KERALA HIGH COURT
K.Ramakrishnan, J.
Santhosh —Petitioner
versus
Nandakumar B Menon & Anr. —Respondents
Crl.M.C.No.1544 of 2015
Decided on 23.11.2015

IMPORTANT POINT
If any payment has been made after the issuance of the cheque, but before presentation of the cheque on the date mentioned in the cheque, unless endorsement as required under Section 56 of the Negotiable Instruments Act is made in the cheque, then the complainant is not entitled to present the cheque for the entire amount and even sending notice for the balance amount will not cure the defect and in such circumstances offence under Section 138 is not attracted.

Headnote:Negotiable Instruments Act, 1881 — Section 138 and 56 — Dishonour of cheque — Prior to presentation of cheque for encashment the drawer made some payment to payee — Liability for prosecution — Petitioner issued cheque for 28 lacs dated 1.11.2013 in favour of complainant — Prior to 1.11.2013 petitioner paid Rs.6 lacs to complainant on different dates — Complainant presented cheque us such and on its bouncing gave notice demanding only balance amount — Whether offence was attracted? — Before presentation of cheque unless endorsement as required u/s 56 of the Act was made in the cheque, complainant was not maintainable.

       Held: It is an admitted fact that there was money transaction between the complainant and the accused and it is also in away admitted that the accused had issued the disputed cheque for 28,00,000/- drawn on the bank in which he is maintaining account with date 01.11.2013. It is also in away admitted by both the parties and it was admitted by the complainant in the complaint itself that, before the date mentioned in the disputed cheque, namely, 01.11.2013 an amount of Rs.6,00,000/- was paid by the accused on different dates and it is also an admitted fact that the complainant had presented the cheque without getting any endorsement of part payment made by the accused as required under Section 56 of the Negotiable Instruments Act for the entire amount, but when the notice was issued, he claimed only the balance amount and since the accused had not paid the amount, according to him, the offence under Section 138 of the Act has been committed by the accused and the complaint is maintainable, is the contention raised.

       The question as to whether even if any part payment is made during the period of validity of the cheque before presentation and if amount was claimed only for the balance amount whether the offence under Section 138 of the Act is attracted or not is considered by the Division Bench of this court in Joseph Sartho v. G. Gopinathan and Another (2008(4) KHC 463) as there were conflicting decisions on that aspect and the Division Bench has held that, if any payment has been made after the issuance of the cheque, but before presentation of the cheque on the date mentioned in the cheque, unless endorsement as required under Section 56 of the Negotiable Instruments Act is made in the cheque, then the complainant is not entitled to present the cheque for the entire amount and even sending notice for the balance amount will not cure the defect and in such circumstances offence under Section 138 is not attracted.

       It is true that as who has to make the endorsement, there is some doubt created in the judgment. But a reading of the judgment will go to show what is ultimately intended by the division bench is that the endorsement as required under Section 56 of the Negotiable Instruments Act has to be obtained before presenting the cheque to claim the balance amount available after deducting the amount paid from the amount shown in the cheque. If such an endorsement is not obtained by the payee of the cheque and if he presented the cheque for the entire amount, then it cannot be said that the said amount was legally due to him as on the date of the presentation of the cheque which make filing of the complaint under Section 138 of the Act not maintainable. Probably his remedy is to file a suit or resort to other legal proceedings to recover the balance amount and not to invoke the provision under Section 138 of the Act.

       So in view of the dictum laid down by the division bench, which is squarely applicable to the facts of the case, the complaint filed by the first respondent against the petitioner is not maintainable and proceeding with the case will only amount to abuse of process of court and it is a fit case where the power under Section 482 of the Code of Criminal Procedure has to be invoked to quash the proceedings. (Paras 9 & 13 to 15)

       Result: Petition allowed.