Searching Case Laws & Precedent on Legal Query.....!
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Searching Case Laws & Precedent on Legal Query.....!
Scanned Judgements…!
In the world of business transactions, cheques remain a common payment method in India. However, what happens when the cheque amount and debt amount differs? This question often arises in cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). A mismatched amount can significantly impact whether an offence is committed, especially with part payments involved.
This blog post breaks down the legal principles, key court rulings, and practical advice. Note: This is general information based on judicial precedents and not specific legal advice. Consult a lawyer for your situation.
Under Section 138 NI Act, liability arises only if the dishonoured cheque represents a legally enforceable debt or liability at the time of presentation. If the cheque amount exceeds the actual enforceable debt—often due to unendorsed part payments made after issuance but before presentation—no offence typically occurs unless the part payment is endorsed on the cheque per Section 56 NI Act. However, a cheque amount larger than the initial consideration may still be valid if it fully discharges the debt, including interest or adjustments. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - 2022 8 Supreme 240
Courts emphasize that the cheque must match the enforceable debt on the date of presentation, not issuance. For instance, in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, part payments of Rs.4,09,315 towards a Rs.20 lakh loan meant the full cheque amount was no longer enforceable, leading to acquittal. The notice demanding the full amount was deemed invalid. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - 2022 8 Supreme 240
Post-issuance part payments reduce the debt, but without Section 56 endorsement on the cheque, the full face value isn't enforceable under Section 138. The core principle is that Section 138 applies only where the dishonoured cheque represents a legally enforceable debt or other liability on the date of presentation. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - 2022 8 Supreme 240
In Dashrathbhai, the Supreme Court acquitted as the Rs.20 lakh cheque no longer matched the reduced debt. Similarly, another case applied this: Rs.16L cheque post-Rs.11L RTGS payments without endorsement—no offence. Srinivasha Fashions Private Limited and Srinivasa Exports International, Rep. by its Managing Director, Coppa Vasudevarao Ravindran VS N. A. S. Periyasamy - 2024 0 Supreme(Mad) 918
Supporting precedents reinforce: In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. So, if the cheque for such an amount was dishonoured, the same will not be an offence under Section 138 of the Act. Sai Auto Agencies VS Hemant Ambadas Bajad - 2022 Supreme(Bom) 729SHREE CORPORATION VS ANILBHAI PURANBHAI BANSAL - DIRECTOR FOR & BEHALF OF - 2018 Supreme(Guj) 613Joseph Sartho, Thekkepallithanam VS G. Gopinathan - 2008 Supreme(Ker) 574Joseph Sartho VS Gopinathan NairJoseph Sartho VS Gopinathan Nair
Here, after part payment (e.g., Rs.2,26,400 towards Rs.4,61,400 debt, balance Rs.2,35,000), presenting the full cheque without endorsement fails Section 138. Once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability. Joseph Sartho VS Gopinathan Nair
If the cheque far exceeds the borrowed amount without evidence of additional liability (e.g., Rs.4 lakhs vs. Rs.2 lakhs loan), acquittal follows. K.B. Raju vs K. Asokan - 2025 Supreme(Online)(MAD) 11200
Contrast: Larger amounts are fine if tied to full discharge. Even if the cheque is for a lesser amount than the actual amount of consideration, still a cause of action would be available... the question of a cheque for a larger amount than what is actually received by the accused also would make no difference provided the entire amount so mentioned is necessary to discharge the debt or legal liability. Kochaiyappa. VS Suprasidhan. - 2002 0 Supreme(Mad) 257
Sections 118/139 presume validity unless rebutted. Drawer must prove no enforceable debt for the cheque amount via evidence like bank statements. Uttam Ram VS Devinder Singh Hudan - 2019 0 Supreme(SC) 1157
Issuance of cheque towards amount due and payable is necessary for prosecution under Sec.138 of N.I.Act. K. Deivasagayam (Deceased) & Others VS St. Joseph Charity Trust & Another - 2009 0 Supreme(Mad) 1549
Discrepancies may lead to dismissal if complainant fails proof, but presumption shifts post-issuance. In one case, acquittal for cheque > due amount. Uttam Ram VS Devinder Singh Hudan - 2019 0 Supreme(SC) 1157
The accused rebuts by preponderance of probabilities, e.g., part payment proof. Courts can't dismiss solely on discrepancy. Uttam Ram VS Devinder Singh Hudan - 2019 0 Supreme(SC) 1157
Note: Third-party recoveries don't rebut if not from accused. Sai Auto Agencies VS Hemant Ambadas Bajad - 2022 Supreme(Bom) 729
Attempt of the appellant to encash the cheque without indorsing the amount already received is perilously bordering dishonesty. Joseph Sartho, Thekkepallithanam VS G. Gopinathan - 2008 Supreme(Ker) 574
Understanding these nuances can prevent failed prosecutions or unwarranted acquittals. Stay informed on NI Act updates, and seek professional guidance for cheque-related disputes.
References (Key Cases):1. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - 2022 8 Supreme 240: Dashrathbhai (Supreme Court).2. Srinivasha Fashions Private Limited and Srinivasa Exports International, Rep. by its Managing Director, Coppa Vasudevarao Ravindran VS N. A. S. Periyasamy - 2024 0 Supreme(Mad) 918: Part payment application.3. Kochaiyappa. VS Suprasidhan. - 2002 0 Supreme(Mad) 257: Larger cheque validity.4. K.B. Raju vs K. Asokan - 2025 Supreme(Online)(MAD) 11200: Excess without proof.5. Uttam Ram VS Devinder Singh Hudan - 2019 0 Supreme(SC) 1157, K. Deivasagayam (Deceased) & Others VS St. Joseph Charity Trust & Another - 2009 0 Supreme(Mad) 1549, and others as cited.
#ChequeBounce, #Section138, #NIACT
The complainant presented the said cheque for collection but the said cheque returned with an endorsement Drawers signature differs dated 13-2-2015. ... When the said cheque was presented to the bank for encashment it returned with an endorsement "Drawers Signature Differs" on 13.02.2015. ... Then presumption arises in favour of the complainant regarding issuance of cheque by the accused for legally enforceable debt or liability. ... At time of receiving the said #HL_....
any debt or liability. ... Hence, when the cheque is returned by a bank with an endorsement 'account closed', it would amount to returning the cheque unpaid because 'the amount of money standing to the credit of that account is insufficient to honour the cheque' as envisaged in Section 138 of the Negotiable Instruments Act if the cheque is returned with an endorsement of “insufficient funds” or the amount involved in the cheque ex....
has bounced due to “drawer's signature differs”. ... If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid causes including that there was no existing debt or ... For instance this Court has held that if after issue of the cheque the drawer closes the account it must be presumed that the #HL_....
The appellant has not discharged its burden to prove that the cheque in question was issued by the respondent towards discharge of legally recoverable debt. Accordingly, she prays to dismiss the appeal. 7. ... It is the case of the complainant that the respondent is a subscriber to the chit conducted by the complainant and towards discharge of legally recoverable debt, the respondent had issued the cheque in question for a sum of Rs.55,452/- in favour of the complainant, and on presentation of the said cheque#....
045164 of amount Rs.20,00,000/-, issued by the petitioner/accused. 3. It is stated that the cheque upon being presented, was dishonoured, on the ground of “drawer's signature differs”. ... of the amount of the cheque. ... Thus, the accused in such a situation has to rebut the presumption that the cheque was issued in the charge of a legally enforceable debt. 23. ... Regarding the balance amount of Rs.36,00,000/-, the accused/petitioner issued two p....
mean the cheque amount. ... A demand notice for an amount higher than the cheque amount was issued. A two-Judge Bench of this Court held that the demand has to be made for the ‘said amount’, which is the cheque amount. ... is a debt or liability that is owed by the drawer of the cheque to the drawee. ... It was contended that it would lead to a possibility where the drawer of the cheque could evad....
mean the cheque amount. ... As against the defence, the complainant has explained that the cheque issued for Rs.80000/- was an independent transaction, and there is no concern with the amount of debt mentioned in the disputed cheque. ... In view of the ratio laid down in the case of Dinesh (supra) the Court does not find force and substance in the argument of learned counsel for the accused that the debt was time-barred and the cheque in question did....
In this regard, a careful perusal of Section 138 of the Act clearly prescribes that any cheque, which has been given towards payment of any amount of money to another person towards the discharge in whole or part of any debt or other liability is returned by the bank unpaid either because of the amount ... Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must repre....
cheque drawn for the payment of any amount of money to another person; (iii) The holder of the cheque fails to make the payment of the ‘said amount of money’ within fifteen days from the receipt of the notice.” ... Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment. ... The interpre....
It was further submitted that a cheque in question was given for the legal debt incurred by the respondent accused as evident from the agreement dated 6.6.2002. Even the amount in the agreement appears to be the amount in the disputed cheque. ... According to the learned advocate, the period of three years of limitation has rightly been applied by the learned Magistrate while arriving at a conclusion that the disputed amount of the cheque relates to time barred #HL_ST....
In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. So, if the cheque for such as amount was dishonoured, the same will not be an offence under Section 138 of the Act. The whole amount of debt or liability was lesser than the amount represented by the cheque. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability. Normally, a penal law has to be interpreted strictly.
So, if the cheque for such an amount was dishonoured, the same will not be an offence under Section 138 of the Act. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability. The whole amount of debt or liability was lesser than the amount represented by the cheque. Normally a penal law has to be interpreted strictly. In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability.
In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. The whole amount of debt or liability was lesser than the amount represented by the cheque. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability. So, if the cheque for such an mount was dishonoured, the same will not be an offence under Section 138 of the Act. Normally, a penal law has to be interpreted strictly.
Normally a penal law has to be interpreted strictly. The whole amount of debt or liability was lesser than the amount represented by the cheque. In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. So, if the cheque for such an amount was dishonoured, the same will not be an offence under Section 138 of the Act. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability.
Normally a penal law has to be interpreted strictly. In fact, the amount covered by the cheque was admittedly larger than the amount of debt or liability. So, if the cheque for such an amount was dishonoured, the same will not be an offence under Section 138 of the Act. The whole amount of debt or liability was lesser than the amount represented by the cheque. In this case, once part payment was received, the cheque no longer was one for payment of money for discharging in whole or in part of any debt or other liability.
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