Goaplast v Chico Ursula D'Souza (2003) | Post-Dated Cheque, Stop Payment & Section 138

Banking Law Case 20 of 29 by Law Easy, for LL.B., CLAT PG, UGC NET Law and Judiciary exams. Case: Goaplast Pvt Ltd v Chico Ursula D'Souza (2003), Supreme Court of India, decided November 2003. FACTS: A former managing director of the company had given it 10 post-dated cheques of Rs 40,000 each towards money he was said to have misappropriated. He then stopped payment. The magistrate acquitted him and the High Court upheld the acquittal. LEGAL ISSUE: Does stopping payment of a post-dated cheque take the drawer outside Section 138 of the Negotiable Instruments Act? JUDGMENT: The Supreme Court reversed both courts. It held that they had failed to give effect to the presumption under Section 139, and that stopping payment of a post-dated cheque does not take the drawer outside Section 138. The court explained that cheques had often been issued merely to stall or defraud creditors, and that Parliament wanted to restore the credibility of cheques as a trustworthy substitute for cash. PRINCIPLE TO REMEMBER: A cheque returned with the remark payment stopped by the drawer can attract the offence, subject to the drawer's right to rebut the presumption. The return memo alone does not decide criminal liability. PROVISIONS: Sections 138 and 139 of the Negotiable Instruments Act, 1881. Section 138 requires a cheque drawn on an account maintained by the accused, for the discharge of a legally enforceable debt or other liability. EXAM NOTE: A stop-payment letter does not replace a careful check of the cheque, the liability, the bank return, the demand notice and the deadline for payment. The drawer can still answer the statutory presumption by evidence. PLAYLIST (all 29 cases in order): https://www.youtube.com/playlist?list=PLbhYsrMKgACA COMPLETE LECTURE (all 29 cases with timestamps): https://youtu.be/ayAN7RLlfPM PREVIOUS CASE (19, Modi Cements v Kuchil Kumar Nandi): https://youtu.be/8vUPB3JoJ0E More law notes: https://www.thelaweasy.com If this helps your exam preparation, please subscribe to Law Easy. This video is for education and is not legal advice. #BankingLaw #ChequeBounce #Section138 #CLATPG #Judiciary #LLB #LawEasy