Failure to rebut statutory presumptions sustains Section 138 conviction despite alleged blank-cheque misuse and part payment.

The complainant alleged that the applicant borrowed ₹4,50,000 in cash as a hand loan and issued two Bank of Baroda cheques of ₹2,00,000 each, dated 25 April 2015 and 25 May 2015, towards repayment.

The cheques were repeatedly presented and dishonoured for “insufficient funds”; a statutory demand notice was thereafter served, but the applicant neither replied nor paid the amount.

The complainant instituted proceedings under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) in Criminal Case No. 7601 of 2015. The Trial Court convicted the applicant and sentenced him to six months’ simple imprisonment, imposed a fine of ₹2,500, and directed payment of compensation equivalent to the cheque amount.

The appellate court dismissed Criminal Appeal No. 94 of 2017 and affirmed the conviction.

In revision under Sections 397 and 401 of the Code of Criminal Procedure, 1973, the applicant contended that the cheques were security/blank cheques, that part-payments had been made, and that inconsistencies existed regarding the loan amount and transaction.

During the revision proceedings, the applicant deposited the cheque amount, which was permitted to be withdrawn by the complainant subject to the outcome of the revision.

1. Whether the concurrent findings that the disputed cheques were issued towards a legally enforceable debt or liability and that the offence under Section 138 of the NI Act was established suffered from any illegality, impropriety, or perversity warranting interference in revision.

2. Whether the applicant rebutted the presumptions under Sections 118 and 139 of the NI Act by establishing that the cheques were misused, issued as security/blank cheques, or did not represent the legally enforceable debt because of alleged part-payments and discrepancies in the complainant’s case.

3. Whether the applicant was entitled to relief on the ground that the cheque amount did not correspond with the alleged loan amount and that the statutory demand notice did not validly demand the “said amount” under Section 138 proviso (b).

Section 138 of the NI Act criminalises dishonour of a cheque issued towards a legally enforceable debt or liability, subject to presentation, issuance of a statutory demand notice, and failure to make payment within 15 days of receipt of notice.

Sections 118 and 139 create rebuttable presumptions that a cheque was drawn for consideration and received in discharge of a legally enforceable debt or liability once its execution/signature is admitted.

Sections 20 and 87 of the NI Act recognise the legal effect of an incomplete or blank negotiable instrument delivered with authority; consistent with Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, a voluntarily signed blank cheque may attract the Section 139 presumption unless cogent evidence rebuts it.

The Court also applied the principle that the accused may rebut the statutory presumptions on a preponderance of probabilities, but must place a credible defence or supporting material on record.

The revisional jurisdiction under Sections 397 and 401 CrPC is limited and does not ordinarily warrant interference with concurrent findings absent an error of legality, propriety, or perversity.

Since the applicant did not dispute his signatures or the handing over of the cheques, the presumptions under Sections 118 and 139 of the NI Act arose in favour of the complainant.

The applicant relied on bank entries showing payments of ₹25,515 and ₹70,000, but the complainant’s admission of those entries did not establish that the payments were made towards the disputed loan transaction; the applicant neither pursued the relevant cross-examination nor produced further evidence connecting them to the liability underlying the cheques.

The defence of misuse or issuance of blank cheques was also unsupported by cogent evidence and therefore did not rebut the statutory presumption, particularly in light of Bir Singh.

The alleged inconsistencies concerning the cash withdrawals, the loan amount of ₹4,50,000, and the cheque claim of ₹4,00,000 were insufficient to dislodge the presumption or demonstrate that no legally enforceable liability existed.

The dishonour of the cheques, service of the statutory notice, failure to pay within the prescribed period, and absence of a credible rebuttal established the ingredients of Section 138.

Consequently, no perversity or legal infirmity was found in the concurrent judgments of the courts below warranting revisional interference.

The applicant was directed to surrender before the concerned Magistrate to undergo the sentence of six months’ simple imprisonment.

As the cheque amount had already been deposited and released to the complainant pursuant to the interim orders, no further direction regarding that amount was made.

After pronouncement, the time for surrender was extended by six weeks from 14 August 2026.