M/S.Electronics
Trade & Technology Development Corporn. Ltd. [1996] INSC 107 (22 January 1996)
Ramaswamy,
K.Ramaswamy, K.G.B. Pattanaik (J)
CITATION:
JT 1996 (1) 643 1996 SCALE (1)636
ACT:
HEAD NOTE:
WITH CRIMINAL
APPEAL NOS. OF 1996 (Arising out of SLP (Crl) Nos.3009-13 of 1992)
O R D
E R
Leave
granted.
We
have heard the counsel on both sides.
The
appellant laid the complaints under Section 138 of the Negotiable Instruments
Act, 1881 (for short, 'the Act') for dishonor of cheque for insufficiency of the
funds in the accounts of the accused. The complaint of the appellant read thus:
"The
above cheque was presented by the complainant on 28.1.1990, through their
Bankers M/s. Hyderabad Bank, Sarojini Devi Road, Secunderabad for realisation, with the promise by the accused, that
the same will be honored when presented. However, the said cheque was dishonoured
with the Banker's endorsement dated 29.11.1990. "1. referred to drawer. 2.
instructions for stopping payment and 3. stamped exceeds arrangements". It
is evident from the Banker's memo dated 29.11.1990 that the said cheque was dishonoured
by the Bank for wants of funds only.
On
receipt of the intimation dated 29.11.1990 from the Bank, the complainant has
issued a notice on 6.12.1990 to the accused by Registered Post Acknowledgement
Due, informing him that the cheque dated 30.6 1996 was dishonoured by their
bankers and demanded payment within 15 days from the date of receipt of the
said notice. The said notice was received and acknowledged by the accused. No
Payment has been made by the accused as required under Section 138(C) of the
Negotiable Instruments Act. The accused 2 also stood as a guarantor to the
payment of the complainant, as the proprietor of M/s. V.V. Rama Rao and Co., Saleemnagar
Colony Hyderabad.
The
accused 2 has issued the cheque knowing fully well that he has no Bank balance
to their credit and he cannot honour the cheque for want of funds alone. He has
not taken any steps to honour the cheque and arrange payment as required under
Section 138(C) of the Negotiable Instruments Act. The accused has thereby
committed the offence under Section 138 of the Negotiable Instruments Act. The
dishonesty intention of the accused in instructing the Bank to stop payment in
evident from the conduct of the accused.
He has
instructed their Bank to stop payment only with the malafide intention of
escaping from the liability under Section 138 of the Negotiable Instruments
Act. He has so instructed their Bank so he has no funds to their credit. Hence
the accused is liable for the offence Under Section 138 of `the negotiable lnstruments
Act." Section 138 of the Act was brought on statute by Central Act 66 of
1988 w.e.f. April 1, l989 with a view to penalise the accused in cases of
dishonor of certain cheques for insufficiency of funds in the accounts of the
accused. It reads thus:
"138.
Dishonor of cheque for insufficiency, etc., of funds in the accounts. - Where
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. of 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 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 punished with
imprisonment for a term which may extend to one, or with fine which may extend
to twice the amount of the cheque, or with both:
Provided
that nothing contained in this section shall apply unless :
(a) the
cheque has been presented to the bank within a period of six months from the
date on which it is drawn or within the period of its validity, whichever is
earlier;
(b)
the payee or the holder in due course of the cheque, as the case may be, makes
a demand for the payment of the said amount of money by giving a notice in
writing, to the drawer of the cheque, within fifteen days of the receipt of
information by him from the bank regarding the return of the cheque as unpaid:
and (c) the drawer of such cheque fails to make the payment of the said amount
of money to the payee or as the case may be, to the holder in due course of the
cheque within fifteen days of the receipt of the said notice.
Explanation. - For the purposes of this section,
"debt or other liability" means a legally enforceable debt or other
liability." Explanation to Section 138 amplifies that for the purpose of
the Section, "debt or other liability" means a legally enforceable
debt or other liability.
It
would thus be clear that when a cheque is drawn by a person on an account
maintained by him with the banker for payment of any amount of money to another
person out of the account for the discharge of the debt in whole or in part or
other liability returned by the bank with the endorsement like
(1) in
this case, "I refer to the drawer"
(2)
"instructions for stoppage of payment" and
(3)
"stamp exceeds arrangement", it amounts to dishonor within the
meaning of Section 138 of the Act. On issuance of the notice by the payee or
the holder in due course after dishonor, to the drawer demanding payment within
15 days from the date of the receipt of such a notice, if he does not pay the
same, the statutory presumption of dishonest intention, subject to any other
liability, stands satisfied.
Shri Nageswara
Rao, learned counsel appearing for the respondents, contended that stoppage of
payment due to instructions does not amount to an offence under Section 138 and
that, therefore, the ingredients in Section 138 have not been satisfied. We
find no force in the contention. The object of bringing Section 138 on statute
appears to be to inculcate faith in the efficiency of banking operations and
credibility in transacting business on negotiable instruments. Despite civil
remedy, Section 138 intended to prevent dishonesty on the part of the drawer of
negotiable instrument to draw a cheque without sufficient funds in his account
maintained by him in a bank and induces the payee or holder in due course to
act upon it. Section 138 draws presumption that one commits the offence if he
issues the cheque dishonestly. It is seen that once the cheque has been drawn
and issued-to the payee and the payee has presented the cheque and thereafter,
if any instructions are issued to the Bank for non-payment and the cheque is
returned to the payee with such an endorsement, it amounts to dishonor of cheque
and it comes within the meaning of Section 138.
Suppose
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 holder in due course presents the cheque
to the Bank for payment and when it is returned on instructions, Section 138
does not get attracted. Under these circumstances, since the accused has not
made the payment within 15 days from the date of the receipt of the notice
issued by the payee or the holder in due course, the dishonest intention is
inferable from those facts. Accordingly, the ingredients as contained in
Section 138 have been prima facie made out in the complaint. The High Court,
therefore, was wholly incorrect in its conclusion that the ingredients have not
been made out in the complaint. Tha orders of the High Court quashing the
complaints are illegal. They are accordingly set aside and the trial Court is
directed to disposed of the matters as expeditiously as possible. It is made
clear that we do not intend to express any opinion on merits.
The
appeals are allowed.
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