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Dishonour of cheque N.I.Act

(Querist) 04 March 2009 This query is : Resolved 
If a cheque is dishonoured due to "Stopped Payment" by the drawer.
Whether in such case complaint under section 138 of N.I. Act is maintainable?
If yes, please give any ruling.
PALNITKAR V.V. (Expert) 04 March 2009
Yes, in certain circumstances it is maintainable. Please narrate the facts.
Apurva Kumar (Expert) 04 March 2009
Why r u in so hurry to litigate 1st go 4 outside crt settlement ok its ony an advice ok!
Jithendra.H.J (Expert) 04 March 2009
penal liability cannot be absolved









Modi Cements Ltd., Vs Kuchi Kumar Nandi AIR 1998 SC 1056
AEJAZ AHMED (Expert) 04 March 2009
DEAR VIKAS,

In addition to the reply of Mr. Planitkar:

Views of the Supreme Court:

Hon’ble Supreme Court has narrated four key Judgments where the drawer was held liable for Stop payment of cheques. However there is only one judgment which deals with the above laid preposition. In M/s. Electronics Trade & Technology Development Corpn. Ltd., Secunderabad v. M/s. Indian Technologists & Engineers (Electronics) Pvt. Ltd. and another . In this case, a cheque was presented by the complainant on 28-1-1990, through their bankers M/s. Hyderabad Bank for realisation, with the promise by the accused, that the same will be honoured when presented. However, the said cheque was dishonoured with the banker's endorsement dated 29-11-1990 which stated "(i). refer to drawer, (ii). instructions for stopping payment and (iii). stamped exceeds arrangements." Appellant filed complaints under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheque for insufficiency of funds in the accounts of the accused. It was held by the Hon’ble Supreme Court that:
“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 amount for the discharge of the debt in whole or in part or other liability is 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 dishonour within the meaning of Section 138 of the Act. On issuance of the notice by the payee or the holder in due course after dishonour, 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".


To conclude it can be stated that whatever may be the ground or reason on the basis of which the cheque is dishonoured by a bank, whether it may "stopped payment by drawer" or "signature differ" or any other ground the offence under the section is made out and the drawee has full right to initiate proceedings and while deciding the case the Court should see that whether payment has been made by the drawer within 15 days of notice issued by the drawee after the dishonour of cheque.


Kindly go through this site:

http://www.legalserviceindia.com/articles/nego.htm
Srinivas.B.S.S.T (Expert) 04 March 2009
Yes complaint under section 138 and 142 of NI Act is maintainable if the cheque returned dishonoured with endorsement"Stopped payment"
Vikas Kr. Sinha (Querist) 04 March 2009
Thank U all,

I think I should narrate the whole case here.

The case is:

An employee (rank of Sr. Manager) who is asked to resign from the service of a Pvt. Ltd. Co.
Employee concern is also willing to resign as he do not want any litigation, provided he is given all his legal dues.
In the mean time he has been give a cheque on A/C of imprest money. He used to gets such amount every month.

Immediately, after he was asked to resign, he recieved this cheque in usual time as he was getting earlier. This time when he presented/diposited the cheque in his a/c for clearance, it was returned by his banker alongwith a memo with the remark "Stopped Payment by the drawer"

Now the question is, whether in such circustances complaint will be maitainable or not.
Out side court settlement is not possible.

Vikas Kr. Sinha (Querist) 04 March 2009
Thank U Aejaz,

Your reply will definately help me.

But in the case in hand the endorsement is only "Stopped Payment"
and
NOT the
"stamp exceeds arrangement".
Had there been any endoresment like "stamp exceeds arrangement",then 138 would have atracted.
J. P. Shah (Expert) 05 March 2009
IF THE DRAWER OF THE CHEQUE HAD SUFFICIENT BALANCE, BUT STOPPED PAYMENT FOR GENUINE REASONS NI SEC 138 WILL NOT BE APPLICABLE.
IF CHQ IS ISSUED FOR IMPREST MONEY, IT CANNOT BE TERMED AS ISSUED IN DISCHARGE OF DRAWER'S LIABILITY TO THE PAYEE AND HENCE 138 WILL NOT BE ATTRACTED.
Vikas Kr. Sinha (Querist) 05 March 2009
Thanks to all of U for the instant response.
Vikas
AEJAZ AHMED (Expert) 05 March 2009
Dear Vikas,

The important one is his " dishonest intention " whatever it may be the reason for dishonour of cheque :

On issuance of the notice by the payee or the holder in due course after dishonour, 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".

Let first issue 'Notice' (if already issued ignored), then with the mention of his "dishonest intention" in the facts of the case, file the the complaint with full of confidence.
M. PIRAVI PERUMAL (Expert) 05 March 2009
I agree with my learned friends.
PALNITKAR V.V. (Expert) 05 March 2009
Mr. Shah and Mr. Aejaz have made the things more clear.
Vikas Kr. Sinha (Querist) 05 March 2009
Dear Aejaz,
I must thank you once again for your promt and sincere reply.
n.k.sarin (Expert) 06 March 2009
I do agree with the opinion Mr j. p. shah.
RAKHI BUDHIRAJA ADVOCATE (Expert) 07 March 2009
Md. Ahjaz is absolutely right. I do agree with him.
Bindu (Expert) 09 March 2009
Well it is true wht Mr Aejaz Said
MANISH (Expert) 11 March 2009
YES SIR,
The complaint under section 138 NI Act is maintainable even when cheque is bounced by "stop payment".
there are a number of authorities on such point.
Tribhuwan Pandey (Expert) 17 April 2009
yes, complaint under section 138 NI Act is maintainable even when cheque is bounced by "stop payment".
a lot of judgments of supreme court is there in this regard.


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