Section 138 liability fails when a BIFR restraint order makes payment impossible before the statutory notice period expires.

Criminal complaints under Section 138 of the Negotiable Instruments Act cannot proceed where, before expiry of the statutory 15-day payment period after notice, a BIFR restraint order prevents the company from disposing of or alienating its assets and makes payment impossible. The offence is complete only on dishonour, service of notice, and failure to pay within that period; if non-payment is beyond the drawer's control when liability would otherwise crystallise, the essential ingredient of default is not satisfied. The analysis follows Kusum Ingots and rejects a later contrary view, with the complaints treated as not maintainable on these facts.

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Issues: Whether criminal complaints under Section 138 of the Negotiable Instruments Act could proceed when, before expiry of the statutory period after notice, the company was restrained by a BIFR order from disposing of or alienating its assets and payment of the cheque amount had become impossible.

Analysis: The offence under Section 138 is completed only upon dishonour of the cheque, service of notice, and failure to pay within 15 days of receipt of notice. A restraint order passed by BIFR under the sick industrial companies legislation, which prohibited disposal or alienation of the company's assets, prevented the company and its directors from making payment once the statutory period expired. Since non-payment was beyond their control on the date when the offence would otherwise have been completed, the essential ingredient of failure to pay within the stipulated period was not satisfied. The decision in Kusum Ingots governed the issue, and the later contrary view relied upon by the complainant could not prevail against the Supreme Court authorities.

Conclusion: The complaints under Section 138 were not maintainable on these facts and were liable to be quashed, in favour of the petitioner.

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