Bald Pleas of Coercion Cannot Dismantle Statutory Presumption Under Section 138: Calcutta High Court Refuses Relief in ₹25 Lakh Cheque Dishonour Case

“Once Issuance of Cheque and Signature Are Admitted, Technical Omissions Cannot Defeat Prosecution” —  In a significant ruling reinforcing the credibility of financial instruments, the Calcutta High Court on 19 November 2025 dismissed a criminal revision petition filed by Ma Kreeng Construction Pvt. Ltd. & Ors., thereby upholding the conviction and sentence imposed for the dishonour of a ₹25,00,000 cheque under Section 138 of the Negotiable Instruments Act, 1881. Justice Ajay Kumar Gupta, sitting in the Criminal Revisional Jurisdiction, ruled that the petitioners failed to rebut the statutory presumption of liability, and attempts to rely on vague allegations of coercion were legally unsustainable.

The cheque in question had been issued pursuant to a Refund Agreement signed after a failed property transaction. Dismissing the contention that the cheque was extracted under duress, the Court observed:

“Mere lodging of a complaint, without any substantive proof of coercion, threat, or compulsion, cannot displace the statutory presumption.”

The Court directed the petitioners to surrender within 15 days to serve their sentence and rejected their post-judgment prayer for stay, making it clear that default in compliance would trigger enforcement proceedings by the Trial Court.

“Admitted Signature on Cheque Invokes Legal Presumption — Accused Must Prove Defence Affirmatively”: Court Rejects Story of Duress and Denied Consideration

The matter arose from a property transaction in which the complainant, Mr. Dipak Saha, along with his wife, had agreed to purchase office space from the petitioners for ₹68,00,000. Despite alleged full payment, the conveyance deed was never executed, nor was possession delivered. As a result, the parties entered into a Refund Agreement dated 19 May 2009, whereby the petitioners acknowledged a liability of ₹1.10 crore to the complainant. Towards partial discharge of this liability, the petitioners issued Cheque No. 092403 dated 23 August 2009 for ₹25,00,000, which was dishonoured with the remark “Exceeds Arrangement”.

Following the dishonour, a statutory demand notice was issued, but no payment was made, prompting the complainant to initiate criminal proceedings under Section 138. The Trial Court, after full trial, convicted the petitioners and sentenced the directors (Petitioner Nos. 2 and 3) to three months' simple imprisonment along with payment of ₹20,00,000 compensation each, and directed the company to pay ₹10,00,000. The same was affirmed by the Revisional Court, and now, once again by the High Court.

In defence, the petitioners had contended that the cheque and refund agreement were obtained through coercion and that there was no actual payment made by the complainant towards the property consideration. But the High Court saw through the lack of any substantive evidence.

Justice Gupta noted:

“The defence of coercion stands on nothing more than a bald assertion. The accused did not take any legal step to challenge the refund agreement nor brought any cogent evidence to support their claims. Such a position fails to discharge the burden imposed under Section 139 of the NI Act.”

On the second limb of defence — that the complainant never paid the ₹68 lakh — the Court found it equally devoid of substance. Despite claiming non-receipt of the amount, the petitioners failed to produce a single bank record, ledger, or financial entry disproving the transaction. The Court found it incredulous that a signed Refund Agreement acknowledging ₹1.10 crore in liability would be entered into if no payment had actually occurred.

“Technical Omissions Like Not Naming Place of Signing Are Not Fatal When Core Ingredients Are Met”: Court Declines to Entertain Procedural Nitpicking

The petitioners also raised technical challenges, arguing that the complainant during cross-examination failed to specify the exact place where the cheque was signed or handed over. But Justice Gupta dismissed this line of defence as inconsequential:

“Such minor discrepancies do not constitute material contradictions. Once the cheque and signature are admitted, the burden shifts to the accused to establish their defence affirmatively. They cannot succeed on technical loopholes alone.”

Relying on the Supreme Court decision in K.N. Beena v. Muniyappan, the Court reiterated that technicalities cannot defeat statutory presumptions which arise upon admission of issuance and signature

“Acknowledgment of ₹1.10 Crore in Refund Agreement Nullifies Denial of Liability”: Court Sees Clear Admission of Debt

Justice Gupta underscored that the signed Refund Agreement dated 19 May 2009 was a crucial piece of evidence against the petitioners. The agreement specifically acknowledged the full liability of ₹1.10 crore towards the complainant, thereby creating a direct link between the dishonoured cheque and a legally enforceable liability. The Court held:

“The Petitioners expressly acknowledged the liability in writing. This single document severely undermines their plea of non-receipt of funds and absence of enforceable debt.”

Quoting from the Supreme Court’s ruling in Hiten P. Dalal v. Bratindranath Banerjee, the Court held that unless the accused brings on record reliable material to rebut the presumption, a conviction under Section 138 is legally sustainable.

“Credibility of Cheques in Commercial Transactions Must Be Preserved — Dishonour Cannot Be Sanitised Through Concocted Narratives”: Court Rejects Revision

Justice Gupta, while affirming the concurrent decisions of the Trial Court and the Revisional Court, concluded that the petitioners' attempt to characterise the cheque as obtained under coercion was merely a convenient afterthought, unsupported by evidence or action.

The Court observed:

“A cheque issued under an admitted refund agreement, which is dishonoured for insufficient funds, squarely attracts the ingredients of Section 138. The scope of revisional interference is limited and cannot be invoked to reappreciate evidence absent any perversity.”

The Court also took note of the fact that the petitioners had previously filed criminal revisions in respect of other dishonoured cheques issued under the same Refund Agreement, which were dismissed in December 2017. Accordingly, the present petition, arising from the same factual matrix, warranted no different treatment.

“Petitioners to Surrender Within 15 Days — No Stay of Operation Granted”: Court Orders Immediate Compliance

After pronouncement, the petitioners sought a stay of the operation of the judgment. However, the High Court rejected the request outright, noting:

“Such prayer is considered and rejected.”

The petitioners have been ordered to surrender before the concerned court within 15 days, failing which the Trial Court has been authorised to proceed with execution of sentence under law. All interim protections stand vacated.

Verdict Reinforces Cheque Dishonour as a Strict Liability Offence — Accused Cannot Escape by Raising Vague or Unsupported Defences

The judgment reaffirms the principles governing Section 138 of the Negotiable Instruments Act — that once issuance and dishonour of a cheque are established, the presumption of liability arises statutorily, and can only be rebutted by concrete, affirmative evidence. The Calcutta High Court’s ruling is a stern message to all litigants seeking to escape liability for bounced cheques on evasive or fabricated grounds. It also reflects the judicial determination to uphold the commercial credibility of cheques and ensure that business transactions do not fall victim to dishonesty.

As Justice Gupta succinctly concluded:

“The petitioners failed to rebut the statutory presumption under law. Their defences were neither supported by evidence nor credible. The conviction must stand.”

Date of Decision: 19 November 2025