Key Supreme Court judgments under Section 138 N I Act

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In July 2024, the Supreme Court of India delivered several important judgments under Section 138 of the Negotiable Instruments Act, 1881, addressing various aspects of cheque dishonor cases. Here are the key highlights:

Acquittal in Cheque Dishonor Case: The Supreme Court upheld an acquittal in a case where the complainant failed to demonstrate the financial capacity to advance a loan, which was critical to proving the cheque's validity under Section 138. The Court emphasized that the presumption under Section 139 of the NI Act does not automatically apply when there are contradictions in the complainant's statements and no evidence of the loan in the Income Tax returns​ (LegalUpdates).

Transfer of Cases Denied: The Court ruled against the transfer of cheque dishonor cases by the accused to a different jurisdiction, reinforcing the principle that convenience of the accused should not override judicial efficiency and the rights of the complainant​ (Bhatt and Joshi Associates).

Statutory Notice and Legally Enforceable Debt: The Court clarified that for a complaint under Section 138 to be valid, the statutory notice must represent a legally enforceable debt at the time of cheque presentation. In cases where part of the debt was already discharged, the Court held that the notice demanding the full amount was invalid, upholding the acquittal of the accused​ (SCC Online).

These judgments provide significant clarity on the application of Section 138, particularly concerning the presumption of debt, the validity of statutory notices, and the jurisdictional aspects of cheque dishonor cases.

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