Case Analysis – V. Raja Kumari vs P. Subbarama Naidu & Anr, (2004) 2004 Latest Caselaw 628 SC

FACTS OF THE CASE

1. The Respondent, P. Subbarama Naidu had already received an advance payment from the appellant’s side about the sale consideration of what is going to be a property transaction. This case represents alleging the commission of a criminal offence under Section 138 along with Section 142 of the Negotiable Instruments Act, of 1881. 
2. The complainant argued that the dishonoured cheque carrying the number SB/A/31839579 with an amount of Rs. 80,000 was issued by the accused, who was insulted by the drawee bank for insufficient funds. The complainant presented this cheque for the discharge of an advance payment regarding a sale consideration.
3. The complainant submitted a legal notice towards the bank by his advocate which he claimed was the right address of the accused. According to the complainant, the legal notice was returned with an endorsement where it was stated that the door of the house of the accused was locked at that time. So the accused could not pay the cheque amount even after the notice period. 
4. The complainant filed a criminal suit under the charges of Section 138 along with Section 142 of the Negotiable Instruments Act. After that, the magistrate recorded the statement of the complainant and proceeded with the case.
5. But the accused further challenged the suit by giving the reason that there was no existence of the proper notice under Section 138 of the Negotiable Instruments Act, so according to the accused this suit should have been dismissed earlier. 
6. Then this case was forwarded to the Andhra Pradesh High Court where the High Court stated that whether the notice was served properly or not would be decided during the proceedings not at an earlier stage. But the appellant was dissatisfied with the verdict of the Andhra Pradesh High Court so he appealed at the Supreme Court by challenging the judgement of the High Court.

ISSUES OF THE CASE 

1. Whether the notice of the complaint be dismissed under Section 138 of the Negotiable Instruments Act at an earlier stage if there is a dismissal of proper service of notice?
2. What is the right stage where the court can determine that the notice needs of requirement or proper way to serve the notice to the accused under section 138 of the Negotiable Instruments Act?
3. What makes the proper way of service of the notice under section 138 of the Negotiable Instruments Act regarding the cases where the notice is returned unserved?
4. Is it appropriate to say that the procedural aspect tied to the call for notice per Section 138 is done whenever the party concerned has tried to contact the accused and at least one of the attempts failed due to situations within the range of the defendant’s liability?
5. How can the courts interpret the cases of notice served under Section 138 according to the referred precedents and all the legislative motives under the provision?

JUDGEMENT 

Justice Arijit Pasayat, a judge of the Supreme Court, issued the decision; and Justice C.K. Thakker agreed with the issue. The Court ruled on the following major points: 

1. The Magistrate after recording the sworn statement of the complainant undertook the case. The accused objected to the legal procedure, claiming that as there was no proper service of a notice according to “section 138” of the Act the complaint should be rejected on the very ground. 
2. Eventually, the question had to be addressed in a trial in the Andhra Pradesh High Court that held that not at the preliminary stage. Displeased with the decision of the High Court, V. Raja Kumari moved to the Supreme Court and questioned the decision of the High Court Case Summary. 
3. If there is a debate about proper service of notice under Section 138 of the Negotiable Instruments Act, whether the case should be dismissed at the inception. What is the correct stage for the court to decide whether the statutory notice required under Section 138 was properly served on the accused?
4.  If unserved notice is returned to the sender through the courier will the notice be considered properly served under Section 138 of the Act? Whether the requirement of notice under Section 138 be taken to be fulfilled when the complainant has tried to serve the notice as per reasonable effort, and it couldn’t be signalled due to circumstances potentially within the control of the accused party? How are courts supposed to understand Section 138 notice requirements consequent to their meaning in the pertaining jurisprudence and the legislative intent of the provision?
5. The Court put across the idea that the question about the services conducted properly could be resolved during the trial phase by the judge taking into account all the circumstances not leading to service rather than at the preliminary complaint stage.  
6. The Court highlighted that if notices are wilfully avoided by the defendant, this can only be found true in a trial stage and should not result in the dropping of the case at the very start of its proceedings. 
7. The only thing for the Court to decide in this case is whether the cause of action accrued at all since the complainant sent notice to the accused that the house had been locked and returned by the post office with the endorsement. The notice to be given under the section has been laid down in detail and included in clauses (b) and (c) of Section 138 of the Act, read with Explanation. 
8. The Supreme Court, therefore, concurred with the Lower Court’s ruling, explaining that the High Court did the correct thing by clarifying that non-notice service is not the reason to throw out a complaint before it is even formed. The Court ruled that the trial court insisted that the trial court should continue with the case and look through the evidence of the non-service of notice.

REASONING

1. After the examination of section 138 of the Negotiable Instruments Act by the court, this section states about the creditor and the withdrawer due to the course of the cheque as the case already makes a demand for the payment of the mentioned amount by sending a written notice. The court directed that whether the notice is served or not it has to be ensured. 
2. The court then made a very important distinction between the two concepts. It decided that giving notice is the time when the notice is sent by the register to the proper address of the drawer. In this case, the actual service or receipt of the notice is the payee’s and so the precondition for going on with the complaint can’t be arranged. 
3. The Court represented some practical problems that can arise if the actual service of notice was made mandatory. It would activate the dishonest drawers of cheques to avoid the notices and escape from the liability of Section 138 of the act which will be the failure of this legal provision. 
4. The court stated various precedents but the complaint which was held under Section 138 of the Negotiable Instruments Act could not be dismissed simply because the notice was not served to the accused without the investigation of the service leading to the non-service of the notice. 
5. The Court opined that only the stage of the trial is the appropriate one to find an answer regarding service of notice; the stage where all the circumstances can be dug up, instead of the previous stage while the complaint has not been even numbered where trial changes can only be discussed. 
6. The Court directed that the obligation of the plaintiff is completed by dispatching the notice to the correct address through registered post. It is unimaginable to expect the complainant to also confirm that the notice was indeed received, most especially in cases where the accused might be purposefully avoiding the services. 
7. The Court’s reasoning also reflected a concern to prevent potential misuse of procedural requirements as a shield against liability. By clarifying that sending a notice by registered post is sufficient compliance with section 138 the court dismissed a potential loophole that dishonest drawers might exploit. 
8. The Court’s reasoning struck a balance between procedural requirements and substantive justice. In the meantime acknowledging the necessity of notice as a statutory requirement it assured that technical procedures did not become an obstacle to the substantive goal of enforcing the liability for dishonoured cheques.  
9. The Court stated that whether a notice was served properly includes factual determination which is better for both the parties to have represented the evidence. This provides an examination of whether the notice was submitted to the correct address whether there are reasonable efforts to serve the notice and whether the accused continuously avoids it. 
10. The verdict represented the proper stage for fixing these factual disputes during the proceedings where the witness of the case can be cross-examined or investigated and the documentary evidence can be scanned. 

REFERENCES

1. https://indiankanoon.org/doc/1197446/ 
2. https://www.latestlaws.com/latest-caselaw/2004/november/2004-latest-caselaw-628-sc 

Written by Amritava Pramanik an Intern under Legal Vidhiya.

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