Well Argued · Rajkot · Section 138

Absence Is No Defence: Rajkot Court Convicts Borrower in Rs 2.37 Lakh Cheque-Bounce Case Argued by Adv. Abhishek Shukla

Well Argued · Claw Editorial

A borrower who had taken a loan to buy a truck gave a cheque to clear the balance. It bounced. At trial he pleaded not guilty, and then he stopped coming to court. In a case argued by Adv. Abhishek Shukla for the lender, the 9th Additional Chief Judicial Magistrate at Rajkot built the case issue by issue on the documents, held that the borrower had done nothing to rebut the presumptions the law raises in favour of a cheque holder, and convicted him. He was sentenced to one year’s simple imprisonment and ordered to pay ₹2,37,765 in compensation.

01The loan and the cheque

The complainant is a vehicle-finance company with an office in Rajkot. The accused, a labourer from Amreli district, approached it for a loan to buy a Bolero Maxxi truck. The company sanctioned ₹6,42,389 under a loan agreement, and he signed the loan documents and promised to pay regular instalments.

He did not keep up the payments. When the company asked him to clear the outstanding amount, he gave it a State Bank of India cheque for ₹2,37,765, dated 8 May 2025, and assured it that the cheque would be honoured.

The company presented the cheque at its bank in Rajkot. On 14 May 2025 it was returned unpaid, marked “funds insufficient”. The company’s advocate sent a legal demand notice by registered post, and it was delivered to the accused on 2 June 2025. He did not reply, and he did not pay. After the 15 days the law allows had run out, the company filed its complaint.

02Timeline

03What Section 138 requires

Section 138 makes it an offence to issue a cheque that bounces for want of funds, but only if the complainant follows a strict sequence. The court set out the provision in full and tested the case against each condition:

1. The cheque was drawn on an account the accused maintained, to pay a legally enforceable debt or liability.
2. It was presented within three months of its date, or within its validity, whichever is earlier (Section 138(a)).
3. It was returned unpaid because the funds were insufficient.
4. The payee sent a written demand within 30 days of learning of the dishonour (Section 138(b)).
5. The drawer failed to pay within 15 days of receiving that notice (Section 138(c)).

Each step has a deadline, and missing one can sink a case regardless of the debt. Citing the Supreme Court in Saroj Kumar Poddar v. State (NCT of Delhi), the court made clear that compliance with clauses (a), (b) and (c) has to be proved, not assumed.

The maximum punishment is imprisonment for up to two years, a fine of up to twice the cheque amount, or both.

04An accused who stopped coming

On filing, the complainant’s verification was recorded on oath under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), and summons issued under Section 227. The accused appeared with his advocate, received copies of the complainant’s documents under Section 230, and on 1 April 2026 pleaded not guilty under Section 274.

The complainant then put his case on record. His evidence was his own sworn deposition, supported by eight documents:

• his identity card and the company’s power of attorney authorising him to act;
• the statement of the accused’s loan account;
• the original cheque and the bank’s original return memo;
• a copy of the legal demand notice, the registered-post receipt and the postal tracking report showing delivery.

From that point the accused took no part. He was given what the court described as sufficient and reasonable opportunities to cross-examine the complainant, and did not. He led no evidence of his own and made no argument. The court closed each of those rights in turn and heard the complainant’s final arguments under Section 352 of the BNSS.

05The four issues the court decided

The court framed four questions and answered each one on the record.

1. Was the cheque given by the accused? Yes.

The original cheque bore the accused’s signature as drawer and named the company as payee. The loan agreement and account statement showed why it had been given: to clear the outstanding balance on the truck loan.

2. Were the Section 138 conditions met? Yes.

The cheque dated 8 May was presented and returned on 14 May, well within three months. The notice of 23 May went out within 30 days of the dishonour. It was delivered on 2 June, the accused paid nothing in the next 15 days, and the complaint was filed within the following month.

3. Did the accused rebut the presumptions? No.

The court went through each limb of Section 118 (consideration, date, time of acceptance and transfer, order of endorsements, stamp, and holder in due course) and then Section 139. It found nothing on record to displace any of them. This is the heart of the case, explained in the next section.

4. Was the offence proved beyond reasonable doubt? Yes.

With the first three answers in place, the court held that every ingredient of the offence had been proved beyond reasonable doubt.

06Why the presumption decided the case

Cheque-bounce law shifts the burden of proof in a way most criminal law does not. Once a complainant proves that the accused signed and issued the cheque, Section 139 requires the court to presume that it was given to discharge a debt or liability. Section 118 adds that it was presumed to be given for consideration, on the date it bears. The accused then has to rebut these presumptions.

The court relied on a line of Supreme Court decisions:

• Rangappa v. Sri Mohan (2010) 11 SCC 441 and T.P. Murugan v. Bojan (2018) 8 SCC 469: where the accused admits issuing and signing the cheque, the Section 139 presumption must be drawn in favour of the holder.
• Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 18 SCC 106: a drawer who signs and hands over a cheque, and does not deny the signature, is presumed to have issued it for a legal debt.
• APS Forex Services v. Shakti International Fashion Linkers (2020) 12 SCC 724: admitting the signature brings the presumption that the cheque was given to discharge a legal debt or obligation.
• Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 and the Gujarat High Court in Girishbhai Natwarbhai Patel v. State of Gujarat: the onus is on the accused, and the presumption stands until it is rebutted by definite and convincing evidence.

An accused can rebut the presumption by discrediting the complainant’s evidence or by leading his own. Here he did neither. He never replied to the demand notice, which the court treated as significant: if the cheque had been misused, that notice, setting out the whole transaction, was the moment to say so. He never denied his signature, never claimed the cheque was lost or obtained by fraud, never cross-examined the complainant, and never gave evidence. On that record, the presumptions stood untouched.

Once the signature is admitted and nothing is offered in rebuttal, the law presumes the debt. The complainant does not have to prove it a second time.

07Proceeding without the accused

An accused who stops attending is a familiar problem in Section 138 cases, because absence can stall a trial for years. The court addressed it directly, relying on two decisions of the Gujarat High Court:

• Manoj Vasudev Sompura v. State of Gujarat (R/Special Criminal Application No. 6721 of 2023): where an accused has been given sufficient opportunity to cross-examine, or to give his statement, and stays away, the court is justified in closing those rights.
• Sharad Jethalal Savla v. State of Gujarat (Criminal Misc. Application No. 19862 of 2015): a judgment and order of conviction can be passed in the accused’s absence.

Applying these, the court held that closing the accused’s rights was justified and pronounced judgment under Section 392 of the BNSS in his absence. Because he was absent, it did not adjourn the case for a separate hearing on sentence.

08The sentence

The court explained how it balanced the sentence. The cheque amount had not been repaid, and the object of the law is to make cheques a reliable instrument of payment. At the same time, a sentence must be proportionate:

“Too lenient punishment may make mockery of justice. Too draconian a penalty might not only result in injustice but may be fraught with other ramification which might defeat the very object of enactment.”

It noted that the Supreme Court and the Gujarat High Court have repeatedly asked trial courts to award compensation in these cases, and that a magistrate may impose a default sentence if compensation is not paid. It ordered:

09Lessons for practitioners

Nothing in this case was left to chance, and that is why it ended in a conviction even without a contest. For anyone filing or defending a Section 138 complaint, the judgment is a useful checklist.

10What happens next

The sentence will be enforced through the warrant once the accused is found. He remains entitled to challenge the conviction in appeal before the Sessions Court. Failing to pay the compensation within the time allowed brings the additional three months of imprisonment.

11FAQ