Case Title - Dashratbhai Trikambhai Patel versus Hitesh Mahendrabhai Patel and others 2022 LiveLaw (SC) 830
No offence for dishonour of cheque under Section 138 of the Negotiable Instruments Act is made out if the cheque is presented for the full amount without endorsing the part-payment made by the borrower after the issuance of the cheque.
The sum reflected on the cheque will not be the "legally enforceable debt" as per Section 138 NI Act, when it has been presented for encashment without endorsing the part-payment. Part-payments must be endorsed on the cheque as per Section 56 of the NI Act. If such endorsement is made, the cheque can be presented for the balance amount, and the offence under Section 138 NI Act will be attracted if such a cheque with endorsement of the part-payment gets dishonoured.
Case Title - Harpal Singh Vs. The State Of Haryana Citation : 2023 LiveLaw (SC) 1046
Availability Of Funds In Other Bank Accounts Not A Defence; Cheque Dishonour Relates To Specific Account: Supreme Court
“In a proceeding under Section 138 of the Negotiable Instruments Act, the accused cannot rely upon other bank accounts for the dishonoured cheque which relates to specific bank account of the accused," - Hon'ble Court held.
Case Title - GHANSHYAM GAUTAM vs. USHA RANI - Citation : 2024 LiveLaw (SC) 23
once the settlement has been arrived at and the complainant has signed the deed accepting an amount in full and final settlement, the proceedings under this provision must be quashed.
“Considering the overall facts and circumstances of the case, we are of the view that once the settlement has been arrived at and the complainant has signed the deed accepting a particular amount in full and final settlement of the default amount and the fine amount awarded by the Trial Court, the proceedings under Section 138 of the NI Act need to be quashed," - Hon'ble Court held.
Case Title - Mathew Kunju Mathew v. K.V. Kuriakose & Anr - Citation: 2024 LiveLaw (Ker) 13
When a competent civil court finds that a dishonoured cheque, which was the subject matter for initiation of criminal proceedings under Section 138 of the Negotiable Instruments Act ('NI Act') was not supported by valid consideration, the conviction and sentence of the criminal court for the offence would not legally sustain
"The presumption under Sections 118 ('Presumptions as to negotiable instruments') and 139 ('Presumption in favour of holder') of the NI Act is of no avail, when the cheques are proved to be not issued towards discharge of any legally enforceable debt," - Hon'ble Kerala High Court
Case Title - Newton Engineering and Chemicals Limited and Ors v. Uem India Pvt Ltd: Delhi High Court; Citation: 2023 LiveLaw (Del) 1189
Arbitration proceedings and proceedings under Section 138 of the Negotiable Instruments Act (“NI Act”) can continue simultaneously.
Case Title - Sri Krishna Agencies v. State of A.P. & Anr. Hon'ble Supreme Court
“…there can be no bar to the simultaneous continuance of a criminal proceeding and a civil proceeding if the two arise from separate causes of action.”
Case Title - Dilip Hariramani vs Bank of Baroda - Citation : 2022 LiveLaw (SC) 457
A person cannot be convicted for the offence of dishonour of cheque under Section 138 of the Negotiable Instruments Act merely because he was a partner of the firm which had taken the loan or that he stood as a guarantor for such a loan.
In the absence of evidence to establish that the appellant was responsible for the conduct of affairs at the firm towards the issuance of the cheques, the conviction has to be set aside. - Hon'ble Court held.
Case Title - Mallikarjun Kodagali through Los v. State of Karnataka & Ors. Hon'ble Supreme Court
The interplay between Section 378(4) and provision to Section 372 of the CrPC was interpreted by Hon'ble Court in the following words:
“The text of this provision is quite clear and it is confined to an order of acquittal passed in a case instituted upon a complaint. The word “complaint” has been defined in Section 2(d) CrPC and refers to any allegation made orally or in writing to a Magistrate. This has nothing to do with the lodging or the registration of an FIR, and therefore it is not at all necessary to consider the effect of a victim being the complainant as far as the proviso to Section 372 is concerned"
Case Title - Ajitsinh Chehuji Rathod v. State of Gujarat and another. Citation : 2024 LiveLaw (SC) 64
Hon'ble Supreme Court held that: In a complaint under Section 138 of the Negotiable Instruments Act, if the accused is disputing the signature on the cheque, then the certified copies of the signatures from the bank could be summoned from the bank to compare the same with the signature appearing on the cheque.
Relying in above Judgment, Hon'ble Chattisgarh High Court held that: "appeal against the order of acquittal under Section 138 of the Negotiable Instruments Act, 1881 lies to the High Court under Section 378(4) of the Code of Criminal Procedure and not under proviso to Section 372 of the Code"
Case Title - BV Seshaiah vs State of Telangana & B Vamsi Krishna vs State of Telangana, 2023 LiveLaw (SC) 75
Conviction in a cheque dishonour case cannot be confirmed overriding the agreement between the parties to compound the offence.
Hon'ble Supreme Court held that "when parties to a litigation proceeding have entered into an agreement to compound a compoundable offence, High Courts cannot override such compounding and impose their will on the parties"
Negotiable Instruments Act 1881 - Section 138- conviction cannot be confirmed overriding the agreement between the parties to compound the offence- Terms and conditions of the settlement entered into by the parties binds them to settle the dispute amicably, or through an arbitration as has been stated in clause 8 of the Memorandum Of Understanding. In such a circumstance, the Appellants cannot be convicted on the basis of the orders passed by the courts below, as the settlement is nothing but a compounding of the offence- This is a very clear case of the parties entering into an agreement and compounding the offence to save themselves from the process of litigation. When such a step has been taken by the parties, and the law very clearly allows them to do the same, the High Court then cannot override such compounding and impose its will.- Para 8,9,11 of the judgment.
Case Title - Sasikumar V Ushadevi
"The fine imposed under Section 138 of the Act should be proportional to the cheque amount, and it must not exceed twice the cheque amount". - Kerala High Court
“A reading of Chapter XVII of the Act and the laudable object sought to be achieved by the legislation, and its interpretation on the point of sentencing, leaves no room for any doubt that the criminal court while sentencing an accused for the offence under Section 138 of the Act has to keep the compensatory part in mind, which has to be commensurate to the cheque amount and not to exceed twice the amount, so that it can be appropriated towards the compensation payable to the complainant under Section 357 of the Code."