Cheque Bounce CRR: Punjab & Haryana High Court Upholds Conviction Where “Security Cheque” Defence Remains Unproved. The Punjab & Haryana High Court, while deciding a Criminal Revision (CRR) arising out of a conviction under Section 138 of the Negotiable Instruments Act, 1881, has reiterated the importance of the statutory presumption under Section 139 of the NI Act.

The Court held that where the accused admits his signatures on the cheque but fails to establish, through cogent evidence, that the cheque was merely a security cheque or that no legally enforceable liability existed on the date of presentation, the statutory presumption in favour of the complainant remains operative.

A person convicted in a cheque dishonour case under Section 138 of the Negotiable Instruments Act faces a punishment of imprisonment for up to two years, a fine up to twice the amount of the cheque, or both. [1, 2]

Cheque Bounce Conviction – Case Background

The complaint arose from a cheque issued for ₹5 lakh, which was dishonoured with the bank endorsement “Account Closed.”

After issuance of the statutory legal notice and failure to make payment, proceedings under Section 138 of the NI Act were initiated.

The Trial Court convicted the accused, and the Appellate Court subsequently upheld the conviction. The accused thereafter approached the High Court through a Criminal Revision Petition challenging both the conviction and sentence.

Defence of a Blank Security Cheque

Before the High Court, the accused argued that the cheque had originally been given as a blank security cheque during earlier business dealings with another person.

It was alleged that the cheque had subsequently been misused and presented by the complainant.

The accused also contended that the actual liability towards the complainant was less than the cheque amount and that there was no legally enforceable liability of ₹5 lakh on the date of presentation.

Also Read-Cheque Bounce HighCourt Revision Petition Chandigarh

Section 139 Presumption Became Crucial

The High Court reiterated that once the issuance of the cheque and the signatures thereon are admitted, Section 139 of the NI Act raises a statutory presumption that the cheque was issued towards discharge of a legally enforceable debt or liability.

The burden then shifts to the accused to rebut that presumption by raising a probable defence on the basis of evidence available on record.

The accused need not necessarily enter the witness box, but the defence must nevertheless be sufficient to rebut the statutory presumption.

“Security Cheque” Defence Was Not Accepted

The High Court examined the evidence concerning the alleged blank security cheque.

The accused had not disputed his signatures on the cheque or its issuance. However, the Court found that the evidence did not establish that the cheque had actually been handed over as security to the alleged third person or that it had subsequently been misused.

The person to whom the accused claimed to have handed over the cheque had also appeared as a witness and denied that the cheque had been given to him as security and subsequently misused.

Consequently, the Court concluded that the defence remained unsubstantiated.

Legally Enforceable Debt Must Exist on Presentation

An important principle highlighted by the Court is that a cheque must represent a legally enforceable debt or liability on the date of its presentation.

A cheque which does not represent an existing legally enforceable liability at the relevant time cannot attract Section 138.

However, after examining the evidence in the present case, the High Court found no basis to conclude that the cheque did not represent a legally enforceable liability.

Also Read-Challenge Cheque Bounce Conviction in HighCourt Revision

CRR Dismissed

After considering the evidence and the findings of both the Trial Court and the Appellate Court, the High Court found no reason to interfere.

The Criminal Revision Petition was therefore dismissed, and the conviction under Section 138 of the NI Act was maintained.

The ₹5 lakh deposited by the petitioner in the High Court Registry was directed to be released to the complainant, subject to an appropriate application, and was to be treated as compensation awarded by the Trial Court, excluding interest.

Key Takeaways

• Admission of signatures on a cheque activates the statutory presumption under Section 139 NI Act.
• A mere assertion that a cheque was a “blank security cheque” is not sufficient to rebut the presumption.
• The accused must establish a probable defence through reliable evidence.
• The cheque must represent a legally enforceable debt or liability on the date of presentation.
• The High Court, in revision, will not ordinarily interfere with well-reasoned concurrent findings of the Trial Court and Appellate Court without sufficient legal or evidentiary grounds.
• A successful defence in a cheque-bounce case must be based on evidence rather than merely on allegations of misuse.

Also Read-Joint Account Cheque Bounce Case-HighCourt Chandigarh

Conclusion

The judgment is a useful reminder that Section 139 of the Negotiable Instruments Act creates a significant statutory presumption in favour of the cheque holder.

Once signatures and issuance are admitted, the accused carries the evidentiary burden of presenting a credible and probable defence. A plea that the cheque was issued as security, without sufficient supporting evidence, may not be enough to avoid conviction.

The decision therefore highlights the importance of carefully examining the nature of the underlying liability, the circumstances of issuance, the evidence regarding alleged misuse, and the financial transaction itself while defending a Section 138 prosecution.

Source: Punjab & Haryana High Court, judgment dated 10 August 2026, Criminal Revision Petition concerning conviction under Section 138 of the Negotiable Instruments Act.

By Satish Mishra, Advocate (99888-17966)