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1996 Supreme(Ker) 349
Judges : G.N.RAY,B.L.HANSARIA
Sidharthan - Appellant
Versus
Praveena Chandran - Respondent
Case No : C.A. No. 1774 of 1996
Decided On : 10/08/1996
Advocates Appeared :
S.N. Sreekumar; Shaju Francis; For Appellants T.T. Kunhikannan; Shakil Ahmed; For Respondents
The main legal point established is that dishonour of cheques due to a 'stop payment' instruction can attract S.138 of the Negotiable Instruments Act.
Headnote:
Negotiable Instruments Act - Dishonour of Cheques - S.138, S.420 IPC, S.190, S.200 CrPC
Fact of the Case:
The respondent filed a complaint against the appellant under S.138 of the Negotiable Instruments Act and S.420 of the IPC, alleging dishonour of post-dated cheques due to insufficient funds. The appellant approached the High Court for quashing the complaint, which was refused, leading to this appeal.
Finding of the Court:
The court found that the cheques were not returned due to insufficient funds, but because the appellant had issued a stop payment instruction to the bank. The court also noted discrepancies in the respondent's written submission and concluded that no case under S.138 of the Act was made out, quashing the complaint.
Issues: The main issue was whether the dishonour of the cheques fell under S.138 of the Act, and if the respondent was entitled to receive any amount from the appellant.
Ratio Decidendi: The court interpreted S.138 of the Act, emphasizing that even a 'stop payment' instruction would attract the provision. However, if a notice is issued to the payee not to present the cheque for encashment and yet it is presented, S.138 does not get attracted.
Final Decision: The appeal was allowed, and the complaint was quashed. The court made no order as to costs.
1. Respondent No. 1, hereinafter referred to as the respondent, filed a complaint against the appellant under S.138 read with 149 of the Negotiable Instruments Act, 1881 (for short the Act) and S.420 of the IPC read with S.190, 200 of the Code of Criminal Procedure. The gravamen of the allegation is that the petitioner had issued two post dated cheques dated. 10.10.1994 and 31.12.1994, each for a sum of Rs. 3,00,000/-, drawn on Indian Overseas Bank, Trichur Branch. But on the cheques being presented, the same were returned unpaid on 15.10.1994 with the endorsement "Payment countermanded by the drawer". The complaint further stated that the cheques were returned unpaid for want of sufficient funds in the account. The appellant approached the High Court of Kerala for quashing the complaint but the High Court refused to do so. Hence, this appeal.
2. This main part of S.138 of the Act reads as below:
"138. Dishonour of cheques for insufficiency 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, or 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 an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both".
3. This shows that S.138 gets attracted in terms if cheques is dishonoured of insufficient funds or where the amount exceeds the arrangement made with the bank. It has, however, been held by a Bench of this Court in Electronics Trade and Technology Development Corporation. Ltd. v. Indian Technologists and Engineers (Electronics) (P) Ltd. JT 1996 (1) (SC) 643 that even if a cheque is dishonoured because of 'stop payment' instruction to the bank, S.138 would be attracted.
4. The case of the appellant is that the cheques were returned, not because of insufficient funds, but because he had issued stop memo to the bank for reasons detailed in the letter of appellant's Advocate dated. 4.10.1994 addressed to the respondent. This letter was replied by the respondent on 12.10.1994 stating, inter alia, that the allegations made in the letter of 4.10.1994 were not true; and dates and place may be fixed for perusal of the accounts and connected records. The appellant has produced a communication of the Indian Overseas Bank, Thrissur Branch, which is at page 64 of the Paper Book, showing that when the cheques in question were presented there was sufficient balance in the account of the appellant. This communication bears the numbers of two cheques which tally with those mentioned in the complaint We are, therefore, satisfied that the cheques were not returned because of insufficient funds, as is the allegation in the complaint.
5. It may be stated that the learned counsel for the respondent field a written submission, without having obtained permission when the case has been finally heard and reserved for judgment, on 7.10.1996 in which it has been stated that the cheques in question were issued against Account No. 562 of the petitioner, in which there was no cover. The further submission is that the letter of the Bank Manager which is at page 64 really represents the balance in Account No. 440. So, the contention is that the cheques had been dishonoured because of insufficiency of fund. Though when the learned counsel mentioned about the written submission on 7th in the Court, it was stated that it would not be possible to consider the written submission in view of the fact that the judgment has already been finalised and has been
