Signature Mismatch Attracts Prosecution Under Section 138 of the Negotiable Instruments Act Subject to Statutory Presumptions

The petitioners (accused) allegedly issued a security cheque of Rs. 5,00,000 to the complainant (Opposite Party No. 2) following a failed franchise deal

The complainant presented the cheque (No. 705962), which was returned on July 15, 2014, with the memo "signature differs"

Despite a demand notice served on August 12, 2014, the petitioners failed to make payment

The Metropolitan Magistrate, 20th Court, convicted the petitioners on June 14, 2019, sentencing them to a fine of Rs. 6,00,000

This conviction was affirmed by the Additional District and Sessions Judge on July 7, 2022

The petitioners moved the High Court in revision, contending that the cheque was never presented for clearing and that no legal debt existed

1. Whether the complainant successfully proved the presentation and dishonour of the cheque despite the absence of a deposit slip and a signature on the reverse side of the cheque

2. Whether the petitioners successfully rebutted the statutory presumption under Section 139 of the Negotiable Instruments Act

3. Whether the concurrent findings of the lower courts suffer from perversity or jurisdictional error warranting interference in revisional jurisdiction

The court primarily applied Sections 138, 139, and 148(3) of the Negotiable Instruments Act, 1881

It relied on Rangappa v. Sri Mohan, establishing Section 139 as a "reverse onus clause" meant to enhance the credibility of negotiable instruments

Following Rajesh Jain v. Ajay Singh, the court noted the accused must meet the standard of "preponderance of probabilities" to rebut presumptions

Regarding revisional jurisdiction, the court applied principles from Bir Singh v. Mukesh Kumar, holding that concurrent findings of fact should not be upset unless there is manual perversity or a jurisdictional error

Finally, it applied Dattatraya v. Sharanappa, noting that while a signature triggers the presumption, the court must evaluate the "prudent man" standard for rebuttal

The court found that the Branch Manager of SBI (P.W. 3) provided conclusive evidence via bank registers and account statements proving that the cheque was presented and dishonoured due to a signature mismatch

The court dismissed the petitioners' argument regarding the lack of a bank seal or deposit slip, noting that since both parties used SBI accounts, the transaction was handled via Core Banking Solution (CBS), making certain manual clearing marks unnecessary

It was further observed that the petitioners admitted to receiving the demand notice but failed to reply or pay

The court reasoned that a signature mismatch still attracts Section 138 liability

Consequently, the court held that the petitioners failed to offer any "convincing rebuttal evidence" to satisfy the preponderance of probabilities, leaving the statutory presumption under Section 139 intact

It held that the complainant had established all ingredients of an offense under Section 138 of the N.I. Act

The court concluded that there was no "perversity" or "irrationality" in the concurrent findings of the Magistrate and the Appellate Court

The petitioners remain liable to pay the fine of Rs. 6,00,000 as originally ordered