2008 (10) TMI 725 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the accused committed an offence u/s 138 of the Negotiable Instruments Act.
2. Interpretation of Section 138 in light of part payment towards the cheque amount.
3. Applicability of Section 56 of the Negotiable Instruments Act regarding endorsement for part payment.

Summary of Judgment:

Issue 1: Whether the accused committed an offence u/s 138 of the Negotiable Instruments Act.

The appellant filed a complaint u/s 138 of the Negotiable Instruments Act against the 1st respondent for issuing a cheque that was dishonoured due to insufficient funds. The Trial Court acquitted the accused, holding that since the cheque presented was not for the amount due, no offence was made out u/s 138 of the Act. The High Court upheld this decision, stating that the cheque must represent the amount due to the payee or part of it on the date of presentation for encashment.

Issue 2: Interpretation of Section 138 in light of part payment towards the cheque amount.

The appellant argued that the accused should have paid the balance amount due under the cheque upon receiving the lawyer's notice. The Court referred to conflicting decisions: one holding that part payment does not extinguish the remedy u/s 138, and another stating that if the cheque amount is larger than the debt, no offence is made out. The Court concluded that the cheque must represent the actual debt or part of it, and since the cheque amount was higher than the debt, no offence u/s 138 was committed.

Issue 3: Applicability of Section 56 of the Negotiable Instruments Act regarding endorsement for part payment.

The Court emphasized that u/s 56, if part payment is made, it must be endorsed on the cheque. The appellant did not endorse the part payment received, thus presenting the cheque for the full amount was illegal. The Court held that the appellant could only claim the balance amount due, and presenting the cheque for the full amount without endorsement does not constitute an offence u/s 138.

Conclusion:

The High Court dismissed the appeal, affirming the Trial Court's acquittal of the accused. It overruled previous decisions that conflicted with this interpretation, emphasizing that a cheque must represent the actual debt or part of it for an offence u/s 138 to be made out. The appellant's failure to endorse the part payment on the cheque invalidated the claim for the full amount.