if he doesn’t pay the required sum within the allotted period and he isn’t served with notice of demand, he is not subject to the presumption under Section 138 of the NI Act.
The respondent’s attorney refuted the accusations, claiming that the complainant is only obligated by law to provide a notice of demand and that delivery of the notice is not necessary. He said that the petitioner’s address was contained in the agreement that the parties had signed and the notice was sent to the same address.
The court observed that three conditions have to be met for the applicability of section 138 of the NI Act. It was observed:
“..Proviso to Section 138 of the NIA Act stipulates that three conditions must be satisfied before dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented before the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque must make a demand for payment of the amount of money by giving a notice in writing to the drawer of the cheque within thirty days of the receipt of information by him from the bank regarding return of the cheque as unpaid. The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the atisfaction of all the aforesaid three conditions that an offence under Section 138 can be said to have been committed by the person issuing the cheque.”
It was further observed after relying on several judgments of the Supreme Court that a notice must be received by the accused and this can only be inferred if it has been dispatched to the correct address which evidently has not happened in this case.
The bench stated while allowing the petition and dismissing the complaint that the evidence on record clearly suggests that the statutory notice of demand was sent by the respondent/complainant at a wrong address, so the presumption of receipt of notice by the petitioner/accused does not arise because the requirement of sending a statutory notice in order to file a complaint under Section 138 of the NI Act has not been met in this case.