Court holds that cheque issued as security cannot be presented for full amount if partial payment was made after issuance but before presentation, setting aside lower courts' conviction under Section 138 of Negotiable Instruments Act.
In a significant judgment dated September 10, 2026, the Himachal Pradesh High Court, presided over by Justice Rakesh Kainthla, acquitted the accused, Mr. Chet Ram, in a cheque bounce case filed by the complainant Mr. Ranjeet. The case revolved around a dishonoured cheque amounting to Rs. 1,40,000/- issued by the accused for rent and maintenance charges under Section 138 of the Negotiable Instruments Act (NI Act), 1881.
The lower courts had convicted the accused, sentencing him to six months' simple imprisonment along with compensation of Rs. 1,84,000/-, holding that the accused had failed to rebut the presumption of liability under Sections 118 and 139 of the NI Act. The complainant had presented the cheque which was dishonoured due to insufficient funds, issued the requisite notice, and proceeded with the complaint when the accused failed to pay.
However, on revision, the High Court found that the complainant himself admitted receiving partial payments amounting to Rs. 1,00,000/- on November 20, 2018, Rs. 50,000/- on November 29, 2018, and Rs. 1,40,000/- transferred from the accused's wife's account on June 27, 2017. Crucially, one of these payments (Rs. 50,000/-) was made after the issuance of the cheque but before its presentation. The Court relied heavily on the Supreme Court judgment in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (2023), which clarified that the cheque must represent a legally enforceable debt at the time of presentation. If part payment is made before presentation, the amount due is reduced accordingly, and the cheque cannot be presented for the full original amount.
The accused had admitted issuing the cheque as security but contended that the partial payments discharged the liability. The trial and appellate courts had overlooked this crucial point and failed to adjust the cheque amount to reflect these payments. The High Court emphasized that the presumption under Section 139 is rebuttable and the complainant must consider any payments made before presenting the cheque.
Moreover, the Court reiterated the limits of revisional jurisdiction, referring to Supreme Court rulings such as Kuntegowda v. Thurubaiah (2026) and Sanjabij Tari v. Kishore S. Borcar (2025), cautioning that a revisional court should not reappreciate evidence unless there is a glaring error or miscarriage of justice. Here, the High Court found that the lower courts committed a material error by ignoring the partial payments, thus justifying interference in revision.
In conclusion, the High Court acquitted the accused of the offence under Section 138 of the NI Act, set aside the conviction and sentences, and ordered refund of any fine paid after the expiry of appeal limitation. The accused was directed to furnish bail bonds, effective for six months, pending any Supreme Court Special Leave Petition.
This judgment underscores the importance of the cheque representing the actual enforceable debt at presentation and the necessity to adjust for any payments made in the interim. It provides clarity on the application of Section 138 in cases where cheques are issued as security and partial payments have been made.
Bottom Line:
A cheque issued as security cannot be presented for the full amount if part payment of the liability has been made after issuance and before presentation. The legally enforceable debt on the date of presentation must reflect the adjusted amount post-payment.
Statutory provision(s):
Negotiable Instruments Act, 1881 Section 138, Section 118, Section 139; Code of Criminal Procedure, 1973 Section 313 (now Section 464 under Bharatiya Nagarik Suraksha Sanhita, 2023), Section 397 (now Section 438 under Bharatiya Nagarik Suraksha Sanhita, 2023), Section 437A (now Section 481 under Bharatiya Nagarik Suraksha Sanhita, 2023).
