Section 138 NI Act: Notice Received by Drawer’s Mother Does Not Defeat Presumption of Service; Supreme Court Declares M.D. Thomas Per Incuriam, Restores Conviction

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

Date of Judgment: 30 September 2026.

Citation: 2026 INSC 1069.

Bench: Justices Ahsanuddin Amanullah and Manmohan.

Held: The Supreme Court held that dispatch of a statutory demand notice by registered post to the cheque drawer’s correct address satisfies the requirement of “giving of notice” under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881 and raises a rebuttable presumption of service. Receipt by the drawer’s mother does not, by itself, rebut that presumption or require the complainant to separately prove the drawer’s actual knowledge. The Court also declared M.D. Thomas v. P.S. Jaleel, (2009) 14 SCC 398, per incuriam for overlooking binding precedent on presumed service, particularly the three-Judge Bench decision in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555. It held that M.D. Thomas cannot be treated as binding precedent under Article 141 of the Constitution.

Summary: The appeal concerned a cheque issued towards repayment of an alleged loan of ₹3 lakh. Following dishonour, the complainant, Sainaba, sent a statutory demand notice dated 31 August 2016 by registered post to the accused’s correct address. His mother received the notice, but no payment or reply followed.

The Trial Court convicted the accused under Section 138 and imposed six months’ simple imprisonment and a fine of ₹3 lakh, with further imprisonment in default. The Appellate Court affirmed the conviction. In revision, however, the Kerala High Court set aside the concurrent findings because the notice had been received by the accused’s mother rather than personally by him. It required evidence that the accused knew about the notice before treating service as established.

The Supreme Court found that this approach reversed the applicable burden of proof. Reviewing K. Bhaskaran, D. Vinod Shivappa and C.C. Alavi Haji, it reaffirmed that a notice properly dispatched by registered post to the correct address attracts the presumption of service under Section 27 of the General Clauses Act, 1897 and Section 114 of the Indian Evidence Act, 1872. The complainant need not additionally establish deliberate evasion or actual knowledge to invoke that presumption.

The presumption remains rebuttable. The drawer may establish that the address was incorrect, that he had no knowledge of the notice having been brought to his address, or that the postal endorsement was erroneous. Personal non-receipt, merely because a family member accepted delivery, is insufficient by itself.

Addressing the contrary decision in M.D. Thomas, the Court noted that the earlier Division Bench had set aside a conviction because the notice was served on the drawer’s wife, without considering the binding larger-Bench ruling in C.C. Alavi Haji. It had also failed to meaningfully examine whether the notice was correctly addressed or whether the wife lived with the drawer.

The Court identified the anomaly that would follow from treating M.D. Thomas as binding: a complainant could benefit from presumed service where a correctly addressed notice remained undelivered, yet lose that benefit where the notice actually reached the residence and was accepted by a family member. Such an interpretation would enable evasion and frustrate the statutory purpose.

On the facts, the address in the demand notice matched the accused’s vakalatnama, appeal and revision petitions. He had also appeared in court following summons delivered at that address and had never disputed its correctness. He did not claim that he lived separately from his mother or that their relationship was inimical. The presumption of service therefore remained unrebutted.

The Supreme Court concluded that the High Court had misread C.C. Alavi Haji by requiring the complainant to prove the accused’s awareness. The conviction could not be reversed solely because the notice was not personally delivered to the drawer.

Decision: The Supreme Court allowed the appeal and set aside the Kerala High Court’s judgment. It restored the Trial Court’s judgment imposing six months’ simple imprisonment and a fine of ₹3 lakh, with the stipulated further imprisonment in default.