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TMI Blog2014 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... hable under Section 138 of the NI Act in case cheque is dishonoured on that count. In Modi Cements v. Kuchil Kumar Nandi [1998 (3) TMI 632 - SUPREME COURT OF INDIA] this Court made it clear that even if a cheque is dishonoured because of “stop payment” instructions given to the bank, Section 138 of the NI Act would get attracted. Whether complainant had failed to discharge its obligations or not could not have been decided by the High Court conclusively at this stage. The High Court was dealing with a petition filed under Section 482 of the Code for quashing the complaint. On factual issue, as to whether the complainant had discharged its obligations or not, the High Court could not have given its final verdict at this stage. - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused, placed various purchase orders with the complainant and the complainant sold and supplied the same as per the demand and specifications. During the course of business, the accused made part payments regularly. For the remaining outstanding legitimate dues of the complainant, the accused handed over a post-dated cheque bearing No.387176 dated 15/07/2006 for ₹ 11,80,670/- drawn on HSBC Bank, Bangalore in favour of the complainant. 5. The complainant presented the cheque twice for collection through its bankers viz. Bank of Baroda, Jetalpur Branch. It was returned unpaid on 3/10/2006 for the reason Payment stopped by drawer . The complainant on 13/10/2006 sent a demand notice to the accused asking them to pay the cheque amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide. Counsel for the accused, on the other hand, supported the impugned order. 9. The High Court held that provisions of Section 138 of the NI Act are attracted where a cheque is returned by the bank on the ground that there is insufficient amount or that the amount of cheque exceeds the amount arranged to be paid from that account by an agreement made with the bank. The High Court further held that the cheque in question was returned on account of stop payment instructions given by the accused vide letter dated 13/07/2006 in view of the fact that the complainant had failed to discharge its obligations as per the agreement by not repairing/replacing the damaged UPS system. The High Court further observed that the complainant had not di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the stop-payment instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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