Stop-payment endorsement does not by itself defeat a cheque dishonour complaint where Section 138 ingredients are otherwise made out.

A complaint under Section 138 of the Negotiable Instruments Act is not liable to be quashed merely because the cheque was returned with a "payment stopped by the drawer" endorsement instead of words indicating insufficiency of funds. The decisive test is whether the statutory ingredients of dishonour are made out on the facts, not the particular phrase used by the bank. If the averments and circumstances show dishonour within the scope of Section 138, a stop-payment endorsement does not by itself defeat prosecution. The Kerala HC held that a rigid literal reading would undermine the object of the provision, and the complaint could proceed.

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Issues: Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 can be quashed merely because the cheque was returned with an endorsement such as "payment stopped by the drawer" instead of the words indicating insufficiency of funds.

Analysis: Section 138 was enacted to enhance the acceptability of cheques and to penalise dishonour when the cheque is returned unpaid because the drawer's account lacks sufficient funds or exceeds the arrangement with the bank. The decisive inquiry is whether the statutory ingredients are made out on the facts, and not whether the bank has used any particular formula of words in its endorsement. A stop payment endorsement does not by itself defeat the complaint if the averments and circumstances show that the cheque was in fact dishonoured for the reasons contemplated by the section. A rigid literal construction of the penal provision would frustrate the object of the enactment.

Conclusion: The complaint was not liable to be quashed at the threshold, and the petition was rejected.

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