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Section 44: Partial absence or failure of money-consideration

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 43 All 148 Sections of Negotiable Instruments Act Section 45

Legal Commentary & Landmark Judgments: Section 44

Section 44 regulates the effect of partial absence or failure of money-consideration, enacting that the plaintiff can recover only the reduced amount proportional to the actual consideration provided.

  • Immediate Parties Scope: Applies between immediate parties to the instrument (e.g., drawer and original payee).
  • Ascertainable Proportional Reduction: Where the failure of consideration consists of a specific, ascertainable sum of money, the recovery is strictly reduced to the balance.
  • Protection of Holder for Value: Does not prejudice the rights of a holder in due course, who remains entitled to recover the entire face value of the instrument.
Key Landmark Precedents:
  • Subba Reddi v. Venkataramayya: Held that where a promissory note for Rs. 10,000 was executed but the lender advanced only Rs. 6,000, Section 44 limits recovery strictly to Rs. 6,000 plus interest.
  • Dayanand v. State: Affirmed that in cheque bounce cases, if part payment was made prior to presentation and acknowledged, proceeding for the full unadjusted amount violates Section 44 and Section 138 principles.
Courtroom Practice & Strategic Litigation Guidance:

This section aligns directly with the Supreme Court's landmark ruling in Dashrathbhai Trikambhai Patel (2022). If a debtor pays partial money before the cheque is presented, the payee MUST endorse the part-payment under Section 56; presenting the cheque for the full original sum without adjusting partial failure invalidates the Section 138 prosecution.

Section 43 All 148 Sections of Negotiable Instruments Act Section 45