GOAPLAST PVT. LTD. versus SHRI CHICO URSULA DSOUZA AND ANR.

Citation: [2003] 2 S.C.R. 712 · Decided: 07-03-2003 · Supreme Court of India · Bench: M.B. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
GOAPLAST PVT. LTD. 
v. 
SHRI CHICO URSULA D'SOUZA AND ANR. 
MARCH 7, 2003 
B 
[M.B. SHAH AND ARUN KUMAR, JJ.] 
Negotiable Instruments Act, I 881-Sections I 38, I 39 and Chapter XVI/-
Post dated cheques-Payment of-Countermanding payment of the same-
Whether would attract the penal provision of Section I 38-Held, once a cheque 
C is issued a presumption under Section I 39 must follow-Jn yiew of the 
presumption and the object of Chapter XVII, countermanding payment of post 
dateq cheques would not preclude an action .under Section I 38. 
Post dated cheques were issued and before the due date of payment, 
instructions were issued to the drawee bank to stop their payment by 
D person issuing the cheque. Respondent filed complaint under Section 138 
of Negotiable Instruments Act, 1881. The co111rt below dismissed the 
complaint taking a view that Section 138 of the Act was not attracted in 
these facts. 
E 
In appeal to this Court appellant contended that mere writing of 
letter to the bank to stop payment of post dated cheques does not take 
the case out of purview of the Act in view of the object behind the 
provision contained in Chapter XVII of the Act. 
Allowing the appeals and remanding the matter to the concerned 
F Judicial Magistrate for deciding the complaints on merits, the Court 
HELD: I. Chapter XVII was introduced in Negotiable Instruments 
Act, 1881 by the Banking, Public Financial Institutions and Negotiable 
Instruments Laws (Amendment) Act, 1988 (Act 66 of 1998) with the 
object of inculcating faith in the efficacy of banking operations and giving 
G credibility to negotiable instruments in business transactions and in order 
to promote efficacy of banking operations. Therefore, while considering 
the question of applicability of Section 138 of the Act to a situation 
presented by the facts of the present case, it is necessary to keep the 
objects of the legislation in mind. The faith, which the legislature has 
H desired that such instruments should inspire in commercial transactions 
712 
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GOAPLAST PVT. LTD. v. SHRI CHICO URSULA D'SOUZA 
713 
would be completely lost if parties are as a matter of routine allowed to A 
interdict payment by issuing instruction to banks to stop payment of 
cheques. (715-C-G( 
2. Sections 138 to 142 of the Act are intended to discourage people 
from not honouring their commitments by way of payment through 
cheques. It is desirable that the court should lean in favour of an B 
interpretation which serves the subject of the statute. The penal provisions 
contained in Sections 138 to 142 of the Act are intended to ensure that 
obligations undertaken by issuing cheques as a mode of payment are 
honoured. A post-dated cheque will lose its credibility and acceptability 
if its payment can be stopped routinely. The purpose of a post-dated C 
cheque is to provide some accommodation to the drawer of the cheque. 
Therefore, it is all the more necessary that the drawer of the cheque 
should not be allowed to abuse the accommodation given to him by a 
creditor by way of acceptance of post-dated cheque. If stoppage of payment 
of a post-dated cheque is permitted to take the case out of the purview of 
Section 138 of the Act, it will amount to allowing the party to take D 
advantage of his own wrong. (715-H, 716-A-C] 
3. In view of presumption under Section 139 coupled with the object 
of Chapter XVII of the Act which is to promote the efficacy of banking 
operations and to ensure credibility in business transactions through 
banks, by countermanding payment of post-dated cheque, a party should E 
not be allowed to get away from the penal provision of Section 138 of the 
Act. A contrary view would render Section 138 a dead letter. (718-C-E) 
Modi Cements Ltd. v. Kuchil Kumar Nandi, (1998( 3 SCC 249; Teshwant 
Badave v. Surendra Madhavrao Nighojakar and Anr., (20011 3 SCC 726 F 
and NEPC Micon Ltd. and Ors. v. Magma Leasing Ltd., (199914SCC253, 
relied on. 
4. Section 138 of the Negotiable instruments Act will be attracted in 
the facts of the case. However, whether a case for punishment under that 
provision is made out, will depend on outcome of the trial. (720-D-E) 
G 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 
315 of 2003. 
From the Judgment and Order dated 16.3 .2002 of the Mumbai High 
Court in Crl. A. No. 68 of 2000. 
H 
A 
B 
c 
714 
SUPREME COURT REPORTS 
(2003] 2 S.C.R. 
WITH 
Crl. A. Nos. 316-321/2003. 
Dhruv Mehta, Mohit Choudhary, Ms. Shalini Gupta 

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