Allahabad High: Demand notice to drawer under 138 NI Act sent via email or WhatsApp is Valid

Allahabad High: Demand notice to drawer under 138 NI Act sent via email or WhatsApp is Valid

The Allahabad High Court has made a landmark decision, affirming that a demand notice sent to the drawer of a cheque via email or WhatsApp under Section 138 of the Negotiable Instruments Act, informing dishonour of a cheque, is valid. The court ruled that if such a notice meets the requirements outlined in Section 13 of the Information Technology Act, it shall be deemed as dispatched and served on the same date.

Section 13 of the IT Act stipulates that once an electronic notice is entered into a computer resource beyond the sender's control, it is considered dispatched. Similarly, when the electronic notice enters the designated computer resource or the recipient's computer resources, it is deemed served.

The Court reached this conclusion by interpreting Proviso (b) of Section 138 of the Negotiable Instruments Act. It was noted that while this provision requires notice in writing, it doesn't specify any particular mode for sending the notice. Even considering Section 94 of the NI Act, it couldn't be inferred that notice must be exclusively sent by post.

The Court observed that according to Section 4 of the IT Act, any law requiring notices to be in written form should also include notices provided in electronic form, as long as they are available for subsequent reference. The term electronic form is defined in Section 2(1)(r) of the I.T. Act, which provides any information generated, sent, received, or stored in media, magnetic, optical, computer memory, microfilm, computer-generated microfiche, or similar device. Therefore, it is evident from this provision that a notice under Section 138 of the Negotiable Instruments Act encompasses email or WhatsApp communications, provided they are available for subsequent reference.

In addition, the Court also referred to Section 65(B) of the Indian Evidence Act, 1972, which acknowledges the admissibility of electronic records.

Justice Arun Kumar Singh Deshwal observed that postal deliveries of notices under Section 138 of the NI Act can presume a postal notice to have been served to the drawer within ten days from its dispatch. This presumption is based on Section 114 of the Evidence Act and Section 27 of the General Clause Act. The court emphasized that with the advancement of digitalization and computerization, postal delivery has become notably faster. In the absence of a specified date of service in the complaint, the court can infer that a correctly addressed registered post has been served within a maximum period of 10 days. The court noted that the introduction of online post tracking systems has facilitated the determination of delivery dates, and typically, registered letters are delivered within 3 to 10 days when correctly addressed.

The applicant's contention essentially revolved around the assertion that the challenged complaint was flawed because it was filed before the lapse of 15 days from the date of service of notice to him concerning the return of the cheque, as mandated by Section 138(c).

In accordance with Section 138 of the NI Act, which addresses the dishonour of cheques, a notice must be dispatched within 30 days from the date of the cheque bounce. If the drawer fails to settle the amount within 15 days from the receipt of said notice, a complaint may be filed within the subsequent month.

The issue emerged following a cheque bounce on July 13, 2022, when the opposite party sent a legal notice to the applicant on July 23, 2022. However, the notice failed to specify a date for its service. Subsequently, the complaint was filed on 31st August, 2022. This led to the argument that the complaint case should be quashed since it was filed before the mandatory 15-day period had elapsed.

In contrast, the AGA argued that it is not necessary to mention the date of service of the notice sent by the complainant to the drawer of the cheque in the complaint. He added that the defense concerning whether notice has been served upon the drawer of the cheque or not can be deliberated during the trial, and such a matter cannot be used as a basis to quash the complaint.

After listening to both parties, the Court framed the following questions for consideration: Firstly, whether the impugned complaint is defective under Clause (c) of the proviso to Section 138 of the Negotiable Instrument Act, as it was filed before the expiration of fifteen days from the date of service of notice. Secondly, whether the law mandates mentioning the date of service of notice upon the drawer in the complaint filed against them under Section 138 of the NI Act.

While addressing the first question, the Court cited the Supreme Court's ruling in the case of C. C. Alavi Haji v. Palapetty Muhammed and Anr. In this precedent, it was established that if the complainant sends a notice to the drawer via registered post without specifying the date of service, the court can presume, under Section 114 of the Evidence Act and Section 27 of the General Clause Act that the notice has been served in a timely manner. This presumption is based on the presumption that a letter dispatched via registered post would ordinarily be delivered within the normal course of business.

To address the question regarding the time frame within which the court may presume delivery of the registered letter in the ordinary course of business, the Court noted that considering the present era of digitalization and computerization, it can be presumed that a properly addressed registered post would have been served upon the addressee within a maximum period of 10 days if the date of service is not specified in the complaint.

In light of this, the Court observed that the complainant sent the notice on 23rd July 2022. Thus, assuming ten days for notice delivery, the applicant had until 2nd August 2022, to fulfill the demand for the cheque amount within the prescribed 15-day period.

The Court elaborated that following the expiration of the 15-day period for payment, a complaint could have been filed after August 17, 2022. Given that, in the present case, the complaint was filed on August 31, the Court concluded that the complaint was not defective under Clause (c) of the proviso of Section 138 and Section 142(1)(b) of the NI Act.

The court issued the following directions to all Magistrates/Courts in the state:

i. When a complaint under the N.I. Act is filed, the respective magistrate or court must emphasize the submission of the post tracking report along with the complaint, especially if sent via registered post. This measure aims to eliminate any possibility for the dishonest drawer of the cheque to claim non-receipt of the statutory notice of 15 days.

ii. A notice sent through 'email or WhatsApp', fulfilling the requirements of Section 13 of the IT Act, will also be deemed a valid notice under Section 138 of the N.I. Act to the drawer of the cheque. Such notices will be considered served on the date of dispatch itself.

The court dismissed the present application and instructed the Registrar (Compliance) to circulate a copy of this order to all learned District Judges of the state of Uttar Pradesh.

Case Title: Rajendra v. State of U.P. and Anr.