The Tripura High Court in the case of Nitai Majumder vs. Tanmoy Krishan Das[1], held that Service of Demand Notice u/s 138 of the Negotiable Instruments Act, 1881 (dishonour of cheque for insufficiency etc. of funds in the account) once served and duly directed, shall serve the purpose of law.
Background
· The Chief Judicial Magistrate convicted the petitioner for having committed an offence punishable under section 138 of the Negotiable Instruments (NI) Act and sentenced him to Simple Imprisonment for 1 year and fine of INR 7,00,000 (USD 9,481) payable to complainant/Respondent.
· Thereafter, the ld. Sessions Judge affirmed the conviction of the petitioner while it reduced the sentence to fine only of INR 4,00,000 (USD 5,418) and Simple Imprisonment for a period of 6 months.
· The Petitioner, aggrieved by the earlier order, hence filed the present petition.
Facts
The Petitioner frequently borrowed money from the Respondent to meet financial needs and repaid the loan in time. On January 15, 2014, he took a loan of INR 3,50,000 (USD 4,741)from the Respondent and promised to pay within November 30, 2014. After such non-payment, and a reminder by the respondent, the Petitioner issued a cheque dated December 13, 2014 from Tripura Gramin Bank for the said amount. The Respondent presented the cheque at his bank, however the same was returned stating “insufficient funds”.
Thereafter, the Respondent issued a demand notice to the Petitioner to pay the amount within 15 days and notice was sent to his known residential address through post registered with AD. The postman visited the petitioner’s house on four different occasions and each time he was told that the addressee was not in town. Thus, the notice was returned to the Respondent.
The Complainant/Respondent filed a complaint alleging offence under Section 138, NI Act as well as Section 420, Indian Penal Code.
Petitioner’s Submissions
· The Petitioner submitted that the cheque issued by him was not is discharge of any debt or liability, but only a blank cheque to serve 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 accused, misused it against him.
· The Petitioner’s second submission is that the learned courts failed to appreciate the fact that the service of statutory notice on the Petitioner after dishonour of cheque from the bank was also not proved.
Respondent’s Arguments
· The Respondent argued that “the law has been settled that in a case under the NI Act, once the notice is dispatched to the correct address of the accused, the onus on part of the complainant is discharged and the rest depends on the accused.”[2]
· Secondly, the presumption under the relevant section of the NI Act is not that of 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.
Court’s Observations
Section 138 NI Act
Section 138 of NI Act, requires proof of the essential ingredients i.e. there is a legally enforceable debt; a cheque is drawn on an account maintained by the accused with his banker for payment of any amount to another person from his account in discharge in whole or in part of the debt or liability; and the cheque is returned by the bank unpaid, either because of insufficient fund in the account of the accused to honour the cheque or that the cheque amount exceeds the amount arranged to be paid from that account by an agreement made with the bank.
Statutory Presumption
The court considered a judgment of the Supreme Court[3] which held that the presumptions to be drawn by the court under sections 138 and 139 of the NI Act, are presumptions of law which cast evidential burden on the accused to disprove the presumptions.
That in the present case, the Petitioner did not lead any evidence in rebuttal of such statutory presumptions. 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 Petitioner was improbable or doubtful.
The law states that the initial burden to rebut the statutory presumptions under the NI Act as to the existence of debt or liability lies on the accused and this is a heavy burden which can be discharged only by an explanation founded on proof.
The Complainant through evidence has established the fact that the loan taken by the accused petitioner created an existing liability and in discharge of the liability the accused issued the cheque in favour of the Complainant which was returned by the bank on its presentation for insufficient fund and when the Complainant issued demand notice to the accused petitioner demanding the money and conveying the fact that his cheque was dishonoured, the accused petitioner avoided the service of the notice.
Service of Statutory Demand Notice
The object of the 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.
Therefore it can be 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. It held that the notice, duly directed, shall serve the purpose of law. It has been previously held that once the notice is dispatched, part of the payee is over and the next depends on what the sender does.
Thus, since it has been proved that the postman visited the house multiple times, it is clear that the Petitioner wanted to avoid the service of the notice. Therefore, it cannot be said that the demand notice was not served on him and hence the conviction and sentence of the Petitioner is upheld.
Conclusion
The Court in this case reiterates strongly the law on presumption of service of statutory notice. It furnishes that while avoiding such notice, the party cannot claim that the same was not served and hence, won’t hold true in a court of law. It eases the burden on the party which issues the notice as their liability stops once the same has been duly directed.
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