Borrower’s Cheque Bounced For “No Such Account”; Madras HC Upholds 1-Year Sentence After He Failed To Rebut Presumption On ₹1.5 Lakh Debt

The complainant alleged that the accused borrowed ₹1,50,000 in January 2005, later executed a promissory note dated 25 July 2005, and issued a cheque dated 28 October 2009 towards repayment. The cheque was dishonoured with the reason “No such account,” leading to a prosecution under Section 138 of the Negotiable Instruments Act, 1881 (NI Act)

The trial court convicted the accused and imposed one year’s simple imprisonment and compensation of ₹2,00,000 with interest; the appellate court affirmed the conviction and sentence

The accused challenged both decisions in revision, including on the grounds that the promissory note was not produced and that no legally enforceable debt had been proved

Section 138 of the NI Act criminalises the dishonour of a cheque issued for discharge of a legally enforceable debt or liability. Under Section 139, once the accused’s signature on the cheque is admitted, a presumption arises that the cheque was received towards such a debt or liability; the accused may rebut that presumption by raising a probable defence.

The Court relied on Rangappa v. Sri Mohan, (2010) 11 SCC 441, concerning the presumption arising upon admission of the signature, and Bir Singh v. Mukesh Kumar, AIR 2019 SC 2446, which holds that a voluntarily signed blank cheque may be completed by the payee and that the accused retains the burden of proving it was not issued in discharge of a debt or liability

The Court noted that the accused did not deny that the cheque belonged to him or that the signature on it was his, thereby attracting the Section 139 presumption

It found that he had not rebutted that presumption or produced evidence supporting his defence, either before the courts below or in revision

Although the accused relied on the non-production of the promissory note, the Court found no error, illegality, or perversity in the concurrent findings that the cheque was issued towards a legally enforceable debt

It cancelled the suspension of sentence, closed the connected miscellaneous petition, and directed the trial court to secure the accused to undergo the sentence