Party who issued post dated cheque to me gave written STOP PAYMENT instruction to his bank after I deposited the cheque in my bank on due date. The cheque was issued after delivery of goods made to him. We have a copy of bill signed by his company’s representative as proof of supply.

Can I prosecute him under NI act, section 138??? Has STOP PAYMENT same meaning as "funds insufficient".

Please advise.



Income Tax and Sales Tax Practitioner




Yes you can. This will not come in fund insufficient but it is the case of 'Contramanded the cheque.


well ur case dertainly  fall under the provisions of 138 ni act, so start procceding within the given time limit prescribed under 138 ni act


SC ruling on cheque 'stop payment' case

Even though a cheque issued by a drawer (respondent-private limited concern) is dishonoured by reason of ``stop payment'' instruction, the complaint by the ``payee'' of the cheque for offence under Section 138 of the Negotiable Instruments Act (NI Act) is maintainable, the Supreme Court has reiterated.

``Even when the cheque is dishonoured by reason of `stop payment' instructions, by virtue of Section 139 of the Act, 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,'' a Bench said.

``Of course, this is a rebuttable presumption and the accused (the drawer) can thus show that the `stop payment' instructions were not issued because of insufficiency or paucity of funds,'' the Bench added.

``If the accused shows that there were sufficient funds in his account to clear the amount of the cheque at the time of its presentation for encashment and that the stop payment notice had been issued because of other valid causes, including that there was no existing debt or liability, then offence under Section 138 would not be made out,'' the Bench said citing an early apex court ruling in the `Modi cements case' (1998).

``The important thing is that the burden of so proving would be on the accused'' and ``thus a court cannot quash a complaint on this ground''. Delivering the judgment, Mr. Justice S.N. Variava set aside the verdict of the Madras High Court, which quashed the complaint from a Public Sector Undertaking and another (appellants-payee) under Section 138 of the NI Act against a private limited concern and another (respondent-drawer) for ``dishonour of two cheques by reason of `stop payment' instruction''.

The Bench, which included Mr. Justice K.T. Thomas, in disposing of the appeals, directed the Metropolitan Magistrate, Chennai, concerend to proceed with the complaint against the respondents concerned in accordance with the law.

The Bench made it clear that the ``setting aside of the impugned order will not tantamount to preventing the respondents from taking, at the trial, pleas available to them including those taken herein''.

Pursuant to the Memorandum of Understanding between the appellant - undertaking and the respondent - concerned, two cheques - one dated October 31, 1994 for a sum of Rs. 20,26,995 and another dated November 10, 1994 for a sum of Rs. 22,10,156 were issued by the respondent in favour of the appellant. Both the cheques, when presented for payment, were returned with the endorsement ``payment stopped by drawer''. As the amounts under the cheques were not paid, the appellants lodged two complaints through the manager of the regional office of the appellant.


Inspite of all the citations where case details are defferent if the stopper of the cheque payment has a sufficient cause regarding legality of the dues , this is sufficient cause to oppose the prosecution..

Very recently there was a  decison by the Honble Supreme Court  on similar line details are not ready in hand but can be found out..

If somebody can post that citation , becaue some hard work has to be done , it will give good sevrce to the defendents of NIA cases.

Gist of thos case was reported in Times of india and Eco times above 3 to 4 months back.




You can file u/s. 138, also file a civil suit for better result


Not simple suit. File a summary suit under order 37 of C.P.C.


well, thanks..since i am not a lawyer..pls explain what is summary suit under order 37 of C.P.C.?????


yes u can file compalaint u/s 138 ni act as per procedure laid down under the ni act. contact any advocate for this so that compalint can be filed as per procedure and within time frame.




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