Cheque Dishonour under S.138 of Negotiable Instruments Act, 1881 and effect of S.269SS of Income-tax Act, 1961
In a recent Judgment, effect of S.269SS of Income-tax Act, 1961 was explained in cases under S.138 of NI Act.
It was held that any breach of Section 269SS of the Income Tax Act, 1961 does not invalidate the transaction or render the debt unenforceable for the purposes of Section 138 of the NI Act. It was clarified that such violation merely invites penalty, and the presumption under Sections 118 and 139 of the NI Act continues to operate unless successfully rebutted by credible evidence. In the present case, the petitioner has neither examined any independent witness nor produced any document to substantiate the alleged financial incapacity of the complainant. Accordingly, Court found that the concurrent findings of the Courts below on this aspect are based on sound reasoning and in conformity with the settled legal position.
There is no dispute that, to constitute an offence under Section 138 of the NI Act, the cheque in question must have been issued in discharge of a legally enforceable debt or liability. However, Section 139 of the NI Act provides that once the drawer admits his signature on the cheque, a statutory presumption arises that the cheque was issued for the discharge, in whole or in part, of a debt or other liability. Section 118 of the NI Act further lays down a presumption that every negotiable instrument, when held by a holder in due course, has been made or drawn for consideration. In addition, Section 20 of the NI Act stipulates that when a person signs and delivers a stamped but otherwise incomplete negotiable instrument, he thereby authorizes the holder to complete it for any amount not exceeding the value covered by the stamp.
Case reference is Satish Kumar v. State NCTD [2025] GCtR 1721 (Delhi).
Full text decision is available at link given below : -
https://delhihighcourt.nic.in/app/showFileJudgment/SKS14112025CRLR8642024_173151.pdf
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