Section 138 presumption rebutted when post-dated cheque's face value exceeds enforceable debt after partial payment before presentation

SC held that where a post-dated cheque is issued but the drawer makes part-payment after the cheque is drawn and before presentation, the legally enforceable debt at maturity is reduced and the cheque's face value may not represent the debt. Consequently, statutory presumption under Section 138 is rebutted if the cheque did not represent the enforceable debt when dishonoured for insufficiency. The trial court's acquittal was affirmed and the appeal dismissed.

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Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Validity of statutory notice under Section 138.
3. Part-payment of debt and its effect on the enforceability of the cheque.
4. Interpretation of "debt or other liability" and its timing.
5. Endorsement of part-payment on the cheque under Section 56 of the Act.

Detailed Analysis:

1. Legally Enforceable Debt under Section 138 of the Negotiable Instruments Act, 1881:
The core issue was whether the offence under Section 138 of the Act would be deemed committed if the dishonoured cheque did not represent an enforceable debt at the time of encashment. The appellant alleged that the first respondent borrowed Rs. 20,00,000 and issued a cheque dated 17 March 2014, which was dishonoured due to insufficient funds. However, the Trial Court found that part of the debt had been paid, and thus, the cheque did not represent the legally enforceable debt at the time of encashment.

2. Validity of Statutory Notice under Section 138:
The High Court upheld the Trial Court's finding that the statutory notice issued under Section 138 was invalid because it did not account for the part-payment made by the first respondent. The notice demanded the full cheque amount without acknowledging the part-payment, making it an omnibus notice, which is not legally sustainable.

3. Part-payment of Debt and Its Effect on the Enforceability of the Cheque:
The appellant contended that the payment of Rs. 4,09,315 was made before the issuance of the cheque and thus should not affect the enforceability of the cheque for Rs. 20,00,000. However, the Court observed that the part-payment made after the issuance of the cheque but before its encashment must be reflected in the statutory notice. Since the cheque amount was higher than the legally enforceable debt at the time of encashment, Section 138 was not attracted.

4. Interpretation of "Debt or Other Liability" and Its Timing:
The Court referred to several precedents, including Indus Airways Private Limited v. Magnum Aviation Private Limited and Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited, to conclude that Section 138 applies only if there is a legally enforceable debt at the time of the cheque's maturity. The Court emphasized that a post-dated cheque must represent a legally enforceable debt on the date of encashment, not just at the time of issuance.

5. Endorsement of Part-payment on the Cheque under Section 56 of the Act:
The Court highlighted that under Section 56, if part-payment is made, it must be endorsed on the cheque. Without such endorsement, presenting the cheque for the full amount when part-payment has been made does not attract the offence under Section 138. This is because the cheque no longer represents a legally enforceable debt for the full amount.

Conclusion:
The Supreme Court dismissed the appeal, holding that the cheque did not represent a legally enforceable debt of Rs. 20,00,000 at the time of encashment due to part-payments made by the first respondent. Consequently, the statutory notice demanding the full cheque amount was invalid, and the offence under Section 138 was not made out. The Court also clarified that part-payments must be endorsed on the cheque as per Section 56 to negotiate the balance amount legally.

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