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PETITIONER:

K.K. SIDHARTHAN

Vs.

RESPONDENT:

T.P. PRAVEENA CHANDRAN AND ANOTHER

DATE OF JUDGMENT: 08/10/1996

BENCH:

G.N. RAY, B.L. HANSARIA

ACT:

HEADNOTE:

JUDGMENT:

J U D G M E N T

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 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 Bank, 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 were returned

unpaid for want of sufficient funds in the account. The

appellant approached the High Court of Kerala for quashing

the complaint but the High Court refused to do so. hence

this appeal.

2. The main part of Section 138 of the Act reads as below:

"138. Dishonour of cheque for

insufficiency of funds in the

account. - Whore 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, or 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

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punished with imprisonment for a

term which may extend to one year,

or with fine which may extend to

twice the amount of the cheques, or

with both."

This shows that section 138 gets attracted in terms if

cheque is dishonoured because of insufficient funds or where

the amount exceeds the arrangement made with the bank. It

has, however, been held by a Bench of this Court in

Electronics Trade and Technology Development Corpn, LTD, vs.

Indian Technologists and Engineers (Electronics) (P) Ltd.,

1996 (2) SCC 739, that even if a Cheque is dishonoured

because of `stop Payment' instruction to the bank, section

138 would get attracted.

3. The case of the appellant is that the cheques were

returned, not because of insufficient funds, but because he

had issued stop memo to the bank for reasons detailed in the

letter of appellant's Advocate dated 4.10.1994 addressed to

the respondent. This letter was replied by the respondent

on 12.10.1994 stating, inter alia, that the allegations made

in the letter of 4.10.1994 were not true; and date and place

may be fixed for perusal of the accounts and connected

records. The appellant has produced and connected records.

The appellant has produced A communication of the Indian

Overseas Bank, Thrissur, Branch, which is at page 64 of the

Paper Book, showing that when the cheques in question were

presented there was sufficient balance in the account of

the appellant. This communication bears the numbers of two

cheques which tally with those mentioned in the complaint.

we are therefore, satisfied that the cheques were not

returned because of insufficient funds, as is the allegation

in the complaint.

3A. It may be stated that the learned counsel for the

respondent filed a written submission, without having

obtained permission when the case has been finally heard and

reserved for judgment, on 7.10.1996 in which it has been

stated that the cheques in question were issued against

Account No. 562 of the petitioner, in which there was no

cover. The further submission is that the letter of the

Bank Manager which is at page 64 really.

5. From the facts mentioned above, we are satisfied that in

the present case cheques were presented after the appellant

had directed its bank to 'stop payment'. We have said so

because though it has been averred in the complaint that the

cheque dated 10.10.1994 was presented for collection on that

date itself through the bank of the respondent which is

Catholic Syrian Bank Ltd. from the aforesaid letter of the

Indian Overseas Branch, we find that the cheque was

presented on 15.10.1994 (in clearing). The lawyer's notice

to the respondent being of 4th October, which had been

replied on 12th 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 to us that

the first cheque had even been presented after the

instruction of 'stop payment' issued by the appellant had

become known to the respondent.

6. The aforesaid being the position, we are satisfied that

no case under Section 138 of the Act has been made out and

we, therefore, quash the complaint. We may make it clear

that we have not addressed ourselves on the question whether

the respondent was in fact entitled to receive any amount

from the appellant.

7. The appeal is, therefore, allowed. In the facts and

circumstances of the case, we make no order as to costs.

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