Woods and Others vs State and Another

Manju Goel, J.—The petition seeks quashment of a complaint u/s 138 of the Negotiable Instrument Act filed by respondent No. 2 against the petitioners and the order summoning the petitioners dated 30.7.2003. The petitioners Nos. 2 & 3 are the partners of petitioner No. 1. As per the complaint the petitioners obtained a loan from the respondent No. 2 and in discharge of their liability issued three cheques bearing No. 225065 dated 25.4.2003 for Rs.78,833/-, cheque bearing No. 225066 dated 9.4.2003 for Rs.7,833/- and cheque bearing No. 225067dated 18.4.2003 for Rs.7,833/-, all drawn on Bank of India, Chitranjan Park, New Delhi and on presentation for payment the three cheques were returned dishonoured with the remarks payment stopped by drawer''. The complainant further alleges that a notice as prescribed u/s 138 of Negotiable Instrument Act was duly issued and the petitioners failed to pay the amount of the cheque.

In the present petition it is contended that no offence u/s 138 of Negotiable Instrument Act is made out as the cheques were not dishonoured on account of insufficiency of funds but on account of instructions to stop payment. It is contended that the Metropolitan Magistrate before summoning the petitioners should have obtained the record of the bank to satisfy himself about the sufficiency of the funds in the account of the petitioners. It is also pleaded that the cheques were issued without consideration.

The law in respect of applicability of Section 138 of Negotiable Instrument Act on account of dishonour of cheque for reasons ''payment stopped by drawer'' has been settled by the Supreme Court in the case of M.M.T.C. Ltd. and Anr. v. M/s. Medchal Chemicals & Pharma P. Ltd. and Anr. reported as 2002 [1] JCC 15. It was held in the first place that when the complainant had pleaded that the cheques were issued in discharge of certain liability, the complaint could not be quashed by the High Court u/s 482 Cr.P.C. on the ground that the cheques had not been issued for any pre-existing debt or liability. It was also held that there was, in fact, no requirement in law for the complainant to specifically allege in the complaint that there was a subsisting liability. Following this it can be said that even when the accused pleads that the payment was stopped on account of absence of any pre-existing debt or liability, the complaint cannot be quashed and the question of fact has to be decided in defense.

The Supreme Court further held in this judgment that if the payment was stopped on account of a dispute in respect of absence of liability, the accused has to show that there were sufficient funds but the burden to prove the same is with the accused which the accused has to discharge at the time of leading defense evidence. Referring to its earlier decision in M/S Modi Cements Limited Vs. Shri Kuchil Kumar Nandi, , the Supreme Court made the following observations in para 19 of the judgment:

"19. Just such a contention has been negatived by this Court has, in the case of M/S Modi Cements Limited Vs. Shri Kuchil Kumar Nandi, . It has been held that even though the cheque is dishonoured by reason of `stop payment'' instruction an offence u/s 138 could still be made out. It is held that the presumption u/s 139 is attracted in such a case also. The authority shows that even when the cheque is dishonoured by reason of stop payment instructions by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the ''stop payment'' instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presumption (sic) of cheque for encashment , then offence u/s 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a Court cannot quash a complaint on this ground."

The complaint does not disclose that there were sufficient funds in the account. As per the complaint the payment was stopped which for the present is sufficient to summon the petitioners. For examining the complaint in the present petition u/s 482 Cr.P.C. this court can only see whether the allegations in the complaint as substantiated in the pre-summoning evidence were sufficient to summon the petitioners. No inherent defect of any kind has been depicted by the petitioners.

The petitioners have produced a copy of the certificate from the Bank of India showing that there was sufficient funds for honouring the three cheques. However, in view of the judgment of the Supreme Court in the case of MMTC (Supra), this court cannot call for evidence to prove the certificate or to enquire as to whether there was any pre-existing debt or liability.

The petition u/s 482 Cr.P.C. has no strength. I am, Therefore, constrained to dismiss the same. The petition is dismissed accordingly.