Service of Notice under Section 138 NI Act: Supreme Court Reaffirms Presumption of Valid Service via Family Members

The Supreme Court of India held that a statutory demand notice under Section 138 of the Negotiable Instruments Act, 1881 is validly served if dispatched by registered post to the drawer’s correct address, even if received by a family member (e.g., mother). A Bench of Justice Ahsanuddin Amanullah and Justice Manmohan reversed the Kerala High Court’s order, affirming that dispatching a notice to the correct address creates a rebuttable presumption of service that the accused must disprove.

Case Title: Sainaba v. State of Kerala & Anr.

Court: Supreme Court of India

Bench: Justice Ahsanuddin Amanullah and Justice Manmohan (Author)

Date of Decision: September 30, 2026

Subject Area: Negotiable Instruments Act, 1881 (Section 138) | Service of Demand Notice | Presumption of Service | Per Incuriam Precedent

Core Principles Established by the Supreme Court

1. Compliance with “Giving of Notice”

• The Court clarified that proviso (b) to Section 138 NI Act mandates the “giving of notice.” Once the complainant dispatches the demand notice by registered post to the correct address, this statutory requirement stands complied with.
• The complainant is not required to establish that the drawer personally received or consciously accepted the physical notice once the presumption arises.

2. Rebuttable Presumption Shifts Burden to Accused

• Sending the notice to the correct address triggers a legal presumption of valid service.
• The burden of proof then shifts entirely to the drawer/accused to rebut this presumption by demonstrating:
  1. The address used for dispatch was incorrect;
  2. They had no knowledge of the notice brought to the residence; or
  3. The postal endorsement was erroneous.

3. M.D. Thomas v. P.S. Jaleel Declared Per Incuriam

• The Kerala High Court had relied on M.D. Thomas v. P.S. Jaleel (2009), which held that service on a spouse/family member was invalid under Section 138.
• The Supreme Court held M.D. Thomas to be bad in law (per incuriam) for failing to follow the prior 3-judge Bench binding precedent in C.C. Alavi Haji v. Palapetty Muhammed (2007), which held that proper dispatch to the correct address satisfies Section 138 proviso (b).

Case Facts & Procedural History

1. Transaction & Dishonour: Respondent No. 2 took a loan of ₹3 Lakh from the appellant (Sainaba) and issued a cheque, which was subsequently dishonoured upon presentation.
2. Notice & Service: The complainant dispatched a statutory demand notice on August 31, 2016 via registered post to the respondent’s correct home address. The notice was physically signed and received by his mother, Amina.
3. Trial & Appeals:
   • Trial Court (2019): Convicted the accused (6 months’ simple imprisonment + ₹3 Lakh fine).
   • Appellate Court (2023): Upheld the conviction.
   • Kerala High Court (Revision): Overturned the conviction, ruling that service upon the mother did not meet statutory requirements under Section 138.
4. Supreme Court Decision: Set aside the High Court’s revision order and restored the conviction, noting that the accused used the exact same home address on his court summons, Vakalatnama, and Section 313 Cr.P.C. statements, failing to disprove co-residence or lack of knowledge.

Comparative Analysis of Precedents

Feature / Issue	M.D. Thomas v. P.S. Jaleel (2009) [Overruled]	C.C. Alavi Haji (2007) & Sainaba (2026) [Upheld]
Bench Strength	2-Judge Bench	3-Judge Bench (Alavi Haji) / 2-Judge Bench (Sainaba)
Service Rule	Required personal delivery/receipt by the drawer.	Dispatch to correct address creates a presumption of valid service.
Family Receipt	Disallowed service if accepted by spouse/family.	Valid service, provided the drawer resides at the address and fails to rebut knowledge.
Legal Status	Declared per incuriam (Passed in ignorance of binding prior precedent).	Settled Law across Indian courts.