The Calcutta High Court has reaffirmed that the mere fact that a cheque is dishonoured due to 'no such account' does not exempt the drawer from liability under Section 138 of the Negotiable Instruments Act, provided the cheque was issued in discharge of a legally enforceable debt. The judgment underscores the weight of statutory presumptions and the burden on the accused to rebut them with credible evidence.
Background & Facts
The Dispute
The petitioner, Sk. Sahedul Islam, operated a bakery business named Pallishree Bakery and procured goods on credit from the complainant, Arabindo Makar, trading as Tarama Stores, between February and August 2012. To settle the outstanding liability of Rs. 10,03,559/-, the petitioner issued a cheque dated 01.03.2013 bearing no. 045012 drawn on United Bank of India. The cheque was dishonoured on 02.03.2013 with the reason 'no such account'. The complainant issued a statutory demand notice on 12.03.2013, which was duly served on 16.03.2013. No payment or response followed.
Procedural History
- 2013: Criminal case no. 276 of 2013 filed before Judicial Magistrate, 4th Court, Serampore.
- 2016: Trial court convicted the petitioner under Section 138 of the Negotiable Instruments Act, sentencing him to four months’ imprisonment and a fine of Rs. 12,50,000/-.
- 2019: Additional Sessions Judge, Serampore, dismissed the petitioner’s appeal, upholding the conviction.
- 2019: Criminal Revisional Petition filed before the Calcutta High Court challenging the conviction.
Relief Sought
The petitioner sought quashing of the conviction, arguing that no cheque was issued by him, the signature was forged, and the account was closed prior to issuance. He further contended that the complainant had obtained a blank cheque and filled it fraudulently.
The Legal Issue
The central question was whether Section 138 of the Negotiable Instruments Act applies when a cheque is dishonoured due to 'no such account', and whether the presumption under Section 139 can be invoked even if the drawer claims the account was closed before issuance.
Arguments Presented
For the Petitioner
The petitioner argued that he never issued the cheque in question, that the signature was not his, and that the complainant had obtained a blank cheque during business dealings and filled it maliciously. He claimed the account was closed before the cheque date, rendering the instrument invalid. He further contended that the complainant failed to prove the existence of a legally enforceable debt beyond the invoices, and that the trial court erred in shifting the burden of proof.
For the Respondent
The complainant relied on Section 139 and Section 118(a) of the NI Act to establish that the cheque, bearing the petitioner’s signature and issued in the course of business, raised a presumption of a legally enforceable debt. He adduced 28 original invoices (Exhibit 1 series), bank return memo (Exhibit 4), and proof of service of demand notice (Exhibits 5 and 6). He argued that the petitioner’s contradictory defences - denying issuance while admitting receipt of a blank cheque - undermined his credibility and failed to rebut the statutory presumption.
The Court's Analysis
The High Court examined the application of Section 139 and Section 118(a) of the NI Act, which together create a rebuttable presumption that a cheque is issued for a legally enforceable debt. The Court held that the complainant had discharged his initial burden by proving the existence of a business relationship, the issuance of the cheque, its dishonour, and service of notice.
"When execution of the impugned cheque has been controverted but could not be rebutted, presumption of existence of legally enforceable debt is in favour of complainant as per provision of Section 139 and Section 118(a) of N.I. Act."
The Court emphasized that the petitioner’s defence was internally inconsistent: he simultaneously denied issuing the cheque and claimed the complainant received a blank one. No evidence was adduced to prove forgery, no handwriting expert was summoned, and no claim of theft or loss was made. The Court noted that silence in response to a demand notice for over Rs. 10 lakh from a business associate was 'uncommon and unnatural', further strengthening the inference of liability.
The Court also clarified that Section 138 is not rendered inapplicable merely because the account was closed at the time of presentation. The critical factor is whether the cheque was issued for a legally enforceable debt, not the operational status of the account at presentation. The burden to rebut the presumption under Section 139 lay squarely on the accused, and he failed to meet the standard of preponderance of probabilities.
The Court further held that under Section 482 CrPC, revisional jurisdiction cannot be used to reappreciate evidence where concurrent findings exist. The trial and appellate courts’ conclusions were neither perverse nor legally erroneous.
The Verdict
The petitioner’s revision petition was dismissed. The Calcutta High Court affirmed the conviction under Section 138 of the Negotiable Instruments Act, upholding the sentence of four months’ imprisonment and fine. The Court directed the petitioner to surrender within 30 days, failing which an arrest warrant may be issued.
What This Means For Similar Cases
Presumption Under Section 139 Is Not Easily Rebutted
- Practitioners must advise clients that mere denial of cheque issuance, without forensic or documentary rebuttal, will not defeat the statutory presumption.
- Defence strategies must include timely applications for handwriting analysis or proof of account closure prior to issuance.
- Silence in response to a statutory notice is a critical adverse factor.
Account Closure Does Not Defeat Section 138 Liability
- A cheque issued for a valid debt remains actionable under Section 138 even if the drawer’s account was closed before presentation.
- The focus is on the existence of a legally enforceable debt at the time of issuance, not the account’s status at presentation.
- Lawyers should not rely on 'no such account' as a standalone defence.
Concurrent Findings Are Nearly Immune to Revision
- High Courts will not interfere with concurrent factual findings unless perversity or illegality is demonstrated.
- Revision petitions under Section 482 CrPC are not second appeals; reappreciation of evidence is impermissible.
- Practitioners must ensure robust evidence presentation at trial level, as appellate and revisional avenues are severely restricted.
