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The Supreme Court has held that “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 bench comprising Justice R Banumathi and Justice Indira Banerjee gave the judgment in the Bir Singh versus Mukesh Singh case where it was examining the issue whether the recipient of a cheque is ineligible to the benefit of the assumption under Section 139 of the Negotiable Instruments Act, of a cheque duly drawn, having been issued in waiver of a debt or other indemnity, only because he is in a financial dealings with the person who has drawn the cheque.

The bench set aside a high court verdict which had ruled “…The complainant is an income tax practitioner and he knows that whenever loan is advanced to anybody, receipt has to be obtained and that such heavy amount is to be advanced only through a cheque or demand draft or RTGS. The accused-petitioner was the client of the complainant and they were having professional relationship… There is no reason why the complainant, who is an income tax practitioner, will advance such a heavy loan to his client without any close relationship and without obtaining any writing to this effect. There was heavy burden on the complainant. In such circumstances, the accused petitioner is successful in raising reasonable doubts that the complainant might have misused one of the blank cheques given to him for payment of income tax for depositing the same in the Treasury” and upheld a trial court verdict which said “the respondent-accused had duly issued the cheque in question for Rs15 lakhs in favour of the appellant-complainant, in discharge of a debt or liability, the cheque was presented to the bank for payment within the period of its validity, but the cheque had been returned unpaid for want of sufficient funds in the account of the respondent-accused in the bank on which the cheque was drawn. Statutory Notice of dishonour was duly issued to which there was no response from the respondent-accused”.

The SC bench further observed: “…the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.

“A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.”

—India Legal Bureau  

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