GOAPLAST PRIVATE LIMITED Vs. CHICO URSILA DSOUZA

JUDGEMENT

(1.) Leave granted in all the appeals.

(2.) These appeals involve a pure question of law as to applicability of S. 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "Act") to a case in which a person issuing a posted dated cheque stops its payment by issuing instructions to the drawee bank before the due date of payment. The facts involved in all the appeals are almost similar except variations in dates and amounts of cheques involved in each case. For purpose of this judgment we have taken the facts in Criminal Appeal No. 315/2003 (arising out of SLP (Cri) 2742/2002). The facts are in a very narrow compass. Respondent No. 1 addressed a letter to the appellant on 20th July, 1992 enclosing therewith ten post-dated cheqeus, each for an amount of Rs. 40,000/- by way of refund of amount due from him to the appellant. The two cheques subject matter of the present appeal were dated 10-12-1994 and 10-4-1995. On 12th February, 1993 respondent No. 1 again wrote to the appellant denying his liability to pay the amount under the aforesaid cheques on the ground that they were issued under a mistaken belief of liability and asked the appellant to treat the cheques as invalid. Respondent No. 1 also wrote to the drawee Bank on 15th March, 1993 to stop payment of the aforesaid post-dated cheques issued by him. On 10th May, 1995, the appellant presented the two cheques dated 10-12-1994 and 10-4-1995 for payment but the said cheques were returned unpaid with the endorsement "present again" on 12-5-1995. On 24th May, 1995 the appellant issued notice under S. 138-B of the Act demanding payment of the amount of Rs. 80,000/- i.e. the total amount of the two cheques. On failure of the respondent No. 1 to make the payment in pursuance to the notice, the appellant filed a complaint under Section 138 of the Act on 7th July, 1995. The concerned Magistrate dismissed the complaint vide order dated 18th October, 1999, taking the view that Section 138 of the Act was not attracted in these facts. The appellant filed an appeal against the said order of the Magistrate. The Goa Bench of the Bombay High Court dismissed the appeal on 16th March, 2002 upholding the view of the learned Judicial Magistrate. Both the courts primarily based their decision on a misreading of the judgment of this Court in Anil Kumar Sawhney vs. Gulshan Rai (1993) 4 SCC 424. They took the view that the accused had only countermanded a bill of exchange on the date the accused wrote the letter about stopping payment of the cheques. Before the due date the instruments were merely bills of exchange and not cheques. Therefore, no offence could be said to have been made out under S. 138 of the Act. According to the courts below the payment had been stopped before the cheques became payable.

(3.) The learned counsel for the appellant has submitted that mere writing of letter to the Bank stopping payment of the post-dated cheques does not take the case out of the purview of the Act. He has invited our attention to the object behind the provision contained in Chapter XVII of the Act. For appreciating the issue involved in the prsent case, it is necessary to refer to the object behind introduction of Chapter XVII containing Sections 138 to 142. This Chapter was introduced in the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act 66 of 1988) 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. With the policy of liberalisation adopted by the country which brought about increase in international trade and commerce, it became necessary to inculcate faith in banking. World trade is carried through banking operations rather than cash transactions. The amendment was intended to create an atmosphere of faith and reliance on banking system. 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. If a party is allowed to use a cheque as a mode of deferred payment and the payee of the cheque on the faith that he will get his payment on the due date accepts such deferred payment by way of cheque, he should not normally suffer on account of non payment. 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. In todays world where use of cash in day to day life is almost getting extinct and people are using negotiable instruments in commercial transactions and plastic money for their daily needs as consumers, it is all the more necessary that peoples faith in such instruments should be strengthened rather than weakened. Provisions contained in 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 ban in favour of an interpretation which serves the object 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. A cheque is a well recognised mode of payment and post-dated cheques are often used in various transactions in daily life. 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 S. 138 of the Act, it will amount to allowing the party to take advantage of his own wrong.