Signature Alone Doesn’t Prove Debt: Kerala High Court Upholds Acquittal in Cheque Bounce Case, Rejects Blanket Presumption Under Section 139 NI Act

“No Guarantee, No Proof of Debt, No Case for Conviction”— In a significant judgment Kerala High Court upheld the acquittal of a woman accused under Section 138 of the Negotiable Instruments Act, 1881, ruling that mere signature on a dishonoured cheque is not sufficient to fasten criminal liability without proof of legally enforceable debt.

Justice Johnson John dismissed the appeal filed by Sree Gokulam Chit and Finance Co. (P) Ltd., which had challenged the acquittal of Anu Thomas by the Sessions Court, Thodupuzha. The complainant-finance company had alleged that Anu, wife of a chitty subscriber, had issued a cheque for ₹2,10,279 as guarantor, which was later dishonoured due to insufficient funds. The trial court convicted her, but the Sessions Court reversed the verdict, leading to the present appeal.

Affirming the Sessions Court's view, the High Court held that the presumption under Section 139 of the NI Act had been rebutted by the accused through a credible and probable defence, and the complainant company had failed to discharge its evidentiary burden thereafter.

“Presumption Under Section 139 is Not Absolute—Accused Raised Probable Defence That Cheque Was Misused”

At the heart of the dispute was the dishonoured cheque dated 21.07.2005, allegedly issued by the accused as a guarantor for her husband’s default in two chitty transactions. The complainant contended that despite statutory notice, the accused failed to honour the cheque, and thus committed an offence under Section 138 of the NI Act.

However, the High Court found that no guarantee agreement was ever produced, and the complainant’s own witnesses admitted crucial gaps in their knowledge of the transaction. PW1, the company’s Assistant Business Manager, admitted that he had no direct knowledge of the transaction or the execution of the cheque, and deposed entirely on the basis of documents. PW2, the Branch Manager, who claimed to have seen the accused sign the cheque, could not corroborate the date, context, or circumstances in which the cheque was issued.

“Even though PW2 deposed that the accused signed the cheque in his presence, his evidence is vague to the core,” observed the Court. “He has not stated anything about the date on which the cheque was signed or delivered.”

The Court concluded: “The complainant has not succeeded in proving that the accused issued the cheque in discharge of a legally enforceable debt… There is no reliable or satisfactory evidence to fix liability.”

“Cheque Must Represent Enforceable Debt on the Date of Issuance”—Court Cites Supreme Court in Dashrathbhai Patel Case

Justice Johnson John underscored the principle laid down by the Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (2023) 1 SCC 578, stating:

“It is well settled that the cheque must represent the legally enforceable debt as on the date of its presentation.”

However, the Court noted that the complainant failed to disclose the actual liability as on the date of the cheque, and there was no clear link between the cheque and the alleged dues. The company also admitted to having started collecting instalments even before the chitty formally commenced, which further undermined their credibility.

Adding to the doubts was the testimony of DW2, the husband of the accused, who deposed that blank cheques were obtained at the time of prize distribution in the chitty scheme, including cheques from his wife who was merely listed as a nominee, not a guarantor.

“Preponderance of Probabilities, Not Beyond Reasonable Doubt”—Court Applies Standard for Rebutting Presumptions Under NI Act Relying on key precedents including Basalingappa v. Mudibasappa (2019) 5 SCC 418 and M.S. Narayana Menon v. State of Kerala (2006) 6 SCC 39, the Court reiterated that: “The standard of proof required to rebut the presumption under Sections 118 and 139 of the NI Act is not proof beyond reasonable doubt, but merely preponderance of probabilities.”

The accused successfully established, through circumstantial evidence and inconsistencies in the complainant’s own witnesses, that there was no liability or enforceable debt, and that the cheque was likely misused after being obtained as a blank instrument.

Justice Johnson John remarked:

“The burden of rebuttal was discharged by the accused. Once that is done, the complainant must prove the debt with affirmative evidence, which is wholly absent in this case.”

“If Two Views Are Possible, Appellate Court Must Not Interfere”—High Court Declines to Reverse Acquittal On the scope of appellate interference, the Court invoked settled law that when two views are possible, one of which supports acquittal, the appellate court should not interfere unless the findings are perverse or manifestly illegal.

In this context, the High Court concluded: “On a careful reappreciation of the entire evidence, I find that the Sessions Court has taken a plausible view supported by contradictions and evidentiary gaps. There is no justification for interference.”

A Reminder That Cheque Bounce Is Not Strict Liability—Burden of Proof Still Matters This decision is a significant reaffirmation of legal safeguards under cheque bounce cases, making it clear that the presumption of guilt under Section 139 NI Act is not a licence to bypass fundamental principles of criminal justice.

While the complainant company relied on statutory presumptions and mere possession of a dishonoured cheque, the High Court insisted on direct evidence of liability and legal enforceability, especially in the absence of a written guarantee or contemporaneous documentation.

Ultimately, the ruling sends a clear message: “Signature on a cheque is not a confession. The law demands proof—documented, dated, and credible.”

Date of Decision: 16 December 2025