GOAPLAST PVT. LTD. versus SHRI CHICO URSULA DSOUZA AND ANR.

GOAPLAST PVT. LTD. versus SHRI CHICO URSULA DSOUZA AND ANR.

Section 138 of the Negotiable Instruments Act is attracted in cases where payment of a post-dated cheque is countermanded before the due date by the drawer. The mere issuance of stop payment instructions does not take the case out of the purview of Section 138. Once a cheque is issued, the statutory presumption under Section 139 operates in favour of the holder. Allowing parties to routinely stop payment would defeat the object of the Act and the efficacy of cheques in business transactions.

Parties
Appellant: Goaplast Pvt. Ltd.; Respondent No. 1: Shri Chico Ursula D'Souza; Respondent No. 2: Respondent No. 2
Jurisdiction
India
Judgment Date
07 March 2003
Procedural Posture
Criminal Appeal / Appeal From Order of Mumbai High Court in Crl. A. No. 68 of 2000, After Complaint Under Section 138 Negotiable Instruments Act Dismissed by Judicial Magistrate and Appeal Dismissed by the High Court
Outcome
Appeals allowed; matter remanded to Judicial Magistrate for decision on merits.
Legal Topics
Negotiable Instruments, Section 138 Applicability, Post Dated Cheques, Stop Payment Instructions, Presumption Under Section 139
Criminal Law Banking Law Negotiable Instruments Section 138 Applicability Post Dated Cheques Stop Payment Instructions Presumption Under Section 139

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Parties

Goaplast Pvt. Ltd.

Appellant

Shri Chico Ursula D'Souza

Respondent No. 1

Respondent No. 2

Respondent No. 2

Procedural Posture

Criminal Appeal / Appeal From Order of Mumbai High Court in Crl. A. No. 68 of 2000, After Complaint Under Section 138 Negotiable Instruments Act Dismissed by Judicial Magistrate and Appeal Dismissed by the High Court

Legal Issues

  1. 1 Does countermanding payment (stop payment instructions) of post-dated cheques before due date preclude prosecution under Section 138 of the Negotiable Instruments Act, 1881?

Ratio Decidendi

Section 138 of the Negotiable Instruments Act is attracted in cases where payment of a post-dated cheque is countermanded before the due date by the drawer. The mere issuance of stop payment instructions does not take the case out of the purview of Section 138. Once a cheque is issued, the statutory presumption under Section 139 operates in favour of the holder. Allowing parties to routinely stop payment would defeat the object of the Act and the efficacy of cheques in business transactions.

Court Disposition

Appeals allowed; matter remanded to Judicial Magistrate for decision on merits.

Orders

  • Impugned judgments of the High Court and Judicial Magistrate set aside.
  • Section 138 of Negotiable Instruments Act held attracted on facts.