Cheque dishonour for account closure lies outside Section 138, and strict construction prevents expansion by implication.

Dishonour of a cheque for closure of the drawer's account was held not to fall within Section 138 of the Negotiable Instruments Act, because the provision is confined to dishonour for insufficiency of funds or where the amount exceeds the arrangement with the bank. The court applied strict construction of penal provisions and declined to extend the section by liberal interpretation to cover a closed account. On that basis, no ground was made out to quash the complaint in exercise of inherent jurisdiction, and the dismissal of the complaint was upheld.

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Issues: Whether dishonour of a cheque on the ground of closure of the drawer's account falls within Section 138 of the Negotiable Instruments Act, 1881, and whether the complaint could be quashed under the inherent jurisdiction.

Analysis: Section 138 is attracted only where the cheque is dishonoured for insufficiency of funds or because the amount exceeds the arrangement with the bank. A closed account is a distinct situation and is not brought within the statutory language by liberal construction. Penal provisions must be construed strictly, and the inherent power is not to be used to quash a validly dismissed complaint on an incorrect extension of the section.

Conclusion: Dishonour of a cheque for closure of the account does not by itself constitute an offence under Section 138. The order dismissing the complaint was upheld and no ground for quashing was made out.

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