“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 N.I Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt,” the High Court said quoting the Bir Singh judgment.
Justice Sophy Thomas made the observation while relying on the Supreme Court’s decision in Bir Singh v. Mukesh Kumar
The Kerala High Court, in a landmark decision, reinforced a crucial legal principle regarding the issuance of blank cheques. Drawing upon the precedent set by the Supreme Court in Bir Singh v. Mukesh Kumar, the court declared that a blank cheque, when signed and given voluntarily, inherently carries the assumption under Section 139 of the Negotiable Instruments Act (NI Act) that it is intended for the settlement of a debt or liability, unless substantial evidence is presented to the contrary.
This principle was applied in the case of PK Uthuppu v NJ Varghese & Anr., where Justice Sophy Thomas emphasized that this presumption persists even in scenarios involving blank cheques. The court was dealing with a revision petition filed by an individual convicted under Section 138 of the NI Act, which addresses cheque bouncing offenses.
The petitioner in question was accused of issuing a cheque that bounced due to insufficient funds in his account, leading to a legal notice and a subsequent complaint under Section 138 of the NI Act for failing to repay a loan of ₹4 lakh. Despite his claims that the blank cheque was issued as a security for a vehicle loan and was misused due to the complainant’s alleged misplacement of documents, the High Court found no evidence to support these assertions. Instead, the court observed evidence of a personal loan of ₹4 lakh and noted the petitioner’s admission of voluntarily giving a signed cheque to the complainant. Consequently, the High Court upheld the presumption in favor of the complainant, affirming that the revision petitioner had not presented convincing evidence to refute the presumption that the cheque was for debt discharge.
In conclusion, the High Court dismissed the revision petition, upholding the initial conviction and sentencing, and directed the petitioner to surrender for serving his sentence and paying the imposed fine. This ruling underscores the legal responsibility associated with issuing a blank cheque and the significance of the presumption under Section 139 of the NI Act in such cases.
The Court also found that the revision petitioner could not counter the presumption that he had issued the check to discharge his debt.
“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, this Court has to hold that, the appellate court rightly upheld the conviction of the revision petitioner under Section 138 of the N.I Act, and sentenced him to undergo imprisonment till rising of the court and to pay fine of Rs.4 lakh,”the Court said.
Crux of the Case
The crux of the Kerala High Court’s ruling in this case is that a blank cheque, when voluntarily issued, is presumed to be intended for the payment of a debt. This presumption holds unless there is substantial evidence to prove otherwise. In the case discussed, the court dismissed the revision petitioner’s argument that his blank cheque was misused, maintaining the conviction for cheque bouncing due to insufficient funds to cover a ₹4 lakh loan.
