The Supreme Court has held that a statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881, sent by registered post to the correct address of a cheque drawer carries a rebuttable presumption of valid service, even where the notice is received by a family member living at that address. The judgment was delivered on September 30, 2026, by a Bench comprising Justice Ahsanuddin Amanullah and Justice Manmohan.
Background
The dispute arose from a cheque dishonour case involving a cheque for Rs.3 lakh. The appellant had issued a statutory demand notice dated August 31, 2016, through registered post to the respondent's correct residential address. The notice was received by his mother. The respondent did not make the payment demanded or send a reply to the notice.
The Trial Court convicted the respondent under Section 138 and sentenced him to six months' simple imprisonment with a fine of Rs.3 lakh. The appellate court upheld that decision, finding that the notice had been sent to the correct address and that the respondent had not disputed the address.
The Kerala High Court, however, later set aside the conviction. It held that the notice had been received by the respondent's mother and that there was no evidence showing that the respondent himself was aware of the notice. The appellant then approached the Supreme Court.
The Supreme Court examined Section 138 of the Negotiable Instruments Act along with Section 27 of the General Clauses Act, 1897. It relied on earlier decisions including K. Bhaskaran, D. Vinod Shivappa and the three-Judge Bench judgment in C.C. Alavi Haji.
The Court explained that when a notice is properly addressed and sent by registered post, the law presumes service unless the drawer successfully rebuts that presumption. The drawer may show, for example, that the address was incorrect, that the notice was never tendered, or that he had no knowledge that it had reached his address.
The Bench also examined M.D. Thomas v. P.S. Jaleel, where notice received by the drawer's wife had earlier resulted in the conviction being set aside. The Supreme Court held that the decision had failed to consider binding precedents and was therefore per incuriam, meaning a decision rendered without considering relevant binding law.
The Court observed:
“This Court is of the considered view that the judgment in M.D. Thomas (supra) was rendered by a coordinate Bench without reference to binding precedents of this Court on the presumption of service of notice under proviso (b) to Section 138 of the Act, 1881 and without any meaningful finding as to whether the wife-recipient was residing with the drawer-husband or whether the notice was dispatched to the correct address.”
In the present case, the Supreme Court noted that the same address appeared on the statutory notice, court summons, Vakalatnama, appeal and revision petition. The respondent had also not disputed the correctness of the address or established that he was unaware of the notice.
The Court therefore held that the statutory requirement of giving notice had been satisfied and that the presumption of service remained unrebutted.
The Bench concluded:
“Consequently, the present appeal is allowed and the impugned judgment of the High Court is set aside. The judgement passed by the Trial Court sentencing respondent No.2 to undergo simple imprisonment for six months and to pay a fine of Rs.3,00,000/-, with a default stipulation of further imprisonment stands restored.”
