It is a common defence of the accused, in complaints filed u/s 138 of the Negotiable Instruments Act, 1881, that signed blank cheques of the drawer have been misused by the complainant and to buttress their stand, it is pleaded that the details of cheque have not been filled up by the accused but by some other person. Accordingly, the Court is requested to obtain the report of the hand writing expert to establish that the handwriting of the details of the cheque were not of the accused.

If we see the prevalent business practices, details of cheques are mostly filled up by the office clerks, accountants, personal assistants and seldom by the Directors/Partners/Proprietors. In these cases the signatures are put by the drawer after summarily checking the details put in the cheque i.e. the name of the drawee, amount in words & figures and the date of the cheque. Thus, invariably the handwriting on the cheque, other than the signatures of the drawer, will not match the handwriting of the drawer. Thus, no fruitful purpose would be served by referring the matter, by the Court, to the handwriting expert for his expert opinion.

It is pertinent to refer to the Apex Court judgment in Bir Singh v. Mukesh Kumar (2019) 4 SCC 197, wherein the Court specifically dealt with the issue in hand in paras 37, 38, 40 & 42 and held thus:

37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.

38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.

42. In the absence of any finding that the cheque in question was not signed by the respondent-accused or not voluntarily made over to the payee and in the absence of any evidence with regard to the circumstances in which a blank signed cheque had been given to the appellant-complainant, it may reasonably be presumed that the cheque was filled in by the appellant-complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent-accused of the charge under Section 138 of the Negotiable Instruments Act."

The Apex Court in the case of Oriental Bank of Commerce vs. Prabodh Kumar Tewari 2022 SCC Online 1089 reiterated that a drawer of a cheque is liable even if the details in the cheque have been filled up not by the drawer but by some other person. It was also observed that the Handwriting Expert's Report by itself holding that the details filled in the cheque are not in the handwriting of the drawer, cannot by itself, rebut the presumption u/s 139 NI Act.

The brief facts of the case are that consortium of five companies availed credit facilities from the Bank and the total outstanding dues of the consortium were in excess of Rs 1200 crores as on the date of the institution of the proceedings u/s Section 138 of the NI Act. The borrower handed over a cheque from it's account for Rs 5.57 crores towards the dues. The cheque was returned with the remarks "insufficient funds".

The drawer pleaded that the handwriting on the cheque is not that of the drawer & the High Court permitted the company to engage a hand-writing expert to seek an opinion on whether "the authorship on the questioned writings" on he disputed cheque could be attributed to the drawer/accused. The drawer admitted that he had signed the cheque and handed over the blank cheque to the complainant/ Bank as security.

Being aggrieved by the order of the High Court permitting to engage a hand writing expert, the complainant Bank moved to the Apex Court. The question which arose in the appeal was whether the High Court was correct in permitting the drawer/respondent to engage a hand-writing expert to determine whether the details that were filled in the cheque were in the hand writing of the respondent.

The Apex Court observed that in view of the presumption inherent in Section 139 of the NI Act, no purpose would be served by obtaining the opinion of the hand writing expert in the matter. The Court opined thus:

For the reasons set out below, we have allowed this appeal against the order of the High Court for the reason that Section 139 of the NI Act raises a presumption that a drawer handing over a cheque signed by him is liable unless it is proved by adducing evidence at the trial that the cheque was not in discharge of a debt or liability. The evidence of a hand-writing expert on whether the respondent had filled in the details in the cheque would be immaterial to determining the purpose for which the cheque was handed over. Therefore, no purpose is served by allowing the application for adducing the evidence of the hand-writing expert.

The Court further categorically held thus:
12. The submission which has been urged on behalf of the appellant is that even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer.

Recently the Apex Court in Criminal Appeal No. of 2024 (Arising out of SLP (Crl.) No.3377 of 2019) in the case of K. Ramesh vs. K. Kothandara decided on February 09, 2024 reiterated the said dictum & held that even a voluntary signed blank cheque leaf would attract presumption u/s 139 of the NI Act.

It is no longer Res Integra that a blank signed cheque, handed over to the payee authorizing him to fill up the blanks as agreed upon, is valid in law and in case such a cheque is dishonoured, Section 138 of NI Act applies with full force.

It would be trite to refer to Karnataka High Court judgment in the case of S.R. Muralidar vs. Ashok G.Y. ILR2001KAR4127, 2001(4) KARLJ233, wherein the Court, inter alia relying on Section 20 of the NI Act, categorically held thus:

7. It is not objectionable or illegal in law to receive a inchoate negotiable instrument duly signed by the maker despite the material particulars are kept blank if done with an understanding and giving full authority to the payee to fill up the material contents as agreed upon. Such a course of action in law cannot vitiate the transaction nor can. invalidate the negotiable instrument issued and such transaction fully binds the maker of the negotiable instruments to the extent it purports to declare.

This is explicit from the provisions of Section 20 of the Negotiable Instruments Act which reads thus:
Inchoate stamped instruments:
Where one person signs and delivers to another, a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp.

The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount, provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder".

8. The fact that a document executed is inchoate with regard to some of the material particulars would not render such contract invalid nor make the instrument illegal or inadmissible. Voluntarily, if a person were to deliver an inchoate instrument authorising the receiver to fill up the material contents as agreed upon, the cheque does not get tainted as inadmissible nor it amounts to tampering with the material particulars."

It would be apropos to refer to K.S. Ranganatha vs Vittal Setty 2021 SCC OnLine SC 1191, wherein the Apex Court summed up thus:
17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated.

Similarly, the Apex Court in Rajesh Jain vs Ajay Singh 2021 SCC OnLine SC 1275 observed thus:

37. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that 'a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.

The Apex Court in M/S Kalamani Tex vs P. Balasubramanian 2021 (5) SCC 283, reiterated the aforesaid dictum & observed thus:

"Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated.''

Thus, it is no longer ' Res Integra' that for admissibility of proceedings under section 138 of the NI Act, it is immaterial when blank signed cheque was handed over and the details of the cheque were filled up by any other person other than the drawer.

Written By:  Inder Chand Jain
Ph no: 8279945021, Email: [email protected]