India: Fiduciary Relationship Between Complainant And Accused Does Not Affect The Presumption Raised Under Section 139 Of NI Act: Supreme Court's Decision In Bir Singh v. Mukesh Kumar

Last Updated: 12 February 2019
Article by Apoorv Sarvaria

Recently, the Supreme Court in the case of Bir Singh v. Mukesh Kumar (Criminal Appeal Nos. 230-231 of 2019, decided on February 6, 2019) has dealt with some interesting issues on the presumption raised under Section 139 of the Negotiable Instruments Act ("NI Act"), including the effect of fiduciary relationship on such presumption and subsequent filling of contents of a signed cheque, besides also revisiting the settled law on exercise of revisional jurisdiction in criminal cases.

Brief Facts

The appellant/complainant filed a complaint against the respondent/accused before the Judicial Magistrate 1st Class, Palwal, under Section 138 of the NI Act. The respondent issued a cheque towards repayment of a friendly loan in favour of the appellant for Rs. 15 lakhs which the appellant deposited and it was returned unpaid with the endorsement "Insufficient Funds". The said cheque was again presented which got dishonoured on the same ground. The Judicial Magistrate, after hearing all the facts, sentenced the respondent to undergo simple imprisonment for a period of one year and further directed him to pay compensation of Rs.15 lakhs to the appellant within one month. The respondent approached the appellate court and the appellate court, though confirming the conviction and compensation amount, reduced the imprisonment from one year to six months. The respondent subsequently approached the Punjab and Haryana High Court which by the impugned order dated 21st November 2017, reversed the findings of the Trial and Appellate Court and acquitted the respondent while observing, inter alia, that there was fiduciary relationship between the appellant, an Income Tax practitioner, and the respondent who was his client. An appeal was, therefore, filed before the Supreme Court.

The Supreme Court in this case was primarily dealing with two issues:

  1. Whether a Revisional Court can, in exercise of its discretionary jurisdiction, interfere with an order of conviction in the absence of any jurisdictional error or error of law; and
  2. Whether the payee of a cheque is disentitled to the benefit of the presumption under Section 139 of the NI Act, of a cheque duly drawn, having been issued in discharge of a debt or other liability, only because he is in a fiduciary relationship with the person who has drawn the cheque.


On the first issue, while referring to its own decision in Southern Sales and Services v. Sauermilch Design and Handels GMBH (2008) 14 SCC 457, the Supreme Court observed it to be settled that in exercise of revisional jurisdiction under Section 482 of the Code of Criminal Procedure ('Cr PC'), the High Court does not, in the absence of perversity, upset concurrent factual findings and it is not for the Revisional Court to re-analyse and re-interpret the evidence on record even if a wrong order is passed by it.

On the second issue, while referring to various judgements on the presumption raised under Section 139 of the NI Act, the Supreme Court stated that the onus to rebut the presumption under Section 139 of the NI Act that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post-dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the NI Act. Referring to Sections 20, 87 and 139 of the NI Act, the Apex Court held that 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. While stating that the presumption raised under Section 139 would lie even in cases of fiduciary relationship between the payee and the drawer, the Supreme Court observed as under in paras 38 and 39:

"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.

39. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. ......."                                                                                                                     (emphasis added)

The Supreme Court further observed that the subsequent filling of an unfilled signed cheque is not an alteration. The Supreme Court set aside the judgment and order of the High Court and confirmed the conviction under Section 138 of the NI Act. However, the Respondent was only sentenced to pay fine which was enhanced to Rs. 16 lakhs and to be paid as compensation to the appellant/complainant to be paid within 8 weeks, failing which the sentence of one year as imposed by the trial court would revive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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