A complainant can pursue dishonor proceedings under Section 138 despite a 'stop payment' endorsement, as allegations may still suggest insufficient funds.

1. The petitioners are the accused, the 1st petitioner is a company and the 2nd petitioner is its proprietor and the respondent is the complainant, on whose complaint, the learned IVth Metropolitan Magistrate, Hyderabad, has taken cognizance of the of the offence under S.138 of Negotiable Instruments Act, 1881 (for short, 'The Act') in C. C. No. 567 of 1993. The petitioners approached this Court to quash the proceedings under S.482 Cr.PC on two grounds; (1) that the allegations in the complaint do not constitute the offence u / S.138 and S.142 of the Act, since the cheque was returned unpaid for the reason of "stop payment by the drawer;" and (2) that the cheque was not issued towards a pre - existing debt. It is contended by the counsel for the petitioners that the offence u / S.138 of the Act, can be fastened on the petitioners only if there was prior debt and that the cheque was returned by the bank on the ground of insufficiency of funds or on the ground of exceeding the limits permitted by the bank, and that the cheque having been returned only on the ground of stop payment ordered by the petitioners, no penal liability is attracted under S.138 of the Act.

2. The learned counsel for the respondent, controverting the above contentions, contended that the complaint contains the allegations necessary to make out the offence under S.138 of the Act, that the endorsement of "stop payment" can be for several reasons and the possibility of insufficient funds in the account of the petitioner could not be eliminated and in fact the cheque was returned for insufficiency of funds in the account of the petitioners. Several decisions have been cited in support of the rival contentions, which will be referred to presently.

3. Before proceeding further, it is well to remember the amplitude of the enquiry in the exercise of this Court's jurisdiction under S.482 Cr. P.C. One of the guidelines in the case R. P. Kapur v. State of Punjab , AIR 1960 SC 866 : 1960 CriLJ 1239, a classic case on the point, is : (Para 6)
"Where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not."
The Division Bench of this Court in Syed Rasool and Sons v. Aildas and Co. , 1992 (3) Andh LT 259 : 1992 CriLJ 4048, considering the scope under S.482 Cr. P.C., in a case arising under S.138 of the Act, observed that (at P. 4061 of Cri LJ) :
"It is a matter to be investigated into by the competent Magistrate but not by the High Court in a proceeding under S.482 of the Criminal Procedure Code. S.482 of the Criminal Procedure Code can be invoked where ex facie no case has been made out on the allegations in the complaint. Whether the cheque was returned for either of the two grounds mentioned in S.138, is a matter that has to be investigated into by the competent Magistrate. On the allegations in the complaint cognizance has been taken by the competent Magistrate. It is not for this Court under S.482 Cr. P.C. to go into the rival contentions. Following the guidelines given by the Supreme Court in Kapur's case (1960 CriLJ 1239) (supra) we hold that it is neither desirable nor permissible to allow the complainant, particularly in the facts and circumstances of the cases on hand, to invoke the jurisdiction under S.482 Cr. P.C. inherent powers under S.482 Cr. P.C. can be used as a shield to prevent the abuse of the process of the Co