#blank cheque

The Karnataka High Court held that when a surrender deed formally crystallizes a debt, the issuance of a signed blank cheque automatically triggers the statutory presumption under Section 138 of the Negotiable Instruments Act. The accused’s failure to rebut this presumption-through silence, lack of forensic challenge, or admission of liability in IT returns-was fatal to the defense, reinforcing that procedural inaction cannot override statutory presumptions in commercial disputes.

Madras High Court holds that mere signature on a blank cheque issued to a third party does not establish liability under Section 138 NI Act unless a legally enforceable debt is proven between the accused and complainant.