Key Dictum: Once a cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act, 1881 arises, and the drawer issuing a notice to the payee or the bank for stoppage of payment does not preclude an action under Section 138 by the payee or holder in due course.[Important Points] (!) [1000027720015] Section 138 does not draw a presumption of dishonesty or commission of an offence merely upon issuance of the cheque; it applies only when the cheque is dishonoured for insufficiency of funds or exceeding arrangement, deeming an offence upon such dishonour.[Important Points] (!) [1000027720017][1000027720018][1000027720019] "Payment stopped by drawer" endorsement constitutes dishonour under Section 138, attracting its provisions.[1000027720008][1000027720009][1000027720010] In complaints under Section 138, courts taking cognizance must assess if a prima facie case exists based on averments; dismissal at threshold under Section 482 Cr.P.C. is improper if presumption under Section 139 can be rebutted at trial.[1000027720020] (!)

Modi Cements vs Kuchil Kumar Nandi - 1998 Supreme(SC) 288

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1998 Supreme(SC) 288

K.T.THOMAS, M.K.MUKHERJEE, S.P.KURDUKAR
Modi Cements – Appellant
Versus
Kuchil Kumar Nandi – Respondent

Judgement Key Points

Key Dictum:

Once a cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act, 1881 arises, and the drawer issuing a notice to the payee or the bank for stoppage of payment does not preclude an action under Section 138 by the payee or holder in due course.[Important Points] (!) [1000027720015]
Section 138 does not draw a presumption of dishonesty or commission of an offence merely upon issuance of the cheque; it applies only when the cheque is dishonoured for insufficiency of funds or exceeding arrangement, deeming an offence upon such dishonour.[Important Points] (!) [1000027720017][1000027720018][1000027720019]
"Payment stopped by drawer" endorsement constitutes dishonour under Section 138, attracting its provisions.[1000027720008][1000027720009][1000027720010]
In complaints under Section 138, courts taking cognizance must assess if a prima facie case exists based on averments; dismissal at threshold under Section 482 Cr.P.C. is improper if presumption under Section 139 can be rebutted at trial.[1000027720020] (!)

Judgment

S.P. Kurdukar, J.-Leave granted.

2. These three appeals are filed by the appellants/complainants challenging the legality and correctness of the judgment and order dated 21.11.1996 passed by the High Court in Crl. Revision Petition Nos. 2303-04 of 1995.

3. The present proceedings arise out of a complaint filed by the appellant in the Court of Chief Judicial Magistrate, Calcutta under Section 138 of the Negotiable Instruments Act, 1881 (for short the ‘Act’) against the respondent. The appellant company is a public limited company manufacturing and selling cement under the brand name “Modi Cement” throughout India.

4. The respondent/accused carries on business in the name and style of “Dubey Construction, M/s. Nandi Traders, M/s. Nandi Concerns, M/s. Nandi and Co., M/s. Nandi Enterprises, M/s. S.K. Enterprises, M/s. S.K. Trading and M/s. Jupitor Art. The respondent/accused is sole proprietor of all these business concerns.

5. It is alleged by the appellant in the complaint that the respondent purchased from them non-levy Modi Cement on credit against the orders placed on behalf of his concerns. These orders were placed by the respondent with the Calcutta office of the appellant

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1998 Supreme(SC) 288

K.T.THOMAS, M.K.MUKHERJEE, S.P.KURDUKARModi Cements – AppellantVersusKuchil Kumar Nandi – Respondent

Cases Referred (2)

K.T.THOMAS, M.K.MUKHERJEE, S.P.KURDUKAR
Modi Cements – Appellant
Versus
Kuchil Kumar Nandi – Respondent