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

The Kerala High Court recently held that the presumption under Section 139 of the Negotiable Instrument Act (NI Act) that a cheque was issued to discharge debt or liability remains applicable even in the case of a voluntarily issued blank cheque [PK Uthuppu v NJ Varghese & Anr.]..Justice Sophy Thomas made the observation while relying on the Supreme Court's decision in Bir Singh v. Mukesh Kumar which ruled that a voluntarily provided signed blank cheque attracts the presumption under Section 139 of the NI Act unless there is evidence to prove otherwise.."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. .The High Court was considering a revision petition filed by a man (revision petitioner) convicted under Section 138 of the NI Act which deals with the offence of cheque bouncing..The revision petitioner was accused of issuing a cheque without ensuring that he had sufficient funds in his bank account, thereby defaulting on a ₹4 lakh loan. The check bounced due to insufficient funds, leading to a lawyer's notice from the lender and a complaint under Section 138 of the NI Act when the borrowed amount was not repaid despite the notice.The trial court found the accused-petitioner guilty. An appellate court upheld the conviction but reduced the sentence..The revision petitioner claimed that he had only issued a blank check to the complainant's financial institution as security for a vehicle loan. He argued that the complainant later failed to return various documents, including the blank cheque, claiming that they were misplaced. As per the petitioner, the blank cheque was then misused to file a false case against him..However, the High Court rejected these arguments. It observed that the petitioner had failed to produce any documents to show that he had availed a vehicle loan from a financial institution run by the complainant. On the other hand, the Court found that there was evidence to indicate that he had availed a personal loan of ₹4 lakh as claimed by the complainant..The Court further noted that the revision petitioner had admitted that he had voluntarily given a signed check to the complainant. Hence, the High Court said that the presumption under Section 139 of the NI Act favored the complainant. 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..Therefore, the High Court dismissed the revision petition and directed him to surrender before the trial court to serve his sentence and pay the fine..The petitioner was represented by advocate S Rajeev.The complainant and the State was represented by advocate R Bindu Sastamangalam..[Read Order]