A stop payment (or "countermand") is an instruction by the drawer to the drawee bank not to pay a specified cheque. When the payee presents it, the bank returns it with the memo "payment stopped by drawer". The Supreme Court has held that such a return amounts to dishonour under Section 138 where the cheque was issued for a legally enforceable debt and the drawer did not have sufficient funds or a genuine reason connected to the transaction. The same 30-day notice and 15-day payment timelines apply.
How stop payment works in India
The drawer gives written or online instructions to its bank identifying the cheque number and amount. When the cheque is presented the bank returns it unpaid with the stop-payment reason. The payee gets a memo like any other dishonour and may send a Section 138 notice. At trial the drawer must show why payment was stopped: for example that goods were never supplied, the debt was paid by other means, or the cheque was obtained by fraud. If the stop was simply to avoid paying an admitted invoice, the conviction follows as it would for insufficient funds.
Why it matters for getting paid
Buyers who stop payment usually think they have escaped criminal liability and will stall. A prompt notice that cites the Supreme Court's position and attaches the invoices and delivery proof changes that view. The cheque return memo must be acted on within 30 days exactly as for insufficient funds. Suppliers should also keep records showing the goods or services were delivered and accepted, since that is what defeats the "genuine dispute" defence.
How FundRaksha uses it
FundRaksha treats a stop-payment return as a Section 138 matter and sends the notice within 24 hours, with the delivery proof and the statement of account attached so the drawer sees the dispute defence will fail. The dedicated advocate then files the complaint if the 15 days pass. The fee is 30% of recovery; nothing is charged upfront.
Worked example (hypothetical)
A Pune machinery supplier delivers equipment worth ₹12,00,000, receives a cheque for ₹12,00,000 dated 30 days later and a signed installation report. On presentation the cheque returns "payment stopped by drawer" on 2 May. The notice goes on 5 May, received 8 May; payment due 23 May; nothing is paid. The complaint is filed on 1 June. The drawer's defence is "machine not working", but the signed installation report and absence of any written complaint before the stop undermine it. The court orders ₹2,40,000 (20%) interim compensation and the matter settles for the full ₹12,00,000 within four months.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.