Blank cheque bouncing is criminal liability: HC | mumbai | Hindustan Times
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Blank cheque bouncing is criminal liability: HC

mumbai Updated: Feb 13, 2010 01:19 IST
HT Correspondent

A person cannot escape criminal liability for bouncing of a blank cheque issued as surety against a credit transaction, ruled the Bombay High Court recently.

“Necessarily, the cheque given as security, if bounced, shall be the subject matter of prosecution under section 138 of the Negotiable Instruments Act,” observed Justice Ashok Bhangale.

“The contention that the cheque was only given as security will not enable him to escape the clutches of law,” he added. The judge was hearing an appeal filed by Amravati-based Sai Auto Agencies challenging acquittal of a farmer, Sheikh Yusuf Sheikh Umar, who had in November 2005 purchased farming equipment worth Rs 49,600 on credit.

The farmer was prosecuted on complaint of the dealer under the Act when he failed to pay the amount even after issuance of notice.

The farmer told the magistrate court that he had issued five blank cheques to the dealer and he had encashed two cheques of Rs 1 lakh.

He had also claimed that two more blank cheques were still lying with the dealer which he could use them against him.

The magistrate accepted the contention and acquitted the farmer, saying that the cheque was not issued against a valid transaction. The high court held that there was a presumption in the Act that every cheque is issued against a valid transaction and the onus to rebut the presumption lay on the accused.

The high court convicted the farmer concluding that he had failed to prove contrary to the presumption. It sentenced him to simple imprisonment for a day and also directed him to pay the amount within two months. The farmer will have to spend six months in jail if he fails to pay the amount.