In Jayalakshmi (R.) v. Rashida [1991] LW (Crl.) 602; [1992] 74 Comp Cas 841 (Mad) Pratap Singh J., while considering the argument that only in a case where the cheque was returned unpaid on the ground of insufficiency of funds or that it exceeded the amount arranged to be paid, an offence under section 138 of the Act should be held to have been made out and not when the endorsement was “payment countermanded by the drawer”. The relevant portion of the observations of learned judge is as under (at page 844 of 74 Comp Cas): “A plain reading of section 138 of the Act would clearly indicate that only in those two contingencies, viz., when the cheque was returned unpaid because of insufficiency of funds and/or it exceeds the amount arranged to be paid is an offence committed. In cases, where the cheque is returned unpaid with the endorsement ‘refer to drawer’, it has been held by this court that the endorsement ‘refer to drawer’ is an euphemistic way of informing the payee that the drawer of the cheque has got no amount to his credit to honour the cheque. Such is not the case here. In all the complaints, the cheques were returned unpaid with the endorsements refer to drawer’ and ‘payment countermanded by the drawer’. So, the reason for referring to the drawer has been pinpointed in the endorsement itself, viz., that payment was countermanded by the drawer. Such a case would not come within the ambit and scope of section 138, Negotiable Instruments Act.”
