5 ADVANCED CASE STUDIES – NEGOTIABLE INSTRUMENTS ACT

5 ADVANCED CASE STUDIES – NEGOTIABLE INSTRUMENTS ACT

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**CASE STUDY 1

(Blank Cheque + Time-Barred Debt + Burden of Proof)**

Question

In 2016, A advanced ₹15 lakhs to B. No written agreement was executed. In 2024, B issued a signed blank cheque to A stating that it was issued “only for settlement discussion”. A filled the cheque and presented it. The cheque was dishonoured for insufficiency of funds.

B contends:

1. The debt was time-barred

2. The cheque was blank and misused

3. No legally enforceable liability existed

Decide the maintainability of the complaint under Section 138 NI Act.

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Model Answer (DJS Style)

Issue: Whether cheque issued for time-barred debt attracts Section 138.

Law & Case-law:

• Section 25(3), Contract Act

• A.V. Murthy v. B.S. Nagabasavanna (2002)

• Bir Singh v. Mukesh Kumar (2019)

Reasoning:
Issuance of cheque amounts to a written promise to pay a time-barred debt. A signed blank cheque carries statutory presumption under Sections 118 and 139.

Conclusion:
Complaint is maintainable. Defence is insufficient.

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**CASE STUDY 2

(Alteration of Cheque + Partial Payment + Excess Claim)**

Question

C issued a cheque of ₹10 lakhs to D. Before presentation, C paid ₹4 lakhs in cash. D altered the cheque amount to ₹10 lakhs and presented it. The cheque was dishonoured. D filed a complaint for ₹10 lakhs.

C challenges the maintainability of the complaint.

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Model Answer

Issues:

1. Effect of partial payment

2. Effect of material alteration

Law & Case-law:

• Section 87 NI Act

• Alliance Infrastructure v. Vinay Mittal (2010)

Reasoning:
Cheque must represent legally enforceable debt to the extent of the cheque amount. Material alteration without consent renders the instrument void.

Conclusion:
Complaint not maintainable.

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**CASE STUDY 3

(Multiple Presentations + Multiple Notices + Limitation Trap)**

Question

Cheque dishonoured on:

• 1 January → notice sent, no complaint filed

• 20 February → cheque re-presented, dishonoured again, fresh notice issued

Complaint filed after second dishonour.

Accused contends complaint is barred by limitation.

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Model Answer

Issue: Whether fresh cause of action arises on re-presentation.

Law & Case-law:

• MSR Leathers v. S. Palaniappan (2013)

Reasoning:
Each dishonour followed by valid notice gives rise to a fresh cause of action.

Conclusion:
Complaint is within limitation and maintainable.

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**CASE STUDY 4

(Power of Attorney + Non-Examination of Complainant)**

Question

Complaint under Section 138 filed by a Power of Attorney holder. Complainant never entered witness box. Accused challenges maintainability.

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Model Answer

Issue: Whether POA holder can depose.

Law & Case-law:

• A.C. Narayanan v. State of Maharashtra (2014)

Reasoning:
POA holder can depose only if he has personal knowledge of the transaction. Foundational facts must be proved.

Conclusion:
If POA lacks personal knowledge, complaint fails.

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**CASE STUDY 5

(Death of Accused + Compensation + Civil Remedy)**

Question

During pendency of Section 138 proceedings, accused dies after conviction but before appeal. Legal heirs seek setting aside of conviction and refund of compensation paid.

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Model Answer

Issues:

1. Effect of death on criminal proceedings

2. Fate of compensation

Law & Case-law:

• H.P. Housing Board v. Varinder Kumar Garg (2005)

• Section 357 CrPC

Reasoning:
Criminal liability abates on death, but compensation already paid is not automatically refundable.

Conclusion:
Conviction abates; compensation does not revive criminal liability