Kerala High Court: Blank cheque will be presumed for payment of debt unless proven otherwise

Kerala High Court: Blank cheque will be presumed for payment of debt unless proven otherwise

Cites the decision of the Supreme Court in a previous case to decide the matter

The Kerala High Court has held that the presumption under Section 139 of the Negotiable Instrument (NI) Act,1881, that a cheque was issued to discharge debt or liability remains applicable even in a voluntarily issued blank cheque.

In the PK Uthuppu vs NJ Varghese & Anr case, the bench of Justice Sophy Thomas relied on the decision of the Supreme Court in the Bir Singh vs. Mukesh Kumar case.

While quoting the judgment in the previous case, the bench said, "Even if a blank cheque leaf is voluntarily signed and handed over by the accused towards some payment, it would attract the presumption under Section 139 of the NI Act in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

The court was considering a revision petition filed by an individual convicted under Section 138 of the NI Act, which deals with cheque bouncing offence.

The petitioner was accused of issuing a cheque without ensuring he had sufficient funds in his bank account, thereby defaulting on a Rs.4 lakh loan. The check bounced, leading to a lawyer's notice from the lender and a complaint under the NI Act when, despite the notice, the borrowed amount was not repaid.

While the accused-petitioner was found guilty by the trial court, an appellate court upheld the conviction but reduced the sentence.

The revision petitioner claimed he had issued a blank check to the complainant's financial institution as security for a vehicle loan. But the complainant did not return various documents, including the blank cheque, claiming they were misplaced. Later, he misused the cheque to file a false case against him.

However, the judge rejected the arguments. He maintained that the petitioner failed to produce any document to prove that he availed a vehicle loan from a financial institution run by the complainant.

On the other hand, the court noted there was evidence to indicate that he availed a personal loan of Rs.4 lakh as claimed by the complainant. It observed that the petitioner admitted that he voluntarily gave a signed check to the complainant. Hence, Section 139 of the NI Act, favored the complainant.

The bench added, "The revision petitioner failed to adduce any cogent evidence to show that the cheque given by him was not towards discharge of any legally enforceable debt. Since the presumption stands unrebutted, the court holds that the appellate court rightly upheld the conviction of the petitioner under Section 138 of the NI Act and sentenced him to undergo imprisonment till the rising of the court and to pay a fine of Rs.4 lakh.”

Thus, the court dismissed the revision petition and directed the petitioner to surrender before the trial court to serve his sentence and pay the fine.

The petitioner was represented by advocate S Rajeev.

Advocate R Bindu Sastamangalam appeared for the complainant and the State.