Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Partial Payment and Section 138 - When a part payment is made after the cheque is issued but before encashment, such payment must be endorsed on the cheque under Section 56 of the Negotiable Instruments Act (N.I. Act). Without endorsement, presentation of the cheque for encashment may not attract Section 138 of the Act, as the cheque must represent a legally enforceable debt at the time of dishonour ["2022 8 Supreme 240"], ["2024 0 Supreme(Mad) 918"], ["2024 0 Supreme(Kar) 243"].
Dishonour Due to Stop Payment - Instructions for stopping payment, endorsements like stop of payment, referred to the drawer, or exceeds arrangement on the cheque or bank return slips constitute dishonour under Section 138, even if the cause is stop payment instructions. Such dishonour triggers the offence provisions, and the presumption under Section 139 applies ["2024 0 Supreme(All) 848"], ["2023 0 Supreme(Cal) 435"].
Effect of Stop Payment and Proviso Conditions - The offence under Section 138 is made out if the cheque is dishonoured due to stop payment instructions, provided all conditions in the provisos are fulfilled, including proper notice demanding payment within stipulated time. The reason for dishonour (like stop payment) is a valid ground for prosecution, and the penal provisions are to be construed strictly ["2023 0 Supreme(Cal) 253"], ["2023 0 Supreme(All) 2429"].
Case Law on Part Payment and Advance Payments - The Supreme Court has clarified that in cases of part payment made after the cheque is issued but before encashment, the cheque must be endorsed to represent the debt. Cheques issued as advance payments or for security, even if dishonoured, may not attract Section 138 unless they represent a legally enforceable debt at the time of dishonour. The date of maturity and whether the cheque reflects a subsisting liability are critical factors ["2024 0 Supreme(Raj) 668"], ["2024 0 Supreme(Raj) 670"].
Summary and Conclusion - For a cheque dishonour to constitute an offence under Section 138, it must be presented for encashment when it represents a legally enforceable debt. If part payment is made after the cheque is issued but before encashment, endorsement is necessary; otherwise, the dishonour may not trigger Section 138. Additionally, dishonour due to stop payment instructions, with proper notice, also attracts the offence. The law emphasizes strict adherence to procedural conditions and accurate reflection of the debt at the time of dishonour ["2024 0 Supreme(All) 848"], ["2022 8 Supreme 240"], ["2023 0 Supreme(Cal) 253"].
References:- 2022 8 Supreme 240- 2024 0 Supreme(All) 848- 2024 Supreme(Online)(Mad) 54266- 2023 0 Supreme(Cal) 253- 2023 0 Supreme(Cal) 435- 2024 0 Supreme(Mad) 918- 2023 0 Supreme(All) 2429- 2024 0 Supreme(Raj) 668- 2024 0 Supreme(Raj) 670
In the world of business transactions, cheques remain a staple for payments, but what happens when a cheque bounces due to insufficient funds? () is a cornerstone provision that criminalizes such dishonour if the cheque was issued for a . A common query arises: S 138 Partialy Payment – does making a partial payment before presenting the cheque shield the drawer from prosecution under Section 138?
This blog post delves into this nuanced issue, drawing from judicial precedents and statutory provisions. We'll explore whether partial payments automatically negate liability, the critical role of endorsements, and practical recommendations. Note that this is general information based on case law and should not be considered specific legal advice; consult a qualified lawyer for your situation.
Section 138 punishes the due to insufficient funds or exceeding arrangement, provided it was issued in discharge of a or liability. The offence is triggered when:- The cheque is presented within its validity period.- It is dishonoured.- A demand notice is sent, and payment isn't made within 15 days.
The presumption under favors the payee, assuming the cheque represents a valid debt unless rebutted. However, partial payments complicate this. 2009 0 Supreme(Ker) 821
The has consistently held that partial payment made before the presentation of a cheque does not necessarily bar the offence under Section 138, provided the cheque was issued for the full amount of a at issuance. However, if partial payment is properly endorsed on the cheque per , presenting it for the balance can still attract prosecution upon dishonour. 2009 0 Supreme(Ker) 821
2009 0 Supreme(MP) 1265
Key points include:- Partial payment before presentation doesn't automatically negate enforceability at issuance. 2009 0 Supreme(Ker) 821
- The offence requires the cheque to represent a . 2009 0 Supreme(Ker) 821
2009 0 Supreme(MP) 1265- under Section 56 is essential for partial payments to adjust the cheque's amount.
2014 0 Supreme(Ker) 126 2025 0 Supreme(Jhk) 1089- Without , presenting the full amount can lead to prosecution despite prior payments. 2009 0 Supreme(Ker) 821
2009 0 Supreme(MP) 1265- Post-issuance partial payments without don't alter original debt enforceability. 2009 0 Supreme(Ker) 821
2025 0 Supreme(Jhk) 1089
Courts clarify that partial payments prior to presentation do not extinguish the debt unless endorsed. The focus is on enforceability at issuance and presentation. For instance, partial payments before presentation do not constitute a to the extent shown in the cheque unless endorsed. 2009 0 Supreme(Ker) 821
In one case, even after part payment of Rs. 16,50,000/-, presenting a cheque of Rs. 49,47,600/- without led to . The court noted: Section 56 specifically provides for an on a Negotiable Instrument, in case of and the instrument can thereafter be negotiated for the balance amount... Open to the payee of the cheque to present the cheque for payment of only that much amount which is due. The complaint was quashed as the full amount was demanded without crediting the part payment.
Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal
mandate for partial payments post-issuance but pre-presentation. This must be on the cheque or an attached note, allowing negotiation for the balance. Without it, the cheque does not represent a at the time of presentation.
2014 0 Supreme(Ker) 126 2025 0 Supreme(Jhk) 1089
Partial payment made before presentation without does not prevent offence under Section 138.
Courts emphasize: if endorsed, dishonour of the balance cheque sustains prosecution; if not, presenting the full amount may fail to prove enforceability. 2014 0 Supreme(Ker) 126
If payments aren't endorsed and the cheque is presented for the full amount, prosecution may not succeed because the debt isn't enforceable for that sum at presentation. Partial payments made after the debt was incurred but before presentation, without , do not establish a at the time of dishonour. 2009 0 Supreme(MP) 1265
However, subsequent payments after dishonour, even if accepted, don't absolve liability: Subsequent payment of dishonoured cheque though accepted by complainant cannot absolve accused of liability u/s. 138... though rigour of offence may lessen.
Suman Motor Ltd. VS Escorts Financial Services Ltd.
and the align on this: dishonour attracts Section 138 unless the debt was extinguished or unenforceable due to unendorsed payments. References include consistent rulings stressing timing and . 2009 0 Supreme(Ker) 821
2009 0 Supreme(MP) 1265 2025 0 Supreme(Jhk) 1089 2012 0 Supreme(Mad) 4166 2022 0 Supreme(Mad) 3834 2023 0 Supreme(Cal) 253 2023 0 Supreme(Cal) 941 2023 0 Supreme(Cal) 942 2002 0 Supreme(Ker) 505
The presumption under is rebuttable by evidence of intent and circumstances, but payees must prove capacity and transaction if challenged. 2019 0 Supreme(Mad) 238
2014 0 Supreme(Ker) 126
To navigate this:- Endorse partial payments under Section 56 to preserve debt enforceability.- Issue cheques only for full enforceable debts.- Verify endorsements before presentation.- In defence/prosecution, scrutinize payment timing and endorsements.
When making partial payments, always endorse the payment on the cheque or attach a note under Section 56.
In summary, partial payment before presentation does not automatically negate Section 138 offences unless properly endorsed. The cheque typically represents the original debt, making dishonour punishable. Businesses and individuals should prioritize endorsements to avoid disputes.
Key Takeaways:- Enforceability at issuance/presentation is paramount.- is non-negotiable for partial adjustments.- Courts quash overreaching complaints but uphold valid ones.
This analysis draws from established precedents; outcomes may vary by facts. Always seek professional legal counsel for cheque-related matters.
References (select excerpts):1. 2009 0 Supreme(Ker) 821: Partial payments need .2.
: Non-endorsed payments don't bar offence.3.
Alliance Infrastructure Project Pvt. Ltd. VS Vinay Mittal
: Quashed for ignoring part payment.4.Suman Motor Ltd. VS Escorts Financial Services Ltd.
: Subsequent payments don't absolve.Stay informed, endorse wisely, and keep transactions compliant.
#Section138 #ChequeBounce #NIACT
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 within the purview of Section 138 where the payment of a part of the cheque amount is made. ... However, the offence under Section 138 of the Act is attracted only when the conditions in the provisos have been fulfilled. Proviso (b) to Section 138 states th....
Hon'ble the Apex Court also observed in that case if the reason for stop payment is excluded under Section 138 N.I. Act, then same would be contrary to the object of Section 138 and 139 of N.I. Act and that will make Section 138 N.I. Act a dead letter. ... Act because after dishonouring the cheque, drawer gets statutory notice giving him opportunity to arrange the payment of amount covered by cheque and i....
No.473/2024, etc., batch, by a judgment of even date, had dismissed the appeals in which similar issue was raised with regard to default in payment of the monthly chit amounts towards which cheque was alleged to have been issued and stood dishonoured resulting in the initiation of the complaint u/s 138 ... to establish that the cheque, which has been dishonoured was given for the purpose of discharging the said debt, which is legally enforc....
The notice demanding the payment of the “said amount of money” has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. ... Therefore, the accused person cannot be said to have committed an offence within the meaning of Section 138 of the N.I. Act. To maintai....
in Section 138. ... (2003) 3 SCC 232, where this Court held that ‘stop payment instructions’ and consequent dishonor of the cheque of a post-dated cheque attracts provision of Section 138. ... It has been held that even though the cheque is dishonoured by reason of “stop-payment” instruction an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is attracte....
If the endorsed cheque when presented for encashment of the balance amount is dishonoured, then the drawee can take recourse to the provisions of Section 138.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 ... Where there is part payment of the debt, the payment must be endorsed on a cheque under Section 56 of....
He has further submitted that where dishonour of the cheque has been made for the reason of stop payment, then too offence under Section 138 of N.I. Act is clearly made out against the applicant. ... He has further submitted that in order to determine the question where the cheque has been dishonoured on the ground of stop payment, the proviso contained in Section 138 of Negotiable Instruments Act is required to be noticed....
The Hon’ble Apex Court, in case Dashrathbhai Trikambhai Patel (supra) decided that as to when Section-138 will be attracted in cases of part-payment made after the cheque was issued but before the cheque was encashed. ... However, the cheques got dishonoured when they were presented on the ground that the purchaser had stopped payment. Thus, while dealing with such situation, Hon'ble Apex Court held that for a criminal liability to be made....
The Hon’ble Apex Court, in case Dashrathbhai Trikambhai Patel (supra) decided that as to when Section-138 will be attracted in cases of part-payment made after the cheque was issued but before the cheque was encashed. ... However, the cheques got dishonoured when they were presented on the ground that the purchaser had stopped payment. Thus, while dealing with such situation, Hon'ble Apex Court held that for a criminal liability to be made ....
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. ... The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dish....
Since no payment was received, the appellant instituted the complaint u/s 138 of Negotiable Instrument Act. The statutory notice issued by the appellant was acknowledged by the respondent/accused on 17.8.2005 and the time of 15 days was elapsed on 1.9.2005.
Since the Petitioner defaulted in payment of the installments, Respondent initiated the proceedings u/s 4/S 138 of the Negotiable Instruments Act 1881. It was alleged that in spite of receiving the amount in terms of the settlement arrived at between the parties, Respondent got three post-dated cheques encashed and sent a letter dated 21.10.04 to the Petitioner showing a debit balance of Rs.28,921.75 in the Auto Loan Account. Finally, an agreement dated 22.3.04 was executed ....
The petitioners, however, have been summoned only under the provisions of Negotiable Instruments Act. The petitioners, however, did not make the payment whereupon a complaint u/s 138/141 of Negotiable Instruments A legal notice dated 23rd January, 2009 was sent to the petitioners calling upon them to make payment within 15 days from the receipt of notice. Act read with 141 thereof and also u/s 420 of IPC was filed against them.
3. Less : Payments made after filing of the return : 1. Demand as per order u/s 154 dated December 9, 1997 2,91,950 3,28,669 2. less : Payment of Rs. 1,00,000 on December 13, 1994, before filing of the return u/s 140A _ 1,00,000
Subsequent payment of dishonoured cheque though accepted by complainant cannot absolve accused of liability u/s. 138 of Negotiable Instruments
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