Stop payments are made based on the cheque number and irrespective of the amount of the cheque.
So he can issue stop payment orders even if the account had nil balance. Else, in case of lost cheques, how will you issue a stop order ? Check with your bank. The bank online systems also simply ask for the cheque number for which stop payment order is to be issued.

Sec 138 does not apply where no consideration is present.
Obligation to honor a commitment is not recognised under contract act as consideration, except for cases of promissory estoppel (where the other party has made further commitments or spent money on expectation of the consideration). In this case a sec 138 does not apply. Further, sec 138 can not be used in case of any dispute between the parties on the transaction for which the cheque was issued. This has successfully been used in court to quash sec 138 proceedings

I agree that in the absence of consideration, 138 doesn't apply

I am not a lawyer, but have little knowledge on these. Lost cheque is a different case altogether.

One can issue stop payment by just giving cheque number. Bank is under no obligation to honour if the Account balance is not sufficient. As per the act, Bank can refuse to honour a cheque only if the account balance is more than the cheque amount. Else, some people would issue cheque and give stop payment advice every time.

As per the N.I. Act, even if one sign a blank cheque, in the court, it is considered valid. The payee can fill any name, any date and any amount. (Of course consideration needs to be established in court).

When you report loss of cheque, bank won't honour it. Once the cheque is presented for clearing, you get intimation that a lost cheque has been presented for clearance and legal formalities follow as to whether the 'cheque lost' complaint was a genuine one or to defraud. Had I given a cheque to X and lodged 'Cheque lost' complaint, I can be tried under N.I. 138. I can even be tried under other sections of IPC for trying to defraud bank and X.
Well, your contention on stop payments are completely wrong.
Once a stop payment is given then the bank is under obligation to return the cheque with a comment that there is a stop payment order. In case there is a theft reported, then the cheque will be kept by the bank pending police action (which is not in this case)

My other comments stand.
Let the original poster do his homework first on whether the bond is legal or not.

When I said Legal formalities would follow, in case of a lost cheque, it includes Police action.

Once reported as stolen, cheque cannot be honoured. Both parties are called by bank to present their case and Bank first probe with the help of their vigilance team. If criminality is established, then it is forwarded to Police. If no criminality is established, no action would be taken. (For eg: After reporting loss of cheque, if customer finds his cheque book, but fails to report to bank and issues this cheque to another party).

Criminality part comes when a customer issues cheque to another party and reports loss of cheque or If 3rd party fills detail in a stolen cheque and present it for clearing. Under these circumstances, police action is initiated. In case payer is at fault, he can be tried under N.I. Act 138 and IPC sections. If payee is at fault, he can be tried under IPC and other sections of N.I. Act

I guess I am clear.

Payee can be tried under 138, if he issues a cheque for Rs. 10000 but has only 9000 in the account and gives stop payment. On the other hand, if the account balance is Rs.10000/- one can issue stop payment and 138 won't apply. Dispute on payment terms between payer and payee will not prevent bank for honouring / dis-honouring a cheque, unless it gets direction from court. You can check this with any good lawyer. (All these, subject to consideration being present. I am not responding with reference to the query raised by Anonymous member here. This is as per regulation issued by RBI ).

With regard to query by Anonymous member, whether consideration is established or not, it is for the advocate to check all the terms of the agreement
Hi Saswatabanerjee,
I went through all the comments. Thank you all for valuable suggestions regarding cheque bounce issues. I consulted a lawyer and sent a reply to company's notice. Once again Thank you all.


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