2014 (8) TMI 464 - SC - Indian Laws

Proof of service of notice under Section 138 of the Negotiable Instruments Act 1881 - cheque bounced - Whether in absence of any averments in the complaint to the effect that the accused had a role to play in the matter of non-receipt of legal notice; or that the accused deliberately avoided service of notice the same could have been entertained keeping in view the decision of this Court in Vinod Shivappa 2006 (5) TMI 441 - SUPREME COURT - Held that - It is clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to aver in the complaint that in spite of the return of the notice unserved it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. High Court clearly erred in quashing the complaint on the ground that there was no recital in the complaint that the notice under Section 138 of the NI Act was served upon the accused. The High Court also erred in quashing the complaint on the ground that there was no proof either that the notice was served or it was returned unserved/unclaimed. That is a matter of evidence - service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for quashing of the proceeding under Section 482 of the Cr.P.C - Decided in favour of appellants.

Summary

The core legal questions considered by the Court were:

1. Whether the absence of an explicit averment in the complaint regarding the service of the statutory notice under Section 138 of the Negotiable Instruments Act (NI Act) renders the complaint non-maintainable and liable to be quashed.

2. The nature and extent of the presumption of service of notice under Section 114 of the Evidence Act and Section 27 of the General Clauses Act, 1897 (GC Act) in the context of complaints under Section 138 of the NI Act.

3. The appropriateness of quashing a complaint at the stage of issuance of process under Section 482 of the Code of Criminal Procedure (Cr.P.C.) on the ground of non-service or non-pleading of service of the statutory notice.

Issue-wise Detailed Analysis

Issue 1: Necessity of averment of service of statutory notice in the complaint under Section 138 of the NI Act

Relevant legal framework and precedents: The Court examined the requirement under Section 138 of the NI Act that a notice demanding payment must be served on the accused before initiating prosecution. The earlier two-Judge Bench decision in Shakti Travel & Tours was relied upon by the High Court to quash the complaint due to absence of averment of service of notice. However, the three-Judge Bench decision in C.C. Alavi Haji v. Palapetty Muhammed was pivotal in reassessing this issue.

Court's interpretation and reasoning: The Court held that it is not necessary to aver in the complaint that the notice was served on the accused. The three-Judge Bench in C.C. Alavi Haji clarified that the complaint need only state that the notice was sent by registered post to the accused's correct address. The absence of explicit averments regarding actual receipt or refusal of the notice does not invalidate the complaint.

Application of law to facts: The High Court had quashed the complaint solely on the ground that the complaint did not mention service of notice on the accused. The Supreme Court found this approach erroneous, holding that such a defect is not fatal at the stage of issuance of process and is a matter of evidence to be examined during trial.

Treatment of competing arguments: The appellant's counsel relied heavily on the binding precedent of C.C. Alavi Haji, which overruled the earlier two-Judge Bench approach in Shakti Travel & Tours. The Court agreed that the High Court's reliance on the latter was misplaced.

Conclusion: The complaint cannot be quashed merely because it is silent on the service of notice. The absence of such averment does not defeat maintainability.

Issue 2: Presumption of service of notice under Section 114 of the Evidence Act and Section 27 of the GC Act

Relevant legal framework and precedents: Section 114 of the Evidence Act permits courts to draw presumptions based on the common course of business, while Section 27 of the GC Act specifically deals with service by post, deeming service effected upon proper addressing, prepayment, and posting by registered post, unless contrary is proved.

The Court referred to earlier decisions including Vinod Shivappa and Jagdish Singh, which held that when a notice is sent by registered post to the correct address, service is presumed even if the notice is returned with endorsements such as "addressee not available" or "premises locked".

Court's interpretation and reasoning: The Court emphasized that the presumption under Section 27 of the GC Act is stronger and more specific than the general presumption under Section 114 of the Evidence Act. When a notice is sent by registered post to the correct address, service is deemed effected unless the addressee proves otherwise.

The Court further explained that even if the notice is returned unserved with postal endorsements, it is open to the complainant to prove at trial that the accused deliberately evaded service. This is a question of fact and evidence, not to be decided at the stage of issuance of process.

Application of law to facts: The complaint alleged that the notice was sent by registered post to the accused's address. The High Court erred in requiring proof of actual service or return of the notice at the complaint stage. The Court held that the presumption of service applies, and the matter must be left to trial.

Treatment of competing arguments: The respondent-accused argued non-service of notice, but the Court clarified that such a defense can be raised and examined at trial and does not justify quashing the complaint prematurely.

Conclusion: Service of notice is presumed when sent by registered post to the correct address, and absence of proof to the contrary at the complaint stage is not fatal.

Issue 3: Appropriateness of quashing complaint under Section 482 Cr.P.C. on ground of non-service of notice

Relevant legal framework and precedents: Section 482 Cr.P.C. empowers the High Court to quash proceedings to prevent abuse of process or to secure ends of justice. However, this power must be exercised sparingly and not to pre-empt trial on disputed questions of fact.

The Court relied on the observations in Vinod Shivappa and C.C. Alavi Haji that the question of service of notice and whether the accused deliberately evaded receipt is a matter of evidence and cannot be decided at the stage of issuance of process.

Court's interpretation and reasoning: The Court held that quashing a complaint on the sole ground of alleged non-service of notice is premature and inappropriate. The High Court should not have exercised its inherent jurisdiction under Section 482 Cr.P.C. to quash the complaint without trial.

Application of law to facts: The High Court quashed the complaint on a short ground of absence of averment of service of notice. The Supreme Court found this to be an erroneous exercise of jurisdiction under Section 482 Cr.P.C.

Treatment of competing arguments: The Court distinguished the earlier two-Judge Bench decision in Shakti Travel & Tours, noting it lacked detailed reasoning and factual matrix, and held that the three-Judge Bench decision in C.C. Alavi Haji is binding and authoritative.

Conclusion: The High Court erred in quashing the complaint under Section 482 Cr.P.C. on the ground of non-service of notice. The complaint must be restored for trial.

Significant Holdings

"It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business."

"When a notice is sent by registered post and is returned with a postal endorsement 'refused' or 'not available in the house' or 'house locked' or 'shop closed' or 'addressee not in station', due service has to be presumed."

"Service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for quashing of the proceeding under Section 482 of the Code of Criminal Procedure."

"The judgment of the two-Judge Bench in Shakti Travel & Tours does not hold the field any more in view of the three-Judge Bench decision in C.C. Alavi Haji."

The Court conclusively determined that the absence of explicit averments regarding service of statutory notice in a complaint under Section 138 of the NI Act is not fatal to the maintainability of the complaint. The presumption of service arises upon sending the notice by registered post to the correct address under Section 27 of the GC Act, and this presumption can only be rebutted by evidence at trial. Consequently, the High Court erred in quashing the complaint on the ground of non-service or non-pleading of service of notice, and the complaint was restored for trial. The Court emphasized the limited and sparing use of inherent jurisdiction under Section 482 Cr.P.C. to quash proceedings prematurely on disputed factual issues such as service of notice.