10 Important Case Laws on Section 138 of Negotiable Instruments Act, 1881

1. Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16

For the offence under Section 138 of the Act, the presumptions under Sections 118(a) and 139 have to be compulsory raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted to accused to prove otherwise. These presumptions shall be rebutted only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists. Presumptions both under Sections 118 and 139 are rebuttable in nature.

2. Rangappa v. Mohan, AIR 2010 SC 1898

Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant.

3. K. Bhaskaran v. Sankaran Vaidhyan Balan 1999 (4) RCR (Criminal) 309

As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability.

4. Kumar Exports v. Sharma Carpets, AIR 2009 SC 1518

The accused may rebut these presumptions by leading direct evidence and in some and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Further, the burden may be discharged by the accused by showing preponderance of probabilities and the onus on the accused is not as heavy as it is on the complainant to prove his case.

5. Satish Jayantilal Shah v. Pankaj Mashruwala, 1996 Cri. L.J. 3099

No law provides that in case of any negotiable instruments entire body has to be written by maker or drawer only.

6. Moideen v. Johny 2006 (2) DCR 421

When a blank cheque is issued, the drawer gives an authority to the person to whom it is issued, to fill it up at the appropriate stage with necessary entries and to present it to the bank.

7. Kajal v. Marwah [Delhi High Court, 27-03-2014]

Even if the appellant / complainant was engaged in lending money, that would not debar her from filing a complaint under Section 138 NI Act, if a cheque issued to her towards repayment of the loan advanced by her is dishonoured by a bank for want of funds and the drawer of the cheque fails to make payment within the prescribed time, after receipt of legal notice from the render. Section 3 of Punjab Registration of Money Lenders Act, 1938, which applies to Delhi, to the extent it is relevant provides that notwithstanding any contained in any other enactment for the time being in force, a suit by a money lender for the recovery of a loan shall, after the commencement of the act, be dismissed unless the money lender at the time of institution of the suit is registered and hold a valid license or holds a certificate from the commissioner under Section 11 of the Act, specifying the loan in respect of which the suit is instituted or if he is not already a registered or licensed money lender, he satisfies the court that he has applied for such registration or license, but the application is pending. The aforesaid provision does not debar a money lender from instituting a complaint under Section 138 of the NI Act, 1881, which is a remedy enforceable before a criminal court, and totally independent of a civil suit. The criminal liability is incurred only in case a cheque is issued in discharge of a debt or any other liability, the said cheque is dishonoured for want of funds and the borrower fails to make payment of the amount of the cheque even after the receipt of notice from the lender.

8. M/s Darbar Exports v. Bank of India, 2003 (2) SCC (NI) 132 (Delhi)

A presumption of service of notice is to be drawn where the notice is sent through registered post as well as UPC on correct address.

9. Santosh Mittal v. Sudha Dayal, 2014 (8) AD (Delhi) 268

The very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. [See Also : G.L. Sharma v. Hemant Kishor, 2015 (2) AD (Delhi) 340]

10. C.C. Alavi Haji v. Palapetty Muhammed, 2007 Crl. L.J. 3214

If the accused did not receive the legal notice, they could have made payment of the cheque amount within 15 days of receipt of summons from this court and could have prayed for rejection of the complaint, but this course of action has not been adopted by accused. Hence the defence of non-service of legal notice is without substance.

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