“Stop payment” instruction-Does the drawer get immunity from criminal liability under section 138 of N.I. Act.

This paper attempts to study whether criminal liability contemplated in section 138 Negotiable Instruments Act 1881 is attracted, when the drawer, after delivering the cheque to the payee, gives “ stop payment” instruction to the drawee bank, resulting in returning the cheque unpaid. The amendment made in the N.I. Act by Act 66 of 1989, inserted a new chapter XVII containing sections 138 to 142 with effect from 01.04.1989, Section 138 created a legal fiction that when a cheque issued is returned unpaid by the drawee bank, on the ground of insufficient funds or it exceeded the arrangement made with the banker, the drawer of the cheque shall, notwithstanding any other provisions of the Act, be deemed to have committed a criminal offence, warranting sentence of imprisonment that may extend to two years or fine which may extend to twice the amount of cheque or both. Section 139 created a presumption that the holder of the cheque, received the cheque for the discharge of a legally enforceable debt. It is not uncommon, a dishonest person, knowing well that his bank account does not have sufficient funds, with a view to delay or defraud the creditor, issues cheque but later gives “stop payment” direction to his banker. His sole aim is to escape from criminal liability under the provisions of the N.I. Act. In this article I have analysed the interpretation of the relevant provisions of the Act and various judicial decisions, where courts have gone beyond the veil of the debtor, to find out the real reason for issuing “stop payment” instruction. When the cheque was issued without sufficient funds in the account of the drawer, stop payment instruction given would not save the drawer from the criminal liability mandated in sections 138–142 of the N.I. Act.