Introduction:
A statutory notice under Section 138(b) of the Negotiable Instruments Act, 1881, is a mandatory precondition for initiating prosecution in cheque dishonour cases. The provision allows the drawer to make payment within the prescribed period and avoid criminal liability.
However, disputes frequently arise when the notice is returned as "unclaimed". Borrowers often contend that they never received the notice, while complainants argue that deliberate avoidance of service should not defeat the object of the statute. The proceedings in HDFC Bank Ltd. v. State of Maharashtra (2025) have once again drawn attention to this important aspect of cheque dishonour litigation.
The Statutory Requirement of Notice:
Section 138(b) requires the payee to issue a written demand notice within the prescribed period after receiving information regarding dishonour of the cheque. Failure to comply with this requirement can render the prosecution unsustainable.
The purpose of the notice is not merely procedural. It provides the drawer with an opportunity to discharge the liability before criminal proceedings are initiated. Consequently, proof of service often becomes a crucial issue in cheque dishonour cases.
Deemed Service and Unclaimed Notices:
The Supreme Court has consistently recognised that an accused cannot evade liability simply by refusing or avoiding service of notice.
In C.C. Alavi Haji v. Palapetty Muhammed (2007) 6 SCC 555, the Court held that where a notice is sent to the correct address and is returned as "unclaimed", service may be presumed. The law therefore recognises the principle of deemed service, preventing deliberate avoidance from frustrating the statutory scheme.
The proceedings in HDFC Bank Ltd. v. State of Maharashtra involved a notice that was returned unclaimed. Despite this, the trial court proceeded with the matter and issued process. While the principal controversy before the courts concerned director liability under Section 141, the case highlights the continuing importance of establishing proper service under Section 138.
The legal position remains that actual physical receipt is not always necessary. What is essential is that the complainant demonstrates that the notice was properly addressed and dispatched through recognised means.
Practical Considerations for Complainants:
The effectiveness of deemed service largely depends upon the complainant's ability to prove that the notice was sent to the correct address.
Accordingly, complainants should preserve:
• Copies of the statutory notice;
• Postal receipts and tracking records;
• Proof of the address used for service; and
• Documents demonstrating that the address corresponds with records provided by the borrower or company.
Where possible, notices may also be sent through multiple modes, including registered post, speed post, courier services, and electronic communication, to minimise service disputes.
For accused persons, a service challenge is more likely to succeed where the notice was sent to an incorrect or outdated address, or where the complainant was aware of an address change but failed to take reasonable steps to effect service.
Conclusion:
The proceedings in HDFC Bank Ltd. v. State of Maharashtra serve as a reminder that service of notice remains a fundamental component of a prosecution under Section 138 of the Negotiable Instruments Act. At the same time, established precedent makes it clear that an accused cannot defeat the statutory process merely by avoiding delivery of a notice.
The principle emerging from judicial decisions is straightforward: where a notice is properly addressed and dispatched, an unclaimed return will ordinarily amount to deemed service. For complainants, meticulous record-keeping and proof of dispatch remain essential. For drawers, the mere assertion that the notice was not physically received will not, by itself, defeat a prosecution under Section 138.
