Blank Cheque and Principles of Acquittal in Cheque Dishonour under S.138 of NI Act, 1881

Blank Cheque and Principles of Acquittal in Cheque Dishonour under S.138 of NI Act, 1881

In this case [K. Yashoda v. K. Venkatesh [2014] GCtR 6580 (Dharwad, Karnataka)], complainant was aggrieved. However, the acquittal of accused was found valid. In this case, complainant was having a blank cheque which was issued by accused ; cheque was issued as a security and cheque got dishonoured after which proceedings under S.138 of Negotiable Instruments Act, 1881 were initiated. After looking at the date of loan and the date of cheque, High Court found acquittal of accused justified. It was held that provision under Section 20 of the N.I. Act, 1881 also envisages that the cheque should not be filled up for any excess amount. Therefore, it goes without saying that when the accused disputes the contents of cheque, particularly the amount mentioned in the said cheque as excessive and mis-used by complainant, in that context, the presumption under Section 139 of the N.I. Act, 1881 cannot be drawn in favour of complainant, because of the simple reason that the liability or debt is disputed by accused and it is admitted by complainant in the course of cross examination that a blank cheque was given and actually she has filled up the contents of said cheque." When the complainant has nowhere stated that a blank cheque has been issued to complainant and thereafter she has filled up the amount for Rs.95,000/- ;  then it is incumbent upon the complainant to show that as on the date of issuance of cheque the amount of Rs.95,000/- was not known to the parties and with an intention to fill up the said cheque, the accused has given the blank cheque so as to enable the complainant to fill up the said cheque, in future, for the exact liability of the accused.

Legal Compliances in Cases of Cheque Dishonour under Negotiable Instruments Act, 1881

Legal Compliances in Cases of Cheque Dishonour under Negotiable Instruments Act, 1881

It has been held in S.S. Binu v. State of WB [2018] GCtR 6467 (Calcutta) that in cases falling under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, the Magistrate is not mandatorily required to comply with the provisions of Section 202 (1) of Code of Criminal Procedure, 1973 before issuing summons to an accused residing outside the territorial jurisdiction of the learned Magistrate concerned.

Cheque Dishonour and S.138 of Negotiable Instruments Act, 1881 : Who has the Right to File Appeal ?

Cheque Dishonour and S.138 of Negotiable Instruments Act, 1881 : Who has the Right to File Appeal ?

It was held in Celestium Financial v. A. Gnanasekaran [2025] GCtR 1578 (SC) that "a person who is a complainant under Section 200 of the Code of Criminal Procedure, 1973 who complains about the offence committed by a person who is charged as an accused under Section 138 of the Negotiable Instruments Act, 1881 thus has the right to prefer an appeal as a victim under the proviso to Section 372 of the Code."

Negotiable Instruments Act, 1881 and "Cheque Dishonour" : SC Explains the Principles

Negotiable Instruments Act, 1881 and Cheque Dishonour : SC Explains the Principles

In case of Damodar S. Prabhu v. Sayed Babalal H [2010] GCtR 6297 (SC) it was held that it may be noted here that Section 143 of the Negotiable Instruments Act, 1881 makes an offence under Section 138 of NI Act, 1881 triable by a Judicial Magistrate First Class (JMFC). After trial, the progression of further legal proceedings would depend on whether there has been a conviction or an acquittal. 

If the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs. Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount. 

It should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction. Such a disclosure should be made on a sworn affidavit which should accompany the complaint filed under Section 200 of the Code of Criminal Procedure, 1973. If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice.

S.138 of NI Act : Accused Acquitted by High Court

 There are many cases which gets decided every year by High Courts.

In case citation [2015] GCtR 2580, the person who was facing allegations of offence under S.138 of Negotiable Instruments Act, 1881 was acquitted.

It started with complainant filing complaint against accused where issue was related to S.138 of NI Act and a loan in respect of which accused had issued cheque. Cheque got dishonoured. Trial was conducted by JMFC. Accused took his defence and argued that his prosecution under S.138 of NI Act is not proper. 

Complainant examined the witness. It has emerged that in cases under S.138 of NI Act, satisfactory proof is needed to secure conviction and when complainant had failed to prove certain things which were necessary to secure conviction, then accused cannot be convicted. While passing the order of acquittal, how the complaint was drafted, the way deposition of complainant's witness were given on certain facts were noted and it was found that this accused cannot be convicted in this case. In fact, witness failed to give few answers in cross - examination. How S.139 of NI Act can be used and if it is sufficient to secure conviction in all cases stands answered and what things are not relevant in cases under S.138 of NI Act can be easily seen through [2015] GCtR 2580.  To have a more holistic understanding of S.138 of NI Act, 1881, one can go through Dashrathbhai Trikambhai Patel v Hitesh Mahendrabhai Patel & Anr [2022] GCtR 1504 (SC).

Written by 

Vishal

Delhi

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