AI Overview...

• Non-Service of Notice under Section 138 NI Act - Main points and insights:
• Under Section 138 of the Negotiable Instruments Act, 1881, the issuance of a notice to the drawer of a cheque is a crucial step in initiating prosecution. However, the Supreme Court clarified that merely issuing the notice does not constitute a cause of action.
• The cause of action arises only when the notice is properly served on the drawer, and the drawer fails to make the payment within the stipulated period of 15 days.
• Failure to serve the notice or improper service can invalidate the initiation of proceedings under Section 138 NI Act.

• The Court emphasized that the completion of the offence depends on the service of the notice and the subsequent failure to pay, not merely on the issuance of the notice.

• Analysis and Conclusion:

• Proper service of notice is a mandatory procedural requirement under Section 138 NI Act. Without proof of proper service, the prosecution may fail.
• Courts have consistently held that the mere dispatch of a notice without proof of service does not suffice to establish the offence.
• Therefore, in cases of non-service of notice, the proceedings under Section 138 NI Act are likely to be dismissed or not initiated until proper service is established.

Reference: Prakiti Enterprisers VS Super Health Care - Dishonour Of Cheque Negotiable Instruments Act, 1881 — Section 138