Cheque Bounce and Money Recovery

Claim only that amount you deserve in a Cheque to have valid claim under Section 138 NI Act: Hon’ble Supreme Court: Read Judgement

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Hon’ble Supreme Court held that offence of Cheque Bounce under Section 138 of the Negotiable Instruments Act will not be valid if the cheque carry total amount without deduting the part-payment made by the borrower after the issuance of the cheque.

The Court held that the sum reflected on the cheque will not be the "legally enforceable debt" as per Section 138 Negotiable instrument Act.


Key Observations by the Hon'ble Supreme courts are


(i) For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation;


(ii) If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque;

(iii) When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted.


Download this important judgement from here


Section 138 NI Act

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