LAW UPDATE: THE SCOPE OF COMPLAINT FOR BALANCE AMOUNT IN CASE OF PART PAYMENT BY CHEQUE

In the recent case of Rajendra vs State of Madhya Pradesh, the Supreme Court of India clarified the scope of complaint for the balance amount in case of part payment by cheque. The court held that in such cases, the complainant is entitled to file a complaint for the remaining amount, provided that the cheque was issued for discharge of a debt or liability. This judgment has provided clarity on the legal position and has important implications for litigants and creditors in India.

Background

The issue of part payment by cheque has been a contentious subject in the Indian legal system. There was ambiguity regarding the legal remedy available to a complainant who received a cheque for part payment of a debt or liability. The question was whether the complainant could initiate proceedings for the balance amount or only for the amount mentioned in the cheque.

In the past, the Supreme Court of India has given differing opinions on this matter. In the case of Rajendra Bohra vs State of Rajasthan, the court held that the complainant can only file a complaint for the amount mentioned in the cheque and not for the balance amount. However, in another case of N. Parameswaran Unnithan vs G. Kannan, the court held that the complainant can initiate proceedings for the remaining amount.

This conflicting precedent created uncertainty and confusion amongst litigants and creditors. Therefore, there was a need for clarity and a definitive ruling by the apex court on this issue.

The Recent Judgment

In the case of Rajendra vs State of Madhya Pradesh, the Supreme Court finally settled the issue by ruling that the complainant can file a complaint for the balance amount in cases of part payment by cheque. The court held that the earlier judgment of Rajendra Bohra’s case was not correctly decided and overruled it.

The court also observed that a complainant is entitled to initiate proceedings for the balance amount under Section 138 of the Negotiable Instruments Act, which deals with dishonour of cheques. The court clarified that the term “amount of cheque” mentioned in the provision means the amount for which the cheque was issued, and not the full amount due.

Rationale behind the Judgment

The Supreme Court’s reasoning behind this judgment is based on the principles of law and equity. The court observed that when a cheque is issued for part payment, it is for the remaining amount that the cheque is given. Therefore, the complainant has the right to initiate proceedings for the balance amount, which has not been paid.

The court further stated that if a complainant is not allowed to file a complaint for the balance amount, it would lead to unjust enrichment of the accused. The accused would effectively be able to escape liability for a part of the debt or liability by issuing a cheque for a smaller amount.

Implications of the Judgment

The Supreme Court’s ruling has significant implications for litigants and creditors in India. The judgment has settled the conflicting precedent and clarified the legal position. It has also provided a remedy for complainants who had previously been unable to seek redressal for the remaining amount.

The ruling also acts as a deterrent for those who deliberately issue cheques for part payment to avoid paying the full amount. It ensures that creditors are not deprived of their rightful dues and can take necessary legal action to recover the remaining amount.

Conclusion

The Supreme Court’s judgment in the case of Rajendra vs State of Madhya Pradesh has provided much-needed clarity on the scope of complaint for balance amount in cases of part payment by cheque. The court’s decision is a welcome step, and it has brought certainty to the legal position. This ruling is a significant development in the law of cheques and has important implications for litigants and creditors in India.