Case: M/S Modi Cements Limited Vs. Shri Kuchil Kumar Nandi

3. The present proceedings arise out of a complaint filed by the appellant in the Court of Chief Judicial Magistrate, Calcutta under Section 138 ofthe Negotiable Instruments Act, 1881 (for short theagainst the respondent. The appellant company is public limited manufacturing and selling cement under the brand nameut India.4. The respondent/accused carries on business in the name and style of "Dubey Construction, M/s. Nandi Traders, M/s. Nandi Concerns, M/s. Nandi and Co., M/s. Nandi Enterprises, M/s. S.K. Enterprises, M/s. S.K. Trading and M/s. Jupitor Art. The respondent /accused is sole proprietor of all these business concerns.5. It is alleged by the appellant in the complaint that the respondent purchased from them non-levy Modi Cement on credit against the orders placed on behalf of his concerns. These orders were placed by the respondent with the Calcutta Office of the appellant and it was agreed that the price of the consignments was to be paid by the respondent at the said office. After taking accounts it was found that on 23.2.1994 the respondent incurred a liability/debt of Rs. 1,10,53,520.30 payable to the appellant towards the purchased price of the cement supplied by them to the respondent. In partial discharge of the said liability/debt the respondent drew three cheques in favour of the appellant on 23.2.1994, 26.2.1994 and 28.2.1994 bearing cheque Nos. 1308340-42 for a sum of Rs. 2,00,000The appellant presented these three cheques on 9.8.1994 for encashment through their Bankers. Bank of India, J.L. Nehru Road Branch, Calcutta. On 6.9.1994 the Indian Bank, Bankura, the Banker of the respondent returned the said cheques as unpaid with an endorsement "payment stopped by the drawer". Later on, it transpired that vide his letter dated 8.8.1994 the respondent had given such instruction. The appellant on 13.9.1994 sent a legal notice in terms of Section 138 of the Act to the respondent demanding payment of the aforesaid amounts under the cheques. The said notice was duly served on the respondent on 17.9.1994. Since the respondent failed and neglected to make the payment of the amount of the aforesaid three cheques within the stipulated period of 15 days which expired on 2.10.1994, the appellent filed three criminal complaints against the respondent under Section 138 of the Act. After entering appearance in obedience to the processes issued in connection with the above three cases the respondent filed applications for staying the proceedings which were rejected.7. The respondent then filed three petitions under Section 482, Cr.P .C. in the High Court of Calcutta for quashing the complaints. The learned Single Judgevide his common judgment and order dated 21.11.1996 allowed the petitions of the respondent and quashed the complaints. It is against this order passed by the High Court the appellant has filed these appeals.

Court's reasoning:
15. According to the learned Counsel if the observation of this Court in Electronics Trade & Technology Development Corporation Ltd., Secundarabad(supra) to the effect, "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" is accepted as good law, the very object of introducing Section 138 in the Act would be defeated.16. We see great force in the above submission because once the cheque is issued by the drawer a presumption under Section 139 must follow and merely because the drawer issues a notice to the drawee or to the Bank for stoppage of the payment it will not preclude in action under Section 138 of the Act by the drawee or the holder of a cheque in due course. The object of Chapter XVII, which is intituted as "Of penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts"and contains Sections 138 to 142, is to promote the efficacy of banking operations and to ensure credibility in transacting business through cheques. It is for this reason we are of the considered view that the observations of this Court in Electronics Trade & Technology Development Corporation Ltd., Secunderabad (supra) in paragraph 6 to the effect "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", does not fit in with the object and purpose for which the above chapter has been brought on the Statute Book.On careful reading of Section 138 of the Act, we are unable to subscribe to the view that Section 138 of the Act draws presumption of dishonesty against drawer of the cheque if he without sufficient funds to his credit in his Bank Account to honour the cheque issues the same and, therefore, amounts to an offence under Section 138 of the Act. For the reasons stated hereinabove, we are unable to share the views expressed by this Court in the above two cases and we respectfully differ with the same regarding interpretation of Section 138 of the Act to the limited extent as indicated above.21. It is needless to emphasize that the Court taking cognizance of the complaint under Section 138 of the Act is required to be satisfied as to whether a prima facie case is made out under the said provision. The drawer of the cheque undoubtedly gets an opportunity under Section 139 of the Act to re-put the presumption at the trial. It is for this reason we are of the considered opinion that the complaints of the appellant could not have been dismissed by the High Court at the threshold.