The Punjab & Haryana High Court has clarified that if interest is claimed on a cheque that does not include an interest component, the cheque does not remain a legally enforceable debt or other liability under Section 138 of the Negotiable Instrument Act (NI Act). The Court quashed a complaint lodged under Section 138 NI Act, noting that the cheque was not intended to discharge any legally enforceable debt or liability for interest, but rather for the amount due for the purchase of articles.
Interest Claimed on Cheques without Interest Component
The Court emphasized that in the absence of a specific demand for interest, the complainant cannot utilize blank or security cheques to claim interest. Cheques are given for the amount corresponding to the amount mentioned in the ledger or books of accounts, referring to bills or invoices. The claim or imposition of interest, which is not mentioned in the cheque, is subject to proof and there is no presumption in favor of the holder for such interest that does not form part of the cheque.
Discharge of Liability
The Court referred to Section 82 of the NI Act, which states that if the payment is made in due course of the amount due on the cheque, then the liability stands discharged. Once the complainant receives the amount equal to the cheque amount, accepts it, and admits receipt of the entire cheque amount, Section 82 triggers the discharge of the entire liability mentioned in the cheque.
Specific Agreement for Interest on Cheques
The Court clarified that in the case of a specific agreement where a blank cheque was given with permission to fill in the accrued interest, the cheque must not exceed the amount due after calculating the interest and specifying the principal, interest, and interest rate in the complaint.
Presumption Under Section 118 of the NI Act
Section 118 of the NI Act raises a presumption in favor of the holder of the cheque for consideration. However, the presumption is only for the consideration of the cheque amount, which must be a legally enforceable debt or any other liability.
