5 ADVANCED CASE STUDIES – NEGOTIABLE INSTRUMENTS ACT
**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:
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The debt was time-barred
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The cheque was blank and misused
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No legally enforceable liability existed
Decide the maintainability of the complaint under Section 138 NI Act.
Model Answer (DJS Style)
Issue: Whether cheque issued for time-barred debt attracts Section 138.
Law & Case-law:
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Section 25(3), Contract Act
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A.V. Murthy v. B.S. Nagabasavanna (2002)
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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.
**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.
Model Answer
Issues:
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Effect of partial payment
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Effect of material alteration
Law & Case-law:
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Section 87 NI Act
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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.
**CASE STUDY 3
(Multiple Presentations + Multiple Notices + Limitation Trap)**
Question
Cheque dishonoured on:
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1 January → notice sent, no complaint filed
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20 February → cheque re-presented, dishonoured again, fresh notice issued
Complaint filed after second dishonour.
Accused contends complaint is barred by limitation.
Model Answer
Issue: Whether fresh cause of action arises on re-presentation.
Law & Case-law:
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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.
**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.
Model Answer
Issue: Whether POA holder can depose.
Law & Case-law:
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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.
**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.
Model Answer
Issues:
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Effect of death on criminal proceedings
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Fate of compensation
Law & Case-law:
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H.P. Housing Board v. Varinder Kumar Garg (2005)
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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