Security cheque -- Post-dated cheque – Interpretation must not permit dishonesty of the drawee of the cheque as well -- Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment -- If there has been a material change in the circumstance such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence u/s 138 is not made out.

(SC) Decided on: 11.10.2022

Part payment – Cheque cannot be presented for encashment without recording the part payment -- If the unendorsed cheque is dishonoured on presentation, the offence u/s 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment.

(SC) Decided on: 11.10.2022

Part payment – (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.

(SC) Decided on: 11.10.2022