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When it comes to bouncing non-MICR (Magnetic Ink Character Recognition) cheques, the Jharkhand High Court made some important findings last week. The Court also provided guidance on how to properly serve a demand notice. Justice Anubha Rawat Choudhary was hearing a criminal revision plea against a Sessions Court ruling upholding the petitioner's conviction under Section 138 of the Act and ordering him to serve one year of hard imprisonment and pay Rs. 80,000 in compensation. The petitioner's cheques were handed to the bank for collection, but on June 15, 2007, they bounced due to a lack of funds. According to the petitioner, on July 10, 2007, the complainant submitted the checks for encashment, but the bank returned them because they were non-MICR and hence could not be accepted by the bank. As a result, the complaint sent the petitioner a legal notice dated July 24, 2007, by certified mail, not registered mail. The petitioner also argued that there was no evidence or averment in connection with the July 24, 2007, legal notice. When the petitioner's second cheque bounced, the Trial Court ignored the fact that it was a non-MICR cheque, which led to his conviction under Section 138 of the Act. The banknote dated July 10, 2007, explicitly stated that the second bouncing of cheques occurred due to the cheques themselves losing their validity/acceptability by the bank.
The Court noted that Section 138 of the Act does not specify how a demand notice for a bouncing check should be sent. The sole requirement is that the demand notice is in writing and sent within 30 days after receiving information about the return of the cheque. In Mohd Asif Naseer v. West Watch Company, the Supreme Court held that notice sent by the certificate of posting was valid in the absence of any legislatively prescribed manner of service. With other facts and circumstances proving the party got notice, this could be deemed sufficient service on the party. Aside from that, the Court found that the Trial Court had neglected to examine the lack of evidence about delivery of demand notice to the petitioner sent under certificate of posting. The serving of demand notice under Section 138 of the Act is thus not presumed. As a result of the petitioner's conviction not having been served with a demand notice, the Court held that the petitioner's conviction could not be upheld in court.
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