Supreme Court: Dishonour Of Blank Cheque Will Also Attract Presumption u/s 139 NI Act

Supreme Court: Dishonour Of Blank Cheque Will Also Attract Presumption u/s 139 NI Act

The Supreme Court of India (SC) observed in the case of M/s. Kalamani Tex (Appellants/ Accused) v. P. Balasubramanian (Respondent/ Complainant) that even a blank cheque leaf would attract presumption under Section 139 of the Negotiable Instruments Act (NI Act) when signatures are admitted by the accused.

The SC bench consisting of Justices NV Ramana, Surya Kant, and Aniruddha Bose observed that 'reverse onus' clauses under Section 118 and Section 139 of the NI Act shall be operative if the accused admits the signature(s) on the cheque.

The Bench observed that though the presumptions raised under Section 118 and Section 139 are rebuttable, a probable defence needs to be raised, which must meet the standard of 'preponderance of probability', and not mere possibility.

The Judicial Magistrate acquitted the accused, against the order of the Trial Court an appeal was filed before the High Court (HC) that had reversed the order and convicted the accused under Section 138 of the NI Act.

The HC noticed that the accused had admitted his signatures on both the Cheque and the Deed of Undertaking and had thus acknowledged the liability.

The Top Court upheld the order of the HC and stated that the Trial Court had completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NI Act.

The Apex Court explained that "The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument is established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him."

The Court further stated that "Once the Appellant had admitted his signatures on the cheque and the Deed, the Trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt."

The SC noted that the Trial Court fell in error, "When it called upon the Complainant/ Respondent to explain the circumstances under which the appellants were liable to pay. Such approach of the Trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law."

The bench further stated that the contention raised by the accused does not meet the standard of 'preponderance of probability'. The Court stated, "Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated."

The Apex Court referred to the judgment of the case Bir Singh v. Mukesh Kumar (2019) 4 SCC 197, wherein the SC held, "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 Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

The accused raised another contention that the Trial Court view was a possible view, and the HC had committed illegality and exceeded its jurisdiction in reversing the acquittal.

While dealing with another contention of the accused, the SC observed and stated, "It is true that the High Court would not reverse an order of acquittal merely on the formation of an opinion different than that of the trial Court.It is also trite in law that the High Court ought to have compelling reasons to tinker with an order of acquittal and no such interferencewould be warranted when there were to be two possible conclusions."

The Bench further stated that "Nonetheless, there are numerous decisions of this Court, justifying the invocation of powers by the High Court under Section 378 CrPC, if the trial Court had, inter alia, committed a patent error of law or grave miscarriage of justice or it arrived at a perverse finding of fact."

While rejecting the plea of the complainant regarding enhancement of compensation, the Court stated, "The record indicates that neither did the respondent ask for compensation before the High Court nor has he chosen to challenge the High Court's judgment. Since, he has accepted the High Court's verdict, his claim for compensation stands impliedly overturned."

After hearing the submissions of both the parties at length and considering the material on record the SC concluded "We are conscious of the settled principles that the object of Chapter XVII of the NI Act is not only punitive but also compensatory and restitutive."

It further clarified that "The provisions of NI Act envision a single window for criminal liability for dishonour of cheque as well as civil liability for realization of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the Courts should uniformly levy fine up to twice the cheque amount along with simple interest at the rate of 9% per annum."