Most of us, even bankers for that matter, overlook that the law allows endorsing cheques for part-payments. A cheque bounce case under Section 138 of the Negotiable Instruments Act ( “The Act” ) fails if the full cheque amount is not actually due because part of the loan has already been repaid and that part-payment is not endorsed on the cheque. The cheque must represent a legally enforceable debt on the date it is presented. Let’s take a look at a simple interpretation of the Supreme Court’s decision in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, Criminal Appeal No. 1497 of 2022 (SC) . The Facts: A lender claimed a relative had borrowed Rs. 20 lakhs and gave a cheque for that amount, which later bounced for insufficient funds. The borrower showed that he had already paid Rs. 4,09,315 towards that loan before the cheque was presented. The trial court and the High Court found these part-payments proved, and the Supreme Court examined whether Section 138 applied in such...
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