Voluntarily Signed Blank Cheque Does Not Invalidate Presumption Under Section 139 of NIA

The High Court of Kerala, in P.K. Uthuppu Vs. N.J. Varghese and Ors.[2023/KER/68691], held that a blank cheque that has been voluntarily signed and issued towards the discharge of a debt does not invalidate the presumption under Section 139 of the Negotiable Instruments Act, 1881.

In the instant case, the revision petitioner had borrowed a sum amounting to Rs. 4 lakh from the respondent. Towards the discharge of this debt, the revision petitioner issued a blank cheque to the respondent, assuring that there would be sufficient funds in his bank account to honour the cheque. However, when the respondent presented the cheque before the drawee bank, it was dishonoured due to insufficiency of funds and returned with a memo. The respondent issued a notice to the revision petitioner at the address of his business place and his residential address informing him of the dishonour of the cheque and demanding the cheque amount. Despite receipt of this notice, the revision petitioner failed to repay the amount, leading the respondent to file a complaint under Section 138 of the Negotiable Instruments Act, 1881. The revision petitioner was found guilty and was sentenced to simple imprisonment for six months and to pay compensation of Rs. 4 lakh with interest @ 9% per annum from the date of dishonour of the cheque till the date of payment. Against this judgement, an appeal was filed by the revision petitioner. The appellate court also confirmed the conviction but reduced the sentence of imprisonment and converted the compensation amount into a fine amount. Again, aggrieved by this judgement, the revision petitioner brought the present case.

The revision petitioner challenged the judgement of the appellate court on the ground that the cheque in question was not issued for the discharge of any legally enforceable debt rather, according to him, he had availed a loan for his vehicle from the financial institution run by respondent and some bank documents including a blank cheque signed by him were given as security. On closing the loan, these documents were returned to him except for the blank cheque which was claimed to be misplaced. The revision petitioner contended that, this blank cheque was misused by the respondent and a false case was brought against him. The revision petitioner also contended that that the fact that he had submitted a blank cheque and his case of misuse is substantiated by the fact that the cheque was filled up in a different ink and handwriting.

The court, relying on the judgement in Bir Singh v. Mukesh Kumar [(2019) 4 SCC 197] observed that when a signed blank cheque is voluntarily given to a payee towards some payment, the payee may fill up the amount and other particulars and that will not invalidate the cheque. Therefore, the onus of rebutting the presumption under Section 139 of the Negotiable Instruments Act, 1881 fell on the revision petitioner and he was unable to show that the cheque in question was issued as a security for the vehicle loan availed by him from the respondent. Further, in the absence of any evidence to show coercion in signing the cheque, the presumption that the cheque was issued towards discharge of debt and the presumption under Section 139 of the Negotiable Instruments Act, 1881, held good. The revision petition was accordingly dismissed and the sentence against the revision petitioner was upheld.