The Chhattisgarh High Court recently reiterated that a cheque dishonour trial under Section 138 of the Negotiable Instruments Act, 1881, is not rendered void just because the cheque return memo lacks the official bank seal or signature. The decision was delivered by Justice Narendra Kumar Vyas while hearing two appeals—ACQA Nos. 425 of 2024 and 194 of 2024—filed by Tulshi Steel Traders against Purva Construction.
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The trial had earlier concluded with the acquittal of the accused, Mitrabhan Sahu, on the ground that the return memos did not contain a seal or signature of the issuing bank and no bank official was examined. The trial court viewed this as a violation of Section 146 of the NI Act. However, this reasoning was challenged before the High Court.
The appellant, Tulshi Steel Traders, argued that the cheques were issued against outstanding liabilities for construction materials such as cement and iron rods, and their dishonour due to insufficient funds was proven through documentation. Two cheques—one for ₹67,640 and another for ₹1,70,600—had bounced. Despite sending a legal notice, the complainant did not receive payment or a reply from the accused, leading to the filing of the complaint under Section 138.
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To support his case, the complainant had submitted an affidavit under Section 145 of the NI Act and provided key documents including:
- The dishonoured cheques
- The cheque return memos
- A registered notice
- Postal receipts
- Sales bills
In response, the accused claimed during examination under Section 313 CrPC that the cheques were only issued as security for material supply which was never fulfilled. However, no witnesses or further evidence were presented by the accused to support this claim.
The trial court had accepted that the cheques were issued towards liability but still dismissed the complaint due to the absence of a bank seal or signature on the return memos.
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The High Court, however, took a different view. It observed:
“The presumption under Section 139 of the NI Act, 1881, stands in favour of the complainant. Therefore, merely because the cheque return memo lacks a seal or signature from the bank, it is misconceived to conclude that no presumption of dishonour arises.”
Justice Vyas explained that a cheque return memo is essentially an informational document stating why a cheque could not be cleared. Section 146 allows the court to presume dishonour if a memo is presented—even without a bank stamp—unless proven otherwise.
He cited multiple precedents, including:
- Delhi High Court in Guneet Bhasin v. State of NCT of Delhi & Ors., which held that a return memo without a seal doesn’t invalidate the trial.
- Allahabad High Court in Mohd. Yunus Malik v. State of U.P., which echoed the same view.
- Madras High Court in India Cements Investments Services Ltd. v. T. P. Nallusamy, where it was suggested that while the bank manager’s testimony can help strengthen the complainant's case, the absence of such examination doesn’t nullify the trial.
“If there is any infirmity in the cheque or letter, it does not render the entire trial under Section 138 of the Act as nullity.”
The Chhattisgarh High Court found that the trial court rightly accepted the existence of a liability but erred in rejecting the cheque return memo’s validity just because of procedural imperfections. The Court held:
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“Neither Section 138 nor Section 146 prescribes any fixed format for a return memo. It is not a document governed under the Bankers Book Evidence Act, 1891. Therefore, its procedural deficiencies do not make the entire trial void.”
As a result, the High Court partly allowed the appeal. It affirmed the finding that the cheques were issued against a liability but set aside the trial court's view on the return memo. The matter was sent back to the trial court to verify that the cheques were indeed presented to the bank and dishonoured due to “insufficient funds.”
The trial court was directed to summon and examine a bank officer along with the relevant records—either physical or digital—concerning the dishonoured cheques.
The Court also noted that since both parties had already appeared before it, no fresh notices were needed. They were instructed to appear before the trial court on May 9, 2025, and the trial was to be concluded within nine months from that date.
Case Details:
Case Number: ACQA No. 425 of 2024
Case Title: Tulshi Steel Traders Propritor Pushpendra Kesharwani v. Purva Construction Propritor -Mitrabhan Sahu
Date: 08.04.2025
