Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Demand for Payment of Said Amount - The demand notice must specify and demand the cheque amount (said amount) to be valid under Section 138(b). A notice demanding a higher or omnibus amount, or not specifying the cheque amount, is invalid. When part payment has been made before the presentation, such payment must be endorsed on the cheque under Section 56, and the demand notice should reflect the remaining due amount. ["Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court"], ["Naveen A. V. , S/O Mr. A. S. Vishwanath VS Srinivasa Murthy S. , S/O Mr. Yerrappa - Karnataka"], ["Tapan Chatterjee @ Tapan Kumar Chatterjee vs State of West Bengal - Calcutta"], ["Aryan Biological Corporation VS Vishwakarma Metal Box - Delhi"], ["Chloride Power Systems & Solutions Limited VS State of West Bengal - Calcutta"], ["Nur Hussain Ali S/o Late Rangsha Ali vs Jatindra bharali s/o late b.d. Bharali - Gauhati"], ["Shyam Sunder Soni VS State Of Rajasthan - Rajasthan"]
Validity of Part Payment and Endorsement - If part payment is made after the cheque is drawn but before encashment, it must be endorsed on the cheque (Section 56 of the NI Act). Without such endorsement, the cheque cannot be presented for encashment, and the demand notice should relate only to the remaining amount. Courts have emphasized that a demand notice must be for the cheque amount and cannot be for a higher or different sum, especially if part payment has been made. ["Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court"], ["M/S.SREE GOKULAM CHIT AND FINANCE CO..(P) LIT vs M.RAJKUMAR - Madras"], ["Tapan Chatterjee @ Tapan Kumar Chatterjee vs State of West Bengal - Calcutta"], ["Jitendra Bhati VS Santosh Devi - Delhi"], ["Chloride Power Systems & Solutions Limited VS State of West Bengal - Calcutta"], ["Navavathi v. Prabhudas - Gujarat"], ["Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque"]
Timing and Service of Demand Notice - The notice must be issued within 30 days of the cheque's dishonour or return unpaid, and the debtor has 15 days from receipt of this notice to make payment. Service of the notice is crucial; mere dispatch is not sufficient, and actual receipt is necessary to trigger the 15-day payment window. Failure to serve a proper demand notice invalidates the prosecution under Section 138. ["Pushpalata Verma v. Sanjay Kumar Rajwade - Chhattisgarh"], ["Usha Agarwalla @ Usha Agarwal VS Citicorp Finance (I) Ltd. - Calcutta"], ["Nur Hussain Ali S/o Late Rangsha Ali vs Jatindra bharali s/o late b.d. Bharali - Gauhati"], ["Jitendra Bhati VS Santosh Devi - Delhi"], ["Ramkrit Jadav VS Samir Kumar Das - Calcutta"], ["Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque"]
Effect of Partial Payment - When a part payment is made after the cheque is drawn but before encashment, it must be endorsed on the cheque. The demand notice should specify the remaining amount due, not the full cheque amount if part payment has been acknowledged. If the notice demands the entire cheque amount despite part payment, it may be invalid. Courts have held that the demand should be for the said amount (cheque amount) and not a higher sum. ["Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court"], ["M/S.SREE GOKULAM CHIT AND FINANCE CO..(P) LIT vs M.RAJKUMAR - Madras"], ["Tapan Chatterjee @ Tapan Kumar Chatterjee vs State of West Bengal - Calcutta"], ["Aryan Biological Corporation VS Vishwakarma Metal Box - Delhi"], ["Shyam Sunder Soni VS State Of Rajasthan - Rajasthan"], ["Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque"]
Analysis and Conclusion:A valid part payment after the issuance of the cheque must be endorsed on the cheque and reflected in the demand notice. The notice should demand only the remaining amount due, i.e., the said amount (cheque amount). Demanding the full cheque amount despite prior part payment, especially if not endorsed or specified, renders the notice invalid under Section 138(b). Proper service and timely issuance of the demand notice are essential for initiating prosecution under the NI Act.
In the world of business transactions, cheques remain a common payment method in India. However, what happens if a drawer makes a part payment after issuing the cheque but before its presentation to the bank? Can the payee still issue a demand notice for the full cheque amount under Section 138 of the Negotiable Instruments Act, 1881 (NI Act)? This question often arises in cheque dishonour cases: part payment after presentation of the cheque issue demand notice for the cheque amount.
This blog post explores the legal nuances, judicial interpretations, and practical implications. Note: This is general information based on case law and statutes. It is not legal advice; consult a qualified lawyer for your specific situation.
Section 138 of the NI Act imposes criminal liability for cheque dishonour due to insufficient funds or exceeding arrangements. The process involves:- Cheque presentation and dishonour.- Issuing a demand notice within 30 days of dishonour information.- Drawer failing to pay within 15 days of notice receipt.
Key provisions include:- Section 138(b): Demand notice must specify the amount of money due.- Section 56: Allows endorsement for part payments, enabling negotiation for the balance.- Section 142: Governs prosecution procedures. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Crimes (2010)
The demand notice must be in writing and reflect the actual amount payable, adjusted for any part payments. Demanding more can invalidate the notice. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque (2010)
Part payments after cheque issuance but before presentation reduce the drawer's liability to the remaining balance. Courts have clarified that the amount of money in Section 138(b) means the actual principal amount payable, not the cheque's face value.
In Rahul Builders v. Arihant Fertilizers & Chemicals, the Supreme Court held: the demand should reflect the actual principal amount due, not inflated figures. Strict construction of penal provisions is essential. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Crimes (2010)
Similarly, demanding the full cheque amount when liability is reduced is improper and may amount to dishonest conduct. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Crimes (2010)
A valid demand notice requires:- Issuance within 30 days of dishonour.- Clear demand for the actual cheque amount or balance.- No excess demands without justification (e.g., interest, if claimed separately).
If part payments reduce liability, the notice demanding the full amount fails. The Supreme Court in a related ruling emphasized: a demand notice demanding an amount exceeding the actual liability is invalid and cannot be used as a basis for criminal prosecution. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque (2010)
From other precedents:- The notice under clause (b) to the proviso, demand has to be made for the cheque amount. But this adjusts for actuals post-payments. Kishan Kumar More (HUF) vs Amit Manpuria - 2025 Supreme(Cal) 466- In the notice, demand has to be made for the cheque amount. Yet, courts quash proceedings if it exceeds liability. B. Surendra Das S/o Late Bhanu Panicker VS State of Kerala - 2019 Supreme(Ker) 295- Thus the notice must make a demand for the amount of cheque. No prescribed form, but must enable rectification opportunity. Ratnagiri Cements Pvt. Ltd. , Visakhapatnam VS Rao N Sons Modern Appliances - 2011 Supreme(AP) 872
In K.R. Indira v. Dr. G. Adinarayana, demand must correspond to the actual recoverable amount after part payments; excess invalidates it. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque (2010)
Rahul Builders v. Arihant Fertilizers (Supreme Court): Demand notice must not exceed actual principal. Part payments reduce liability; full demand improper. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Crimes (2010)
Joseph Sartho v. Gopinathan Nair (Kerala High Court): Principal amount decisive absent interest claims; demand matches actual payable. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque (2010)
Central Bank of India v. Saxons Farms (Supreme Court): Notice's object is drawer rectification; excess demand defeats purpose. Alliance Infrastructure Project Pvt. Ltd. vs Sanjeev Kapur - Delhi (2010)
Suman Sethi v. Ajay K. Churiwala: Interest/costs severable, but principal excess invalidates. Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Crimes (2010)
Additional Insights from Precedents:
Failure to adjust can lead to quashed proceedings, as courts protect against misuse of Section 138.
In conclusion, judicial trends emphasize fairness: the NI Act aims to enforce debts, not penalize unduly. Payees must ensure demands reflect reality post-part payments to sustain Section 138 actions. Drawers gain protection against inflated claims.
Disclaimer: Laws evolve; rulings are context-specific. Seek professional advice for case-specific guidance.
Sources:Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Crimes (2010)Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal - Dishonour Of Cheque (2010)Alliance Infrastructure Project Pvt. Ltd. vs Sanjeev Kapur - Delhi (2010)Kishan Kumar More (HUF) vs Amit Manpuria - 2025 Supreme(Cal) 466B. Surendra Das S/o Late Bhanu Panicker VS State of Kerala - 2019 Supreme(Ker) 295Ratnagiri Cements Pvt. Ltd. , Visakhapatnam VS Rao N Sons Modern Appliances - 2011 Supreme(AP) 872Supply House, Represented by Managing Partner VS Ullas Proprietor, Bright Agencies & Anr.
#ChequeBounce, #NIAct138, #PartPaymentCheque
It was also held that the notice of demand which requires the drawer of the cheque to make payment of the whole amount represented in the cheque despite receiving part repayment against the sum, before the issue of notice, cannot be valid under Section 138(b) of the Act. ... In the notice, demand has to be made for the “said amount” i.e. the cheque amo....
A registered demand notice dated 18-06-2009 with acknowledgment due was issued by the complainant making demand of payment of the amount under the cheque, which was returned unserved on 10-07-2009. ... The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving not....
He also issued one more cheque for Rs.2,50,000/- dated 05.11.2015 towards part payment of interest. Accused assured prompt payment of the amount on presentation of cheques to the bank. Complainant presented the cheque, through his banker. ... It held that: For attracting Section 138, as per proviso(b) a demand notice needs to be made by the drawee and an Omni bus demand notice (For the entire sum)....
One of the conditions was service of a notice making demand of the payment of the amount of cheque as is evident from the use of the phraseology "payment of the said amount of money". ... Following are the acts which are components of the said offence: (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving not....
So, the notice under clause (b) to the proviso, demand has to be made for the cheque amount. ... parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. ... He further submits that the respondent herein despite the service of a perfectly valid and legal demand notice had failed ....
It was also held that the notice of demand which requires the drawer of the cheque to make payment of the whole amount represented in the cheque despite receiving part repayment against the sum, before the issue of notice, cannot be valid under Section 138(b) of the Act. ... demand for the payment of the “said amount of money” by giving a notice in writing to th....
It was also held that the notice of demand which requires the drawer of the cheque to make payment of the whole amount represented in the cheque despite receiving part repayment against the sum, before the issue of notice, cannot be valid under Section 138(b) of the Act. ... The notice demanding the payment of the “said amount of money” has been interpreted by judgments of this C....
of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice. ... From a reading of the provision and clause (b) of the proviso thereof, it is crystal clear that the payee or the holder in due course is required to raise a demand for payment of amount of money by giving a statutory notice in writing to the drawer of the cheque....
The proviso (a) to S.138 mandates that the cheque has to be presented to the bank and, therefore, the meaning of "presentation" cannot be lost sight of. The presentation must entail realisation of the amount or payment of the sum of the cheque. ... On receipt of the intimation that the cheque was dishonoured, the opponent No. 1 on August 11, 1997, gave a notice to the petitioner calling upon him to make the payment. The pa....
It was also held that the notice of demand which requires the drawer of the cheque to make payment of the whole amount represented in the cheque despite receiving part repayment against the sum, before the issue of notice, cannot be valid under Section 138(b) of the Act. ... Thus, when a part- payment of the debt is made after the cheque was drawn but before the cheque#....
A demand for payment of the amount of the cheque by sending a notice in writing is sine qua non for filing such a complaint. Adinarayana, AIR 2003 SC 4689 and M/s Rahul Builders vs. M/s Arihant Fertilizers, (2008) 2 SCC 321. If no such demand is made, no doubt, the notice would fall short of its legal requirement Indira vs. In the notice, demand has to be made for the cheque amount.
Thus the notice must make a demand for the amount of cheque. The provisions of Section 138 proviso Clause (b) of the Act prescribes no form of notice. Though no form of notice is prescribed in the above clause (b) the requirement is that notice shall be given in writing within fifteen days of receipt of information from the bank regarding return of the cheque as unpaid and a demand for payment of the amount of the cheque has to be made in the notice. In the said case also, the Supreme Court held that the nature and object of giving notice to the drawer of the cheque is to g....
After the cheque is dishonoured, the complainant has to issue notice demanding the payment of the cheque amount. However, once cheque has been dishonoured, complainant can not be expected to run after the accused. Then the accused is expected to make the payment to the complainant at the place of his work or at the place of his residence.
There upon complainant made a demand for payment of the amount covered by Ext. P1 cheque by issuing a notice.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
