S.138 of NI Act, 1881 : Supreme Court Lays Down Clear Principle

S.138 of NI Act, 1881 : Supreme Court Lays Down Clear Principle

An important Judgment was passed by Hon'ble Supreme Court on 11 October 2022. 

In context of Negotiable Instruments Act, 1881, it has been commented in  Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel [2022] GCtR 1504 (SC) thus: - 

"Under Section 56 read with Section 15 of the Act, an endorsement may be made by recording the part-payment of the debt in the cheque or in a note appended to the cheque. When such an endorsement is made, the instrument could still be used to negotiate the balance amount. 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 cheque under Section 56 of the Act. The cheque cannot be presented for encashment without recording the part-payment. If the unendorsed cheque is dishonoured on presentation, the offence under Section 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment."

Kindly note that full text Judgments of Hon'ble Delhi High Court can be downloaded absolutely free of cost (without any charges except internet data) from the official website at the link 

https://delhihighcourt.nic.in/judgment

Then entering the date of Judgment, for example, as  11 October 2022.

Written by 

Vishal

Delhi

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