Vinod Kumar Gupta vs Jai Paul

A complaint was filed by the respondentcomplainant against the petitioneraccused under Section 138 of the Negotiable Instruments Act. It was

alleged in the complaint that two cheques bearing No.791017 dated 07.11.2003 for an amount of Rs.2.00 lacs and bearing No.791015 dated

11.11.2003 for an amount of Rs.3.00 lacs were issued by the petitioner in favour of the respondent. The said cheques were presented by the

complainantrespondent through his banker i.e. Punjab National Bank, Gangyal, Jammu for encashment on 10.11.2003 and 13.11.2003

respectively but the same were returned unpaid due to the reason that ""cheques amount exceeds arrangement"" in the account of the

accusedpetitioner.

That both the cheques, above referred, were again presented by the respondent/complainant through his banker for encashment on 03.12.2003.

However, the said cheques were again dishonoured and returned by the banker of the accused unpaid. A joint memo came to be issued by the

State Bank of India on 03.12.2003, which reveals that the payment was stopped by the petitioner and the said endorsement has been erased and

it was written that the cheques ""reported stolen"".

After the complaint was filed, the process was issued against the petitioneraccused. He filed application before the trial court for dropping of the

proceedings and the said application was dismissed on 06.06.2005, against which a criminal revision petition was preferred before the Learned

District Judge, Jammu, who also vide its order dated 06.01.2007 dismissed the same. It is how this petition under section 561A Cr.P.C. is before

this court.

I have heard learned counsel for the parties and perused the record. There is no dispute that the cheques, details of which is given above, were

presented before the banker of the accused and were returned unpaid on account of ""cheques amount exceeds arrangement"". Again on

presentation of the cheques to the same bank on 03.12.2003 endorsement was made that the payment has been stopped which has been

scratched and new endorsement that cheques have been stolen, has been made. In essence, the cheques presented by the respondentcomplainant

issued by the petitioner accused have not been encashed on account of the endorsement mentioned hereinabove. Section 138 of the Negotiable

Instrument Act deals with the dishonour of cheqes for insufficiency of funds in the account maintained by the drawer. For facility of reference

Section 138 of Negotiable Instrument Act is reproduced as under:

Dishonour of cheque for insufficiency, etc. of funds in the account Where any cheque drawn by a person on an account maintained by him

with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or

other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour

the cheque or that it exceeds the amount arranged to be paid from that account by any agreement made with that bank, such person shall be

deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment a term which

may be extended to two years or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in

this section shall apply unless

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity,

whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by

giving a notice, in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of

the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due

course of the cheque, within fifteen days of the receipt of the said notice.

The argument of learned counsel for the petitioner is that on subsequent presentation of the cheques on 03.12.2003, the endorsement shows

that the payment had been stopped which consequently was scratched and it was written that the cheques had been stolen. This according to the

petitioner does not constitute an offence under Section 138 of Negotiable Instrument Act. Undoubtedly, there are two expressions used under

Section 138 of Negotiable Instruments Act, one is on account of insufficiency of funds to honour the cheque and the second is when it exceeds the

payment arranged to be paid from that account. Stopping of cheques or having been stolen is not covered. The argument is catchy at the outset but

on a deep scrutiny, it would reveal that it was an act of the drawer by intimating to its banker to stop the payment which resulted in noncashment of

cheques. The intention became clear when the encashment of the cheques were stopped after having been issued in discharge of the liability or

debt. Stopping of cheques or closing of account by the drawer itself means that the drawer had no intention of allowing these cheques to get

encashed at that time, the same were issued in favour of the drawee.

However, under one eventuality it would not be a penal offence if the drawer had informed in advance that the account had been closed or

payment had been stopped. It could be stopped but not in such a manner. If the drawer after issuing the cheques would have intimated its banker

to stop payment or close the account, it would be deemed that there was no money in the account and the same is squarely covered by Section

138 of the Negotiable Instrument Act.

I fortify my view with the Supreme Court judgments. In M/s Electronics Trade and Technology Development Corpn. Ltd. Secunderabad,

Appellant Vs. M/s Indian Technologist and Engineers, (Electronics) Pvt. Ltd. and another, Respondents, reported in AIR 1996 SC 2339, their

lordships of Hon'ble Supreme Court while dealing with this question have stated that issuance of instructions to stop payment tantamount to

dishonour of cheque.

In NEPC Micon Ltd. and others, Appellant Vs. Magma Leasing Ltd., Respondent, reported in AIR 1999 SC 1952, the Hon'ble Supreme

Court observed that dishonouring of cheque by the bank r n tne ground that the account stands closed would be covered by the phrase that the

amount of cheque standing to the credit of that account was insufficient to honour the cheque.

Other argument was that there is endorsement in the 2nd memo of December, 2003 that cheques have been stolen. This question has also been

elaborately discussed in Chandran Vs. Sathyananda reported in Cr.M.C.No.3820 of 1997 decided on 28.06.2000. In this judgment, the Kerala

High Court observed that the cheque presented for payment returned unpaid for being 'reported stolen', the intention of the drawer is clear that he

wanted either to stop payment or dishonor the cheque.

The conjoint reading of the aforesaid discussion reveals that the intention of the accused alone would determine the nature of offence

committed by him, more particularly, in cases under Section 138 of the Negotiable Instrument Act.

In view of the above, I do not find any merit in this petition, the same is dismissed along with connected Cr.M.P., if any.