The Hon’ble High Court of Judicature at Bombay (Bench at Aurangabad) in Mohammad Irfan Salimmuddin Bagwan v. Abhishek Kamalkishor Malpani [Criminal Revision Application No. 333 of 2025 dated March 16, 2026] dismissed the criminal revision filed by the accused-client and upheld the conviction recorded by the trial court as affirmed in appeal, holding that dishonour of a cheque with the bank’s remark “Account Blocked” is a valid ground for prosecution under Section 138 of the Negotiable Instruments Act, 1881 (“the NI Act”), and that a blank signed cheque filled in by the payee is equally enforceable, especially when the drawer fails to rebut the statutory presumption of a legally enforceable debt.
Facts:
The respondent-complainant, a Chartered Accountant (CA) by profession, was engaged by the revisionist-accused (a businessman) to render audit and financial services, including uploading 3CB/3CD forms, income tax returns, and causing digital signatures for the accused’s firm. An agreed professional fee of Rs. 2,50,000/- was fixed for the said services.
The accused handed over a blank signed cheque (Cheque No. 036302, Punjab National Bank) to the complainant as payment towards the professional fees. The complainant himself filled in the remaining details and presented the cheque dated December 06, 2016, for a sum of Rs. 2,37,500/-. The cheque was dishonoured on December 08, 2016, with the bank’s remark “Account Blocked”.
The complainant issued a statutory demand notice dated December 19, 2016 (received by the accused on December 21, 2016). On failure to pay within the stipulated period, the complainant instituted S.C.C. No. 536 of 2017 before the learned JMFC, Aurangabad.
The Trial Court convicted the accused under Section 138 of the NI Act vide its judgment dated January 11, 2022, sentencing him to pay a fine of Rs. 4,72,000/- (with default simple imprisonment of three months) and directing payment of Rs. 3,43,972/- to the complainant as compensation. The Sessions Court (Criminal Appeal No. 9 of 2022) dismissed the accused’s appeal on October 10, 2025, maintaining the conviction. The accused then filed the present Criminal Revision before the High Court.
Contentions of the Revisionist (Accused):
- No legally enforceable debt existed; the cheque was given only as a security.
- The cheque was blank when signed and was subsequently misused by the complainant who filled in the contents himself.
- The bank returned the cheque with the remark “Account Blocked” — a reason originating from the bank, not attributable to the accused — and therefore did not constitute dishonour attracting Section 138 of the NI Act.
- The complainant’s inability to recall the exact date and year of cheque issuance during cross-examination created reasonable doubt about the transaction.
Issues:
- Whether a cheque dishonoured with the bank’s remark “Account Blocked” constitutes a valid dishonour attracting prosecution under Section 138 of the Negotiable Instruments Act, 1881?
- Whether a blank signed cheque whose remaining contents are filled in by the payee/complainant is a valid instrument for the purpose of Section 138 of the NI Act?
- Whether the accused successfully rebutted the statutory presumption of a legally enforceable debt under Section 138 of the NI Act?
- Whether the High Court, in its limited revisionary jurisdiction under Section 397 of the Code of Criminal Procedure (Cr.P.C.), was justified in interfering with concurrent findings of the trial court and the first appellate court?
Held:
The Hon’ble High Court of Judicature at Bombay (Bench at Aurangabad) in Criminal Revision Application No. 333 of 2025 held as under:
- Observed that, the revisionary jurisdiction under Section 397 of Cr.P.C. is limited and can be invoked only where the decisions under challenge are grossly erroneous, based on no evidence, where material evidence is ignored, or where judicial discretion is exercised arbitrarily or perversely. The Court relied on Amit Kapoor v. Ramesh Chander and another [(2012) 9 SCC 460].
- Noted that, the complainant produced documentary evidence (Exhibits 48, 49 — 3CB/3CD forms, income tax returns, and digital signatures — and Exhibit 50, the balance sheet showing Rs. 2,81,432/- outstanding as Sundry Debtors), which the accused neither disputed nor denied. The professional-client relationship itself was not contested.
- Held that:
- Blank Cheque: Once a cheque is duly signed by the drawer, it is immaterial who fills in the remaining contents. Relying on Bir Singh v. Mukesh Kumar [2019 Cri.L.J. 3227], both courts below rightly held that the argument of misuse of a blank signed cheque has no legal basis.
- “Account Blocked” as Valid Dishonour: Though the remark “Account Blocked” is not expressly enumerated in Section 138 of the NI Act, the Madras High Court’s reasoning in Challani Rank Jewellery v. Ashok Kumar Jain [Crl. O.P. No. 21268 of 2024, reported in LAWS (MAD) 2024-10-50] and the Supreme Court’s observations in Laxmi Dyechem v. State of Gujarat [(2012) 13 SCC 375] and NEPC Micon Ltd. v. Magma Leasing Ltd. [(1999) 4 SCC 253] were applied. The Court held that insufficient funds is the “genus” of the Section 138 offence and various specific return reasons (account closed, stop payment, account blocked) are merely “species” of that genus. A prosecution under Section 138 is maintainable when it is shown that, irrespective of the account being blocked or frozen, the accused had no sufficient funds to honour the cheque.
- Statutory Presumption Not Rebutted: Once issuance and signature of the cheque are admitted, the statutory presumption under Section 138 of the NI Act is automatically drawn. The accused’s bare denial, without any substantive rebuttal evidence (including the failure to examine any bank official), was insufficient to discharge even the preponderance-of-probabilities standard.
Our Comments:
- Section 138 of the Negotiable Instruments Act, 1881 creates a criminal liability on the drawer of a cheque when the cheque is returned by the bank unpaid due to: (a) insufficiency of funds in the account, or (b) the cheque amount exceeding the amount arranged to be paid from that account. The section is a penal provision intended to instil confidence in the banking system and ensure that cheques are not issued lightly or dishonestly.
- The presumption under Section 139 of the NI Act raises a legal presumption that the holder of a cheque received it for the discharge, in whole or in part, of a legally enforceable debt or liability. This presumption is rebuttable, but the burden on the accused is to displace it by a preponderance of probabilities — not beyond reasonable doubt. A mere denial, without documentary or oral corroboration, is insufficient.
- On the issue of “Account Blocked” as a ground for dishonour, there has been some divergence in judicial opinion across High Courts. Certain courts had taken the view that since “account blocked” is a bank-initiated action (e.g., in compliance with instructions from enforcement agencies), it may not be attributed to the drawer’s conduct, and thus may not attract Section 138. The Karnataka High Court in M/s. ND Developers Private Ltd. v. Ritesh Raushan [Criminal Petition No. 11207 of 2025] was cited for such a proposition. However, the Bombay High Court in the present case, following the Madras High Court and the Supreme Court’s “genus-species” doctrine (Laxmi Dyechem; NEPC Micon/Magma), has clarified that if the underlying cause is the account holder’s failure to maintain sufficient funds, the specific label assigned by the bank (“account blocked”, “account closed”, “account frozen”) does not insulate the drawer from prosecution under Section 138.
- For CA Professionals: This judgment is a significant affirmation that professional fees constitute a legally enforceable debt recoverable through the NI Act mechanism. Professionals such as CAs, CSs, CMAs, advocates, and consultants who receive blank signed cheques from clients as payment/security must retain supporting documentation of their services (billing records, filed returns, correspondence) to withstand challenges to the existence of a debt. The ruling in Bir Singh v. Mukesh Kumar [(2019) Cri.L.J. 3227] conclusively settles that the payee filling in a blank cheque does not render it invalid or amount to misuse, provided the underlying liability exists.
- From a revisionary jurisdiction standpoint, concurrent findings of two courts on questions of fact will not ordinarily be disturbed by the High Court in revision under Section 397 of Cr.P.C. unless there is a patent error of law, no evidence, or manifest perversity — a threshold the present revision conspicuously failed to meet.
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