Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
References:- ["Naveen A. V. , S/O Mr. A. S. Vishwanath VS Srinivasa Murthy S. , S/O Mr. Yerrappa - 2024 0 Supreme(Kar) 243"]- ["M. CHILUKUNAIDU, VISAKHAPATNAM DT. VS RATNA CONSTRUCTIONS COMPANY, VISAKAPATNAM AND ANR, REP PP. - Andhra Pradesh"]- ["Kishan Kumar More (HUF) vs Amit Manpuria - Calcutta"]- ["Beena Kuruvila VS Standard Chartered Bank - Kerala"]- ["Salim A. , S/o. Assan Bava VS State Of Kerala - Kerala"]- ["Ranjeet Chauhan VS RKC, Narkanda - Himachal Pradesh"]- ["Usha Khare W/o A. K. Khare VS Harpal Singh Chhabda, S/o Harbansh Singh Chhabda - Chhattisgarh"]- ["Raju Saha VS State of West Bengal - Calcutta"]- ["M/S.SREE GOKULAM CHIT AND FINANCE CO..(P) LIT vs M.RAJKUMAR - Madras"]- ["Aaremsky Sports and Fitness, Represented by its Managing Partner, Mohammed Shafi VS P. A. Sadanandam, S/o. Achuthan - Kerala"]- ["Simranpreet Singh VS Satnam Singh - Punjab and Haryana"]- ["Chloride Power Systems & Solutions Limited VS State of West Bengal - Calcutta"]- ["Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court"]- ["Qasim Ali Bhutto VS Abdul Aziz - Crimes"]
In the fast-paced world of business transactions, cheques remain a common payment method in India. But what happens when a cheque bounces due to insufficient funds, and the drawer (accused) claims part payments were already made? A frequent question arises: Part payment paid by the accused 138 is not attract – essentially, does a part payment by the accused prevent the attraction of offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act)?
This blog post dives deep into this nuanced issue, drawing from key judicial precedents. We'll explore the critical role of endorsements, presumptions under the NI Act, and practical remedies. Note: This is general information based on case law and not specific legal advice. Consult a lawyer for your situation.
Under Section 138 of the NI Act, a cheque dishonoured due to insufficient funds or similar reasons can lead to criminal liability if the drawer fails to pay within 15 days of receiving a demand notice. However, part payments made by the accused after cheque issuance but before its presentation change the game.
Courts have consistently held that such part payments require an endorsement on the cheque under Section 56 of the NI Act to reflect the reduced balance. Without this endorsement, presenting the cheque for the full original amount does not represent a legally enforceable debt, making Section 138 inapplicable. Even sending a notice demanding only the balance doesn't cure this defect – the complainant's remedy typically lies in civil proceedings, not criminal prosecution. Santhosh VS Nandakumar B Menon - Dishonour Of Cheque (2015)Santhosh VS Nandakumar B Menon - Crimes (2015)Santhosh K. G. VS Nandakumar B. Menon - 2015 0 Supreme(Ker) 1259
As clarified in Joseph Sartho v. G. Gopinathan (2008(4) KHC 463), if any payment has been made after the issuance of the cheque, but before presentation of the cheque on the date mentioned in the cheque, unless endorsement as required under Section 56 of the Negotiable Instruments Act is made in the cheque, then the complainant is not entitled to present the cheque for the entire amount and even sending notice for the balance amount will not cure the defect and in such circumstances offence under Section 138 is not attracted. Santhosh VS Nandakumar B Menon - Dishonour Of Cheque (2015)
Key Points:- Part payments prior to presentation necessitate endorsement under Section 56; failure invalidates Section 138 as the full amount isn't legally due.- Notice demanding full amount (or even balance) post-part payment without endorsement doesn't sustain the offence; it may be seen as an abuse of process.- Partial payments before complaint filing may lead to acquittal under Section 138, though courts can impose compensation for the remaining debt. George Construction Private Ltd. VS B. C. Patel & Company - 2009 0 Supreme(MP) 1265
Section 56 mandates that any payment or adjustment must be endorsed on the instrument by the holder. Without it, the cheque no longer accurately reflects the debt at presentation.
The endorsement as required under Section 56 of the Negotiable Instruments Act has to be obtained before presenting the cheque to claim the balance amount available after deducting the amount paid from the amount shown in the cheque. If such an endorsement is not obtained by the payee of the cheque and if he presented the cheque for the entire amount, then it cannot be said that the said amount was legally due to him as on the date of the presentation of the cheque. Santhosh VS Nandakumar B Menon - Dishonour Of Cheque (2015)
In another ruling: Negotiable Instruments Act, 1881 - Sections 138 and 56 - ... endorsement of part payments is necessary for the cheque to represent a legally enforceable debt at the time of presentation - Without this endorsement, proceedings under Section 138 cannot be sustained. Ultimate Computer Care vs S.M.K.Systems - 2025 0 Supreme(Mad) 4715
This ratio decidendi has led courts to quash proceedings where endorsements were missing, emphasizing the cheque must mirror the actual debt. Ultimate Computer Care vs S.M.K.Systems - 2025 0 Supreme(Mad) 4715
Timing is crucial. Part payments after dishonour or notice don't automatically absolve liability if they don't fully settle the cheque amount within 15 days.
Partial payments made by the accused after the issuance of the cheque do not absolve the liability under Section 138 of the Negotiable Instruments Act. R. Gopikuttan Pillai VS Sankara Narayanan Nair - Dishonour Of Cheque (2003)
Yet, in cases of substantial pre-complaint payments: Since the accused had made part payments, the cheque did not represent the full amount due, and thus the offence under Section 138 was not established. Naveen A. V. , S/O Mr. A. S. Vishwanath VS Srinivasa Murthy S. , S/O Mr. Yerrappa - 2024 0 Supreme(Kar) 243
Even upon acquittal, courts may order compensation: Partial payment before the filing of the complaint can absolve the drawer of a cheque from liability under Section 138... (but) compensation of Rs. 25,000 each ordered for remaining Rs. 30,000 debt. George Construction Private Ltd. VS B. C. Patel & Company - 2009 0 Supreme(MP) 1265
Relatedly, under Section 139, a presumption exists that the cheque was issued for a legally enforceable debt. The accused must rebut this on preponderance of probabilities with evidence like bank records. Mere denial isn't enough. ROHITBHAI JIVANLAL PATEL VS STATE OF GUJARAT - 2019 3 Supreme 662
From additional precedents, even stop payment instructions (a common defence) attract Section 138 liability if the presumption isn't rebutted: Penal liability under Section 138 of NI Act gets attracted when stop payment instruction is issued either before or after presentation of the cheque. Reddys Laboratories Limited VS Reddy Pharmaceuticals LimitedReddy's Laboratories Limited VS Reddy Pharmaceuticals Limited Delhi - 2014 Supreme(AP) 1487
It is trite to say that an accused in a trial under section 138 of the NI Act has only two options... a cheque which is dishonoured, will have to be drawn by a person on an account maintained by him with the bank. Dipak Kumar Shaw VS State of West Bengal - 2023 Supreme(Cal) 345
Civil suits remain viable for balances without valid Section 138 claims. Santhosh VS Nandakumar B Menon - Dishonour Of Cheque (2015)
For complainants:- Obtain Section 56 endorsement before re-presenting or adjust notices accurately.- Document all transactions meticulously.
For accused:- Seek immediate endorsement for part payments.- Adduce bank records to rebut Section 139 presumption.- Explore early compounding to avoid trials.
Parties should prioritize settlements, as courts favor them with compensation directives.
Part payments don't universally shield against Section 138, but pre-presentation ones without endorsement typically do – shifting focus to civil remedies. Post-notice partials may sustain liability unless fully rebutted.
Key Takeaways:- Always endorse part payments under Section 56.- Rebut presumptions with solid evidence.- Consider compounding for quick resolutions.
Stay informed on NI Act updates to navigate cheque disputes effectively. For tailored advice, reach out to a legal expert.
References (select case IDs for further reading):1. Santhosh VS Nandakumar B Menon - Dishonour Of Cheque (2015) – Endorsement core holding.2. Ultimate Computer Care vs S.M.K.Systems - 2025 0 Supreme(Mad) 4715 – Enforceable debt requirement.3. George Construction Private Ltd. VS B. C. Patel & Company - 2009 0 Supreme(MP) 1265 – Acquittal with compensation.4. Reddy's Laboratories Limited VS Reddy Pharmaceuticals Limited Delhi - 2014 Supreme(AP) 1487 – Presumption in stop payment cases.
#Section138, #NIACT, #ChequeBounce
However, the evidence placed on record prove that part payment towards principle and interest was paid and since complainant has not given deductions for the payment so made, it is held that the cheque does not represent the actual amount due and therefore, the offence under Section 138 of N.I. ... 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 th....
, (2023) 1 SCC 578 detailed the ingredients essential to attract the offence under Section 138 as follows: “11. ... of the cheque amount within 30 days, thereafter, and the failure of the accused to make payment, within 15 days of the receipt of the notice.
In this context the case of the appellant in para 4 of the complaint may be reproduced below: “That the accused had paid Rs. 16,250/-, 16,250/-, 7042, and 8288 on 01/12/2015, 29/02/2016,29/03/2016 and 25/05/2016 respectively by cheques to the complainant as part payment of interest ... In the cross examination of PW1 he has stated that as per his demand the accused has paid interest time to time and at present he could not say how much money the accused has ....
without recording the part payment and if the unendorsed cheque is dishonoured for presentation, the offence under Section 138 N.I Act would not be attracted since the cheque does not represent a legally enforceable debt. ... But it is to be borne in mind that the accused failed to adduce any evidence to show that the amount which she paid by virtue of Ext.D4 series receipts were part payments of the amounts covered by Exts.P2 and P3 cheques. ... Hence this Crl.Revision Petition is all....
In spite of receipt of Ext.P4 lawyer notice, accused neither sent any reply nor paid the amount covered by Ext.P1 cheque. Accused thereby committed the offence punishable under Section 138 of N.I Act. 4. ... that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract the provisions of Section 138.” ... Section 139 of the Negotiable Instruments Act mandates that unless the contrary is proved, it is to be presumed that a holder of a cheque....
In the said case, the Apex Court has held that in case of part-payment before the presentation of the cheque must be endorsed whereinafter alone the cheque dishonour would attract Section 138 of the Act against the issuer of the cheque. ... Thus, when a part- payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment wit....
to be paid to the tune of Rs. 2.50 Lakh under Section 357 of CrPC, in default of payment of compensation has imposed to undergo two months’ SI. ... Upon deposit of the amount of fine, it shall be paid to the non-applicant/ complainant as compensation. 14. Revision is allowed in part. ... Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments ....
Moreover, by now it is well settled that dishonour of cheque issued as security can also attract offence under Section 138 of the Negotiable Instruments Act. Hon’ble Apex Court in case titled Sripati Singh v. ... It is quite apparent from the evidence available on record that there is no denial, if any, on the part of the petitioner-accused that cheque was issued by him and it bears his signature. ... He alleged that since accused failed to make the payment good within the stipulated p....
The amount of Rs.1,50,000/- to have been paid in cash was subsequently denied by the appellant along with a further payment of Rs.22,000/- The moot question to be resolved in the perspective of the instant case is whether part payment on the part of the opposite party no.2 against the total loan amount ... paid. ... The appellant contends that the purpose of Section 138 of the Act would be defeated if the dishonour of the cheque issued for security is not included wit....
From a reading of the said section, it is very clear that in order to attract the provisions of Section 138 of the N.I. ... It is only such a cheque which is dishonoured would attract the provisions of Section 138 of the above Act against the drawer of the cheque. 22. ... It is trite to say that an accused in a trial under section 138 of the NI Act has only two options. ... Act, a cheque which is dishonoured, will have to be drawn by a person on an account maintained by him with the ba....
The accused demanded Rs.11,000/- per head for providing job and the part payment by those witnesses were made with the assurance that the rest amount will be paid later on. Subsequently, the accused disappeared and neither provided job nor returned the money. Thereafter, PW1, Brajeswar Sen, lodged FIR on 26.08.2010 and it was registered under Section 420 of IPC, i.e., Kumarghat P.S. Case No. 67/2010. The payment was made on 20.03.2010 in the house of the informant, PW1, Sri Brajeswar Sen in presence of PWs 5 and 6.
So in order to attract the offence under Section 138 of the Act, there must be non-payment of the amount by the accused till the presentation of the cheque for the amount due and in spite of notice issued the amount is not paid, if it is really due as on that day, then the offence under Section 138 of the Act is attracted. Further it is also settled law that if the accused did not pay the amount covered by the cheque within the time prescribed under law, and if it is dishonoured for the reasons mentioned in the Section, and in spite of the notice issued by the complainant w....
Further it is also settled law that if the accused did not pay the amount covered by the cheque within the time prescribed under law, and if it is dishonoured for the reasons mentioned in the Section, and in spite of the notice issued by the complainant within 15 days of receipt of the intimation dishonor from the bank, if the accused did not pay the amount within 15 days of receipt of such notice, then the offence under Section 138 of the Act is complete. So in order to attract the offence under Section 138 of the Act, there must be non-payment of the amount by the accused till th....
In the light of above rival arguments, the points that arise for determination in this appeal are: "1. Whether the stop payment instructions issued by the Accused to his banker will attract penal liability under Section 138 of N.I. Act? 2. If Point No. 1 is held in affirmative, whether accused could successfully rebut the presumption drawn under Section 139 of N.I.
1. Whether the stop payment instructions issued by the Accused to his banker will attract penal liability under Section 138 of N.I. In the light of above rival arguments, the points that arise for determination in this appeal are: 2. If Point No.1 is held in affirmative, whether accused could successfully rebut the presumption drawn under Section 139 of N.I.
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