Absence Of Written Loan Agreement Does Not By Itself Defeat Section 138 NI Act Complaint Once Liability And Issuance Of Cheque Are Established: Calcutta High Court

The Court held that where a cheque is admittedly issued for a specific amount, statutory presumptions under the Negotiable Instruments Act operate in favour of the complainant, and the burden lies on the accused to rebut such presumptions by cogent evidence.

The Court was hearing a criminal revisional application challenging concurrent findings of conviction recorded by the Judicial Magistrate and affirmed by the Sessions Court in a cheque dishonour case.

A Single Judge Bench of Justice Ajay Kumar Gupta, while dismissing the revision, observed: “Even though the Petitioner contends that the complaint was not maintainable in the absence of a written agreement, the complainant has established its claim and the liability of the Petitioner. Ultimately, the petitioner has issued a cheque of the Rs.6,00,000/- to discharge his liability. Therefore, the complaint is well maintainable unless it is rebuttable.”

Background

The complainant alleged that the accused had approached him for an accommodation loan of ₹6,00,000/-, which was advanced on a trust and personal relationship between the parties.

To discharge the said liability, the accused issued an account payee cheque for ₹6,00,000/- in favour of the complainant. Upon presentation, the cheque was dishonoured with the endorsement “Insufficient Funds”.

The complainant issued a statutory demand notice calling upon the accused to make payment of the cheque amount within the prescribed period. Despite the service of notice, no payment was made.

Consequently, the complainant filed a complaint under Section 138 of the Negotiable Instruments Act before the Judicial Magistrate.

The trial court, after recording evidence and considering documentary exhibits including the cheque, dishonour memo, demand notice, and acknowledgement, convicted the accused and sentenced him to simple imprisonment and fine, with a substantial portion directed to be paid as compensation.

The accused preferred a criminal appeal before the Sessions Court, which affirmed the conviction and sentence.

Aggrieved, the accused filed the present criminal revision before the Calcutta High Court under Section 482 of the Code of Criminal Procedure, challenging the legality and propriety of the concurrent findings.

Court’s Observation

The High Court first identified the issues arising for determination, including whether there existed a legally enforceable debt or liability, whether the cheque was issued towards discharge of such liability, whether the statutory presumption was rebutted, and whether the ingredients of Section 138 of the Negotiable Instruments Act were satisfied.

The Court noted that the accused did not dispute the issuance of the cheque but contended that the cheque was issued only as security and that no accommodation loan of ₹6,00,000/- was taken from the complainant.

The Court examined the evidence on record and found that the cheque for ₹6,00,000/- was issued by the accused, was dishonoured for insufficiency of funds, and that the statutory demand notice was duly served and remained unreplied.

The High Court rejected the defence that the cheque was issued only as security for a loan of ₹1,00,000/- allegedly taken from a third party. The Court noted that no documentary or oral evidence was produced by the accused to substantiate this claim.

The Court held that a person cannot reasonably be expected to issue a cheque for ₹6,00,000/- when the alleged liability was only ₹1,00,000/-, and that such a defence was unsupported by any credible material.

On the contention that the absence of a written loan agreement rendered the complaint not maintainable, the Court held that accommodation loans may be advanced on trust and personal relationship, and once issuance of a cheque and liability are established, the absence of a written agreement does not defeat the statutory presumption.

The Court further held that the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act operated in favour of the complainant, and that the accused failed to rebut such presumptions by leading any cogent evidence.

The High Court also examined the limited scope of interference under Section 482 CrPC and Article 227 of the Constitution and held that it could not re-appreciate evidence or act as a court of appeal over concurrent findings unless perversity or patent illegality was demonstrated.

The Court found that both the trial court and the appellate court had passed detailed and reasoned orders and that no illegality, perversity, or miscarriage of justice was shown.

Conclusion

The Calcutta High Court held that the complainant had successfully established the liability of the accused and the issuance of the cheque towards the discharge of such liability.

Accordingly, the High Court declined to interfere with the concurrent findings of the courts below and dismissed the criminal revision, affirming the conviction and sentence.

Cause Title: Kausik Barui v. Kartick Chandra Basu & Anr. (Neutral Citation: 2026:CHC-AS:113)

Appearances

Petitioner: Kallol Kr. Basu, Anindya Sundar Das, Jannat Ul Firdous, Suman Haldar, Prabuddha Mandal, Advocates

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