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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION  

CRIMINAL APPEAL NO. 1808          OF 2014   [Arising out of Special Leave Petition (Crl.) No.9901 of  

2011]

Pulsive Technologies P. Ltd. … Appellant

Vs.

State of Gujarat & Ors. … Respondents

WITH

CRIMINAL APPEAL NO.1807 OF 2014 [Arising  out  of  Special  Leave  Petition  (Crl.)  No.9915  of  2011]

J U D G M E N T

(SMT.) RANJANA PRAKASH DESAI, J.

1. Leave granted.

2. These appeals are directed against the judgment and  

order  dated  08/09/2011  passed  by  the  High  Court  of  

Gujarat in Criminal Misc. Application No.1757 of 2007 and  

Criminal Misc.  Application No.9158 of 2007 whereby the

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High Court of Gujarat quashed the criminal complaint filed  

by  the  appellant  being  Criminal  Case  No.6076  of  2006  

pending  on  the  file  of  the  Chief  Judicial  Magistrate  of  

Vadodara for offences punishable under Section 138 and  

142 of the Negotiable Instruments Act (‘the NI Act’).  

Brief facts of the appellant-Company’s case.

3. The  appellant  in  both  the  appeals  is  the  original  

complainant.  It is a private limited company.   Contesting  

respondent no. 2 in appeal arising out of SLP No. 9915 of  

2011 is the accused company and contesting respondent  

nos. 2 to 4 in appeal arising out of SLP No. 9901 of 2011  

are its directors.     

4. In the course of its business, the accused received  

bulk  orders  from Gujarat  Informatics  Limited  (“GIL”),  a  

Government  of  Gujarat  Company  for  supply  of  desktop  

computers,  printers,  UPS  and  other  products.    The  

complainant being one of the approved vendors on the list  

of the GIL,  the accused, placed various purchase orders  

with  the  complainant  and  the  complainant  sold  and  

supplied the same as per the demand and specifications.    

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During  the  course  of  business,  the  accused  made  

part payments regularly.  For the remaining outstanding  

legitimate dues of the complainant, the accused handed  

over  a  post-dated  cheque  bearing  No.387176  dated  

15/07/2006  for  Rs.11,80,670/-  drawn  on  HSBC  Bank,  

Bangalore  in favour of the complainant.

  5.  The  complainant  presented  the  cheque  twice  for  

collection  through  its  bankers  viz.   Bank  of  Baroda,  

Jetalpur Branch.  It was returned unpaid on 3/10/2006 for  

the  reason  “Payment  stopped  by  drawer”.  The  

complainant on 13/10/2006 sent a demand notice to the  

accused asking  them to pay  the cheque amount within a  

period  of  15  days  from the  date  of  the  receipt  of  the  

notice.   The  accused  failed  to  pay  the  amount  to  the  

complainant.  

6. On  15/11/2006  the  complainant  filed  a  complaint  

being Criminal Complaint No.6076/06  in the Court of Chief  

Judicial Magistrate, Vadodara, Gujarat against the accused  

under Sections 138/142 of the NI Act.  The Chief Judicial  

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Magistrate, Vadodara, by order dated 15/11/2006 issued  

summons to all the accused.   

7.  The accused filed applications before the High Court  

under  Section  482  of  the  Code  Criminal  Procedure  for  

quashing of the said complaint case.  The High Court by  

the impugned order dated 8/9/2011 allowed the petition  

and quashed the said complaint.  Being aggrieved by the  

said order the complainant has approached this Court.  

8.  We have heard Mr. D.N. Ray, learned counsel for the  

complainant and Mr. Giriraj Subramanium, learned counsel  

for  the accused.  Counsel  for  the complainant submitted  

that the High Court erred in coming to the conclusion that  

the complaint does not disclose offence punishable under  

Section 138 of  the NI  Act.   Counsel  submitted that  the  

High  Court  was  wrong  in  holding  that  “stop  payment”  

instructions are not covered by Section 138 of the NI Act.  

The  High  Court  failed  to  notice  authoritative  

pronouncements of this Court which state that if a cheque  

bounces because of “stop payment” instructions it would  

constitute  an  offence  under  Section  138  of  the  NI  Act.  

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Counsel  urged that  impugned order  must,  therefore,  be  

set aside.  Counsel for the accused, on the other hand,  

supported the impugned order.   

9. The High Court held that provisions of Section 138 of  

the NI Act are attracted where a cheque is returned by the  

bank on the ground that there is  insufficient amount or  

that the amount of cheque exceeds the amount arranged  

to be paid from that account by an agreement made with  

the bank.  The High Court further held that the cheque in  

question  was  returned  on  account  of  “stop  payment”  

instructions  given  by  the  accused  vide  letter  dated  

13/07/2006 in view of the fact that the complainant had  

failed to discharge its obligations as per the agreement by  

not  repairing/replacing  the  damaged  UPS  system.   The  

High Court further observed that the complainant had not  

disclosed complete facts  as  required under  provisos  (b)  

and  (c)  of  Section  138  of  the  NI  Act.   The  High  Court  

concluded  that  the  complaint  did  not  disclose  offence  

contemplated under Section 138 of the NI Act.  The High  

Court, in the circumstances, quashed the complaint.  

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10. The High Court, in our opinion, fell into a grave error  

when  it  proceeded  to  quash  the  complaint.  Even  “stop  

payment” instructions issued to the bank are held to make  

a person liable for offence punishable under Section 138  

of the NI Act in case  cheque is dishonoured on that count.  

In Modi Cements  v.   Kuchil Kumar Nandi  1   this Court  

made  it  clear  that  even  if  a  cheque  is  dishonoured  

because of “stop payment” instructions given to the bank,  

Section 138 of the NI Act would get attracted.  This Court  

further observed that 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 an action under Section 138 of the NI Act by the  

drawee or the holder of the cheques in due course.   

11. Again  in  M.M.T.C. Ltd.  and anr.    v.    Medchl   

Chemicals and Pharma (P) Ltd. and anr.  2   this Court  

reiterated the same view.  What is more important is the  

fact that this Court declared that the complaint cannot be  

1 (1998) 3 SCC 249 2 (2002)1 SCC 234

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quashed  on  this  ground.   Relevant  observations  of  this  

Court read as under:

“… … …Even when the cheque is dishonoured  by  reason  of  stop-payment  instructions  by   virtue of Section 139 the court has to presume  that the cheque was received by the holder for   the discharge, in whole or in part, of any debt or   liability.  Of  course  this  is  a  rebuttable   presumption. The accused can thus show that   the “stop-payment” instructions were not issued   because of insufficiency or paucity of funds. If   the  accused  shows  that  in  his  account  there   were sufficient funds to clear the amount of the   cheque  at  the  time  of  presentation  of  the   cheque for encashment at the drawer bank and   that the stop-payment notice had been issued  because  of  other  valid  causes  including  that   there  was  no  existing  debt  or  liability  at  the   time of presentation of cheque for encashment,   then offence under  Section 138 would not  be  made  out.  The  important  thing  is  that  the   burden of so proving would be on the accused.   Thus a court cannot quash a complaint on this   ground.”

12. In  Laxmi Dyechem   v.   State of Gujarat and  

ors  3   this Court reiterated the above view.

13. We find that the High Court has relied on M.M.T.C.  

Ltd. and  Modi  Cements  and  yet  drawn  a  wrong  

conclusion  that  inasmuch  as  cheque  was  dishonoured  

3 (2012) 13 SCC 375

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because  of  “stop  payment”  instructions,  offence  

punishable under Section 138 of the NI Act is not made  

out.   The  High  Court  observed  that  “stop  payment”  

instructions  were  given  because  the  complainant  had  

failed to discharge its obligations as per agreement by not  

repairing/replacing  the  damaged  UPS  system.   Whether  

complainant had failed to discharge its obligations or not  

could  not  have  been  decided  by  the  High  Court  

conclusively at  this  stage.   The High Court  was dealing  

with  a  petition  filed under  Section  482 of  the Code for  

quashing the complaint.  On factual issue, as to whether  

the complainant had discharged its obligations or not, the  

High Court could not have given its final  verdict at this  

stage.  It is matter of evidence.  This is exactly what this  

Court  said  in  M.M.T.C.  Ltd.   Though  the  High  Court  

referred to M.M.T.C. Ltd., it failed to note the most vital  

caution sounded therein.  

14. The High Court also erred in quashing the complaint  

on the ground that the contents of the reply sent by the  

accused were not  disclosed in  the complaint.   Whether  

any money is paid by the accused to the complainant is a  

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matter of evidence. The accused has ample opportunity to  

probabilis his defence.  On that count, in the facts of this  

case, complaint cannot be quashed.  

15. In  view  of  the  above,  we  set  aside  the  impugned  

order dated 08/09/2011 passed by the Gujarat High Court  

in  Criminal  Misc.  Application  No.  1757  of  2007  with  

Criminal Misc. Application No. 9158 of 2007.  We direct the  

Chief  Judicial  Metropolitan  Magistrate,  Vadodara  to  

dispose  of  the  Criminal  Complaint  No.6076  of  2006  as  

expeditiously  as  possible  and,  in  any  event,  within  a  

period of one year from the date of receipt of this order.   

16. The  appeals  are  disposed  of  in  the  afore-stated  terms.  

……………………………………………..J. (RANJANA PRAKASH DESAI)

……………………………………………..J. (N.V. RAMANA)

NEW DELHI, August 22, 2014.

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