Dishonorable payment under S.138 occurs if the cheque is dishonored for insufficient funds, warranting penal repercussions for issuance without adequate funds.

1 Leave granted.

2 We have heard the counsel on both sides.

3 The appellant laid the complaints under S.138 of the Negotiable Instruments Act, 1881 (for short, 'the Act') for dishonour of cheque for insufficiency of the funds in the accounts of the accused. The complaint of the appellant read thus :
"The above cheque was presented by the complainant on 28-1-1990, through their Bankers M/s. Hyderabad Bank, Sarojini Devi Road, Secunderabad for realisation, with the promise by the accused, that the same will be honoured when presented. However, the said cheque was dishonoured with the Banker's endorsement dated 29-11-1990. "1, referred to drawer, 2. instructions for stopping payment and 3. stamped exceeds arrangements". It is evident from the Banker's memo dated 29-11-1990 that the said cheque was dishonoured by the Bank for wants of funds only.
On receipt of the intimation dated 29-11-1990 from the Bank, the complainant has issued a notice on 6-12-1990 to the accused by Registered Post Acknowledgment Due, informing him that the cheque dated 30-6-1990 was dishonoured by their bankers and demanded payment within 15 days from the date of receipt of the said notice. The said notice was received and acknowledged by the accused. No payment has been made by the accused as required under S.138(C) of the Negotiable Instruments Act. The accused 2 also stood as a guarantor to the payment of the complainant, as the proprietor of M/s. V.V. Rama Rao and Co., Saleemnagar Colony Hyderabad.
Accused 2 has issued the cheque knowing fully well that he has no Bank balance to their credit and he cannot honour the cheque for want of funds alone. He has not taken any steps to honour the cheque and arrange payment as required under S.138(C) of the Negotiable Instruments Act. The accused has thereby committed the offence under S.138 of the Negotiable Instruments Act. The dishonest intention of the accused in instructing the Bank to stop payment is evident from the conduct of the accused. He has instructed their Bank to stop payment only with the mala fide intention of escaping from the liability under S.138 of the Negotiable Instruments Act. He has so instructed their Bank so he has no funds to their credit. Hence the accused is liable for the offence under S.138 of the Negotiable Instruments Act."

4 S.138 of the Act was brought on statute by Central Act 66 of 1988 w.e.f. April 1, 1989 with a view of penalise the accused in cases of dishonour of certain cheques for insufficiency of funds in the accounts of the accused. It reads thus:
"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts.-- 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, of 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, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this section shall apply unless:--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque tails to make the payment of the said