Holding

A stop‑payment instruction does not preclude the operation of Section 138; the cheque is deemed dishonoured and the presumption of dishonesty under Section 139 arises, subject to rebuttal at trial.

Summary

Modi Cements Ltd. filed three criminal complaints under Section 138 of the Negotiable Instruments Act against K.K. Nandi for dishonour of cheques that were returned with a "payment stopped by the drawer" endorsement. The High Court quashed the complaints on the ground that the stop‑payment instruction precluded liability and that the complaint did not allege insufficient funds. The Supreme Court held that a stop‑payment instruction does not defeat the operation of Section 138; the cheque is still deemed dishonoured and the presumption of dishonesty under Section 139 arises, which the drawer may rebut at trial. The Court overruled the earlier decisions in Electronics Trade & Technology Development Corp. Ltd. and K.K. Sidharthan, emphasizing the object of Sections 138‑142 to preserve banking credibility. It further clarified that cognizance of a complaint requires a prima facie case, which was present. Consequently, the Supreme Court allowed the appeals, set aside the High Court order, and restored the magistrate's proceedings, leaving all contentions open.

Issues considered

The effect of a drawer's stop‑payment instruction on the applicability of Section 138 of the Negotiable Instruments Act.
Whether a complaint under Section 138 can be quashed on the ground that the cheque was returned on a stop‑payment endorsement.
The role of the presumption of dishonesty under Section 139 when a cheque is dishonoured despite a stop‑payment notice.
Whether the High Court was correct in holding that no prima facie case existed under Section 138.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Negotiable Instruments Act, 1881s. 138, s. 139

Subjects

Negotiable Instruments ActSection 138stop paymentcheque dishonourpresumption of dishonestySection 139Section 482prima facie casebanking operationscriminal complaint

Judgment

A MODI CEMENTS LTD.
v.
SHRI KUCHIL KUMAR NANDI

MARCH 22, 1998

B [M.K. MUKHERJEE, S.P. KURDUKAR AND K.T. THOMAS, JJ.]

Criminal Law :

Negotiable Instruments Act, 1881 :
c
Sections 138 and 139-Dishonour of cheque-Complaint against-
Cognizance of-By Metropolitan Magistrate-Drawer of cheque issued "stop
payment" instructions to his back prior to presentation of cheque-High
Court quashed complaint under S. 482 Cr. P.C. -Validity of-Held: "Stop
D payment" instructions will not preclude an action under S. 138-Such liability
cannot be avoided even by giving notice to the payee or holder in due
course, prior to presentation of the cheque, not to present the cheque but he
presents it and the cheque is returned pursuant to "stop payment"
instructions-Decision to that effect in para 6 of Electronics Trade and
Technology Development Corporation's case [1996] 2 SCC 734 and followed
E in K.K. Sidharthan 's case [1996] 6 sec 369 being contrary to the object and
purpose of Ss. 138-142, overruled-The fact that presumption under S. 139
is attracted to such a situation was wrongly ignored in the above cases-
Drawer of the cheque will get an opportunity to rebut the presumption at the
trial-Hence, High Court not justified in quashing the complaint at the
threshold-Case restored before Metropolitan Magistrate and all contentions
F are kept open.

Section 138-lnsujficient funds-At the time of drawing of cheque-
Dishonesty-Presumption of-Held : Jn such a situation drawing of
presumption of dishonesty on the part of the drawer under S. I 38 not
G justified-Drawer can make arrangement or deposit amount in his account
before cheque is presented-S. 138 gets attracted only when cheque is
dishonoured.

Sections 138 and 139-Dishonour of cheque-Complaint against-
Cognizance of-Taken on being satisfied about existence of a prima facie
H case-High Court quashed complaint under S. 482 Cr. P.C.-Held: Issuance
1192
MODI CEMENTS LTD. v. K.K. NANDI 1193

of cheque raises a presumption under S. 139-Drawer of cheque gets an A
opportunity to rebut that presumption at the trial-Petition under S.482 Cr.
P. C. is tenable only when no offence even prima facie is made out-Whether
a prima facie offence under S. 138 is made out or not depends upon the
averments made in the complaint-Criminal Procedure Code, 1973, S.482.

Interpretation of Statutes : B

Deeming provision-Held : Distinction between the deeming provision
and a presumption is well discernible.

The respondent had drawn three cheque in favour of the appellant in
February 1994 in partial discharge of liability/debt. The appellant presented C
these three cheques on 9-8-1994 for encashment through its bankers. On 1
6-9-1994 the respondent's banker returned the said cheques as unpaid with
the endorsement "payment stopped by the drawer". Later on it transpired
that the respondent void his letter debated 8-8-1994 had given ~uch instmction.
The ap11ellant on 13-9-1994 sent a legal notice in terms of Section 138 of D
+ the Negotiable Instruments Act, 1881 to the respondent demanding payment
of the amounts under the cheques. Since the respondent failed 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 appellant filed three
criminal complaints against the respondent under Section 138 of the Act.
The respondent filed applications for staying the proceedings, which were E
rejected.

The respondent then filed three petitions under Section 482 of the
Criminal Procedure Code, 1983 for quashing the complaints. The High
Court allowed the petitions and quashed the complaints on the following
grounds:- F
(1) The appellant has not pleaded in his complaint that the cheques
were 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. The necessary ingredients of Section 138 G
of the Act having not been pleaded the Court could not have taken cognizance
...._ of the offence.

(ii) Mere endorsement of the Bank "payment stopped" was not
sufficient to entertain the com plaint, as that was not an ingredient of the
offence under Section 138 of the Act. H
1194 SUPREME COURT REPORTS [1998) l S.C.R.

A Being aggrieved of th4~ High Court's .iudgment the a1111ellant 11referred
the 11resent a1111eal.

Allowing the ap11eal, this Court

HELD : 1.1. Even if a cheque is dishonoured because of ·~1op 11ayment'
B instruction to the bank, Section 138 of the Negotiable Instruments Act, 1881
would get attracted Electronics Trade & Technology Development Corporation "'-
Ltd. Secunderabad v. Indian Technologists & Engineers (Electronics) (P.)
Ltd, (1996) 2 SCC 739 and K.K. Sidharthan v. T.P. Praveena Chandran,
(1996) 6 SCC 369, approved. (1198-E-F]
C 1.2. The position will not different even if the drawer had issued a
notice to the bank to stop the 11ayment 11rior to the presentation of the
cheques as in the present case. The observations of the Court in Electronics
Trade & Technology Development Coporation Ltd., Secunderabed in
paragraph 6 to the effect "Suppose after the cheque is issued to payee or to
the holder in due course and before it is presented for encashment, notice
D 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," do
not fit in with the object and to purpose of Sections 138 to 142 which are
to promote the efficacy of banking operations and to ensure credibility in
E transacting business through cheques. Acceptance of this provision would
take make Section 138 a dead letter, for, by giving instructions to the Bank
of "stop payment" immediately after issuing a cheque against a debt or
liability the drawer can easily get rid of "the penal consequences,
notwithstanding the fact that a deemed offence was committed. Once the
cheques is issued by the drawer a presumption under Section 139 of the Act
F must follow and merely because the drawer issues a notice to the drawee or
to the Bank for ~1oppage of the payment it will not preclude an action under ,..
Section 138 of the Act by the drawee or the holder of a cheque in due course.
(1202-D-F]
Electronics Trade & Technology Development Corporation Ltd.,
G Secunderabad v. Indian Technologists & Engineers (Electronics) (P) Ltd.,
(1996) 2 SCC 739 and K.K. Sidharthan v. T.P. Praveena Chandran, (1996)
6 sec 369, overruled. >-
1.3. Section 138 of the Act is a penal provision wherein if a person
draws a cheque on an account maintained by him with the Bank for payment
H of any amount of money to another person from out of that account for the
MODI CEMENTS LTD. v. K.K. NANDI 1195
discharge, in whole or in 11art of any debt or other liability, is returned by A
the Bank unpaid, on the ground 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. The di~1inction between the deeming provision and the B
presum11tion is well discernible. To illustrate, if a person, draws a cheque
with no sufficient funds available to his credit on the date of is~ue, but makes
the arrangement of deposits the amount thereafter before the cheque is put
in the bank by the drawee, and the cheque is honoured, in such a situation
drawing of presumption of dishonesty on the part of the drawer under Section
138 would not be justified. Section 138 of the Act gets attracted only when C
the cheque is dishonoured. It is, therefore, not possible to accept the view that
Section 138 of the Act draws 1>resumption of dishonesty against the drawer
of the cheque if he without sufficient funds to his credit in his bank account
to honour the cheque issues the same.

Electronics Trade & Technology Development Corporation Ltd., D
Secunderabad v. Indian Technologists & Enginel!rs (Electronics) (P) Ltd.,
[1996) 2 SCC 739 and K.K. Sidharthan v. T.P. Praveena Chandran, [1996)
6 sec 369, overruled.

2.1. The Court taking cognizance of the complaint under Section 138
of the Act is required to be satisfied as to whether a prima /acie case is made E
out under the said provision. The drawer of the cheque undoubtedly gets an
opportunity under Section 138 of the Act to rebut the presumption at-the
trial. [1203-A-D]
2.2. The appeal, therefore, succeeds and the order passed by the High
Court is quashed and set aside and the order passed by the Metropolitan F
Magistrate is restored. It is made clear that all contentions are kept open.
[1203-C]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos.
244-46 of 1998.
G
From the Judgment and Order dated 21.11. 96 of the Calcutta High Court
-\ in Cr!. R. No. 2303-04of1995.

Ranjit Kumar and Ms. Bina Tamta for the Appellant.

Ranjan Mukherjee for the Respondent. H
11% SUPREME COURT REPORTS [1998] l S.C.R.

A The Judgment of the Court was delivered by

S.P. KURDUKAR, J. Leave granted.

(2) These three appeals are filed by the appellants/complainants
challenging the legality and correctness of the judgment and order dated
B 21.11.1996 passed by the High Court in Cr!. Revision Petition Nos. 2303-04 of
1995.

(3) The present proceedings arise out of a complaint filed by the appellant
in the Court of Chief Judicial Magistrate, Calcutta under Section 138 of the
Negotiable Instruments Act, 1881 (for short the' Act') against the respondent.
C The appellant company is a public limited company manufacturing and selling
cement under the brand name "Modi Cement" throughout India.

(4) The respondent/accused carries on business in the name and style
of "Dubey Construction, Mis Nandi Traders, Mis Nandi Concerns, Mis
Nandi and Co., Mis Nandi Ente1prises, Mis S.K. Enterprises, Mis B.K. Trading
D and Mis 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 tl1em non-levy Modi Cement on credit against the orders
E 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
F discharge of the said liability/debt the respondent drew three cheques in
favour of the appellant on 23.2.94, 26.2.94 and 28.2.94 bearing cheque Nos.
1308340-42 for a sum ofRs.2,00,000 each.

(6) The appellant presented tl1ese three cheques on 9.8.1994 for
G encashment through their bankers. Bank of India, J.L. Nehru Road Branch,
Calcutta. On 6.9.94 the Indian Bank Bankura, the Banker oftlle respondent
returned the said cheques as unpaid with an endorsements "payment stopped
by the drawer''. Lateron it transpired tllat vide his letter dated 8.8.94 tlle
respondent had given such instruction. The appellant on 13. 9. 94 sent a legal
notice in terms of Section 138 of tlle Act to the respondent demanding
H payment of tlle aforesaid amounts under the cheques. The said notice was
MODI CEMENTS LTD. v. K.K. NANDI [S.P. KURDUKAR, J.] 1197

duly served on t11e respondent on 17.9.94. Since t11e respondent failed and A
neglected to make tlle payment of tlle amount of t11e aforesaid tlrree cheques
witllin t11e stipulated period of 15 days which expired on 2.10.94, ilie appellant
filed tlrree criminal complaints against tlle respondent under Section 138 of
t11e Act. After entering appearance in obedience to the processes issued in
connection wit11 the above tlrree cases tlle respondent filed applications for
staying tlle proceedings which were rejected.
B

(7) The respondent tllen filed tlrree petitions lillder Section 482 Cr.P.C.
in tlle High Court of Calcutta for quashing tlle complaints. The Learned Single
Judgevide his conunon Judgment and order dated 21.11.96 allowed tllepetitions
of t11e respondent and quashed tlle complaints.
c
It is against iliis order passed by tlle High Court tlle appellant has filed
tllese appeals.

Section 138 of tlle Act reads tllus:-

.. Dishonour of cheque for insufficiency, etc., of funds in tlle account:-
D
where any cheque drawn by a person on an accolillt maintained by him with
a banker for payment of any amount of money to anotller person from out
of tllat account for tlle discharge, in whole or in part, of any debt or other
liability, is returned by tlle bank unpaid, eitller because of the amount of
money standing to tlle credit of tllat account is insufficient to honour tlle E
cheque or tllat it exceeds the amount arranged to be paid from tllat account
by an agreement made witll tllat bank, such person sball be deemed to have
committed an offence and shall, without prejudice to any oilier provision of
tllis Act, be plillished with imprisonment for a term which may extend to one
year, or witll fme which may ell.1end to twice tlle amount oft11e cheque, or wit11
F
both:

Provided tllat nothing contained in this Section shall apply unless:-

(a) tlle cheque has been presented to tlle bank witllin a period of
six montlls from the date on which it is drawn or witllin the G
~
period of its validity, whichever is earlier;

- -\
(b) tlle payee or tlle holder in due course of the cheque, as tlle case
may be, makes a demand for tlle payment of the said amount of
money by giving a notice in writing, to tlle drawer of tlle cheque,
witllin fifteen days of tlle receipt of tlle information by him from H
1198 SUPREME COURT REPORTS [1998] 1 S.C.R.

A the bank regarding the return of the cheque as unpaid; and
f-..
(c) the drawer of such cheque fails to 1i1ake the payment of the said
amount of money 110 the payee or as the case may be, to the
holder in due course of the cheque within fifteen days of the
receipt of the said notice.
B
&planation - For the purpose of this Section, "debt or other liability" means <.

a legally enforceable debt or other liability.

(8) Briefly stated the reasons given by the High Court are as under:-

c returned(i) by
The appellant has not pleaded in his complaint that the cheques were
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. The necessary ingredients of Section 138 of the Act .:
having not been pleaded the Court could not have taken cognizance of the
D offence.
~
(ii) Mere endorsement of the Bank "payment stopped" was not sufficient
to entertain the complaint as that was not an ingredient of the offence under
Section 138 of the Act.

E (9) The High Court has laid much stress in its judgment to emphasize
that a petition under Section 482 Cr. P.C. is tenable when no offence even
prima facie ':"as made out in the complaint. There can be no dispute regarding
that legal proposition but the application thereof will depend upon the avennents
made in the complaint. But the second reasoning of the High Court is contrary
to the decision of this Court (rendered by a Bench of two Judges) in Electronics
F Trade & Technology Development Corporation Ltd., Secunderabadv. Indian
Technologists & Engineers (Electronics) (P) Ltd., & Anr. [1996] 2 SCC 739.
While interpreting Section 1311 of the Act, it firstly observed as under:

"It would thus be clear that when a cheque is drawn by a person on
an account maintained by him with the banker for payment of any
G amount of money to another person out of the account for the discharge ~

of the debt in whole or in part or other liability is returned by the bank
with the endorsement like (I) in this case, "refer to the drawer" (2)
"instructions for stoppage of payment" and stamped (3) " exceeds
~·
-
arrangement", it amounts to dishonour within the meaning of Section
H 138 of the Act. On issuance of the notice by the payee or the holder
MODI CEMENTS LTD. v. K.K. NANDI [S.P. KURDUKAR, J.] 1199

in due course after dishonour, to the drawer demanding payment A
,-\
witllin 15 days from the date of the receipt of such a notice, if he does
not pay the same, the statutory presumption of dishonest intention,
subject to any other liability, stands satisfied".

(10) It t11en took up for consideration a similar contention advanced
before tllem by the Learned Counsel for the drawer of the cheques tllat B
"' stoppage of payment due to instructions does not amount to an offence
under Section 13 8 of the Act and repelling the same observed, "We find no
force in t11e contention. The object of bringing Section 138 on tlle Statute
appears to be to inculcate faith in the efficacy of banking operations and
credibility in transacting business on negotiable instruments ........ ". The Court
further observed, " .............. it is seen t11at once tlle cheque has been drawn
c
and issued to the payee and the payee has presented the cheque and thereafter,
if any instructions are issued to the bank for non-payment and the cheque
is returned to the payee with such an endorsement, it amounts to dishonour
of cheque and it comes within the meaning of Section 138".
·'(
D
(11) Another two Judge Bench while dealing with t11e same question in
K.K. Sidharthan v. T.P. Praveena Chandran & Anr, [1996) 6 SCC 369 observed.
"This shows that Section 138 gets attracted in terms if cheque is dishonored
because of insufficient funds or where t11e 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 E
Technologists and Engineers (Electronics) (P.) Ltd., tllat even if a cheque is
dishonored because of 'stop payment' instruction to t11e bank, Section 138
would get attracted". We are in complete agreement with the above legal
proposition.

(12) The Learned Counsel for the appellant vehemently urged that botll F
these decisions of this Court clearly support tlle case of the appellant and
the trial court had rightly issued the process and the High Court was totally
wrong in taking a contrary view.

(13) It was, however contended on behalf of the respondent that the
decision in Electronics Trade & Technology Development Corporation Ltd.,
G
-<, Secunderabad, (supra) does not support the appellant as far as the facts that
emerged in the present cases inasmuch as the drawer had intimated to the
Bank on 8.8.1984 to stop tl1e payment whereas tlle cheques were presented
for encashment on 9.8.94 although the same were drawn on 23.2.1994, 26.2.1994
and 28.2.1994. The Learned counsel for tlle respondent strongly relied upon H
1200 SUPREME COURT REPORTS (1998) 1 S.C.R.

A the following observations in Electronics Trade and Technology Development
Corporation Ltd., (supra):

"Suppose after the cheque is issued to the payee or to the holder in
due course and before it is presented for encashn1ent, notice is issued
to him not to present the same for encashment and yet the payee or
B holder in due course presents the cheque to the hank for payment
and when it is returned on instructions Section 138 does not get
attracted'.

(emphasis supplied)

C (14) The Learned Counsel for the appellant submitted that if the attention
of the Court was drawn to the provisions of Section 139 of the Act which
according to him. had an important bearing on the point in issue, the Court
would certainly not have made the above observations. The said Section
reads as under:
!
D Section I 39 - Presumption in favour of holder :- It shall be presumed,
unless the contrary is proved, that the holder of a cheque received
the cheque, of the nature referred to in Section 138 forthe discharge,
in whole or in part, of any debt other liability".

(15) According to the learned counsel if the observations of this Court
E in Electronics ,Trade & Technology Development Corporation Ltd.
Secunderahad (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
F for payment and when it is returned on instruction. 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
G 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 Act by the drawee or the holder of a cheque in due course. The object
of Chapter XVII, which is intituled as "OF PENALTIES IN CASE OF
DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS IN
H THE ACCOUNTS" and contains Sections 138 to 142, is to promote the
MODI CEMENTS LTD. v. K.K. NANDI [S.P. KURDUKAR, J.] 1201

efficacy of banking operations and to ensure credibility in transacting business A
through cheques. It is for this reason we are of the considered view that the
observations of this Court in Electronics Trade & Technology Development
Cmporation 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 B
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.

(17) The above view had been referred to in K.K. Sidharthan (supra) as
is clear from Paras 5 and 6 of the Judgment. C
Paras 5 and 6 read as under:-

"5. The above apart, through 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 ii'i,issued D
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".

"6. From the facts mentioned above. We are satisfied that in the E
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
Ietter of the Indian overseas Branch, we find that the cheque was F
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 G
known to the respondent"

With the above observations, the complaint under Section 138 of the Act was
quashed.

(18) The aforesaid propositions in both these reported judgments, in our H
1202 SUPREME COURT REPORTS [1998] l S.C.R.

A considered view, with great respect are contrary to the spirit and object of
Sections 138 and 139 of the Act. If we are to accept this proposition it will
make Section 138 a dead letter, for, by giving instructions to the Bank to stop
payment immediately after issuing a cheque against a debt or liability the
drawer can easily get rid of the penal consequences notwithstanding the fact
B that a deemed offence was committed. Further the following obseivations in
para 6 in Electronics Trade & Technology Development Corporation Ltd.,
Secunderabad, (supra). "........... Section 138 of the Act intended to prevent
dishonesty on the part of the drawer of negotiable instrument to draw a
cheque without sufficient funds in his account maintained by him in a bank
and induce the payee or holder in due course to act upon it. Section 138
C dress presumption that one commits the offence if he issues the cheque
dishonestly" in our opinion, do not also lay down the law correctly.

(19) Section 138 of the Act is a penal provision wherein if a person
draws a cheque on an account maintained by him with the Banker for payment
of anl amount of money to another person from out of that account for the
D discharge, in whole or in part of any debt or other liability, is returned by the
Bank unpaid, on the ground either because of the amount of money standing
to the credit of that account is insufficient to honor 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
E offence. The distinction between the deeming provision and the presumption
is well discernible. To illustrate, if a person, draws a cheque with no sufficient
funds available to his credit on the date of issue, but makes the arrangement
or deposits the amount thereafter before the cheque is out in the bank by the
drawee, and the cheque is honored, in such a situation drawing of presumption
of dishonesty on the part of th': drawer under Section 138 would not be
F justified. Section 138 of the Act gets attracted only when the cheque is
dishonored.

(20) 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
G dishonesty against drawer of the cheque if he without sufficient funds to his
credit in his bank account to honor 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 of the limited extent as indicated
H above.
MODI CEMENTS LTD. v. K.K. NANDI [S.P. KURDUKAR, J.] 1203

(21) It is needless to emphasize that the Court taking cognizance of the A
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 rebut 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 B
dismissed by the High Court at the threshold.

(22) In the result the appeals succeed and the common order dated
21.1l.96 passed by the High Court in Criminal Revision Petition Nos. 2303-
2304 of 1995 is quashed and set aside and the order passed by the Metropolitan
Magistrate 11th Court, Calcutta on 6.4.95 is restored. It is made clear that all C
contentions are kept open.

v.s.s. Appeals allowed.