Sita Ram vs Baldev Chand

Headnote AI-drafted · Reviewed and approved

The petitioner (accused) filed a criminal revision before the Himachal Pradesh High Court challenging the concurrent findings of the learned Trial Court and Appellate Court convicting him under Section 138 of the Negotiable Instruments Act, 1881, for dishonour of a cheque for ₹2,50,000/- drawn in favour of the complainant. The cheque was dishonoured with the endorsement 'funds insufficient', and the statutory demand notice sent by registered post was returned with the endorsement 'refused', which was held to constitute deemed service.

The accused contended that he had issued a blank signed cheque to one Shyam Lal as security and that the complainant had misused it. The learned Courts below held that since the accused had admitted his signature on the cheque, the statutory presumption under the Negotiable Instruments Act arose that the cheque was issued for consideration and in discharge of a liability. The burden shifted to the accused to rebut this presumption, which he failed to discharge, particularly by not examining Shyam Lal to whom the cheque was allegedly handed over.

The petitioner also raised a preliminary objection that the demand notice dated 09.07.2015 was issued beyond the fifteen-day period prescribed under Section 138(c) of the NI Act from the date of the memo of dishonour dated 22.06.2015, and that the compensation of ₹5,00,000/- awarded by the Trial Court was excessive. The revision was heard and reserved for judgment, the final operative outcome not being fully captured in the extracted text.

Catchwords: Negotiable Instruments Act · cheque dishonour · Section 138 · presumption of consideration · burden of proof · deemed service · refusal of notice · demand notice · limitation · blank cheque · compensation · criminal revision

Cheque dishonour (Section 138 NI Act)