Blank cheque completed by payee can sustain Section 138 liability when legally enforceable debt is proved

A signed cheque delivered in blank and later filled by the payee remained valid in law because the drawer gave implied authority to complete it, and such completion was not a material alteration. The statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act applied, but they were rebuttable on a preponderance of probabilities. The complainant also had to prove that the cheque was issued towards a legally enforceable debt, which was done through invoices, ledger entries, debit notes and surrounding circumstances. The defence failed to rebut the presumptions or disprove liability, so conviction under Section 138 was sustained and acquittal was held unsustainable.

---

---

Issues: Whether a cheque signed and delivered in blank, later completed by the payee, remained a cheque in law and whether the complainant had proved a legally enforceable debt so as to sustain conviction under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: The statutory scheme of Sections 5, 6, 20, 87, 118 and 139 of the Negotiable Instruments Act, 1881 was read harmoniously. A signed but incomplete instrument delivered to the payee carries implied authority to complete it, and such completion does not by itself amount to material alteration. The presumption under Sections 118 and 139 is mandatory but rebuttable, and the accused must rebut it on a preponderance of probabilities. At the same time, the complainant must establish that the cheque was issued towards a debt or liability that was legally enforceable. On the evidence, the invoice, ledger entries, debit notes and surrounding circumstances showed a subsisting business liability, while the defence only established an attempted return of goods and did not displace the presumption or the proof of liability.

Conclusion: The cheque was validly completed, the presumption in favour of the holder stood unrebutted, and the existence of a legally enforceable debt was proved. Conviction under Section 138 was warranted and the acquittal was unsustainable.

Ratio Decidendi: A signed and delivered blank cheque, when completed by the payee within the implied authority of the drawer, attracts the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881, and conviction under Section 138 follows if the complainant proves the underlying debt to be legally enforceable and the accused fails to rebut the presumption on a preponderance of probabilities.

---