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C.C Alavi Haji v. Palapetty Muhammed And Another
Factual and Procedural Background
The case arises out of a complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The statutory notice required under proviso (b) to that section was dispatched to the petitioner-accused but was returned unserved with the postal endorsement “Out of Station.” The complainant conceded that the notice never reached the petitioner and made no allegation that the petitioner had deliberately avoided service or procured a false postal endorsement. The central procedural question before the Supreme Court was whether cognizance of the offence could nevertheless be taken. The present order is delivered by a Division Bench of the Court and concerns the propriety of relying on an earlier two-judge decision when the pleadings contain no averment of deliberate evasion by the drawer.
Legal Issues Presented
- Whether service of notice under proviso (b) to Section 138 of the Negotiable Instruments Act is mandatory for taking cognizance of the offence.
- Whether a court can take cognizance when the notice is returned unserved and the complaint contains no averment that the accused deliberately evaded service or manipulated the postal endorsement.
- The extent to which the rebuttable presumption of regularity of official acts under Section 114 of the Indian Evidence Act, 1872 affects the above determination.
- Whether the earlier Division Bench ruling in D. Vinod Shivappa v. Nanda Belliappa (2006) 6 SCC 456 constitutes an authoritative precedent on these questions.
Arguments of the Parties
Respondent’s Arguments
- Relied heavily on the Supreme Court decision in D. Vinod Shivappa v. Nanda Belliappa, which recognises that prosecution under Section 138 should not be defeated merely because the drawer avoids service or the notice is returned unserved for reasons such as non-availability or locked premises.
- Contended that requiring actual service in every case would allow dishonest drawers to evade prosecution simply by remaining unavailable for a brief period.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| D. Vinod Shivappa v. Nanda Belliappa, (2006) 6 SCC 456 | A statutory notice returned unserved for reasons such as the drawer’s non-availability may still give rise to a presumption of service; questions of deliberate evasion are matters of evidence and should not lead to quashing at the threshold. | The Bench noted that this decision did not examine the interplay with the presumption under Section 114 of the Evidence Act. Because of that omission, the Bench held that the ruling is not an authoritative pronouncement on the present issue and that a larger Bench should revisit the matter. |
Court's Reasoning and Analysis
1. The Court reaffirmed that service of notice is an essential ingredient of the offence under Section 138.
2. On the facts pleaded, it is undisputed that the notice never reached the petitioner and that the complaint lacks any allegation of deliberate evasion or manipulation by the accused.
3. The Division Bench examined the precedent in Vinod Shivappa but observed that it failed to consider the statutory presumption of correctness attached to official acts under Section 114 of the Evidence Act. That presumption is rebuttable, yet rebuttal would require specific averments, which are absent here.
4. Because this critical facet was overlooked in Vinod Shivappa, the Bench concluded that the earlier ruling does not conclusively settle the present controversy.
5. Given the importance of the issue and the potential conflict of authority, the Bench exercised its power to refer the matter for reconsideration by a larger Bench.
Holding and Implications
REFERRED TO LARGER BENCH.
The Division Bench directed that the papers be placed before the Hon’ble Chief Justice of India for constituting an appropriate larger Bench. No final adjudication on the merits of the Section 138 complaint has been made. The immediate effect is that proceedings are paused pending a definitive ruling, and the authoritative value of Vinod Shivappa on this point remains unsettled until the larger Bench clarifies the law.
Order
1. One of the questions which arises for consideration is as to whether service of notice in terms of proviso (b) appended to Section 138 of the Negotiable Instruments Act, 1881 is mandatory. It is not disputed that service of notice is an ingredient of the offence. In this case, the complainant respondent accepted the fact that the notice could not be served upon the petitioner and it was returned unserved with an endorsement of the postal peon “Out of Station”.
2. The complainant in the complaint petition does not allege that the service of notice was deliberately avoided by the petitioner or the postal endorsement of the postal peon on the envelope was wrongly obtained. The question which arises for consideration is as to whether in a situation of this nature, the Court could take cognizance of the offence under Section 138 of the Negotiable Instruments Act on the basis of the averments made in the complaint petition.
3. The learned counsel appearing on behalf of the respondent has drawn our attention to a decision of this Court in D. Vinod Shivappa v. Nanda Belliappa (2006) 6 SCC 456 wherein a Division Bench of this Court held:
“14. If a notice is issued and served upon the drawer of the cheque, no controversy arises. Similarly, if the notice is refused by the addressee, it may be presumed to have been served. This is also not disputed. This leaves us with the third situation where the notice could not be served on the addressee for one or the other reason, such as his non-availability at the time of delivery, or premises remaining locked on account of his having gone elsewhere, etc. etc. If in a each such case the law is understood to mean that there has been no service of notice, it would completely defeat the very purpose of the Act. It would then be very easy for an unscrupulous and dishonest drawer of a cheque to make himself scarce for some time after issuing the cheque so that the requisite statutory notice can never be served upon him and consequently he can never be prosecuted. There is good authority to support the proposition that once the complainant, the payee of the cheque, issues notice to the drawer of the cheque, the cause of action to file a complaint arises on the expiry of the period prescribed for payment by the drawer of the cheque. If he does not file a complaint within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of the Act, his complaint gets barred by time. Thus, a person who can dodge the postman for about a month or two, or a person who can get a fake endorsement made regarding his non-availability can successfully avoid his prosecution because the payee is bound to issue notice to him within a period of 30 days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. He is, therefore, bound to issue the legal notice which may be returned with an endorsement that the addressee is not available on the given address.
15. We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely, the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. Therefore, 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 question as to whether the service of notice has been fraudulently refused by unscrupulous means is a question of fact to be decided on the basis of evidence. In such a case the High Court ought not to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.”
4. However, in the said decision, this Court has not taken into consideration the presumption arising out of an official act as provided under Section 114 of the Evidence Act. The presumption raised under Section 114 of the Evidence Act is undoubtedly a “rebuttal presumption”, but for the purpose of rebuttal of such a presumption, necessary averments must be made in the complaint petition. The question which, therefore, in our opinion, arises for consideration is, whether in absence of any averments in the complaint petition, that the accused had a role to play in the matter of such endorsement; the same could have been entertained keeping in view the decision of this Court in Vinod Shivappa case (2006) 6 SCC 456.
5. We are of the opinion that the Division Bench having not considered that aspect of the matter, the same cannot be said to be an authoritative pronouncement on the said question; as even in such a case, the Court shall have to proceed to try the accused for commission of an offence under Section 138 of the Negotiable Instruments Act; although, on the face of the complaint petition, no offence can be said to have been made out. We, therefore, are of the opinion that the matter should be considered by a larger Bench.
6. Let the matter be placed before the Hon'ble the Chief Justice of India for appropriate orders.
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