Section 138 NI Act: If demand notice is sent at wrong address, complaint cannot be maintained [Read the Order]

July 3, 2019:

Delhi High Court has held that if the notice is incorrectly addressed no legal presumption can arise.

A bench of Justice Sachdeva has passed the order in the case titled as R.L. Verma vs P.C. Sharma on 01.07.2019.

In a cheque bounce case, the accused submits that the statutory notice exhibit CW-1/5 was not addressed to the correspondence address mentioned in the said alleged acknowledgement (Exh.CW1/2) but was sent to Dr. Gopal Das Building, 28, Barakhamba Road, New Delhi. He submits that the said building was a building promoted by the family of the petitioner, however, as on the date of the statutory notice there was no space occupied by the petitioners in the said building. 5. He further submits that the notices which were sent through registered post were delivered back unserved and this was acknowledged by the complainant and the returned envelope was exhibited as exhibit CW-1/8 which had an endorsement “Left”.

High Court observed "Perusal of the record clearly shows that the complainant even in the complaint had stated that the statutory notice was not delivered and had accordingly annexed with the complaint the returned envelope containing the statutory notice. 22. Legal presumption of service of notice can only arise in case the notice is correctly addressed. If the notice is incorrectly addressed no legal presumption can arise. In the present case, the complainant had annexed the letterhead of the petitioner containing the address mentioned in the statutory notice but specifically mentioning there in the correspondence address as that of New Friends Colony".

High Court further observed "Section 138 of the Negotiable Instruments Act mandates the issuance of the statutory notice as a pre-condition to filing of a complaint. The cause of action to file a complaint under section 138 of the Negotiable Instruments Act arises only on issuance and service of statutory notice and failure of the accused to comply with the statutory notice. In the absence of service of statutory notice the cause of action would not accrue. Service of statutory notice would also include legal presumption of service if circumstances so warrant".

It further observed "As noted above, in the present case there was admittedly novservice of statutory notice and the presumption of service of thevstatutory notice also does not arise in the facts of the present case as the notice was not correctly addressed".

It also observed "A security guard posted at the building which houses several offices would not satisfy the condition of being an agent empowered to receive notices on behalf of the occupants of the building. Further the complainant had not placed on record any material to suggest that on the date when the notice was sent, the petitioner was in possession of an office or visited any office in the said building".

High Court then held "Since the pre-condition of filing a complaint under section 138 of the Negotiable Instruments Act of sending a statutory notice has not been satisfied in the present case, no cause of action arose in favour of the complainant to file the subject complaint. Since no cause of action arose, the petitioner could not have instituted the complaint nor could the trial court as well as the appellate court by the impugned order have convicted the petitioner".

Read the Order here:

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