Section 138 dishonour law: cheque returned after court-attachment of account did not make out the offence.

Section 138 of the Negotiable Instruments Act is attracted only when a cheque drawn on an account maintained by the drawer is returned unpaid for a reason contemplated by the provision, such as insufficiency of funds or excess over the agreed arrangement. Where the drawer's bank account had already been attached by court order, the drawer was disabled from operating, funding, withdrawing from, or effectively instructing the bank in relation to that account, so the dishonour was not attributable to a voluntary act or omission by the drawer. The Delhi HC held that such an attached account could not be treated as maintained by the drawer in the relevant sense, and no offence under Section 138 was made out; the complaint was liable to be quashed.

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Issues: Whether prosecution under Section 138 of the Negotiable Instruments Act is maintainable where a post-dated cheque is dishonoured after the drawer's bank account had been attached by a court order, preventing the drawer from operating or maintaining the account.

Analysis: The statutory offence under Section 138 is attracted only when a cheque drawn on an account maintained by the drawer is returned unpaid for the reasons specified in the provision, namely insufficiency of funds or the cheque amount exceeding the arrangement with the bank. The Court distinguished cases involving stop-payment instructions or closure of account by the drawer, and held that the operative factor is whether the dishonour is attributable to a voluntary act or omission of the drawer and whether the real cause is one contemplated by the section. An account attached by court order cannot be treated as an account maintained by the drawer in a practical or legal sense, because the drawer is disabled from operating it, depositing funds into it, withdrawing funds from it, or issuing effective instructions to the bank. The attachment here was not a voluntary act of the drawer and did not amount to a device to evade liability under Section 138.

Conclusion: No offence under Section 138 of the Negotiable Instruments Act was made out on the facts, and the complaint was liable to be quashed.

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