Signed Blank Cheque Defence Rejected under Section 138 NI Act

Case Details: Sanjabij Tari vs. Kishore S. Borcar - [2025] 180 taxmann.com 701 (SC)

Judiciary and Counsel Details

Manmohan & N.V. Anjaria, JJ.
Amarjit Singh Bedi, Ms. Surekha Raman, Shreyash Kumar, Harshit Singh & Sidharth Nair, Advs. for the Appellant.
Ankit Yadav, Ms. Gunjan Rathore, Ms. Shivangi Gulati, Chaitanya Sonkeria, Ms. Aastha Harshwal, Advs., T. Mahipal & Merusagar Samantaray, AORs for the Respondent.

Facts of the Case

The instant case concerns a loan transaction between the appellant-complainant and the accused, wherein the appellant had advanced a loan to the accused. Towards repayment of the said loan, the accused issued cheques in favour of the appellant. However, upon presentation, the cheques were dishonoured. Consequently, the appellant initiated proceedings against the accused under section 138 of the Negotiable Instruments Act, 1881.

The Trial Court, after appreciating the evidence on record, held that the accused had failed to rebut the statutory presumptions under sections 118 and 139 of the Act and that the appellant had successfully proved the existence of a legally enforceable debt. The contention of the accused that the appellant lacked the financial capacity to advance the loan was also rejected. The Sessions Court, in appeal, concurred with the findings of the Trial Court and dismissed the appeal filed by the accused.

However, the High Court, in revision, accepted the defence of the accused that the cheque in question was a signed blank cheque issued only to enable the appellant (a friend of the accused) to obtain a loan from a bank. On this basis alone, the High Court held that the presumptions under sections 118 and 139 stood rebutted and consequently acquitted the accused of the offence under section 138. Notably, the accused had neither produced any documentary evidence nor examined any independent witness, nor led any cogent evidence to establish either the alleged defence or the financial incapacity of the appellant to advance the loan.

Supreme Court Held

On appeal, the Supreme Court held that the High Court had erred in exercising its revisional jurisdiction by acquitting the accused on the basis of a mere bald explanation, unsupported by any evidence. It was observed that a vague plea of issuance of a signed blank cheque, without any corroborative material, is insufficient to rebut the statutory presumptions. Accordingly, the impugned order of the High Court was set aside, and the judgments and orders passed by the Trial Court and the Sessions Court were restored. The accused was directed to pay the outstanding cheque amount to the appellant in 15 equated monthly instalments.

List of Cases Referred to

Rangappa v. Sri Mohan [2010] 100 SCL 389 (SC) (para 8)
APS Forex Services (P.) Ltd. v. Shakti International Fashion Linkers [2020] 114 taxmann.com 367/159 SCL 1 (SC) (para 9)
Krishna Janardhan Bhat vs. Dattatraya G. Hegde (2008) 4 SCC 54 (para 15)
Bir Singh v. Mukesh Kumar [2019] 103 taxmann.com 228/152 SCL 563 (SC) (para 17)
P.C. Hari v. Shine Varghese 2025 SCC OnLine Ker 5535 (para 19)
Rajaram v. Maruthachalam [2023] 146 taxmann.com 336/177 SCL 22 (SC) (para 22)
Southern Sales & Services v. Sauermilch Design and Handels GMBH (2008) 14 SCC 457 (para 27)
Tedhi Singh v. Narayan Dass Mahant [2022] 136 taxmann.com 177/171 SCL 580 (SC) (para 29)
M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P.) Ltd. [2001] 45 CLA 374/[2002] 108 COMP CASE 48/1 COMP. LJ 58/39 SCL 270 (SC) (para 30)
Damodar S. Prabhu v. Sayed Babalal H. [2010] 159 COMP CASE 1/101 SCL 27 (SC) (para 33)
Indian Bank Association v. Union of India [2014] 45 taxmann.com 79/121 CLA 1/184 COMP CASE 377/3 COMP. LJ 277/126 SCL 349 (SC) (para 33)
Expeditious Trial of Cases Under Section 138 of N.I. Act, 1881, In re [2021] 127 taxmann.com 23/167 SCL 103 (SC) (para 33)
P. Mohanraj v. Shah Brothers Ispat (P.) Ltd. [2021] 125 taxmann.com 39/167 SCL 327 (SC) (para 34)
Chellammal v. State 2025 SCC OnLine SC 870 (para 35)
Gian Chand Garg v. Harpal Singh [Criminal Appeal No. 3789 of 2025, dated 11-8-2025] (para 35)
M.V. Nalinakshan vs. M. Rameshan 2009 All MR (Cri) Journal 273 (para 35)
Ashok v. Fayaz Aahmad 2025 SCC OnLine Kar 490 (para 36)
Rajesh Agarwal v. State [2010] 159 COMP CASE 13 (Delhi) (para 36).