1996 JTR(SC) 1650
1996 3 AICLR 494 ; 1991 AIR(SC) 1462 ; 1997 1 AllCJ 39 ; 1997 1 AllMR(SC) 502 ; 1997 1 ALT(SC) 10 ; 1996 BankJ 653 ; 1997 1 BLJR 528 ; 1996 87 CompCas 685 ; 1996 CriLR 758 ; 1996 4 Crimes(SC) 102 ; 1997 1 CTC 54 ; 1998 DCR 630 ; 1997 ISJ(Banking) 117 ; 1996 9 JT 191 ; 1997 1 KLT 6 ; 1997 15 LCD 498 ; 1997 1 MhLJ(SC) 1 ; 1997 MLJ(Cri) 212 ; 1997 1 MPLJ 1 ; 1997 1 PLR(SC) 233 ; 1997 1 RCR(Cri) 158 ; 1996 7 Scale 454 ; 1996 6 SCC 369 ; 1991 1 SCC(Cri) 1047 ; 1991 1 SCC(Cri) 703 ; 1996 SCC(Cri) 1340 ; 1996 1 SCC(Cri) 1340 ; 1996 SCR 248 ; 1997 KHC 2 ; 1996 7 Supreme 453
1996(7) Supreme 453
SUPREME COURT OF INDIA
G.N. Ray and B.L. Hansaria, JJ.
K.K. Sidharthan -Appellant
versus
T.P. Praveena Chandran & Anr. -Respondents
Criminal Appeal No. 1774 of 1996
(Arising out of SLP (Crl.) No. 4447 of 1995)
Decided on 8-10-1996
Counsel for the Parties :
For the Appellant : C.N. Sree Kumar and Shaju Francis, Advocates.
For the Respondents :T.T. Kunhikannan and Shakar Ahmed Syed, Advocates.
IMPORTANT POINT
If 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 and yet the payee or holder in due course presents the cheque to bank and when it is returned on instruction, Section 138 of Negotiable Instruments Act does not get attracted.
Act
Referred
:INDIAN PENAL CODE : S.420
NEGOTIABLE INSTRUMENTS ACT : S.138
(A) The Negotiable Instruments Act, 1881, Section 138, read with the Indian Penal Code, Section 420, and the Code of Criminal Procedure, Sections 190 and 200, are engaged in this matter. Section 138 of the Act creates a statutory offence for the dishonour of a cheque due to insufficiency of funds in the account, covering cases where the payment is stopped by the drawer after issuance. The provision applies irrespective of the specific reason for dishonour, including stop payment instructions, as long as the cheque is returned unpaid. Section 420 of the IPC, along with Sections 190 and 200 of the CrPC, addresses the allegation of dishonesty and deception in the execution of the cheque transaction, focusing on the intent behind the issuance of the post-dated cheques. The complaint invokes these provisions to hold the appellant liable for the alleged non-payment of the specified sums.
(B) The core legal principles established are that Section 138 is attracted even when a cheque is dishonoured due to a stop payment instruction, provided the cheque was issued and presented after the instruction was communicated. However, if the payee or holder in due course is notified in advance not to present the cheque and still does so, Section 138 does not apply. The court also clarified that allegations regarding the account number on which the cheque was drawn must be clearly pleaded and examined, as amendments or new allegations at a later stage are not permissible.
Facts of the case:
The respondent filed a complaint alleging that the appellant issued two post-dated cheques dated 10.10.1994 and 31.12.1994, each for Rs. 3,00,000, drawn on Indian Overseas Bank, Trichur Branch. The cheques were returned unpaid on 15.10.1994 with the endorsement 'Payment countermanded by the drawer'. The appellant contended that the cheques were dishonoured not due to insufficient funds but because he had issued a stop memo to the bank, supported by a letter dated 4.10.1994. The appellant submitted bank communications indicating sufficient funds in his account at the time of presentation. The learned counsel for the respondent made a submission regarding the insufficiency of funds in a different account, which was not raised in the original complaint.
Findings of Court:
The High Court of Kerala refused to quash the complaint. The appellate court examined the evidence and concluded that the cheques were presented after the appellant had directed the bank to stop payment. The court noted that the notice issued by the appellant's advocate on 4.10.1994 was acknowledged by the respondent on 12.10.1994, implying that the respondent was aware of the stop payment instruction. Consequently, the court was satisfied that the cheques were not dishonoured due to insufficient funds but due to the stop payment order, and thus no offence under Section 138 was made out.
Issues:
Whether a cheque dishonoured on account of a stop payment instruction by the drawer attracts the provisions of Section 138 of the Negotiable Instruments Act, 1881. Whether the court can consider a written submission that raises a new and different allegation not mentioned in the original complaint.
Ratio Decidendi:
Section 138 of the Negotiable Instruments Act is not attracted when a cheque is dishonoured because the drawer had given a valid stop payment instruction and the payee was notified in advance not to present the cheque for payment. The court cannot allow a party to raise a new defence or allegation in a written submission after the case has been heard and reserved for judgment, especially if it pertains to a different account or issue not raised in the plaint.
Result:
The appeal is allowed. The complaint is quashed. No order as to costs is made.
(A) The Negotiable Instruments Act, 1881, Section 138, read with the Indian Penal Code, Section 420, and the Code of Criminal Procedure, Sections 190 and 200, are engaged in this matter. Section 138 of the Act creates a statutory offence for the dishonour of a cheque due to insufficiency of funds in the account, covering cases where the payment is stopped by the drawer after issuance. The provision applies irrespective of the specific reason for dishonour, including stop payment instructions, as long as the cheque is returned unpaid. Section 420 of the IPC, along with Sections 190 and 200 of the CrPC, addresses the allegation of dishonesty and deception in the execution of the cheque transaction, focusing on the intent behind the issuance of the post-dated cheques. The complaint invokes these provisions to hold the appellant liable for the alleged non-payment of the specified sums.
(B) The core legal principles established are that Section 138 is attracted even when a cheque is dishonoured due to a stop payment instruction, provided the cheque was issued and presented after the instruction was communicated. However, if the payee or holder in due course is notified in advance not to present the cheque and still does so, Section 138 does not apply. The court also clarified that allegations regarding the account number on which the cheque was drawn must be clearly pleaded and examined, as amendments or new allegations at a later stage are not permissible.
Facts of the case:
The respondent filed a complaint alleging that the appellant issued two post-dated cheques dated 10.10.1994 and 31.12.1994, each for Rs. 3,00,000, drawn on Indian Overseas Bank, Trichur Branch. The cheques were returned unpaid on 15.10.1994 with the endorsement 'Payment countermanded by the drawer'. The appellant contended that the cheques were dishonoured not due to insufficient funds but because he had issued a stop memo to the bank, supported by a letter dated 4.10.1994. The appellant submitted bank communications indicating sufficient funds in his account at the time of presentation. The learned counsel for the respondent made a submission regarding the insufficiency of funds in a different account, which was not raised in the original complaint.
Findings of Court:
The High Court of Kerala refused to quash the complaint. The appellate court examined the evidence and concluded that the cheques were presented after the appellant had directed the bank to stop payment. The court noted that the notice issued by the appellant's advocate on 4.10.1994 was acknowledged by the respondent on 12.10.1994, implying that the respondent was aware of the stop payment instruction. Consequently, the court was satisfied that the cheques were not dishonoured due to insufficient funds but due to the stop payment order, and thus no offence under Section 138 was made out.
Issues:
Whether a cheque dishonoured on account of a stop payment instruction by the drawer attracts the provisions of Section 138 of the Negotiable Instruments Act, 1881. Whether the court can consider a written submission that raises a new and different allegation not mentioned in the original complaint.
Ratio Decidendi:
Section 138 of the Negotiable Instruments Act is not attracted when a cheque is dishonoured because the drawer had given a valid stop payment instruction and the payee was notified in advance not to present the cheque for payment. The court cannot allow a party to raise a new defence or allegation in a written submission after the case has been heard and reserved for judgment, especially if it pertains to a different account or issue not raised in the plaint.
Result:
The appeal is allowed. The complaint is quashed. No order as to costs is made.
JUDGMENT
Hansaria, J.-Respondent No.1, hereinafter referred to as the respondent, filed a complaint against the appellant under Section 138 read with 149 of the Negotiable Instrument Act, 1881 (for short the Act ) and Section 420 of the IPC read with Sections 190 and 200 of the Code of Criminal Procedure. The gravamen of the allegation is that the petitioner had issued two post-dated cheques dated 10.10.1994 and 31.12.1994, each for a sum of Rs. 3,00,000/- drawn on Indian Overseas Bank, Trichur Branch. But on the cheques being presented, the same were returned unpaid on 15.10.1994 with the endorsement "Payment countermanded by the drawer". The complaint further stated that the cheques were returned unpaid for want of sufficient funds in the account. The appellant approached the High Court of Kerala for quashing the complaint but the High Court refused to do so. Hence this appeal.
2. The main part of Section 138 of the Act reads as below :
"138. Dishonour of cheque for insufficiency of funds in the account. -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 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 year, or with fine which may extend to twice the amount of the cheque, or with both."
This shows that Section 138 gets attracted in terms if cheque is dishonoured because of insufficient funds or where the amount exceeds the arrangement made with the bank. It has, however, been held by a Bench of this Court in Electronics Trade and Technology Development Corpn. Ltd. v. Indian Technologists and Engineers (Electronics) (P) Ltd.1, that even if a cheque is dishonoured because of stop payment instruction to the bank, Section 138 would get attracted.
3. The case of the appellant is that the cheques were returned, not because of insufficient funds, but because he had issued stop memo to the bank for reasons detailed in the letter of appellant s Advocate dated 4.10.1994 addressed to the respondent. This letter was replied by the respondent on 12.10.1994 stating, inter alia, that the allegations made in the letter of 4.10.1994 were not true; and date and place may be fixed for perusal of the accounts and connected records. The appellant has produced a communication of the Indian Overseas Bank, Thrissur, Branch, which is at page 64 of the Paper Book, showing that when the cheques in question were presented there was sufficient balance in the account of the appellant. This communication bears the numbers of two cheques which tally with those mentioned in the complaint. We are, therefore, satisfied that the cheques were not returned because of insufficient funds, as is the allegation in the complaint.
3A. It may be stated that the learned counsel for the respondent filed a written submission, without having obtained permission when the case has been finally heard and reserved for judgment, on 7.10.1996 in which it has been stated that the cheques in question were issued against Account No. 562 of the petitioner, in which there was no cover. The further submission in that the letter of the Bank Manager which is at page 64 really represents the balance in Account No. 440. So the contention is that the cheques had been dishonoured because of insufficiency of fund. Though when the learned counsel mentioned about the written submission on 7th in the Court, it was stated that it would not be possible to consider the written submission in view of the fact that the judgment has already been finalised and has been fixed for pronouncement tomorrow; even so, we have gone into the written submission. We find that in the complaint it was not mentioned that the cheques had been issued against Account No. 562, because of which this amounts to making out a new case in the written submission. So, we do not accept the allegation that the bank had issued letter in question "with a purpose to help the accused in the case".
4. The above apart, though in the aforesaid case this Court held that even stop payment instruction would attract the mischief of Section 138, it has been observed in para 6, that if "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 present the cheque to the bank for payment and when it is returned on instruction, section 138 does not get attracted".
5. From the facts mentioned above, we are satisfied that in the present case cheques were presented after the appellant had directed its bank to stop payment . We have said so because though it has been averred in the complaint that the cheque dated 10.10.1994 was presented for collection on that date itself through the bank of the respondent which is Catholic Syrian Bank Ltd., from the aforesaid letter of the Indian Overseas Branch, we find that the cheque was presented on 15.10.1994 (in clearing). The lawyer s notice to the respondent being of 4th October, which had been replied on 12th from Cochi, which is the place of the respondent, whereas the Advocate who issued notice on behalf of the appellant was at Thrissur, it would seem to us that the first cheque had even been presented after the instruction of stop payment issued by the appellant had become known to the respondent.
6. The aforesaid being the position, we are satisfied that no case under Section 138 of the Act has been made out and we, therefore, quash the complaint. We may make it clear that we have not addressed ourselves on the question whether the respondent was in fact entitled to receive any amount from the appellant.
7. The appeal is, therefore, allowed. In the facts and circumstances of the case, we make no order as to costs.
Appeal allowed.
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