A cheque that does not reflect a legally enforceable debt due to part payments cannot attract liability under Section 138 of the NI Act.

JUDGMENT :

A. BADHARUDEEN, J.

1. 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 1^st respondent herein is the accused in the said case and the 2^nd 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 1^st 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 Rs.10,90,000/- (Rupees ten lakh ninety 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, 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/1^st 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 1^st 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. 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 purport