Modi Cements v Kuchil Kumar Nandi (1998) | Stop Payment Cheque & Section 138 Explained

Banking Law Case 19 of 29 by Law Easy, for LL.B., CLAT PG, UGC NET Law and Judiciary exams. Case: Modi Cements Ltd v Kuchil Kumar Nandi (1998), Supreme Court of India (three-judge bench), decided March 1998. FACTS: Modi Cements supplied cement on credit to the respondent, who gave it three cheques of Rs 2 lakh each in part payment. Before they were presented he wrote to his bank to stop payment, and the cheques came back with the remark payment stopped by the drawer. The Calcutta High Court quashed the complaints because the cheques had not been returned for insufficient funds. LEGAL ISSUE: Does a stop-payment instruction take a cheque outside Section 138 of the Negotiable Instruments Act? JUDGMENT: The Supreme Court set aside the High Court order. It held that once a cheque is issued, the presumption under Section 139 follows and the drawer cannot avoid prosecution merely by telling his bank to stop payment. The court respectfully differed from the earlier remark in Electronics Trade (Case 18), and later decisions treat that remark as overruled. The drawer can still rebut the presumption at trial, for example by showing that he had enough money in his account and stopped payment for a genuine reason. PRINCIPLE TO REMEMBER: Stopping payment cannot, by itself, defeat the conditions of the cheque law. The stop instruction and the underlying debt are different legal questions. PROVISIONS: Sections 138 and 139 of the Negotiable Instruments Act, 1881. EXAM NOTE: Do not say that every stop-payment return automatically proves guilt. The complaint must still satisfy every statutory step (a cheque for a legally enforceable debt, presentation, the statutory demand notice and failure to pay in time), and the accused can raise an evidence-based defence about the debt. 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 (18, Electronics Trade v Indian Technologists): https://youtu.be/I3GgnglCJ8A 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