K.K. SIDHARTHAN versus T.P. PRAVEENA CHANDRAN AND ANR.

Citation: [1996] SUPP. 7 S.C.R. 248 · Decided: 08-10-1996 · Supreme Court of India · Bench: G.N. RAY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

• 
A 
K.K. SIDHARTHAN 
v. 
T.P. PRA VEENA CHANDRAN AND ANR. 
OCTOBER 8, 1996 
B 
[G.N. RAY AND B.L. HANSARIA, JJ.] 
Negotiable Instrnments Act, 1881-Section 138 r/w 149-Dishonour of 
cheque because of 'stop payment'-Complaint u/s 138-Main-
tainability-Notice was issued to the payee or holder in due course not to 
C present the cheque for encashment-Payee or holder in due course presenting 
the cheque-cheque returned on instruction-Sec. 138 held not ap-
plicable-complaint liable to be quashed. 
Respondent filed a complaint against the appellant u/S 138 r/wS 149 
of the Negotiable Instruments Act, 1881 and Section 480 IPC r/w Ss 190 & 
D 200 of the Code of Criminal Procedure, alleging that the appellant 
petitioner had issued two post dated cheques but on the cheques being 
presented the same were returned unpaid with the endorsement 'Payment 
countermanded by the drawer' and for want of sufficient funds in the 
account. The appellant tiled a petition for quashing the complaint but it . 
E was dismissed. Hence this appeal. 
The appellant submitted that the cheques were returned, not because 
of insufficient funds, but he had issued stop memo to the bank and that 
there was sufficient balance in the account of the appellant. 
F 
The respondent contended that the cheques had been dishonoured 
G 
because of insufficiency of funds and that the bank had issued letter 
stat.ing that when the cheques in question were presented there was suffi-
cient balance in the account of the appellant, with a purpose to help the 
accused in the case. 
Allowing the appeal, this Court 
HELD : If after the cheque is issued to the payee or to the holder in 
due course and before it is presented for encashment, notice is issued to 
him not to present the same for encashment and yet the payee or the holder 
H in due course presents the cheque to the bank for payment and when it is 
248 
KK SIDHARIBAN v. T.P. PRA VEENACHANDRAN [HANSARIA,J.] 249 
,_ returned on instruction, section 138 of the Negotiable Instruments Act A 
does not get attracted. In the present case cheques were presented after 
the appellant had directed its bank to 'stop payment'. Though it had been 
averred in the complaint that the cheque dated 10.10.1994 was presented 
for collection on the date itself through the bank of the respondent, the 
cheque was presented on 15.10.1994 (in clearing). The lawyer's notice to B 
the respondent being of 4th October, 1994 which had been replied on 12th 
October, 1994 from Cochi, which is the place of the respondent, whereas 
the Advocate who issued notice on behalf of the appellant was at Thrissur, 
it would seem that the first cheque had even been presented after the 
instruction of 'stop payment' issued by the appellant had become known 
to the respondent. No case under section 138 of the Act had been made out C 
and, therefore, the complaint is liable to be quashed. [251-E-H; 252-A; BJ 
Electronics Trade and Technology Development Corpn. Ltd. v. Indian 
Technologists and Engineers (Electronics) (P) Ltd., [1996) 2 SCC 739, 
· referred to. 
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 
1774 OF 1996. 
From the Judgment and Order dated 23.8.95 of the Kerala High 
Court in Crl. M. C. No. 677 of 1995. 
C.N. Sree Kumar and Shaju Francis for the Appellant. 
T.T. Kunhikannan and Shakil Ahmed Syed for the Respondents. 
The Judgment of the Court was delivered by 
D 
E 
F 
HANSARIA, J. Respondent No. 1, hereinafter referred to as the· 
respondent, filed a complaint against the appellant under section 138 read 
with 149 of the Negotiable Instruments Act, 1881 (for short the 'Act') and 
section 420 of the IPC read with sections 190 and 200 of the Code of 
Criminal Procedure. The gravamen of the allegation is that the petitioner G 
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 Barik, 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 was returned unpaid for 
want of sufficient funds in the account. The appellant approached the High H 
250 
SUPREME COURT REPORTS (1996] SUPP. 7 S.C.R. 
A Court of Kerala for quashing the complaint but the High Court refused to 
do so. Hence this appeal. 
B 
c 
D 
2. The main part of Section 138 of the Act reads as below : 
"138. Dishonour of cheque for insufficiency of funds in the
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