MODI CEMENTS LTD. versus SHRI KUCHIL KUMAR NANDI

Citation: [1998] 1 S.C.R. 1192 · Decided: 22-03-1998 · Supreme Court of India · Bench: M.K. MUKHERJEE · Disposal: Appeal(s) allowed
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

A 
MODI CEMENTS LTD. 
v. 
SHRI KUCHIL KUMAR NANDI 
MARCH 22, 1998 
B 
[M.K. MUKHERJEE, S.P. KURDUKAR AND K.T. THOMAS, JJ.] 
c 
Criminal Law : 
Negotiable Instruments Act, 1881 : 
Sections 138 and 139-Dishonour of cheque-Complaint against-
Cognizance of-By Metropolitan Magistrate-Drawer of cheque issued "stop 
payment" instructions to his back prior to presentation of cheque-High 
Court quashed complaint under S. 482 Cr. P.C. -Validity of-Held: "Stop 
D payment" instructions will not preclude an action under S. 138-Such liability 
cannot be avoided even by giving notice to the payee or holder in due 
course, prior to presentation of the cheque, not to present the cheque but he 
presents it and the cheque is returned pursuant to "stop payment" 
instructions-Decision to that effect in para 6 of Electronics Trade and 
Technology Development Corporation's case [1996] 2 SCC 734 and followed 
E in K.K. Sidharthan 's case [1996] 6 sec 369 being contrary to the object and 
purpose of Ss. 138-142, overruled-The fact that presumption under S. 139 
is attracted to such a situation was wrongly ignored in the above cases-
Drawer of the cheque will get an opportunity to rebut the presumption at the 
trial-Hence, High Court not justified in quashing the complaint at the 
F 
threshold-Case restored before Metropolitan Magistrate and all contentions 
are kept open. 
Section 138-lnsujficient funds-At the time of drawing of cheque-
Dishonesty-Presumption of-Held : Jn such a situation drawing of 
presumption of dishonesty on the part of the drawer under S. I 38 not 
G justified-Drawer can make arrangement or deposit amount in his account 
before cheque is presented-S. 138 gets attracted only when cheque is 
dishonoured. 
Sections 138 and 139-Dishonour of cheque-Complaint against-
Cognizance of-Taken on being satisfied about existence of a prima facie 
H case-High Court quashed complaint under S. 482 Cr. P.C.-Held: Issuance 
1192 
+ 
MODI CEMENTS LTD. v. K.K. NANDI 
1193 
of cheque raises a presumption under S. 139-Drawer of cheque gets an A 
opportunity to rebut that presumption at the trial-Petition under S.482 Cr. 
P. C. is tenable only when no offence even prima facie is made out-Whether 
a prima facie offence under S. 138 is made out or not depends upon the 
averments made in the complaint-Criminal Procedure Code, 1973, S.482. 
Interpretation of Statutes : 
Deeming provision-Held : Distinction between the deeming provision 
and a presumption is well discernible. 
B 
The respondent had drawn three cheque in favour of the appellant in 
February 1994 in partial discharge of liability/debt. The appellant presented C 
these three cheques on 9-8-1994 for encashment through its bankers. On1 
6-9-1994 the respondent's banker returned the said cheques as unpaid with 
the endorsement "payment stopped by the drawer". Later on it transpired 
that the respondent void his letter debated 8-8-1994 had given ~uch instmction. 
The ap11ellant on 13-9-1994 sent a legal notice in terms of Section 138 of D 
the Negotiable Instruments Act, 1881 to the respondent demanding payment 
of the amounts under the cheques. Since the respondent failed to make the 
payment of the amount of the aforesaid three cheques within the stipulated 
period of 15 days, which expired on 2-10-1994, the appellant filed three 
criminal complaints against the respondent under Section 138 of the Act. 
The respondent filed applications for staying the proceedings, which were E 
rejected. 
The respondent then filed three petitions under Section 482 of the 
Criminal Procedure Code, 1983 for quashing the complaints. The High 
Court allowed the petitions and quashed the complaints on the following 
grounds:-
F 
(1) The appellant has not pleaded in his complaint that the cheques 
were 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. The necessary ingredients of Section 138 G 
of the Act having not been pleaded the Court could not have taken cognizance 
...._ 
of the offence. 
(ii) Mere endorsement of the Bank "payment stopped" was not 
sufficient to entertain the com plaint, as that was not an ingredient of the 
offence under Section 138 of the Act. 
H 
1194 
SUPREME COURT REPORTS 
[1998) l S.C.R. 
A 
Being aggrieved of th4~ High Court's .iudgment the a1111ellant 11referred 
the 11resent a111
Excerpt shown. Read the full judgment & AI analysis in Lexace.