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Pulsive Technologies Pvt. Ltd. v. State of Gujarat

Criminal Appeal · Neutral citation not assigned (Criminal Appeal No. 1808 of 2014)Decided 22 Aug 2014
Criminal Appeal No. 1808 of 2014
Justice Ranjana Prakash Desai · Justice N.V. Ramana

Background

A computer equipment supplier received a cheque for ₹11,80,670 towards outstanding dues. The bank returned it because the customer had stopped payment, allegedly over unrepaired equipment. The Gujarat High Court quashed the supplier's cheque-dishonour complaint, treating the stop-payment instruction and the contractual dispute as grounds to end the prosecution.

Decision Breakdown

The Supreme Court set aside the quashing order and directed the Vadodara trial court to decide the complaint within a year of receiving its order. A stop-payment instruction does not by itself take a dishonoured cheque outside Section 138 of the Negotiable Instruments Act. The presumption of a debt can be rebutted, but whether the supplier failed to fulfil its obligations, or payment was otherwise made, required evidence. The High Court could not conclusively accept those disputed defences at the quashing stage. The Court did not convict the company or its directors.

Lesson Learnt

Stopping a cheque does not automatically prevent a dishonour prosecution; a genuine dispute about the debt can be proved as a defence through evidence.

Official source (sci.gov.in)View Judgment (PDF)

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