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Supreme Court | A blank cheque voluntarily signed and handed over by the accused towards some payment would attract presumption under Section 139 of the NIA, 1881

The Hon’ble Court observed that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in the discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.

The court also observed that, if the signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

Material Facts of the Case:

The respondent accused issued a cheque in the name of the appellant towards repayment of a friendly loan of Rs. 15 Lakhs advanced by the appellant to the respondent. The appellant deposited the said cheque in his bank, but the cheque was returned unpaid with the endorsement “Insufficient Fund”.

The appellant, on the assurance of the respondent, again presented the cheque to his bank but it was again returned unpaid with the remark “Insufficient Fund”. The appellant issued a legal notice to the respondent through his lawyer however the accused did not reply to the notice nor did he pay the cheque amount to the appellant. 

The appellant initially filed a criminal complaint under Section 138 of NIA, 1881 against the accused, and the accused was found guilty of an offence under Section 138 of Negotiable Instrument Act, 1881 ( hereinafter be referred to as ACT) by an order of conviction passed by the Judicial Magistrate, 1st Class, Palwal. The judgment came to be assailed by way of an appeal before the Additional Sessions Judge, Palwal whereby the Court affirmed the judgment of the Magistrate. Being aggrieved, the convict filed a Criminal Revision before the High Court of Punjab and Haryana High Court which allowed the revision and set aside the order of conviction. The appellant has assailed the judgment passed by the High Court of Punjab and Haryana at Chandigarh.

The plea took by the respondent before the trial court: 

The respondent pleaded that the appellant had misused a blank cheque made over by the respondent to the appellant for the deposit of Income Tax.

Observations of the Court:

The Supreme Court observed that the High Court has misconstrued Section 139 of the ACT which mandates that unless the contrary is proved, it is to be presumed that the holder of a cheque received the cheque of nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. 

The Court relied upon the following judgments;

  1. Hiten P. Dalal versus Bratindranath Banerjee (2001) 6 SCC 16.
  2. Laxmi Dyechem versus State of Gujrat & Ors. 2013 (2) JKJ 1 (SC).
  3. Kumar Exports versus Sharma Carpets (2009) 2 SCC 513.
  4. K.N. Beena versus Muniyappan and Another (2001) 8 SCC 458
  5. R. Vijayan vs Baby and Another (2012) 1 SCC 260
  6. Krishna Janardhan Bhat versus Dattatraya G. Hedge (2008) 4 SCC 54.

The Court observed that even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the ACT in the absence of any cogent evidence to show that the cheque is not issued in discharge of a debt.

The Court held that the High Court patently erred in holding that the burden was on the appellant to prove that he had advanced the loan and the blank signed cheque was given to him in repayment of the same. The finding of the High Court that the case of the appellant became highly doubtful or not beyond a reasonable doubt is patently erroneous.

The Court allowed the appeal and confirmed the conviction of the respondent however the respondent is sentenced only to a fine of Rs. 16 Lakhs to be paid as compensation to the appellant.