Cheque Cases; Essential Conditions For Successful Prosecution

Culpability for the offence of dishonor of cheque under Section 138 of the Negotiable Intrument Act, 1881 requires that the accused should have drawn the cheque on a bank account maintained by him and issued the same to the complainant in discharge of a debt or other legal liability.

The cheque should have been dishonored for the reasons specified in section 138. It further enjoins the payee to send a notice to the drawer demanding payment of the cheque amount within 30 days of the dishonor of the cheque. It is only upon non payment of the cheque amount within 15 days of the receipt of demand notice that the complainant is at liberty to file a criminal complaint against the drawer for dishonor of thecheque.

As enumerated above, an essential condition for the successful prosecution of the offence constituted by section 138 of the NI Act pertains to demand notice. The payee is required to send a demand notice to the accused demanding payment of the cheque amount and only upon non payment of the same by the accused within 15 days of the receipt of the notice, the accused becomes entitled to file a complaint.

The successive interpretation of Section 27 of General Clauses Act 1887 read with Section 114 of the Indian Evidence Act has obviated the need of the complainant to adduce positive evidence regarding receipt of demand notice by the accused.

It is now settled law that if the demand notice is properly and correctly addressed, there is presumption of service thereof. It is then for the accused to prove that he did not receive the demand notice and this cannot be accomplished by a mere denial.

See Also:

  • Ajeet Seeds Ltd. v. K. Gopala Krishnaiah VI (2014) SLT 524.
  • C.C. Alavi Haji v. Palapetty Muhammad 2007 Cri.L.J. 3214

The reason for casting this evidentiary burden upon the complainant is to ensure that unscrupulous drawers are not given a wide berth to escape the rigor of law merely by manipulating the postal report at their end.

As stated above, a heavy evidentiary burden is cast upon the accused to disprove the receipt of demand notice and the accused cannot discharge this burden by denial simpliciter.

Whether the cheque issued to the complainant by the accused to discharge a legal liability.

The appreciation of evidence led in a complaint case under section 138 of the NI Act on this aspect is guided by certain presumptions laid down in the Act itself and the extent to which the accused has been successful in dislodging them. Hence a mention of the same is befitted.

Section 118 of the Act enjoins the court to presume that a cheque has been given for consideration while section 139 enjoins the court to presume that the cheque has been given to the holder in discharge of a legally enforceable debt or liability. It is also pertinent to mention Section 118 (g) which requires the court to presume that the holder of a cheque is a holder in due course.

In order to rebut these presumptions, all that the accused is required to do is to create a reasonable doubt and this can be accomplished either by leading positive evidence or by pointing out inconsistencies in the case of the complainant himself.

Filled up particulars in the cheque

It is now well established by a conspectus of cases of the Delhi High Court that the holder of a cheque is entitled to fill up its particulars in the amount of the liability of the drawer. It is then for the accused to prove that he did not owe any liability to the complainant in the amount of the cheque.

Ravi Chopra v. State and Anr. 2008 (2) JCC (N I) 169

Even under the scheme of the NI Act it is possible for the drawer of the cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee.

There is no provision in the NI Act which either defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with the signatures thereon as constituting a material alteration for the purposes of section 87 NI Act. What however is essential is that the cheque must have been signed by the drawer.

Security for Loan

It is settled law that the liability of a debtor is coextensive with his guarantor. Further, Section 138 of NI Act does not require that the drawer of a cheque should have issued the same only in discharge of his own liability. The requirement of the legal provision as per the explanation u/s 138 NI Act is merely that ofcheque having being issued in discharge of legally enforceable debt or liability even if the same is the liability of another person.

In such situations it is still incumbent upon the drawer of the cheque himself to prove that there is no consideration for the cheque or that the liability of the person on behalf of whom the cheque has been issued has already been discharged.

See Also : ICDS Ltd. vs Beena Shabeer and Anr. (2002) 6 SCC 426