{"id":270383,"date":"2003-03-07T00:00:00","date_gmt":"2003-03-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/goaplast-pvt-ltd-vs-shri-chico-ursula-dsouza-anr-on-7-march-2003"},"modified":"2018-10-09T18:54:08","modified_gmt":"2018-10-09T13:24:08","slug":"goaplast-pvt-ltd-vs-shri-chico-ursula-dsouza-anr-on-7-march-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/goaplast-pvt-ltd-vs-shri-chico-ursula-dsouza-anr-on-7-march-2003","title":{"rendered":"Goaplast Pvt. Ltd vs Shri Chico Ursula D&#8217;Souza &amp; Anr on 7 March, 2003"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Goaplast Pvt. Ltd vs Shri Chico Ursula D&#8217;Souza &amp; Anr on 7 March, 2003<\/div>\n<div class=\"doc_author\">Author: A Kumar<\/div>\n<div class=\"doc_bench\">Bench: M.B. Shah, Arun Kumar<\/div>\n<pre id=\"pre_1\">           CASE NO.:\nAppeal (crl.)   of 2003\n\nPETITIONER:\nGoaplast Pvt. Ltd.\n\nRESPONDENT:\nShri Chico Ursula D'Souza &amp; Anr.\n\nDATE OF JUDGMENT: 07\/03\/2003\n\nBENCH:\nM.B. SHAH &amp;  ARUN KUMAR\n\nJUDGMENT:\n<\/pre>\n<p id=\"p_1\">JUDGMENT<\/p>\n<p>(Arising out of SLP (Crl.) 2742\/02)<\/p>\n<p>With Criminal Appeals No.____________________of 2003<br \/>\n(Arising out of SLP(Crl.) No.3844\/2002, SLP(Crl.) No.3907\/2002,<br \/>\nSLP(Crl.) No.3937\/2002, SLP(Crl.) 3940\/2002, SLP(Crl.)<br \/>\nNo.3944\/2002 and SLP(Crl.)No.3950\/2002)_________________<\/p>\n<p>ARUN KUMAR, J.\n<\/p>\n<p id=\"p_1\">\tLeave granted in all the appeals.\n<\/p>\n<p id=\"p_2\">\tThese appeals involve a pure question of law as to<br \/>\napplicability of <a href=\"\/doc\/1823824\/\" id=\"a_1\">Section 138<\/a> of the Negotiable Instruments<br \/>\nAct, 1881 (hereinafter referred to as &#8220;Act&#8221;) to a case in which<br \/>\na person issuing a post dated cheque stops its payment by<br \/>\nissuing instructions to the drawee bank before the due date<br \/>\nof payment.  The facts involved in all the appeals are almost<br \/>\nsimilar except variations in dates and amounts of cheques<br \/>\ninvolved in each case.\tFor purpose of this judgment we<br \/>\nhave taken the facts in Criminal Appeal<br \/>\nNo._________\/2003(arising out of SLP(Crl.)2742\/2002.  The<br \/>\nfacts are in a very narrow compass. Respondent No.1<br \/>\naddressed a letter to the appellant on 20th July, 1992<br \/>\nenclosing therewith ten post-dated cheques, each for an<br \/>\namount of Rs.40,000\/- by way of refund of amount due from<br \/>\nhim to the appellant.  The two cheques subject matter of the<br \/>\npresent appeal were dated 10.12.1994 and 10.4.1995.  On<br \/>\n12th February, 1993 respondent No.1 again wrote to the<br \/>\nappellant denying his liability to pay the amount under the<br \/>\naforesaid cheques on the ground that they were issued<br \/>\nunder a mistaken belief of liability and asked the appellant to<br \/>\ntreat the cheques as invalid.  Respondent No.1 also wrote to<br \/>\nthe drawee Bank on 15th March, 1993 to stop payment of the<br \/>\naforesaid post-dated cheques issued by him.  On 10th May,<br \/>\n1995, the appellant presented the two cheques dated<br \/>\n10.12.1994 and 10.4.1995 for payment but the said cheques<br \/>\nwere returned unpaid with the endorsement &#8220;present again&#8221;<br \/>\non 12.5.1995.  On 24th May, 1995 the appellant issued<br \/>\nnotice under\t<a href=\"\/doc\/1132672\/\" id=\"a_1\">Section 138B<\/a> of the Act\t demanding payment<br \/>\nof the amount of Rs.80,000\/- i.e. the total amount of the two<br \/>\ncheques.  On failure of the respondent No.1 to make the<br \/>\npayment in pursuance to the notice, the appellant filed a<br \/>\ncomplaint under <a href=\"\/doc\/1823824\/\" id=\"a_2\">Section 138<\/a> of the Act on 7th July, 1995.<br \/>\nThe concerned Magistrate dismissed the complaint vide<br \/>\norder dated 18th October, 1999, taking the view that <a href=\"\/doc\/1823824\/\" id=\"a_3\">Section<br \/>\n138<\/a> of the Act was not attracted in these facts.  The<br \/>\nappellant filed an appeal against the said order of the<br \/>\nMagistrate. The Goa Bench of the Bombay High Court<br \/>\ndismissed the appeal on 16th March, 2002 upholding the<br \/>\nview of the learned Judicial Magistrate.  Both the courts<br \/>\nprimarily based their decision on a misreading of the<br \/>\njudgment of this Court in <a href=\"\/doc\/1664391\/\" id=\"a_4\">Anil Kumar Sawhney vs. Gulshan<br \/>\nRai<\/a> [ 1993 (4) SCC 424].  They took the view that the<br \/>\naccused had only countermanded a bill of exchange on the<br \/>\ndate the accused wrote the letter about stopping payment of<br \/>\nthe cheques. Before the due date the instruments were<br \/>\nmerely bills of exchange and not cheques.  Therefore, no<br \/>\noffence could be said to have been made out under <a href=\"\/doc\/1823824\/\" id=\"a_5\">Section<br \/>\n138<\/a> of the Act.\t According to the courts below the payment<br \/>\nhad been stopped before the cheques became payable.<br \/>\n\tThe learned counsel for the appellant has submitted<br \/>\nthat mere writing of letter to the Bank stopping payment of<br \/>\nthe post-dated cheques does not take the case out of the<br \/>\npurview of the Act.  He has invited our attention to the object<br \/>\nbehind the provision contained in Chapter XVII of the Act.<br \/>\nFor appreciating the issue involved in the present case, it is<br \/>\nnecessary to refer to the object behind introduction of<br \/>\nChapter XVII containing <a href=\"\/doc\/1823824\/\" id=\"a_6\">Sections 138<\/a> to <a href=\"\/doc\/595945\/\" id=\"a_7\">142<\/a>.  This Chapter<br \/>\nwas introduced in the Act by the Banking, Public Financial<br \/>\nInstitutions and <a href=\"\/doc\/1132672\/\" id=\"a_8\">Negotiable Instruments Laws (Amendment)<br \/>\nAct<\/a>, 1988 (Acts 66 of 1998) with the object of inculcating<br \/>\nfaith in the efficacy of banking operations and giving<br \/>\ncredibility to negotiable instruments in business transactions<br \/>\nand in order to promote efficacy of banking operations.\t With<br \/>\nthe policy of liberalisation adopted by the country which<br \/>\nbrought about increase in international trade and commerce,<br \/>\nit became necessary to inculcate faith in banking.  World<br \/>\ntrade is carried through banking operations rather than cash<br \/>\ntransactions.  The amendment was intended to create an<br \/>\natmosphere of faith and reliance on banking system.<br \/>\nTherefore, while considering the question of applicability of<br \/>\n<a href=\"\/doc\/1823824\/\" id=\"a_9\">Section 138<\/a> of the Act to a situation presented by the facts of<br \/>\nthe present case, it is necessary to keep the objects of the<br \/>\nlegislation in mind.  If a party is allowed to use a cheque as a<br \/>\nmode of deferred payment and the payee of the cheque on<br \/>\nthe faith that he will get his payment on the due date accepts<br \/>\nsuch deferred payment by way of cheque, he should not<br \/>\nnormally suffer on account of non payment.  The faith, which<br \/>\nthe legislature has desired that such instruments should<br \/>\ninspire in commercial transactions would be completely lost<br \/>\nif parties are as a matter of routine allowed to interdict<br \/>\npayment by issuing instruction to banks to stop payment of<br \/>\ncheques.  In today&#8217;s world where use of cash in day to day<br \/>\nlife is almost getting extinct and people are using negotiable<br \/>\ninstruments in commercial transactions and plastic money<br \/>\nfor their daily needs as consumers, it is all the more<br \/>\nnecessary that people&#8217;s faith in such instruments should be<br \/>\nstrengthened rather than weakened.  Provisions contained in<br \/>\n<a href=\"\/doc\/1823824\/\" id=\"a_10\">Sections 138<\/a> to <a href=\"\/doc\/595945\/\" id=\"a_11\">142<\/a> of the Act are intended to discourage<br \/>\npeople from not honouring their commitments by way of<br \/>\npayment through cheques.  It is desirable that the court<br \/>\nshould ban in favour of an interpretation which serves the<br \/>\nobject of the statute.\tThe penal provisions contained in<br \/>\n<a href=\"\/doc\/1823824\/\" id=\"a_12\">Sections 138<\/a> to <a href=\"\/doc\/595945\/\" id=\"a_13\">142<\/a> of the Act are intended to ensure that<br \/>\nobligations undertaken by issuing cheques as a mode of<br \/>\npayment are honoured.  A post-dated cheque will lose its<br \/>\ncredibility and accepatibility if its payment can be stopped<br \/>\nroutinely.  A cheque is a well recognized mode of payment<br \/>\nand post-dated cheques are often used in various<br \/>\ntransactions in daily life.  The purpose of a post-dated<br \/>\ncheque is to provide some accommodation to the drawer of<br \/>\nthe cheque.  Therefore, it is all the more necessary that the<br \/>\ndrawer of the cheque should not be allowed to abuse the<br \/>\naccommodation given to him by a creditor by way of<br \/>\nacceptance of post-dated cheque.  If stoppage of payment of<br \/>\na post-dated cheque is permitted to take the case out of the<br \/>\npurview of Seciton 138 of the Act, it will amount to allowing<br \/>\nthe party to take advantage of his own wrong.<br \/>\n\tThe present case was decided by courts below mainly<br \/>\non the basis of the judgment of this Court in Sawhney&#8217;s<br \/>\ncase (supra).  In that case this court noted that a cheque<br \/>\nunder <a href=\"\/doc\/1012630\/\" id=\"a_14\">Section 6<\/a> of the Act is a bill of exchange drawn on a<br \/>\nbanker and is payable on demand.  From this it follows that a<br \/>\nbill of exchange though drawn on a banker, if not payable on<br \/>\ndemand is not a cheque.\t A post-dated cheque is only a bill<br \/>\nof exchange when it is written or drawn. It becomes a<br \/>\ncheque when it is payble on demand.  It is not payable till the<br \/>\ndate which is shown on the face of the document.  It will<br \/>\nbecome a cheque only on the date shown on it, prior to that<br \/>\nit remains a bill of exchange. In Sawhney&#8217;s case this Court<br \/>\nwas concerned with the question of limitation as provided in<br \/>\nproviso (a) to <a href=\"\/doc\/1823824\/\" id=\"a_15\">Section 138<\/a> of the Act.\tThis proviso requires<br \/>\nthat a cheque should be presented to the Bank within a<br \/>\nperiod of six months from the date on which it is drawn or<br \/>\nwithin the period of its validity, whichever is earlier.  The<br \/>\ncheques in question in Sawhney&#8217;s case (supra) were dated<br \/>\n15.12.1991 and 15.5.1991 totalling an amount of<br \/>\nRs.5,00,000\/-.\tThese cheques were returned by the Banker<br \/>\nwith the endorsement &#8220;not arranged for\tno fund&#8221;.  The<br \/>\npayee thereafter issued notice as contemplated under<br \/>\n<a href=\"\/doc\/1823824\/\" id=\"a_16\">Section 138<\/a> of the Act followed by complaint under <a href=\"\/doc\/1823824\/\" id=\"a_17\">Section<br \/>\n138<\/a> being filed in the Court of the Chief Judicial Magistrate<br \/>\nat Karnal.  It appears from the judgment that these cheques<br \/>\nwere handed over to the payee in a settlement arrived at in a<br \/>\ncourt case on 5th March, 1990.\tThe question for<br \/>\nconsideration was as to the date on which the cheques in<br \/>\nquestion could be taken as drawn, in other words, what is<br \/>\nthe starting point of limitation of six months provided in<br \/>\nproviso (a) to <a href=\"\/doc\/1823824\/\" id=\"a_18\">Section 138<\/a> of the Act.\tAccording to the<br \/>\ndrawer the cheques were drawn in March, 1990 when they<br \/>\nwere written and handed over to the payee.  The cheques<br \/>\nwere post-dated and bore the dates mentioned hereinbefore.<br \/>\nProviso (a) to <a href=\"\/doc\/1823824\/\" id=\"a_19\">Section 138<\/a> uses the words &#8220;the date on which<br \/>\nit is drawn&#8221;.  The cheques were drawn in March, 1990 and<br \/>\nwere presented for encashment in the year 1991 which was<br \/>\nbeyond the period of six months provided in proviso (a) to<br \/>\n<a href=\"\/doc\/1823824\/\" id=\"a_20\">Section 138<\/a> and therefore, no offence was said to be made<br \/>\nout under <a href=\"\/doc\/1823824\/\" id=\"a_21\">Section 138<\/a>.\tKeeping in view the object of <a href=\"\/doc\/1823824\/\" id=\"a_22\">Section<br \/>\n138<\/a> i.e.  to enhance the acceptability of cheques by making<br \/>\nthe drawer liable for penalty in case the cheque is<br \/>\ndishonoured, it was felt that drawer of a post-dated cheque<br \/>\ncould defeat <a href=\"\/doc\/1823824\/\" id=\"a_23\">Section 138<\/a> of the Act by showing a date<br \/>\nbeyond six months of its delivery.  An interpretation which<br \/>\nsupports the object of the provision had to be adopted.<br \/>\nTherefore, it was held that a post dated cheque for purpose<br \/>\nof clause (a) of the provision to <a href=\"\/doc\/1823824\/\" id=\"a_24\">section 138<\/a> has to be<br \/>\nconsidered to have been drawn on the date it bears.  On the<br \/>\nbasis of <a href=\"\/doc\/6856\/\" id=\"a_25\">Sections 5<\/a> and <a href=\"\/doc\/1012630\/\" id=\"a_26\">6<\/a> of the Act, it was observed that<br \/>\n&#8220;post-dated cheque is only a bill of exchange when it is<br \/>\nwritten or drawn, it becomes a cheque when it is payable on<br \/>\ndemand.\t The post-dated cheque is not payable till the date<br \/>\nwhich is shown on the face of the document.  It will only<br \/>\nbecome cheque on the date shown on it and prior to that it<br \/>\nremains a bill of exchange under <a href=\"\/doc\/6856\/\" id=\"a_27\">Section 5<\/a> of the Act.\tAs a<br \/>\nbill of exchange a post-dated cheque remains negotiable but<br \/>\nit will not become a cheque till the date when it becomes<br \/>\npayable on demand.&#8221;  The ratio of the decision in<br \/>\nSawhney&#8217;s case is found in the following words:\n<\/p>\n<p id=\"p_3\">&#8220;One of the main ingredients of the<br \/>\noffence under <a href=\"\/doc\/1823824\/\" id=\"a_28\">Section 138<\/a> of the Act is,<br \/>\nthe return of the cheque by the bank<br \/>\nunpaid.\t Till the time the cheque is<br \/>\nreturned by the bank unpaid, no offence<br \/>\nunder <a href=\"\/doc\/1823824\/\" id=\"a_29\">Section 138<\/a> is made out.\tA<br \/>\npostdated cheque cannot be presented<br \/>\nbefore the bank and as such the<br \/>\nquestion of its return would not arise.\t It<br \/>\nis only when the postdated cheque<br \/>\nbecomes a &#8220;cheque&#8221;, with effect from<br \/>\nthe date shown on the face of the said<br \/>\ncheque, the provisions of <a href=\"\/doc\/1823824\/\" id=\"a_30\">Section 138<\/a><br \/>\ncome into play.\t The net result is that a<br \/>\npostdated cheque remains a bill of<br \/>\nexchange till the date written on it.  With<br \/>\neffect from the date shown on the face<br \/>\nof the said cheque it becomes a<br \/>\n&#8220;cheque&#8221; under the Act and the<br \/>\nprovisions of <a href=\"\/doc\/1543553\/\" id=\"a_31\">Section 138(a)<\/a> would<br \/>\nsquarely be attracted.\tIn the present<br \/>\ncase the postdated cheques were drwn<br \/>\nin March 1990 but they became<br \/>\n&#8220;cheques&#8221; in the year 1991 on the dates<br \/>\nshown therein.\tThe period of six<br \/>\nmonths, therefore, has to be reckoned<br \/>\nfrom the dates mentioned on the face of<br \/>\nthe cheques.&#8221;\n<\/p>\n<p id=\"p_4\">\tFrom the above it will be seen that in Sawhney&#8217;s case<br \/>\nthe point for consideration was the date from which the<br \/>\nperiod of six months provided in proviso (a) to <a href=\"\/doc\/1823824\/\" id=\"a_32\">Section 138<\/a><br \/>\nshould be counted.  The Court clearly held that a post-dated<br \/>\ncheque becomes a cheque only on the date it bears when it<br \/>\nbecomes payable on demand, and therefore, limitation will<br \/>\nstart from that date.\n<\/p>\n<p id=\"p_5\">In the present case the issue is very different.  The<br \/>\nissue is regarding payment of a post-dated cheque being<br \/>\ncountermanded before the date mentioned on the face of the<br \/>\ncheque.\t For purpose of considering the issue, it is relevant<br \/>\nto see <a href=\"\/doc\/268919\/\" id=\"a_33\">Section 139<\/a> of the Act which creates a presumption in<br \/>\nfavour of the holder of a cheque.  The said Section provides<br \/>\nthat &#8220;it shall be presumed that, unless the contrary is proved,<br \/>\nthat the holder of a cheque received the cheque of the<br \/>\nnature referred to in <a href=\"\/doc\/1823824\/\" id=\"a_34\">Section 138<\/a> for the discharge, in whole<br \/>\nor in part, or any debt or other liability&#8221;.  Thus it has to be<br \/>\npresumed that a cheque is issued in discharge of any debt<br \/>\nor other liability.  The presumption can be rebutted by<br \/>\nadducing evidence and the burden of proof is on the person<br \/>\nwho wants to rebut the presumption.  This presumption<br \/>\ncoupled with the object of Chapter XVII of the Act which is to<br \/>\npromote the efficacy of banking operation and to ensure<br \/>\ncredibility in business transactions through banks persuades<br \/>\nus to take a view that by countermanding payment of post-<br \/>\ndated cheque, a party should not be allowed to get away<br \/>\nfrom the penal provision of <a href=\"\/doc\/1823824\/\" id=\"a_35\">Section 138<\/a> of the Act.  A<br \/>\ncontrary view would render <a href=\"\/doc\/1823824\/\" id=\"a_36\">Section 138<\/a> a dead letter and will<br \/>\nprovide a handle to persons trying to avoid payment under<br \/>\nlegal obligations undertaken by them through their own acts<br \/>\nwhich in other words can be said to be taking advantage of<br \/>\none&#8217;s own wrong.  If we hold otherwise, by giving<br \/>\ninstructions to banks to stop payment of a cheque after<br \/>\nissuing the same against a debt or liability, a drawer will<br \/>\neasily avoid penal consequences under <a href=\"\/doc\/1823824\/\" id=\"a_37\">Section 138<\/a>.  Once<br \/>\na cheque is issued by a drawer, a presumption under<br \/>\n<a href=\"\/doc\/268919\/\" id=\"a_38\">Section 139<\/a> must follow and merely because the drawer<br \/>\nissued notice to the drawee or to the bank for stoppage of<br \/>\npayment it will not preclude an action under <a href=\"\/doc\/1823824\/\" id=\"a_39\">Section 138<\/a> of<br \/>\nthe Act by the drawee or the holder of the cheque in due<br \/>\ncourse.\t This was the view taken by this Court in <a href=\"\/doc\/1371862\/\" id=\"a_40\">Modi<br \/>\nCements Ltd. vs. Kuchil Kumar Nandi<\/a> [1998 (3) SCC 249].<br \/>\nOn same facts is the decision of this Court in <a href=\"\/doc\/1693025\/\" id=\"a_41\">Ashok<br \/>\nYeshwant Badave vs.  Surendra Madhavrao Nighojakar<br \/>\nand another<\/a> [2001 (3) SCC 726]. The decision in Modi&#8217;s<br \/>\ncase overruled an earlier decision of this Court in<br \/>\nElectronics Trade &amp; Technology Development Corpon.<br \/>\n<a href=\"\/doc\/979235\/\" id=\"a_42\">Ltd. vs. Indian Technologists &amp; Engineers<\/a> [AIR 1996 SC<br \/>\n2339] which had taken a contrary view.\tWe are in respectful<br \/>\nagreement with the view taken in Modi&#8217;s case.  The said<br \/>\nview is in consonance with the object of the legislation.  On<br \/>\nthe faith of payment by way of a post-dated cheque, the<br \/>\npayee alters his position by accepting the cheque.  If<br \/>\nstoppage of payment before the due date of the cheque is<br \/>\nallowed to take the transaction out of the purview of <a href=\"\/doc\/1823824\/\" id=\"a_43\">Section<br \/>\n138<\/a> of the Act, it will shake the confidence which a cheque is<br \/>\notherwise  intended to inspire regarding payment being<br \/>\navailable on the due date.\n<\/p>\n<p id=\"p_6\">NEPC Micon Ltd. &amp; Ors. Vs.  Magma Leasing Ltd.<br \/>\n[(1999) 4 SCC 253] was a case in which the drawer of the<br \/>\ncheque closed the account in the Bank before presentation<br \/>\nof the cheque and the cheque when presented was returned<br \/>\nby the Bank with the remark &#8220;account closed&#8221;.  The question<br \/>\narose whether in this situation <a href=\"\/doc\/1823824\/\" id=\"a_44\">Section 138<\/a> of the Act\twould<br \/>\nbe attracted.  It was contended on behalf of the appellant<br \/>\nthat <a href=\"\/doc\/1823824\/\" id=\"a_45\">Section 138<\/a> being a penal provision it should be strictly<br \/>\ninterpreted. <a href=\"\/doc\/1823824\/\" id=\"a_46\">Section 138<\/a> according to the appellant applied<br \/>\nonly in two situations i.e. either because the money standing<br \/>\nto the credit of the account of the drawer is insufficient to<br \/>\nhonour the cheque or it exceeds the amount arranged to be<br \/>\npaid from that account by an agreement made with the bank.<br \/>\nRejecting the contentions raised on behalf of the accused<br \/>\nthis Court held that return of a cheque on account of account<br \/>\nbeing closed would be similar to a situation where the<br \/>\ncheque is returned on account of insufficiency of funds in the<br \/>\naccount of the drawer of the cheque.  Before one closes his<br \/>\naccount in the Bank he withdraws the entire amount<br \/>\nstanding to credit in the account.  Withdrawal of the entire<br \/>\namount would therefore mean that there were no funds in<br \/>\nthe account to honour the cheque which squarely brings the<br \/>\ncase within <a href=\"\/doc\/1823824\/\" id=\"a_47\">Section 138<\/a> of the Act. On the question of strict<br \/>\ninterpretation of penal provisions raised on behalf of the<br \/>\naccused it was observed: &#8220;If the interpretation, which is<br \/>\nsought for, were given, then it would only encourage,<br \/>\ndishonest persons to issue cheques and before presentation<br \/>\nof the cheques, close the account and thereby escape from<br \/>\nthe penal consequences of <a href=\"\/doc\/1823824\/\" id=\"a_48\">Section 138<\/a>.&#8221;\t Any interpretation<br \/>\nwhich withdraws the life and blood of the provision and<br \/>\nmakes it ineffective and a dead letter, should be averted. It is<br \/>\nthe duty of the court to interpret the provision consistent with<br \/>\nthe legislative intent and purpose so as to suppress the<br \/>\nmischief and advance the remedy.  The legislative purpose<br \/>\nis to permit the efficacy of banking and of ensuring that in<br \/>\ncommercial or contractual transactions, cheques are not<br \/>\ndishonoured and credibility in transacting business through<br \/>\nbanks is maintained.  The Court relied upon its earlier<br \/>\njudgment in  Modi Cement Ltd.(supra).  We would like to<br \/>\nquote the following observations t contained in NEPC Micon<br \/>\nLtd. &amp; Ors. Vs. Magma Leasing Ltd. (supra).<br \/>\n&#8220;15. &#8221; In view of the aforesaid discussion we are of<br \/>\nthe opinion that even though <a href=\"\/doc\/1823824\/\" id=\"a_49\">section 138<\/a> is a penal<br \/>\nstatute, it is the duty of the court to interpret it<br \/>\nconsistent with the legislative intent and purpose so<br \/>\nas to suppress the mischief and advance the<br \/>\nremedy.\t As stated above, <a href=\"\/doc\/1823824\/\" id=\"a_50\">Section 138<\/a> of the Act has<br \/>\ncreated a contractual breach as an offence and the<br \/>\nlegislative purpose is to promote efficacy of banking<br \/>\nand of ensuring that in commercial or contractual<br \/>\ntransactions cheques are not dishonoured and<br \/>\ncredibility in transacting business through cheques is<br \/>\nmaintained.  The above interpretation would be in<br \/>\naccordance with the principle of interpretation quoted<br \/>\nabove &#8220;brush away the cobweb varnish, and shew<br \/>\nthe transactions in their true light&#8221; (Wilmot, C.J.) or,<br \/>\n(by Maxwell) &#8220;to carry out effectively the breach of<br \/>\nthe statute, it must be so construed as to defeat all<br \/>\nattempts to do, or avoid doing, in an indirect or<br \/>\ncircuitous manner that which it has prohibited.&#8221;<br \/>\nHence, when the cheque is returned by a bank with<br \/>\nan endorsement &#8220;account closed&#8221;, it would amount to<br \/>\nreturning the cheque unpaid because &#8220;the amount of<br \/>\nmoney standing to the credit of that account is<br \/>\ninsufficient to honour the cheque&#8221; as envisaged in<br \/>\n<a href=\"\/doc\/1823824\/\" id=\"a_51\">Section 138<\/a> of the Act.&#8221;\n<\/p>\n<p id=\"p_7\">We are unable to agree with the reasoning adopted by<br \/>\nthe courts below.  The impugned judgments of the High<br \/>\nCourt and the Judicial Magistrate, Ist Class, Panaji, Goa are<br \/>\nset aside. We hold that <a href=\"\/doc\/1823824\/\" id=\"a_52\">Section 138<\/a> of the Negotiable<br \/>\nInstruments Act will be attracted in the facts of the case.<br \/>\nHowever, whether a case for punishment under that<br \/>\nprovision is made out, will depend on outcome of the trial.<br \/>\nThe cases are remanded to the concerned Judicial<br \/>\nMagistrate for deciding the complaints filed by the appellant<br \/>\nherein on merits in accordance with law.  All the appeals are<br \/>\nallowed.  Nothing contained in this judgment be taken as<br \/>\nexpression of opinion on merits.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Goaplast Pvt. Ltd vs Shri Chico Ursula D&#8217;Souza &amp; Anr on 7 March, 2003 Author: A Kumar Bench: M.B. Shah, Arun Kumar CASE NO.: Appeal (crl.) of 2003 PETITIONER: Goaplast Pvt. Ltd. RESPONDENT: Shri Chico Ursula D&#8217;Souza &amp; Anr. DATE OF JUDGMENT: 07\/03\/2003 BENCH: M.B. SHAH &amp; ARUN KUMAR JUDGMENT: JUDGMENT [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-270383","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Goaplast Pvt. 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