Negotiable Instruments Act, 1881 – Section 138 – Dishonour of cheque – “Payment stopped by drawer” endorsement – Legally enforceable debt or liability. A cheque issued conditionally, where the condition precedent (securing signatures of legal heirs on a confirmation deed) is not fulfilled by the payee, does not constitute a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act. The drawer’s instruction to stop payment in such a scenario, especially when sufficient funds are available, does not attract the penal provisions of Section 138.
Criminal Procedure Code, 1973 – Section 313(b) – Examination of Accused. The denial by the Accused of incriminating evidence during examination under Section 313(b) Cr.P.C., coupled with probable defence evidence, can rebut the presumption under Section 139 of the Negotiable Instruments Act.
Dishonour by “Payment Stopped by Drawer”: Even if a cheque is dishonoured with the endorsement “payment stopped by drawer” and sufficient funds are available, the provisions of Section 138 NI Act are not attracted if the underlying transaction lacked a present legally enforceable debt due to non-fulfillment of a pre-condition for its issuance.