Endorsement of part-payments on cheques is essential for them to represent a legally enforceable debt under Section 138 of the Negotiable Instruments Act; otherwise, dishonor does not constitute an offense.

ORDER :

N. ANAND VENKATESH, J.

These criminal original petitions have been filed to quash the proceedings pending in C.C.Nos.122, 123, 130, 131, 132, 133, 134, 135 and 136 of 2022, on the file of the learned Judicial Magistrate, Aruppukotai.

2. The respondent in each quash petition has filed a private complaint against the petitioners for offence under Section 138 of the “Negotiable Instruments Act, 1881” (hereinafter referred to as the “NI Act” for brevity) on the ground that the respondent has supplied materials to the petitioners and there was an enforceable liability towards which cheques were issued and when these cheques were presented, it was dishonored with endorsement “exceeds arrangement”. Thereafter, legal notice was issued and in some cases it was refused and in other cases, it was received and no reply notice was given nor the cheque amount was paid. The same resulted in the filing of individual private complaints which have been put to challenge in these quash petitions.

3. When the matter came up for hearing on 31.01.2025, this Court passed the following order:

“The main ground that was urged by the learned counsel for the petitioner is that the subject cheques were alleged to have been issued for the period from 03.01.2022 to 27.04.2022 and whereas, during this period, the petitioner has made various payments which is reflected in the bank entries. Therefore, it was contended that where part payment has been made, the cheques cannot be presented unless an endorsement is made in the cheque as mandated under Section 56 of the Negotiable Instruments Act. The learned counsel in order to substantiate his submission relied upon the judgment of this Court in Srinivasha Fashions Pvt. Ltd., & Srinivasa Exports International v. N.A.S.Periyasamy reported in 2024 (2) MWN (Cr.) DCC 5 (Mad.)

2. This Court normally does not look into the defense documents at the time of dealing with the quash petition. The only exception is where the materials that are relied upon are sterling in quality and is of unimpeachable character. The bank entries that have been put forth before this Court will fall under this category.

3. The learned counsel for the respondent sought for sometime. Post this case on 30.01.2025.”

4. The learned counsel for the respondent submitted that in none of these cases, the petitioners issued a reply notice and that apart, the various payments that were made by the petitioners is not relatable to any particular cheque and therefore, the operation of Section 56 of the Negotiable Instruments Act will not come into play.

5. The learned counsel for the petitioners submitted that in nine private complaints, 23 cheques are involved and the sum total of all those cheques works out to Rs.4,72,041/-. Towards this liability, the petitioners have made various payments for the period from 11.01.2022 to 22.02.2022 to the tune of Rs.4,47,941/-. Therefore, the total liability as claimed by the respondent is unsustainable and Section 56 of the Negotiable Instruments Act will clearly apply to the facts of the present case.

6. While dealing with the above submission, this Court has to rely upon the judgment of the Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel , reported in 2022 (6) CTC 467. The relevant portions are extracted hereunder:

“9. Under Section 56 read with Section 15 of the Act, an endorsement may be made by recording the part- payment of the debt in the cheque or in a note appended to the cheque. When such an endorsement is made, the instrument could still be used to negotiate the balance