Court’s Decision:
The Kerala High Court allowed a criminal appeal filed by the complainant challenging the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881. The Court convicted the accused, holding that the trial court had adopted a hyper-technical view in accepting the defence of blank cheque misuse without any evidence. The accused was sentenced to undergo simple imprisonment for a day (till rising of the court) and pay a fine of ₹1,00,000, failing which he shall undergo four months’ default imprisonment.
Facts:
The complainant alleged that the accused had borrowed ₹50,000 on 25.02.2006 and issued a cheque dated 07.03.2006 in discharge of that debt. The cheque was returned for insufficiency of funds. A legal notice issued to the accused was returned unclaimed. The complaint was filed after non-repayment despite due notice. The complainant examined himself and produced documents including the dishonoured cheque and postal receipts. The accused did not adduce any evidence but contended that the cheque was issued blank for a ₹10,000 loan and misused.
Issues:
- Whether the trial court erred in acquitting the accused under Section 138 of the NI Act.
Whether a signed blank cheque amounts to valid execution under law. - Whether the complainant was entitled to presumptions under Sections 118 and 139 of the NI Act.
Petitioner’s Arguments:
The complainant contended that the accused executed a cheque for ₹50,000 as part of a legally enforceable debt and that the dishonour was proven by valid documentary evidence. It was argued that the trial court wrongly ignored statutory presumptions and that the complainant had discharged his burden under the law. The accused’s plea of issuing a blank cheque for ₹10,000 was unsupported by evidence and insufficient to rebut the statutory presumption.
Respondent’s Arguments:
The accused claimed he had issued a signed blank cheque for a much smaller loan of ₹10,000, which was allegedly misused by the complainant to fabricate the cheque for ₹50,000. He relied on the trial court’s observation that issuance of a signed blank cheque does not amount to valid drawing of a cheque and hence Section 138 was not attracted.
Analysis of the Law:
The Court held that under Sections 20, 87, and 139 of the NI Act, even a blank cheque, if voluntarily signed and handed over, attracts the presumption of validity. Relying on Bir Singh v. Mukesh Kumar (2019) and Hiten P. Dalal v. Bratindranath Banerjee, the Court reiterated that the burden is on the accused to rebut the presumption that the cheque was issued for discharge of a debt. The absence of corroborating evidence in defence makes the statutory presumption unassailable.
Precedent Analysis:
- Bir Singh v. Mukesh Kumar (2019): Held that a signed blank cheque voluntarily handed over attracts presumption under Section 139 unless cogent evidence is led to rebut it.
- Kamalammal v. C.K. Mohanan, 2006 (3) KLJ 95: Trial court wrongly applied this case to argue that a cheque must be completely filled by the drawer. The High Court clarified that such a proposition has no legal backing in NI jurisprudence.
Court’s Reasoning:
The Court found that the trial court committed a grave error by discarding the complainant’s evidence and presuming misuse without proof. It held that the existence of debt was established, the cheque was duly executed, and no evidence rebutting the presumption was offered by the accused. The trial court’s reasoning was hyper-technical and contrary to binding precedents.
Conclusion:
The Court set aside the acquittal, convicted the accused, and imposed a sentence of one-day simple imprisonment with a fine of ₹1,00,000 under Section 138 of the NI Act. In default of payment, the accused shall undergo four months’ imprisonment. He was directed to surrender before the trial court on 07.07.2025.
Implications:
This ruling reinforces the principle that statutory presumptions under Sections 118 and 139 must be respected unless rebutted by credible evidence. It clarifies that blank cheques, when voluntarily handed over, are valid instruments under the NI Act. The judgment is a strong reaffirmation of creditor rights and sets a precedent against speculative defences in cheque dishonour cases.
