Service of notice via registered post sufficient under Section 138 NI Act; no mandate to serve notice under certificate of posting: Karnataka HC

The Karnataka High Court recently observed that service of notice through a registered post is proper service of notice under section Section 138 of the Negotiable Instruments Act (NI Act) and there is no further requirement to serve the notice under certificate of posting [Nagappa vs MA Savanur]..While setting aside the acquittal order passed by the trial court against an accused under Section 138 of the NI Act, Justice Ashok G Nijagannavar of the High Court held that when a sender has dispatched the notice through registered post with correct address written on it, service of notice can be deemed to have been effected. ."When a sender has dispatched the notice through registered post with correct address written on it, Section 27 of General Clauses Act could be profitably imported and in such a situation service of notice deemed to have been effected on the addressee unless he proves that it was really not served and he was not responsible for such non-service. In the present case, there is no rebuttal evidence to show that the complainant has deliberately and intentionally sent the legal notice to the wrong address and the accused was not working at the place and address shown in the registered envelope.".The appellant-complainant had lent an amount of Rs.1,50,000 as loan to the respondent-accused for his family necessities. The accused, having failed to pay the amount within a reasonable time, had issued three cheques. The said cheques were presented to bank for encashment but they were dishonoured and returned with an endorsement "funds insufficient"..Owing to this, the appellant issued legal notice dated May 22, 2006, but the same was returned with an endorsement "not claimed". Since the respondent failed to repay the loan amount, he filed a private complaint under Section 200 of the Code of Criminal Procedure for the offence punishable under Section 138 of the NI Act before the trial court..After analysing of the evidence adduced by the appellant, the trial court arrived at a factual finding that the accused had duly issued cheques in question for a sum of Rs. 50,000 each in favour of the appellant in discharge of a debt or liability. However, the trial court opined that the appellant ought to have issued a notice under Certificate of Posting (COP) in addition to the legal notice sent through Registered Post with Acknowledgment Due, commonly known as RPAD.Therefore, the trial court held that as the appellant had not sent the legal notice to the accused under certificate of posting, there can be no presumption of proper service of notice to the accused.Thus, it held that the appellant failed to prove that he had intimated the accused regarding dishonour of cheques and there was nothing on record to prove that the accused received the intimation. Advocate Gururaj Joshi, appearing for the appellant submitted that the subordinate Court's finding is erroneous as the documentary evidence placed on record clearly goes on to show that a legal notice is sent through registered post acknowledgement due. .In the appeal before the High Court, Advocate Gururaj Joshi, appearing for the appellant submitted that the subordinate court's finding is erroneous as the documentary evidence placed on record clearly showed that a legal notice was sent through registered post. .Advocates Ramakrishna and MR Hiremathad, appearing for the accused, supported the decision of the trial Court and submitted that there were no valid grounds to interfere with the trial court order. It was also claimed that the appellant-complainant intentionally issued legal notice to the wrong address so as to file a false case against the respondent-accused..After going through the facts of the case, Section 94 of the NI Act, Section 17 of General Clauses Act and the judgments of the Supreme Court and Karnataka High Court cited by the appellant, the High Court opined that there was no evidence to show that the complainant intentionally sent the legal notice to the wrong address.."In the present case, there is no rebuttal evidence to show that the complainant has deliberately and intentionally sent the legal notice to the wrong address and the accused was not working at the place and address shown in the registered envelope," the order noted. .The Court further held that the finding that service of notice through registered post is not proper service of notice is contrary to Section 138 of NI Act.."The finding recorded by the Court below regarding service of notice through registered post holding that there is no proper service of notice is contrary to Section 138 of N.I.Act. In view of the ratio laid down in the decisions (of Supreme Court and Karnataka), there is proper service of notice and there was no requirement to serve the notice under certificate of posting.".With these observations, the Court allowed the appeal and set aside the order dated July 5, 2011, thereby convicting the accused for the offence punishable under Section 138 of the NI Act. The accused was directed to pay a fine amount of Rs.1,60,000, out of which, a sum of Rs.10,000 is to be remitted to the State by way of fine and the remaining amount is to be paid to the appellant by way of compensation along with interest at the rate of 6 percent pen annum.[Read Judgment]