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Pramod (Student)     13 July 2010

Stop Payment

Just wanted to know...

If supposed you enter into verbal agreement with a money lender and you issue him a post dated cheque......but due to miscommunication you do the stop payment of the same. But you have the sufficient balance in your account, do you still bound to get notice u/s 138.



Learning

 4 Replies

mayilsamy n (student)     13 July 2010

Hai,

 

I am also a law student, i wish reproduce so the information on ses:138 of NI act 1881 in the website of law mirror.com, so as per my understanding of the below case laws is that "stop payment" is an offence u/s 138 will attract unless there is valid reason. so notice u/s 138 should be issued.

 

     Section 138 - 'Cheque reported stolen' - Cheque dishonoured with this endorsement - It shows intention of drawer that he wanted to stop payment - Offence u/s 138 is made out - Merely because drawer issued a notice to the drawee or to the Bank for stoppage of payment, it will not preclude an action under Section 138 by the drawee or the holder of cheque in due course. (Chandran Vs Sathyanandan) 2000(3) CIVIL COURT CASES 181 (Kerala) : 1999 - 2001 (SUPP.) ISJ (BANKING) 0010

 

  Section 138 - 'Payment stopped by drawer' - No averment in the complaint that bank dishonoured the cheque for want of adequate funds in the account of the drawer - Section 138 is not attracted. (Bhageerathy Vs Beena) 1992 CIVIL COURT CASES 595 (Kerala): 1993 (1) RCR (CRL.) 0386 : 1992 CRL. L.J. 3946

 Section 138 - 'Stop Payment' - After issuance of a cheque, subsequent notice by drawer to the drawee or the Bank for stoppage of payment does not preclude action under Section 138 by the drawee or holder in due course. 1996(1) Civil CC 309 (SC) : 1996(1) Apex Court Journal 99 (S.C.) & 1996(2) Apex Court Journal 555 (S.C.) overruled. (M/s Modi Cements Ltd. Vs Kuchil Kumar) 1998(1) APEX COURT JOURNAL 554 (S.C.) : 1998(2) CIVIL COURT CASES 1 (S.C.) : 1998 ISJ (BANKING) 0308 : 1998 (1) ALL INDIA CRIMINAL LR (S.C.) 0802 : 1998 (3) CIVIL LJ 0276 : 1998 (2) RCR (CRL.) 0077 : 1998 (1) BANKING CASES 0421 : 1998 (92) COMP. CASES 0088 : 1998 AIR SCW 0842 : 1998 (2) ALL CJ 0905 : 1998 (1) CRIMES 0268 : 1998 CRL. L.J. 1397 : 1998 (1) ALT (CRL.) 0290 : 1998 (2) CLT 0041 : 1998 CCLR 0207 : AIR 1998 SC 1056 : 1998 (36) ALL CRI C 0593 : 1998 (2) APLJ 0021 : 1998 (2) BLJR 0954 : 1998 (1) CAL HN 0133

 Section 138 - 'Stop payment' - An offence is made out - However, an accused can prove that 'stop payment' was not due to insufficiency or paucity of funds but payment was stopped because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque then offence u/s 138 is not made out. (M/s M.M.T.C.Ltd. Vs M/s Medchl Chemicals & Pharma P.Ltd.) 2002(1) CIVIL COURT CASES 13 (S.C.) : 2001(2) APEX COURT JOURNAL 636 (S.C.) : 2002 (1) ISJ (BANKING) 0237

 Section 138 - 'Stop payment' - Before encashment notice issued not to present the cheque yet the payee or holder in due course presented the cheque to bank and the same returned on instruction, Section 138 of Negotiable Instruments Act is not attracted. (K.K.Sidharthan Vs T.P.Praveena Chandran & Anr.) 1996(2) APEX COURT JOURNAL 555 (S.C.)

 Section 138 - 'Stop payment' - Instructions by accused to bank to 'stop payment' after issuance of cheque - Would not absolve offence under Section 138. (Bhupendra Vs Prithviraj) 2000(1) APEX COURT JOURNAL 55 (S.C.)

          Section 138 - 'Stop payment' - Instructions given by the drawer to the Bank to stop payment as accounts had not been reconciled with the drawee - Cheque presented and dishonoured - Drawee is guilty of offence under Section 138. (Sukhinder Singh Vs S.R.Chaudhary) 1999(1) CIVIL COURT CASES 303 (P&H) : 1999 (1) RCR (CRL.) 0279

          Section 138 - 'Stop payment' - Intimation to drawee before presentation of cheque - Offence is committed without reference to balance in the account whether sufficient to honour the cheque or not - This is also irrespective of amount of cheque being less or more than the amount arranged to be paid from the account by an agreement with the bank. (Vinod Tanna Vs Zaheer Siddiqui) 2001(3) CIVIL COURT CASES 217 (Bom.) : 2002 (1) ISJ (BANKING) 0655

          Section 138 - 'Stop payment' - Request also made by drawer to drawee not to present the cheque - Drawee still presenting the cheque - Cheque dishonoured by bank as per instructions of drawer and not on account of insufficiency of funds - Offence under Section 138 is not made out. (M/s Mahaplasto Ltd. Vs Bhushan Steels and Strips Ltd.) 1997(1) CIVIL COURT CASES 548 (P&H) : 1997 (1) AIJ 0587 : 2000 (1) ALL INDIA CRIMINAL LR (P&H) 0349 : 1997 (2) RCR (CRL.) 0249 : 1998 (92) COMP. CASES 0438 : 1997 BJ 0709 : 1997 (2) CRIMES 0486 : 1997 (3) CCR 0147

          Section 138 - 'Stop payment' - When drawer of cheque stops payment by giving intimation to the Bank, action can be initiated under Section 138 of the Act. (George Vs Muhammed) 1999(2) CIVIL COURT CASES 588 (Kerala) : 1999 ISJ (BANKING) 0643 : 1999 (3) RCR (CRL.) 0396 : 1999 (97) COMP. CASES 0664 : ILR 1992 (2) KERALA 0833

 Section 138 - "Stop payment" - Merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. (Goa Plast (P) Ltd. Vs Chico Ursula D'Souza) 2004(1) APEX COURT JUDGMENTS 273 (S.C.) = 2004(1) CIVIL COURT CASES 577 (S.C.) = 2004(1) CRIMINAL COURT CASES 693 (S.C.)

 Section 138 - Post dated cheque - Stop payment before the due date of payment - Held, Section 138 of the Act is attracted. (Goaplast Pvt.Ltd. Vs Shri Chico Ursula D'Souza & Anr.) 2003(1) APEX COURT JUDGMENTS 506 (S.C.) = 2003(2) CIVIL COURT CASES 01 (S.C.) = 2003(2) CRIMINAL COURT CASES 450 (S.C.)

          Section 138 - Stop payment - Even if a cheque is dishonoured because of 'Stop payment' instructions to the Bank, still Section 138 gets attracted. (DSA Engineers (Bombay) Vs M/s U.E.M. India Pvt.Ltd.) 1999(SUPPL.) CIVIL COURT CASES 247 (Delhi) : 1996 - 99 (SUPP.) ISJ (BANKING) 0597 : 1999(3) RCR (CRL.) 0556 : 1999(2) CHANDIGARH CRL. CASES 93

          Section 138 (as amended ) - Cheque - Returned unpaid as 'Payment stopped by the drawer' - Not an offence as envisaged by Section 138 - Offence only when cheque bounces due to insufficient balance in the account. (Abdul Samad Managing Director Vs Satya Narayan Mahawar) 1990 CIVIL COURT CASES 832 (P&H) : 1991 ISJ (BANKING) 0134 : 1990 (2) CLR 0338

          Sections 138, 142 - Dishonour of cheque - 'Payment stopped by drawer' - No offence is made out - Court can take cognizance only when cheque is dishonoured either due to inadequacy of funds or due to the amount exceeding the limit. (M/s Embee Textiles LimitedVs Sadhu Ram & Co.) 1993 (SUPPL.) CIVIL COURT CASES 106 (P&H) : 1990 - 1996 (SUPP.) ISJ (BANKING) 0727 : 1993 (1) RCR (CRL.) 0349 : 1993 (1) BANKING CASES 0068 : 1993 (1) CRIMES 0394

Hope tha above information is useful...


good luck

Shyam Ji Srivastava (Practising Lawyer)     03 October 2010

Dear Mayilsamy N,

You are correct.

Good Luck

kishan prasad (nil)     10 May 2012

sir, i have a cheque  payment stopped by drawer,dated 30.04.2012,my questin is how to find out drawer account how much amount on .30.04.2012.   Becuse   the Cheque - Returned unpaid as 'Payment stopped by the drawer' - Not an offence as envisaged by Section 138 - Offence only when cheque bounces due to insufficient balance in the account. 

    thanking you,

jaisuryadelhi@yahoo.com

07503210233

V R SHROFF (Sr. ADVOCATE Bombay High Court Mob: 9892432152)     14 May 2012

stop payment ALSO ATTRACT 138 NI 


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