No Offence u/s 138 If Cheque Lost and Stop Payment Issued Before Use | HC

Case Details: Gaurav Agarwal vs. State of Uttarakhand [2025] 178 taxmann.com 785 (HC-Uttarakhand)

Judiciary and Counsel Details

• Pankaj Purohit, J.
• Tapan Singh, Adv. for the Applicant.
• S.S. Chauhan, Deputy Adv. General & Mohd. Alauddin, Adv. for the Respondent.

Facts of the Case

The Magistrate vide impugned order took cognisance and summoned applicant to face trial. The Applicant challenged the impugned order on the ground that he was maintaining a bank account with the Indian Overseas Bank. The subject cheques were stolen and misused by the respondent.

On the basis of such alleged misuse, the respondent instituted a complaint. It was noted that continuation of proceedings against the applicant would be wholly unwarranted in law. It was admitted on record that the applicant had lodged a stop payment request with his banker in respect of the cheques in question, much before the alleged date of issuance.

Further, the Bank’s contemporaneous report confirmed that stop-payment instructions had been acted upon and charges debited. In such circumstances, subsequent presentation of a cheque resulting in dishonour on the ground of ‘insufficient funds’ could not be treated as a valid dishonour attracting the penal consequences of Section 138 of the NI Act.

High Court Held

The High Court observed that the respondent had alleged the dispatch of a statutory notice, but no proof of service of a statutory notice, such as an acknowledgement due card or a postal receipt showing actual delivery, had been brought to record. Even if the date of dispatch was accepted, the 15-day statutory period for making payment would have expired only after 03.02.2017, and the cause of action would have arisen thereafter. However, a complaint was instituted on 16.01.2017, much before the accrual of the cause of action.

The High Court held that the complaint suffered both on account of the absence of a valid cause of action and failure to satisfy the essential ingredients of Section 138 of the NI Act. Thus, an instant Criminal Revisional Application under section 482 of Cr. P.C., inter alia, praying that proceedings under section 138, read with section 141, be quashed, was to be allowed.

List of Cases Reviewed

• Raj Kumar Khurana v. State (NCT of Delhi) [2009] 92 SCL 370 (SC)/(2009) 6 SCC 72
• Yogendra Pratap Singh v. Savitri Pandey [2014] 52 taxmann.com 473/[2015] 130 SCL 246 (SC)/(2014) 10 SCC 713 (Para 19) followed
• Kishore Sharma v. Sachin Dubey [Criminal Revision No. 1326 of 2019, dated 3-9-2019]
• Ajeet Seeds Ltd. v. K. Gopala Krishnaiah [2014] 48 taxmann.com 333/127 SCL 227 (SC)/(2014) 12 SCC 685 (Para 19) distinguished

List of Cases Referred to

• Raj Kumar Khurana v. State (NCT of Delhi) [2009] 92 SCL 370 (SC) (para 4)
• Yogendra Pratap Singh v. Savitri Pandey [2014] 52 taxmann.com 473/[2015] 130 SCL 246 (SC) (para 6)
• Kishore Sharma v. Sachin Dubey [Criminal Revision No. 1326 of 2019, dated 3-9-2019] (para 11)
• Ajeet Seeds Ltd. v. K. Gopala Krishnaiah [2014] 48 taxmann.com 333/127 SCL 227 (SC) (para 12).