In Brief
A borrower received a loan of Rs 20 lakhs and issued a cheque for the full amount as security. Before the cheque matured, the borrower made partial payments totalling Rs 4,09,315. When the cheque was presented and dishonoured due to insufficient funds, the lender filed criminal charges under Section 138 of the Negotiable Instruments Act. The Supreme Court held that the offence is committed only when the dishonoured cheque represents a legally enforceable debt at the time of presentation. Since the borrower made part-payments before encashment, the debt was reduced and was no longer equal to the cheque amount. Without endorsing the part-payment on the cheque under Section 56, no offence occurred. The appeal was dismissed, upholding the acquittal.
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