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KERALA HIGH COURT
A. Badharudeen, J.
Danikutti Philip – Appellant
versus
Johnykutty. J. and Anr. – Respondents
Crl.A No.1965 of 2025
Decided on 26.3.2026
For the Appellant:Shri. Lalji P. Thomas, Advocate
For the Respondents:Shri. Sarath Babu Kottakkal, Smt. Archana Vijayan and Shri. Sebastin, Advocates and Sri. Vipin Narayan A., Sr. Public Prosecutor
IMPORTANT POINT
Dishonour of cheque – When a part of sum covered by cheque is paid during period between date on which cheque is drawn and its encashment upon maturity, then legally enforceable debt on the date of maturity would not be sum represented on cheque.
Headnote:
Negotiable Instruments Act, 1881 – Sections 138 and 56 – Dishonour of cheque – In order to attract offence under Section 138 of NI Act, dishonoured cheque must represent a legally enforceable debt – When a part of sum covered by cheque is paid during period between date on which cheque is drawn and its encashment upon maturity, then legally enforceable debt on the date of maturity would not be sum represented on cheque – When a part, or whole of sum represented in a cheque is paid by drawer, same must be indorsed on cheque as prescribed under Section 56 of NI Act – Then endorsed cheque could be used to negotiate balance – On dishonour of cheque, which was presented for getting balance amount, excluding amount endorsed as paid, then offence under Section 138 of NI Act would be attracted – However, when part payment(s) is/are made and endorsement mandated under Section 56 of NI Act failed to be recorded, presenting cheque for whole sum, of which a part payment has already been paid, does not represent legally enforceable debt and no offence under NI Act would lie in case of dishonour of such a cheque. (Para 11)
Result: Appeal dismissed.
JUDGMENT
This criminal appeal has been filed under Section 419(4) of the Bharatiya Nagarik Suraksha Sanhita, 2023, at the instance of the complainant in S.T.No.404/2018 on the files of the Judicial First Class Magistrate Court, Nedumkandam. The 1st respondent herein is the accused in the said case and the 2nd respondent herein is the State of Kerala, represented by the Senior learned Public Prosecutor.
2. Heard the learned counsel for the appellant, the learned counsel appearing for the 1st respondent/accused and the learned Senior Public Prosecutor.
3. I shall refer the parties in this appeal as ‘complainant’ and ‘accused’ for easy reference.
4. The complainant lodged complaint under Section 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘NI Act’ for short), alleging commission of offence punishable under Section 138 of the NI Act by the accused, on the premise that the accused issued a cheque bearing No.02075324 dated 31.10.2017 to the complainant, in discharge of a loan to the tune of 10,90,000/- (Rupees ten lakh ninety Rs. thousand only) availed by the accused on 27.05.2011, got dishonoured for want of funds.
5. The learned Magistrate recorded evidence of the complainant as PW1 and the evidence of one witness as PW2 on the side of the prosecution. Further, Exts.P1 to P6 were also marked on the side of the prosecution. No evidence was adduced on the side of the defence.
6. Thereafter, relying on the decision of the Apex Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and Another, reported in 2022 (7) KHC 61, the learned Magistrate acquitted the accused on the finding that before presentation of Ext.P1 cheque for Rs.10,90,000/- (Rupees ten lakh ninety thousand only) for collection on 16.01.2018, the complainant had received Rs.1,94,000/- and Rs.1,96,000/- from the accused on 14.11.2017 and 15.11.2017, respectively. Accordingly, the learned Magistrate found that the amount covered by Ext.P1 cheque is higher than the actual amount of debt due on the date of presentation of cheque and as a sequel thereof, it was found that Ext.P1 cheque did not represent a legally enforceable debt to fasten criminal liability upon the accused finding commission of offence under Section 138 of the NI Act. Thereby he accused/1st respondent was acquitted.
7. The learned counsel for the appellant argued that, even though the said omission happened on the part of the appellant, the amount covered by the cheque is due to the appellant. Therefore, the verdict impugned is to be interfered.
8. Opposing this contention, the learned counsel for the 1st respondent/accused submitted that the ratio laid down in Dashrathbhai’s case (supra) is the correct law. In view of the above, the offence under Section 138 of the NI Act could not be found, as rightly held by the learned Magistrate, and therefore, the appeal deserves to be dismissed.
9. Coming to the legal issue involved in this case, Sections 15 and 56 of the NI Act assumes significance. Section 15 of the NI Act deals with indorsement and Section 56 of the NI Act deals with indorsement for part of the sum due. Section 15 of the NI Act provides as under:
“15. Indorsement.—When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the “indorser.”
Section 56 of the NI Act provides as under:
“56. Indorsement for part of sum due.—No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid, a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance”.
10. In Dashrathbhai’s case (su
