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Modi Cements VS Kuchil Kumar Nandi - 1998 2 Supreme 471 : Yes, the endorsement on the back of the cheque showing the reason for dishonour is sufficient even if a separate return memo is not provided. The court held that when a cheque is returned by the bank with endorsements such as ''''payment stopped by the drawer'''', ''''instructions for stoppage of payment'''', or ''''exceeds arrangement'''', it amounts to dishonour within the meaning of Section 138 of the Negotiable Instruments Act, 1881. The court emphasized that the mere presence of such endorsements on the cheque itself is sufficient to constitute dishonour under the Act, and does not require a separate return memo.Checking relevance for Birendra Prasad Sah VS State Of Bihar...

Checking relevance for Electronics Trade And Technology Development Corporation LTD. , Secunderabad VS Indian Technologists And Engineers (Electronics) Private LTD. ...

Electronics Trade And Technology Development Corporation LTD. , Secunderabad VS Indian Technologists And Engineers (Electronics) Private LTD. - 1996 1 Supreme 744 : Yes, endorsement on the back of the cheque showing the reason for dishonour is sufficient even if a separate return memo is not provided. The document explicitly states that a cheque returned with endorsements such as ''''Refer to drawer'''', ''''Stop payment'''', or ''''Exceeds arrangements'''' amounts to dishonour within the meaning of Section 138 of the Negotiable Instruments Act, 1881, and satisfies the requirement for dishonour, regardless of whether a separate return memo is issued.Checking relevance for LAFARGE AGGREGATES & CONCRETE INDIA PVT. LTD. VS SUKARSH AZAD...

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Nikunj Keyal VS Golden Goenka Credit Pvt. Ltd. - 2023 0 Supreme(Cal) 434 : The endorsement on the back of the cheque showing the reason for dishonour is sufficient even if a separate return memo is not provided. The Supreme Court has held that a cheque returned by the bank with endorsements such as ''''referred to drawer'''', ''''instructions for stoppage of payment'''', or ''''exceeds arrangements'''' amounts to dishonour within the meaning of Section 138 of the Negotiable Instruments Act, 1881. This is confirmed in multiple judgments, including Electronics Trade and Technology vs Indian Technologists (1996) and M/s. Laxmi Dyechem vs State of Gujarat & Ors. (2012), which establish that such endorsements constitute dishonour even without a separate return memo. Furthermore, the banking rule explicitly states that ''''Refer to Drawer'''' includes dishonour for insufficient funds, reinforcing that the endorsement on the cheque itself is legally sufficient.Checking relevance for Deepak Lohiya, S/o Shri Chhitar Mal Lohiya vs Nirmala Devi Jain, W/o Shri Chhitar Mal Jain...

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Checking relevance for J. Veeraraghavan VS Lalith Kumar...

J. Veeraraghavan VS Lalith Kumar - Crimes (1994) : The endorsement on the back of the cheque showing the reason for dishonour is sufficient even if a separate return memo is not provided. The court held that the reason for dishonour, such as ''''account closed'''', does not preclude prosecution under Section 138 of the Negotiable Instruments Act, 1881. The nomenclature of the return, by itself, is not decisive of the cause of return. The complainant can establish the actual reason for dishonour, including insufficiency of funds or inadequate arrangement, by summoning bank records and bank witnesses, even if the endorsement on the cheque indicates a different reason. Thus, the presence of an endorsement on the cheque is sufficient to initiate proceedings, and the absence of a separate return memo does not bar the complaint.Checking relevance for J. Veeraraghavan VS Lalith Kumar...

J. Veeraraghavan VS Lalith Kumar - Dishonour Of Cheque (1994) : The endorsement on the back of the cheque showing the reason for dishonour is sufficient even if a separate return memo is not provided. The court held that the nomenclature of the return by the bank, such as ''''account closed'''', ''''stopped payment'''', or ''''refer to drawer'''', is not decisive of the cause of dishonour. It remains open to the complainant to establish, through evidence like bank records and witnesses, that the cheque was actually returned due to insufficiency of funds or inadequate arrangement, regardless of the reason stated on the cheque. Therefore, the presence of an endorsement on the cheque itself, indicating the reason for dishonour, is legally sufficient for initiating prosecution under Section 138 of the Negotiable Instruments Act, 1881, without requiring a separate return memo.

• Endorsement of Reason for Dishonour - Sufficient Without Return Memo The key insight across multiple cases indicates that a bank's endorsement on the cheque or a return slip stating the reason for dishonour (e.g., Account Closed, No Sufficient Funds, Payment Stopped) can be considered sufficient proof of dishonour, even if the official bank return memo does not bear the bank's official stamp or mark. For instance, in Central Bureau of Investigation vs Jitendra Kumar Narang @ J.K. NARANG - 2025 Supreme(Online)(HP) 4606 and S. X. J. Vasan I. R. S. v. Indian overseas bank - 2022 Supreme(Online)(Mad) 60719, courts held that the absence of an official stamp on the return memo did not invalidate the document, and the reason provided in the endorsement was deemed adequate to establish dishonour. Similarly, Govind Ram vs State of HP - 2025 Supreme(Online)(HP) 7259 and S.X.J. Vasan vs Indian Overseas Bank The Managing Director & C.E.O.& anr - 2025 Supreme(Online)(SCDRC) 24036 emphasize that the reason for dishonour given by the bank's endorsement or memo suffices for legal proof, provided it is clear and consistent. Conversely, some cases highlight that if the reason for dishonour is not clearly documented or if the return memo lacks credibility (e.g., missing official mark), the proof of dishonour becomes weak, and the burden shifts to the complainant to prove dishonour through other means.

• Return Memo and Circulars Circulars and legal standards suggest that the cheque return memo should ideally contain the reason for dishonour, date of return, and be signed or initialed for validity. However, courts have recognized that even unsigned or unofficial memos, if they clearly state the reason, can be sufficient evidence.

• Legal Presumption and Evidence Under section 146 of the Negotiable Instruments Act, the bank's endorsement or memo indicating the reason for dishonour creates a presumption of dishonour. The absence of an official stamp does not necessarily negate this presumption, especially if the endorsement explicitly states the reason.

• Additional Factors Cases like INDHHC010022302020 and MOHIT BATOLA vs M/S JAYDEE CAPITAL INFRASTRUCTURE - 2025 Supreme(Online)(UK) 2327 show that the timing of presentation, the reason given, and subsequent correspondence (e.g., letters requesting reasons for dishonour) are critical to establishing proof. If the reason is clear and consistent with the bank's endorsement, it generally suffices to prove dishonour without a separate return memo.

Analysis and Conclusion

The consensus from the provided sources is that an endorsement on the back of the cheque stating the reason for dishonour can be considered sufficient proof of dishonour, even if a separate return memo is not provided or lacks the bank's official mark. Courts prioritize the clarity and consistency of the reason given over the formalities of the document's appearance. However, for stronger legal standing, it is advisable to have the return memo signed, initialed, and stamped, but its absence does not automatically invalidate the proof of dishonour.

References:- Central Bureau of Investigation vs Jitendra Kumar Narang @ J.K. NARANG - 2025 Supreme(Online)(HP) 4606, Govind Ram vs State of HP - 2025 Supreme(Online)(HP) 7259, S.X.J. Vasan vs Indian Overseas Bank The Managing Director & C.E.O.& anr - 2025 Supreme(Online)(SCDRC) 24036, S. X. J. Vasan I. R. S. v. Indian overseas bank - 2022 Supreme(Online)(Mad) 60719, MOHIT BATOLA vs M/S JAYDEE CAPITAL INFRASTRUCTURE - 2025 Supreme(Online)(UK) 2327