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Section 56: Endorsement for part of sum due

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 55 All 148 Sections of Negotiable Instruments Act Section 57

Legal Commentary & Landmark Judgments: Section 56

Section 56 strictly regulates indorsement for part of the sum due, enacting that an indorsement which purports to transfer only a part of the amount payable is invalid, but permits indorsement of the balance when part payment has been made and noted.

  • Prohibition of Splitting Causes of Action: An indorsement cannot transfer a portion of the bill to one person and a portion to another; commercial debt cannot be split into multiple lawsuits.
  • Endorsement of Balance Allowed: Where an instrument has been paid in part, a note of that payment must be written upon the instrument, after which the balance may be negotiated.
  • Direct Nexus with Section 138: Supreme Court in Dashrathbhai Trikambhai Patel held that part payments must be endorsed on the cheque or acknowledged, failing which prosecution for the gross sum fails.
Key Landmark Precedents:
  • Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (2022) 10 SCC 737: The Supreme Court authoritatively held that under Section 56 read with Section 138, if part payment is made prior to presentation, the payee must endorse the payment on the cheque; presenting the cheque for the full amount without adjustment invalidates the prosecution.
  • Hawkins v. Cardy (1698) 1 Ld Raym 360: The foundational mercantile authority establishing that a bill of exchange cannot be apporioned or split by indorsement so as to subject the drawer to multiple actions.
Courtroom Practice & Strategic Litigation Guidance:

In cheque bounce litigation, Section 56 is a potent weapon. If the drawer made any part payment (via RTGS/cash) before the cheque was presented, and the payee presented the cheque for the unadjusted gross amount, argue Dashrathbhai Patel: failure to endorse part payment under Section 56 destroys the Section 138 cause of action.

Section 55 All 148 Sections of Negotiable Instruments Act Section 57