Holding

A notice sent by correctly addressed registered post is deemed to have been served, so the first notice of 12 April 1991 satisfied the statutory requirement and the complaint was timely filed.

Summary

The appellant, N. Parameswaran Unni, presented two cheques drawn by the first respondent, G. Kannan, which were returned unpaid and received a bank intimation on 8 April 1991. He issued a statutory notice by registered post on 12 April 1991, which was returned marked "addressee absent," and a second notice on 4 May 1991, which was returned as "refused." The appellant filed a criminal complaint under Section 138 of the Negotiable Instruments Act, leading to conviction and imprisonment of the respondent in the trial courts. The High Court set aside the conviction, holding that the notice was served beyond the 15‑day period prescribed by the proviso to Section 138. The Supreme Court held that a notice sent by correctly addressed registered post is deemed served, making the first notice of 12 April effective, and that a reminder notice does not invalidate the service. Consequently, the complaint was filed within the statutory period, Section 138 read with Section 142 applied, and the High Court judgment was reversed, directing the respondent to deposit compensation.

Issues considered

Whether the notice sent on 12 April 1991 complied with the 15‑day limitation prescribed under proviso (b) of Section 138 of the Negotiable Instruments Act.
Whether a second notice sent after the limitation period affects the validity of the first notice.
Whether a notice returned as "addressee absent" or "refused" can be deemed to have been served under the General Clauses Act and the Evidence Act.

Legislation cited

General Clauses Act, 1897s. 27
Indian Evidence Act, 1872s. 114
Negotiable Instruments Act, 1881s. 138, s. 142

Subjects

Cheque dishonourSection 138Statutory noticeRegistered post serviceLimitation periodCompensationCriminal conviction

Judgment

[2017] 4 S.C.R. 365

N PARAMESWARAN UNNI A
v.
G KANNAN AND ANOTHER
(Criminal Appeal No. 455 of 2006)
MARCH OJ, 2017 B
[N. V. RAMANA AND PRAFULLA C. PANT, JJ.]
Negotiable Instruments Act, 1881 - s.138 rlw. s.142 -
Dishonour of cheque - First notice served within time - Second
notice issued beyond limitation period - Effect -Appellant presented C
cheques issued by the first respondent to his bank, which were
returned with an endorsement "Refer to drawer" -Appellant received
intimation memo from his bank on 08.04.1991- Pursuant thereto,
appellant issued legal notice on 12.04.1991 to the first respondent,
which was returned with postal endorsement "intimation served,
addressee absent" - Appellant again sent the legal notice on D
04. 05.1991, which was again returned with postal endorsement
"refused, returned to sender" - Thereafter, appellant filed complaint
u/s.138 - Lower courts convicted and sentenced the first
respondent - However, High Court reversed the concurrent findings
of lower courts on basis that legal notice demanding payment was
E
sent on 04.05.1991, whereas intimation regarding dishonour of the
cheques was given by appellant's bank on 08.04.1991 and thus,
notice being beyond 15 days, hence, s.138 not attracted - On
appeal, held: Once notice is sent by registered post by correctly
addressing to the drawer of cheque, the service is deemed to have
been effected - Thus, the first notice dated 12.04.1991 was deemed F
to have been served on the first respondent - Further, generally
there is no bar under the Act to Send a reminder notice to the drawer
of the cheque and such notice cannot be construed as an admission
of non-service by the appellant - In the instant case, second notice
dated 04. 05.1991 could be construed as a reminder of respondent's G
obligation to discharge his liability and hence, it had no relevance
at all - Complaint was filed within stipulated time contemplated
u/Cl.(b) of s.142, therefore, s.138 rlw. 142 was attracted- General
Clauses Act, 1897 - s.27 - Evidence Act, 1872 - s.114.

H
365
366 SUPREME COURT REPORTS [2017] 4 S.C.R.

A Disposing of the appeal, the Court
HELD: 1. A bare reading of Section 138 of the Negotiable
Instruments Act,1881, indicates that the purport of Section 138
is to prevent and punish the dishonest drawers of cheques who
evade and avoid their liability. As explained in Clause (b) of the
B proviso, the payee or the holder of the cheque in due course is
necessarily required to serve a written notice on the drawer of
the cheque within fifteen days from the date of intimation received
from the bank about dishonour.[Para 11][370-G-H; 371-A]
2. It is explicitly made clear under Clause (c) of Section
c 138 of N.I. Act, that this gives an opportunity to a drawer of the
c:heque to make payment within fifteen days of receipt of such
notice sent by the drawee. It is manifest that the ob.ject of
providing Clause (c) is to avoid unnecessary hardship. Even if
the drawer has failed to make payment within fifteen 1ays of
receipt of such notice as provided under Clause (c), the drawer
D shall be deemed to have committed an offence under the Act and
thereafter the drawee would be competent to file complaint against
the drawer by following the procedure prescribed under Section
142 of the Act. [Para 12](371-A-C]
3. It is clear from Section 27 of the General Clauses Act,
E 1897 and Section 114 of the Indian Evidence Act, 1872, that once
notice is sent by registered post by correctly addressing to the
drawer of the cheque, the service of notice is deemed to have
been effected. Then requirements under proviso (b) of Section
138 stands complied, if notice is sent in the prescribed manner.
F However, the drawer is at liberty to rebut this presumption. [Para
13][371-C-D]
4. The Supreme Court in catena of cases has held that
when a notice is sent by registered post and is returned with
postal endorsement "refused" or "not available in the house" or
G "house locked" or "shop closed" or "addressee not in station",
due service .has to be presumed. Though in process of
interpretation right of an honest lender cannot be defeated as
has happened in this case. From the perusal of relevant section"S
it is clear that generally there is no bar under the N.I. Act to send
a reminder notice to the drawer of the cheque and usually such
H
N PARAMESWARAN UNNI v. G KANNAN AND ANOTHt:R 367

notice cannot be construed as an admission of non-service of the A
first notice by the appellant as has happened in this case. [Para
15][371-G-H; 372-A-B]
5. Moreover the first notice sent by appellant on .12-04-
1991 was effective and notice was deemed to have been served
on the first respondent. Further, it is clear that the second notice B
has no relevance at all in this case at hand. Second notice could
be construed as a reminder of respondent's obligation to
discharge his liability. As the complaint, was filed within the
stipulated time contemplated under Clause (b) of Section 142 of
the N.I. Act, therefore Section 138 read with 142 of N.I. Act is
attracted. In the view of the matter, the impugned judgment of C
the High Court set aside.[Para 16](372-B-D] ·
Mis. New India Sugar Mills Ltd. v. Commissioner <?f
Sales Tax AIR 1963 SC 1207 : [1963] Suppl. SCR 459;
Jagdish Singh v. Natthu Singh (1992) 1 SCC 647 :
(1991] 2 Suppl. SCR 567; State of MP v. Hirata/ (1996) D
7 SCC 523; V Raja Kumari v. P. Subbarama Naidu
(2004) 8 sec 774 : (20041 5 Suppl. SCR 882 -
referred to.
Case Reference Law
E
(1963] Suppl. SCR 459 referred to Para 14
[1991] 2 Suppl. SCR 567 referred to Para 15
(1996) 7 sec 523 referred to Para 15
[2004] 5 Suppl. SCR 882 referred to Para 15
F
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 455 of 2006.
From the Judgment and Order dated 06. l 0.2003 of the High Court
ofKerala at Ernakulam in Crl. Revision Petition No. 644 of 1995.
M. Gireesh Kumar, Sriram P., Ms. Athira G. Nair (forAnkur S. G
Kulkarni), Ad vs. for the Appellant.
C. K. Sasi, Manu Krishnan G., Abraham Mathews (for P. V.
Dinesh), Advs. for the Respondents.
The Judgment of the Court was delivered by
H
368 SUPREME COURT REPORTS [2017] 4 S.C.R.

A N. V. RAMANA, J. I. This appeal arises out of the judgment
and order dated 06-10-2003 passed by the High Court of Kerala at
Ernakulam in Criminal Revision Petition No. 644 of 1995 whereby the
High Court allowed the criminal revision of the first respondent by setting
aside the concurrent judgments of Trial Court and Appellate Court, that
B first respondent cannot be convicted.under Section 138 of the Negotiable
Instruments Act, 1881 (in short "N .I. Act") as the procedure prescribed
under this section was not satisfied in the instant case.
2. Brief facts leading to this criminal appeal, as per the prosecution
case, are that the first respondent/accused borrowed Rs. 64,000/- oil
C 13-10-1990 from the appellant/complainant. In lieu of the borrowed
amount, first respondent issued two cheques dated 13-10-1990 for Rs.
10,000/- and Rs. 25,000/- respectively both drawn on State Bank of
India, Alappuzha Branch. Another cheque for Rs. 29 ,0001- dated 08-10-
1990 was also given to the appellant by first respondent, which was
issued by one K Rajesh, Development Officer, LIC drawn on State
D Bank ofTravancore, Vadai Canal branch, Alappuzha.
3. Appellant presented first-two cheques dated 13-10-1990 Oil
04-04-1991 to his bank, State Bank of Travancore, Main branch,
Alappuzha. First respondent's bank returned the said two cheques on
05-04-1991 with an endorsement "Refer to drawer." Appellant received
E intimation memo dated 05-04-1991 from his bank on 08-04-1991.
4. Appellant got issued a legal notice on 12-04-199 l to the first
respondent, which was returned with postal endorsement "intimation
served, addressee absent" on 20-04-1991. The same was received by
the appellant's advocate on 25-04-199 l. Appellant again sent the legal
F notice on 04-05-1991. The second notice sent to first respondent's
address was returned with postal endorsement "Refused, returned to
sender." Thus, according to the appellant, first respondent failed to return
the borrowed amount Rs. 64,000/- for which statutory notice under
proviso (b) of Section 138 ofN .I. Act was issued to him to make good
the dishonoured cheques due to insufficiency of funds in his bank account.
G
5. On 23 .05 .1991 appellant lodged a private complaint before the
Judicial First Class Magistrate-ll, Alappuzha for the alleged offen.:e under
Section 13 8 of the N.I. Act, which was numbered as Summary Trial No.
34/92. After a full fledged trial and upon appreciatingYhe documentary
evidence adduced on behalf of the parties, the Trial Court allowed the
H
N PARAMESWARAN UNNI v. G KANNAN AND ANOTHER 369
[N. V. RAMANA, J.]

complaint as the appellant was successful in proving, the case beyond A
reasonable doubt that first respondent committed an offence punishable
under Section 138 of the N.I. Act. Accordingly, the Trial Court by
judgment dated 29-07-1993 convicted and sentenced the first respondent
to undergo simple imprisonment of three months.
6. Aggrieved by the conviction and sentence, first respondent B
preferred Criminal Appeal No I04of1993 before Addi. Sessions Judge
at Alappuzha. The Ld. Judge, after perusing the records and on elaborate
hearing, by its judgment dated 07-07-1995 dismissed the appeal by
upholding and confirming the judgment of the Trial Court.
7. Against the said order, respondent preferred Criminal Revision c
no 644 oft 995 before the High Court ofKerala. The only ground raised
before the High Court was that the provisions of Section 138 of the N.J.
Act cannot be invoked as the appellant had not complied with the
conditions in Clause (b) of the proviso to the said section. Notice
demanding payment of the amount arising from the two dishonoured
cheques in question was on 04-05-199 l, whereas the intimation regarding D
dishonour of the said cheques was given by the appellant's bank on 08-
04-199 l. Therefore, the notice was beyond 15 days. Hence, in such
circumstances Section 138 of the N.I. Act was not attracted and no
offence was made out.
8. The High Court by its judgment dated 06-10-2003 had allowed E
the revision by reversing the concurrent findings of the two Courts below
holding that the statutory notice was beyond the prescribed limitation
period as mentioned under Section 138 of the N.I. Act.
9. Now the issue before us is even though the first notice was
issued by the appellant within time to the correct address of the first F
respondent, whether the High Court was right in rejecting the case of
the appellant herein on the ground that second notice was issued beyond
the period of limitation i.e. 15 days from the date ofreceiving dishonour
intimation from the bank under Clause (b) of the proviso to Section 138
of the N .I. Act. G
l 0. Before delving into the issue, it would be appropriate to
reproduce Section 13 8 of the Act, as it then stood.
138. Dishonour of cheque for insufficiency, etc., of funds in
the account:
H
370 SUPREME COURT REPORTS [2017] 4 S.C.R.

A Where any cheque drawn by a person on an account maintained
by him with a banker for payment of any amount of money to
another person from out of that account for the discharge, in
whole or in part, ofany debt or other liability, is returned by the
bank unpaid, either because of the amount of money standing
to the credit of that account is insufficient to honour the cheque
B
or that it exceeds the amount arranged to be paid from that
account by an agreement made with that bank, such person
shall be deemed to have committed an offence and shall, without
prejudice. to any other provision of this Act, be punished with
imprisonment for a term which may extend to two years, or with
c fine which may extend to twice the amount of the cheque, or
with both:
Provided that nothing contained in this section shall apply
unless"
(a) the cheque has been, presented to the bank within a period
D
of six months from the date on which it is drawn or within
the period of its validity, which~ver is earlier;
(b) the payee or the holder in due course of the cheque as the
case may be, makes a demand for the payment of the said
amount of money by giving a notice, in writing, to the drawer
E
of the cheque, within fifteen days of the receipt of information
by him from the bank regarding the return of the cheque as
unpaid; and
(c) the drawer of such cheque fails to make the payment of the
said amount of money to the payee or, as the case may be, to
F
the holder in due course of the cheque, within fifteen days
of the receipt of the said notice.
Explanation.-For the purposes of this section, "debt . or other
liability" means a legally enforceable debt or other liability.
G 11. A bare reading of Section 138 of the N .I. Act, indicates that
the purport of Section 138 is to prevent and punish the dishonest drawers
·of cheques who evade and avoid their liability. As explained iri Clause
(b) of the proviso, the payee or the holder of the cheque in due course is
necessarily required to serve a written notice on the drawer of the cheque
H
N PARAMESWARAN UNNI v. G KANNAN AND ANOTHC:R 37 l
[N. V. RAMANA, J.]

within fifteen days from the date of intimation received from the bank A
about dishonour.
12. It is explicitly made clear under Clause (c)ofSection 138 of
N.I. Act, that this gives an opportunity to a drawer of the cheque to
make payment within fifteen days of receipt of such notice sent by the
drawee. It is manifest that the object of providing Clause (c) is to avoid B
unnecessary hardship. Even if the drawer has failed to make payment
within fifteen days of receipt of such notice as provided under Clause
(c), the drawer shall be deemed to have committed an offence under the
Act and thereafter the drawee would be competent to file complaint
against the drawer by following the procedure prescribed under Section
142 of the Act. C
13. It is clear from Section 27 of the General Clauses Act, l 897
and Section 114 of the Indian Evidence Act, 1872, that once notice is
sent by registered post by correctly addressing to the drawer of the
cheque, the service of notice is deemed to have been effected. Then
requirements under proviso (b) of Section 138 stands complied, ifnotice D
is sent in the prescribed manner. However, the drawer is at liberty to
rebut this presumption.
14. It is well settled that interpretation of a Statute should be based
on the object which the intended legislation sought to achieve.
"It is a recognized rule of interpretation of statutes that expressions
E
used therein should ordinarily be understood in a sense in which
they best harmonize with the object of the statute, and which
effectuate the object of the Legislature. If an expressivn is
susceptible of a narrow or technical meaning, as well as a popular
meaning, the Court would be justified in assuming that the F
Legislature used the expression in the sense which would carry
out its object and reject that which renders the exercise of its
power invalid" 1•
15. This Court in catena of cases has held that when a notice is
sent by registered post and is returned with postal endorsement "refused" · G
or "not available in the house" or "house locked" or "shop closed" or
"addressee not in station", due service has to be presumed2 • Though in
' MIS New India Sugar Mills Ltd. v. Commissioner of Sales Tax, AIR 1963 SC
1207
1Jagdish Singh v. Natthu Singh, ( 1992) I SCC 647; State of M.P. v. Hiralal. ( 1996)

7 SCC 523 and V. Raja Kumari v. P. Subbarama Naidu, (2004) 8 SCC 774. H
372 SUPREME COURT REPORTS [20 I 7] 4 S.C.R.

A process of interpretation right of an honest lender cannot be defeated as
has happened in this case. From the perusal of relevant sections it is
dear that generally there is no bar under the N.I. Act to send a reminder
notice to the drawer of the cheque and usually such notice cannot be
construed as an admission of non-service of the first notice by the
B appellant as has happened in this case.
16. Moreover the first notice sent by appellant on 12-04-1991
was effective and notice was deemed to have been served on ~he first
respondent. Further, it is clear that the second notice has no relevance at
all in this case at hand. Second notice could be construed as a reminder
of respondent's obligation to discharge his liability. As the complaint,
C was filed within the stipulated time contemplated under Clause (b) of
Section 142 of the N.I. Act, therefore Section 138 r/w 142 ofN.I. Act is
attracted. In the view of the matter, we set aside the impugned judgment
of the High Court.
17. However, during the course of hearing, learned counsel for
D first respondent, as agreed by appellant herein, submitted that first
respondent was willing to pay Rs. 2,00,000/-(Rupees two lakhs only) in
lieu of suffering simple imprisonment of three months as imposed by the
Trial CoUli, as confirmed by the first Appellate Court, and endorsed by
this Court.
E 18. In view of the undertaking given by the learned counsel, we
direct the first respondent to deposit the said amount of Rs. 2,00,000/-
(Rupees two lakhs only) before the Judicial First Class Magistrate-II at
Alappuzha on or before 30.04.2017. Out of the said amount of Rs.
2,00,000/-(two lakhs only) so deposited, Rs.1,30,000/-( one lakh thirty
F thousand) shall be paid to the appellant as compensation.
19. In the event, first respondent fails to deposit the said amount
of Rs.2,00,000/- within the stipulated period as indicated above, the
conviction and sentence of three months awarded by the Ld. Trial Court
and affirmed by the Appellate Court shall stand restored and bail granted
G to the first respondent shall stand cancelled.
20. The appeal is accordingly disposed of in the aforesaid terms.

Ankit Gyan Appeal disposed of