N PARAMESWARAN UNNI versus G KANNAN AND ANOTHER

Citation: [2017] 4 S.C.R. 365 · Decided: 01-03-2017 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Disposed off

Judgment (excerpt)

[2017] 4 S.C.R. 365 
N PARAMESWARAN UNNI 
v. 
G KANNAN AND ANOTHER 
(Criminal Appeal No. 455 of 2006) 
MARCH OJ, 2017 
[N. V. RAMANA AND PRAFULLA C. PANT, JJ.] 
A 
B 
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 
E 
of lower courts on basis that legal notice demanding payment was 
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. 
365 
H 
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] 
E 
F 
3. It is clear from Section 27 of the General Clauses Act, 
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. 
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 a

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