THE ERA OF ELECTRONIC NOTICE

BY

PRAVEEN DALAL*

 The aim of this article is to analyse the requirements of giving a notice in the information technology era for the dishonouring of a cheque. The discussion becomes essential due to the advent of “Internet banking” and the use of “truncated cheques” in electronic form. The article is trying to analyse the requirement of a “notice in writing”, as specified under section 138 of the Negotiable Instruments Act, 1881, by using the information technology.

 I. Introduction

 The requirement of giving a valid legal notice is the beginning of a case. The entire edifice of the case is dependant upon a “good and valid” notice and it is appropriate to mention, “well begun is half done”. The entire “cause of action” may be lost if it is not preceded by a valid notice. Thus, the importance of a “good and valid notice” cannot be undermined except at the cost of loosing the cause of action or the case. The process of sending a good and valid notice is an art that requires an expertise and the sound knowledge of the law in a “holistic manner”. For instance, a notice under section 138 of the Negotiable Instruments Act, 1881(NIA) cannot be given by merely considering the provisions of the NIA but the provisions of the IT Act, 2000, the General Clauses Act, 1897, etc must also be considered. These Acts have an inescapable and inseparable impact on the provisions of section 138 of the NIA. Further, if the medium of information technology is used for this purpose, it will bring numerous benefits and advantages to its users.

 II. Advantages of information technology

The importance of information technology cannot be ignored. This is so because the use of information technology produces certain advantages, which are not available when the traditional and conventional methods are used. The use of information technology generates the following advantages to its users[1]:

(1) easy handling of day to day affairs of an organisation,

(2) speedy disposal of routine and daily works,

(3) assurance of authenticity, integrity and confidentiality in the functioning of the organisation,

(4) cost economy,

(5) integration and interaction with the global institutions and organisations,

(6) better communication and presentation facilities,

(7) assurance of safety and sound security of the sensitive and valuable information, like trade secrets,

(8) instant transfer of data and information where the situation demands so,

(9) it provides access to public documents which are digitalized by various department s of the Government,

(10) for making online payments of various bills and dues,

(11) to file statutory documents online[2],

(12) to give legal notices, etc.

 III. Internet banking and the Information Technology Act, 2000

 The Internet banking and its allied matters[3] cannot operate properly unless it is in conformity with the Information Technology Act. 2000 (IT Act). A holistic approach should be adopted, the purpose of which should be to bring uniformity and harmony between the provisions of the IT Act on the one hand and the guidelines issued by the RBI, the provisions of other laws, etc on the other. It must be appreciated that in case of conflict between the provisions of the IT Act on the one hand and the guidelines and these other laws on the other, the former would prevail[4]. The following provisions of the Act have a direct bearing on the functioning of Internet banking and its allied matters in India:

(1) The authentication of electronic records for the purposes of Internet banking should be in accordance with the provisions of the Act[5],

(2) The electronic records duly maintained for the purposes of Internet banking would be recognized as legally valid and admissible[6],

(3) The digital signature affixed in a proper manner would satisfy the requirement of signing of a document for the purposes of Internet banking[7],

(4) Any kind of paper work, which is required to be filed in the government offices or its agencies, would be deemed to be duly filed if it is filed in the prescribed electronic form[8]. Thus the paper formalities can be effectively substituted with electronic filings for Internet banking purposes,

(5) The banking business requires certain documents or records to be retained for a fixed period. In Internet banking such documents or records can be retained in an electronic form[9],

(6) The rules, regulations, order, bye-law, notification or any other matter pertaining to Internet banking can be published in the Official Gazette or Electronic Gazette, as the case may be[10],

(7) The Internet banking presupposes the existence of attribution and certainty. If any electronic record is sent by the originator himself, by his agent, or by an information system programmed by or on behalf of the originator to operate automatically, then the electronic shall be attributed to the originator[11],

(8) The requirement of acknowledgement of documents sent for the purposes of Internet banking is adequately safeguarded by the Act[12],

(9) The Internet banking may require to determine the time and place of dispatch and receipt of electronic records. This problem can be easily solved by applying the provisions of the Act[13],

(10) The Internet banking would require the secured electronic records for its proper working. Where any security procedure has been applied to an electronic record at a specific point of time, then such record shall be deemed to be a secure electronic record from such point of time to the time of verification[14],

(11) A digital signature meeting the specified requirements would be deemed to be a secured digital signature for carrying out Internet banking transactions[15],

(12) The Central Government has the power to prescribe the security procedures to give effect to the provisions of the Act, having regard to the commercial circumstances prevailing at the time when the procedure was used[16]. Thus, the Central Government can specify safety measures and security procedures for Internet banking under the provisions of the Act.

(13) The Controller of Certifying Authorities (CCA) can issues licences to the Certification Authority under the IT Act, 2000[17]. The Certifying Authority is assisted by the Registration Authority, which is created at the level of the organisations subscribing to the services of the Certifying Authority .The Reserve Bank would function as a Registration Authority (RA) for the proper functioning of Internet banking.

Thus, the information Technology Act, 2000 has laid down the basic legal framework conducive to the Internet banking and its allied matters in India.

 IV. Notice of dishonouring

 The NIA contains provisions for dealing with dishonoured cheques u/s 138. This section requires, among other things, the giving of a demand notice for invoking the cause of action. If the complainant before the court does not assert that demand notice has been served, the complaint is not maintainable[18]. The mere “giving” of the notice will, however, not give rise to the cause of action but the same will begin only if the notice has been “received” by the drawer of the cheque. Thus, the cause of action begins where the receipt of the demand notice by the concerned party accompanies the proven fact of giving of notice. If any one of them is missing, there will not be a legal cause of action. The giving is the process of which receipt is the accomplishment. It is for the payee to perform the former process by sending the notice to the drawer at the correct address[19]. The question of giving of the notice and the receipt of the same cannot, however, be decided at the initial stage and the same can be decided only at the trial stage. Thus the court will prima facie presume that the demand notice has been duly served if the “mode” of delivery of the same is genuine and as per law. It is interesting to note that section 138 of the NIA does not prescribe any particular mode of demand notice and it merely requires a “notice in writing”. This has made this section very flexible and it can accommodate the developments of information technology. Thus, a demand notice can be sent through the mode of registered post, e-mail, fax etc and there cannot be any objection for the same.  

V. The receipt dichotomy

The criminal liability for the dishonoured cheque arises only if the drawer fails to pay the amount of cheque within stipulated period once he has received the notice. A situation may arise when he “refuses” to accept the demand notice. It is well settled that a notice not accepted by the addressee may be presumed to have been served on him[20]. Further, a complaint u/s 138 of the Act cannot be quashed or dismissed merely because the notice was not served on the accused or drawer, without enquiring into the circumstances leading into the non-service of the notice[21]. This is so because there may be a situation where the accused manage to have the notice returned with postal remarks “not available in the house”, “house locked”, “not found”, etc. In such a situation it would be deemed that the notice has been served on the accused[22]. It would be important to mention that though section 138 of the NIA does not require that the notice should be given only by post yet if it is given by post than the provisions of section 27 of the General Clauses Act, 1897(GCA) can be invoked. Section 27 of the GCA provides a “presumption of service of notice” if the notice carries the correct address of the recipient. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very fragile position, as the drawer of the cheque who is liable to pay the amount would resort to the strategy of deception by successfully avoiding the notice[23]. This is the reason why claims and counter-claims of sending and receiving of demand notices are dealt with at the trial stage and the same cannot be agitated at the preliminary stage of the case.

 VI. The benign justice

    The first duty of a court is to do justice. The concept of justice requires that:

(1) it must firstly be done in a just, fair and reasonable manner,

(2) it must be seemed to be done, and

(3) it must be "felt" to be done.

Thus, unless this third element of "felt to be done" is satisfied, the concept of justice is not complete because this third element is the most important component of justice delivery system. A court of law cannot render justice unless the ultimate decision is based on the contemporary law as prevailing in the society. A decision based on an old law, which does not satisfy the requirements of the present situation, and environment should be avoided. In such a situation the efforts of the courts should be to give the law a "purposive, updating and an ongoing interpretation". This position makes the interface of justice delivery system with the information technology inevitable and unavoidable. The greatest virtue of the law is its flexibility and its adaptability; it must change from time to time so that it answers the cry of the people, the need of the hour and the order of the day. Thus, the justice delivery system cannot afford to take the information technology revolution lightly. The Indian Judiciary has understood this requirement very pertinently. The Supreme Court has encouraged the use of information technology for effective justice administration. The judicial response vis-à-vis information technology is positive and technology friendly. In M/S SIL Import, USA v M/S Exim Aides Silk Exporters[24] the words "notice in writing", in Section 138 of the Negotiable Instruments Act, were construed to include a notice by fax. The Supreme Court observed: "A notice envisaged u/s 138 can be sent by fax. Nowhere is it said that such notice must be sent by registered post or that it should be dispatched through a messenger. Chapter XVII of the Act, containing sections 138 to 142 was inserted in the Act as per Banking Public Financial Institution and Negotiable Instruments Laws (Amendment) Act, 1988.Technologiacl advancements like Fax, Internet, E-mail, etc were on swift progress even before the Bill for the Amendment Act was discussed by the Parliament. When the legislature contemplated that notice in writing should be given to the drawer of the cheque, the legislature must be presumed to have been aware of the modern devices and equipments already in vogue and also in store for future. If the court were to interpret the words "giving notice in writing" in the section as restricted to the customary mode of sending notice through postal service or even by personal delivery, the interpretative process will fail to cope up with the change of time. So if the notice envisaged in clause (b) of the proviso to section 138 was transmitted by Fax, it would be compliance with the legal requirement". This judgment shows that the requirement of a written notice will be satisfied if the same is given in the form of a fax, e-mail etc, using the information technology. It must be noted that a notice by e-mail can be send instantaneously and its delivery is assured and acknowledged by a report showing the due delivery of the same to the recipient. This method is more safe, accurate, economical and lesser time consuming as compared to its traditional counterpart, popularly known as "Registered A.D". In State of Maharashtra v Dr.Praful.B.Desai[25] the Supreme Court observed: "The evidence can be both oral and documentary and electronic records can be produced as evidence. This means that evidence, even in criminal matters, can also be by way of electronic records. This would include video conferencing. The advancement of science and technology is such that now it is possible to set up video conferencing equipments in the court itself. In that case evidence would be recorded by the magistrate or under his dictation in the open court". This judgment again recognises the importance of information technology for the smooth and efficient justice administration. The Law Commission in its 188^th Report has made recommendations for the establishment of electronic courts and use of information technology. It will not be difficult to visualise the use of e-mails as legal notices. Such recourse will satisfy the requirements of section 138 and would be valid notices. 

 VII. Conclusion

 The possibility of use of e-mails as legal notices is very bright in the distant future. This is more so when we have the mechanism of “digital signatures” that is substituting the traditional paper based signatures. In any case the requirements of section 138 of the NIA is that the notice must be “in writing” and e-mail satisfies that requirement in the most efficient manner. The judicial trend seems to be encouraging the use of information technology and very soon we will see the next revolution of  “electronic legal notices”.

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