The Supreme Court of India in Goaplast Pvt. Ltd. Vs. Shri Chico Ursula D’Souza & Anr. held that a post-dated cheque is a well recognized mode of payment and are often used in various transactions in daily life.
A bench comprising of M.B. SHAH & ARUN KUMAR, JJ. observed that Once a cheque is issued a presumption under Section 139 must follow. In view of the presumption and the object of Chapter XVII countermanding payment of post dated cheques would not preclude an action under Section 138.
While allowing the appeals and remanding the matter to the concerned Judicial Magistrate for deciding the complaints on merits, the Apex Court held that Chapter XVII was introduced in Negotiable Instruments Act, 1881 by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act 66 of 1998) with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions and in order to promote efficacy of banking operations.
Therefore, while considering the question of applicability of Section 138 of the Act to a situation presented by the facts of the present case, it is necessary to keep the objects of the legislation in mind. The faith, which the legislature has desired that such instruments should inspire in commercial transactions would be completely lost if parties are as a matter of routine allowed to interdict payment by issuing instruction to banks to stop payment of cheques.
Sections 138 to 142 of the Act are intended to discourage people from not honouring their commitments by way of payment through cheques. It is desirable that the court should lean in favour of an interpretation which serves the subject of the statute.
The penal provisions contained in Sections 138 to 142 of the Act are intended to ensure that obligations undertaken by issuing cheques as a mode of payment are honoured. A post- dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of post-dated cheque. If stoppage of payment of a post-dated cheque is permitted to take the case out of the purview of Section 138 of the Act, it will amount to allowing the party to take advantage of his own wrong.
In view of presumption under Section 139 coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operations and to ensure credibility in business transactions through banks, by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter.
Facts of the Case
Post dated cheques were issued and before the due date of payment, instructions were issued to the drawee bank to stop their payment by person issuing the cheque. Respondent filed complaint under Section 138 of Negotiable Instruments Act, 1881. The court below dismissed the complaint taking a view that Section 138 of the Act was not attracted in these facts. In appeal to the Apex Court appellant contended that mere writing of letter to the bank to stop payment of post dated cheques does not take the case out of purview of the Act in view of the object behind the provision contained in Chapter XVII of the Act.
Case Law Reference
- Modi Cements Ltd. v. Kuchil Kumar Nandi,  3 SCC 249
- Teshwant Badave v. Surendra Madhavrao Nighojakar and Anr.,  3 SCC 726
- NEPC Micon Ltd. and Ors. v. Magma Leasing Ltd.,  4 SCC 253