The Kerala High Court has held that where the complainant proves the underlying transaction and the execution of the cheque, the statutory presumptions under Sections 118 and 139 of the NI Act must operate in her favour. A second loan advanced to a relative during the subsistence of an earlier unpaid liability does not, by itself, make the case improbable. Likewise, a cheque being typewritten is not illegal and cannot, by itself, discredit the prosecution. The Court also reaffirmed that cheque dishonour for the reason “Drawer’s signature differs” can still fall within Section 138 NI Act if there were insufficient funds in the drawer’s account and other legal requirements are met.
Allowing the appeal, the High Court set aside the acquittal and convicted the accused for the offence under Section 138 NI Act. The accused was sentenced to simple imprisonment for one day till the rising of the court and directed to pay a fine of Rs. 4.75 lakhs. The Court ordered that the fine amount, if paid or realised, shall be given as compensation under Section 357(1)(b) CrPC.
A Single Judge Bench of Justice A. Badharudeen found that the trial court had taken an unduly narrow view of the evidence. It held that merely because an earlier liability remained unpaid, that by itself was not enough to treat the later loan as unbelievable, especially when the parties were admittedly relatives and the gap between the two transactions was only around five months. The Court also observed that issuance of a typewritten cheque is not prohibited by law, and therefore the mere fact that the cheque was typewritten could not be a reason to reject the complainant’s case once the transaction and execution were otherwise proved.
The High Court further noted that dishonour on the ground “Drawer’s signature differs” can still attract Section 138 NI Act where there were insufficient funds in the account and the statutory requirements are otherwise satisfied. On facts, the bank statement produced through PW3 showed that the accused’s account had only Rs.554.55 at the relevant time, which supported the complainant’s case.
The Court also attached significance to the defence version itself: during cross-examination and the Section 313 statement, the accused admitted an earlier borrowing from the complainant and set up a case that a blank cheque from that earlier transaction had been misused. The Court found that these circumstances did not demolish the complainant’s case; rather, they supported the existence of financial dealings between the parties.
Briefly, the appeal arose from an acquittal in a complaint under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused, who was her relative, had first borrowed Rs. 1.75 lakhs on June 14, 2012 and later borrowed another Rs. 3 lakhs on Nov 12, 2012. According to the complainant, towards repayment of the total liability of Rs. 4.75 lakhs, the accused issued cheque dated Dec 13, 2012, which was later dishonoured on presentation with the endorsement “Drawer’s signature differs.” Despite statutory demand notice, no payment was made. The trial court had acquitted the accused, leading to the appeal by the complainant under Section 378 CrPC.
