Cheque dishonour from a closed account attracts Section 138 liability, reinforcing banking credibility and payment discipline.

A cheque drawn on an account that had already been closed and was dishonoured on presentation was treated as falling within Section 138 of the Negotiable Instruments Act, 1881, because the provision is aimed at preserving the credibility of cheques and the faith of banking transactions. The Court read the requirement that the cheque be drawn on an account maintained by the drawer in light of the statutory object and the mischief addressed by Sections 138 to 142, holding that closure of the account leaves no credit and therefore amounts to the dishonour contemplated by the section. It also noted that an earlier contrary view could not bind because it had not accounted for the Supreme Court's interpretation. The complaint was therefore not liable to be quashed.

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Issues: Whether a cheque issued on an account that had already been closed, and dishonoured on presentation, attracts criminal liability under Section 138 of the Negotiable Instruments Act, 1881, and whether an earlier contrary view treating such cases as outside Section 138 is per incuriam.

Analysis: Section 138 was enacted to enhance the credibility of cheques and to promote faith in banking transactions. The expression that the cheque must be drawn on an account maintained by the drawer was construed in the context of the statutory object, the mischief sought to be remedied, and the broader scheme of Sections 138 to 142. A closed account, when a cheque is drawn and presented, was treated as a case where the amount standing to the credit of that account is nil, which falls within the mischief of dishonour contemplated by Section 138. The Court held that the earlier contrary decision did not notice the binding effect of the Supreme Court's interpretation and therefore could not operate as a binding precedent.

Conclusion: Dishonour of a cheque issued after closure of the account does attract Section 138 of the Negotiable Instruments Act, 1881, and the petition seeking quashing of the complaint was not sustainable.

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