{"id":266804,"date":"2022-05-13T09:00:16","date_gmt":"2022-05-13T03:30:16","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=266804"},"modified":"2022-05-27T11:03:52","modified_gmt":"2022-05-27T05:33:52","slug":"law-on-liability-of-guarantor-dishonour-of-cheque-section-138-ni-act","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/13\/law-on-liability-of-guarantor-dishonour-of-cheque-section-138-ni-act\/","title":{"rendered":"Liability of Guarantor for Cheque Dishonour: Can lender enforce his right against either principal borrower or his guarantor? Dwarka Courts answers"},"content":{"rendered":"

Dwarka Courts, Delhi: <\/strong>Rahul Jain, Metropolitan Magistrate, while addressing a matter regarding dishonour of cheque, held that mere assertion of non-receipt of legal notice cannot help the accused in escaping liability under Section 138 Negotiable Instruments Act, 1881.<\/p>\n

It was alleged in complaint that accused had approached the complainant to purchase a car. It was sold vide an agreement for Rs 7 lakhs only to be paid in 35 EMIs of Rs 20,000.<\/p>\n

After default in the instalments, the accused issued a cheque which was returned dishonoured with remark \u201cfunds insufficient\u201d. Thereafter, the complainant approached the accused repeatedly about the dishonour of the cheque and then the accused agreed to repay the consideration at one time and issue one cheque which was dishonoured.<\/p>\n

Since no response was made within the statutory period regarding the demand notice, the present complaint was filed.<\/p>\n

\n

Analysis, Law and Decision<\/span><\/h3>\n
\n<\/blockquote>\n

Legal Notice<\/u><\/strong><\/span><\/h4>\n

The Court stated that the assertion of non-receipt of legal notice cannot help the accused in escaping liability under Section 138 NI Act, especially keeping in mind that firstly the accused has admitted his address mentioned on legal demand notice to be correct and secondly that the accused entered appearance in the court pursuant to service upon the same address as was mentioned in the legal demand notice.<\/p>\n

It was settled in the decision of the Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, <\/em>(2007) 6 SCC 555<\/a>, \u00a0that an accused who claimed that he did not receive legal notice, can within 15 days on receipt of summons from the Court, make payment of the cheque amount, and an accused who does not make such payment cannot contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the General Clauses Act and Section 114 of the Evidence Act.<\/p>\n

Legal Enforceable Debt<\/u><\/strong><\/span><\/h4>\n

Bench noted that the initial defence of the accused had been that he had not purchased any car from the complainant and denied his signatures on the vehicle agreement. Further, he stated that car was purchased by his brother from the complainant, and he had just stood as a guarantor in the transaction and issued the cheque as security. The said defence was not even a defence but rather an admission to the liability to pay the cheques.<\/p>\n

Liability of Guarantor under Section 138 NI Act<\/u><\/strong><\/span><\/h4>\n

Section 138 NI Act uses the words \u201cwhere any cheque\u201d and therefore, the cheque could be drawn for whatever reason and the drawer would be liable if it is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability.<\/p>\n

\n

\u201cThe cheque could be issued for the discharge of the debt or liability of the drawer or of any other person including a guarantor.\u201d<\/span><\/p>\n

Section 128 of the Indian Contract Act provides that the liability of the surety is coextensive with that of the principal debtor, unless it is otherwise provided in the contract.<\/span><\/p>\n<\/blockquote>\n

Hence, as per the Indian Contract Act, the liability of the guarantor is coextensive with that of the borrower which means that lender can enforce his right against either the principal borrower or the guarantor of the principal borrower.<\/p>\n

Therefore,<\/p>\n

\n

On a joint reading of section 138 of Negotiable Instruments Act and Section 128 of Indian Contract act, it is now crystal clear that the liability of the guarantor of a loan fall within the provisions of Section 138 NI Act.<\/span><\/p>\n<\/blockquote>\n

Court added that, with the presumption under Section 139 NI Act raised in the favour of the complainant as the accused admitted his signatures on the cheque, the burden of proof was on the accused to raise a probable defence.<\/p>\n

Such burden is only to the extent of the preponderance of probabilities but mere verbal denial won\u2019t discharge even this burden. The onus was on the accused to prove that the signatures on the agreement were not his.<\/p>\n

In the absence of evidence for the above, Court used its power under Section 73 of the Evidence Act to compare his signatures on the vehicle agreement with the admitted signatures on the cheque.<\/p>\n

In view of the above discussion, a presumption existed in the favour of the complainant, and it was the accused who had to discharge the onus, but he miserably failed to do so.<\/p>\n

Therefore, the complainant duly proved his case against the accused for offence punishable under Section 138 NI Act, 1881 beyond the shadow of any reasonable doubt. [Anju Devi v. Mukesh, 2022 SCC OnLine Dis Crt (Del) 19<\/b><\/a>, decided on 9-5-2022]<\/p>\n","protected":false},"excerpt":{"rendered":"

Dwarka Courts, Delhi: Rahul Jain, Metropolitan Magistrate, while addressing a matter regarding dishonour of cheque, held that mere assertion of non-receipt of <\/p>\n","protected":false},"author":8808,"featured_media":216245,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,4721],"tags":[31346,2862,6252,29785,42834,42768,3301,49426,23584,33580],"class_list":["post-266804","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-district-court","tag-debt","tag-dishonour_of_cheque","tag-evidence-act","tag-law","tag-legal-news","tag-legal-updates","tag-liability","tag-section-128-contract-act","tag-section-138-ni-act","tag-section-139-ni-act"],"yoast_head":"\nLiability of Guarantor for Cheque Dishonour: Can lender enforce his right against either principal borrower or his guarantor? 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Dwarka Courts explains","author":"Bhumika Indulia","date":"May 18, 2022","format":false,"excerpt":"Dwarka Courts, New Delhi: Deeksha Sethi, MM (NI Act)\u201406, reiterated that, even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, 1881. In the present matter, Raj Singh was referred to\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":260010,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/01\/14\/dishonour-of-cheque-occurring-when-parties-entered-in-an-illegal-and-void-agreement\/","url_meta":{"origin":266804,"position":1},"title":"Dishonour of Cheque occurring when parties entered in an illegal and void agreement: Can Court still take cognizance in S. 138 NI Act complaint? Dwarka Court decides","author":"Bhumika Indulia","date":"January 14, 2022","format":false,"excerpt":"Dwarka Court, New Delhi: Shipra Dhankar, MM (NI Act) on noting that the dishonour of cheque occurred in consequence of an illegal and void agreement, dismissed the complaint under Section 138 of the Negotiable Instrument Act, 1881. What are we dealing with in the present matter? The Complainant was approached\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":255796,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/18\/dishonour-of-cheque-3\/","url_meta":{"origin":266804,"position":2},"title":"Mere denial is useless, Presumption under S. 138 NI Act can be rebutted only by leading cogent evidence: Court holds accused guilty where “payment stopped by drawer”","author":"Bhumika Indulia","date":"October 18, 2021","format":false,"excerpt":"Saket Courts, New Delhi: Swati Gupta, Metropolitan Magistrate reiterated what is expected of an accused to rebut the statutory presumption against him in cases of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881. Brief facts Complainant and accused had entered into an agreement to sell the property\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Saket Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":255614,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/14\/law-on-dishonour-of-cheque\/","url_meta":{"origin":266804,"position":3},"title":"Law on Dishonour of Cheque | Loan given in cash, no documentary evidence available. Lender files a complaint under S. 138 NI Act: Read how \u2018presumption\u2019 under S. 118 (a) plays a role","author":"Bhumika Indulia","date":"October 14, 2021","format":false,"excerpt":"Patiala House Courts, New Delhi: Prayank Nayak, MM-01 acquitted the accused of offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1885, holding that the accused successfully dislodged the statutory presumption. In the present matter, complaint was filed under Section 138 of the Negotiable Instruments Act, 1881\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Patiala House Courts, Delhi","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/03\/patialacourt.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/03\/patialacourt.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/03\/patialacourt.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/03\/patialacourt.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/03\/patialacourt.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":222285,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/11\/19\/bom-hc-dishonour-of-a-cheque-issued-as-a-mere-guarantee-does-not-attract-punishment-under-s-138-ni-act\/","url_meta":{"origin":266804,"position":4},"title":"Bom HC | Dishonour of a cheque issued as a mere guarantee does not attract punishment under S. 138 NI Act","author":"Bhumika Indulia","date":"November 19, 2019","format":false,"excerpt":"Bombay High Court:\u00a0K.R. Shriram, J., dismissed a criminal appeal filed against the order of the trial court whereby the accused was acquitted of the charge under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881. The appellant had initiated a complaint under Section 138 against the accused alleging\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":257713,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/11\/26\/dishonour-of-cheque-4\/","url_meta":{"origin":266804,"position":5},"title":"What is the consequence of complainant’s failure to explain the occasion for issuance of cheque in his favour? How does it affect S. 138 NI Act complaint? Del Court answers","author":"Bhumika Indulia","date":"November 26, 2021","format":false,"excerpt":"South-West, Dwarka, Delhi: Mridul Gupta, Metropolitan Magistrate \u201309, on noting a very weak case of the complainant and not being able to produce sufficient evidence, dismissed his complaint filed for the dishonour of cheque under Section 138 of Negotiable Instruments Act, 1881. Complainant alleged that the accused who had been\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/266804","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/8808"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=266804"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/266804\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/216245"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=266804"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=266804"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=266804"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}