The presentation of a cheque after a stop payment instruction does not bar prosecution under Section 138 of the Negotiable Instruments Act.

K.S. Kumaran, J. - The respondent-herein filed a complaint (Annexure P-13) dated 4.7.1992 under Sections 138/142 of the Negotiable Instruments Act against the petitioner-herein alleging as follows :-

2. The complainant-company supplied to/through the accused MG Craft Paper through invoice and the accused accepted Hundies against the said invoice to clear the payments. The Hundies returned unpaid from the bank of the accused i.e. Canara Bank, Sector 17, Chandigarh, and to clear the payment of the said returned unpaid Hundies, the accused issued the following cheques payable at Canara Bank, Sector 17, Chandigarh :-

Cheque No. Amount (Rs.)

480 1760 Dt. 19.2.92 158152.44

4801786 Dt. 24.3.92 206500.67

4801787 Dt. 26.3.92 126823.55

4801788 Dt. 27.2.92 134129.75

4801789 Dt. 29.3.92 141243.58

The complainant presented the said cheques with Andhra Bank, Chandigarh, for encashment but the said cheques were received back dischonoured with the remarks funds insufficient. The attempt by the complainant to get the payment of the said cheques from the accused did not bear result. The dishonouring of the cheques amounts to an offence under law. The complainant served a notice dated 9.6.1992 which was received by the accused. The notice was sent by registered post with Acknowledgement as well as under certificate of posting. In spite of such service of notice the accused has not paid the amount.

3. The learned Judicial Magistrate Ist Class, Chandigarh, after the preliminary evidence, found that a prima facie case is made out against the accused under Section 138 of the Negotiable Instruments Act and ordered the accused/petitioner-herein to be summoned by his order dated 2.4.1993.

4. Aggrieved by this order, the petitioner/accused has approached this Court under Section 482 Criminal Procedure Code for quashing the above-said complaint and the summoning order dated 2.4.1993 alleging as follows :-

The petitioner is Managing Director of Gobind Agencies and Investment Company (P) Ltd. (hereinafter referred to as Gobind Agencies) doing trading business. While M/s Sukhana Paper Mills required the petitioner to sell MG Craft Paper manufactured by it, the sister concerns of the said Gobind Agencies namely M/s Nalagarh Chemicals Pvt. Ltd. and Misriot Enterprises were supplying chemicals to Sukhana Paper Mills for manufacturing of the above-said paper. Accounts were opened by all of them with Sukhana Paper Mills. While Gobind Agencies had been making the payment to M/s Sukhana Paper Mills (hereinafter referred to as the Mills), the said Mills in turn had been making payments to Nalgarh Chemicals and Misriot Enterprises. The transactions started somewhere in the year 1985-86. The credit and debit balance entries were being made by all of them in their respective books of account. The accounts relating to the years 1991, 1992 and 1993 were not at par among them. The matter was taken up with the Mills but every time the reply was that after settling the accounts of Nalagarh Chemicals the accounts of others will be settled, but, the Mills did not settle the accounts of Nalgarh Chemicals or others.

5. The Mills at one time wanted to settle the accounts of Gobind Agencies and required that as per the books of account of the mills, Gobind Agencies should issue cheques. Gobind Agencies stated that the cheques would be issued, but they shall be encashed only subject to the re-conciliation of the accounts vis-a-vis Gobind Agencies, M/s Nalagarh Chemicals and M/s Misriot Enterprises. The Mills continued to supply MG Craft paper to the petitioner directly and also against hundies. But the supply of the said paper was continuously being adjusted against the payments which were to be made by the Mills to Nalagarh Chemicals and Misriot Enterprises, and in turn Gobind Agencies was required to market the paper for the Mills. In some cases the entire proceeds were required to be transferred to the above named companies. The Mills did not reconcile its accounts with Nala