HC Upholds Section 138 Conviction Despite “Account Blocked” Cheque Dishonour for CA Fees

The complainant, a Chartered Accountant, filed a case under Section 138 of the Negotiable Instruments Act against his client over unpaid professional fees of Rs. 2.5 lakh. The accused had issued a signed cheque, which was later dishonoured with the remark “Account Blocked.” Despite receiving a statutory notice, the accused failed to make payment.

The trial court, relying on documents such as audit records, financial statements, and bank memo, convicted the accused and imposed a fine and compensation. The appellate court upheld this finding. Before the High Court, the accused argued that the cheque was only a security instrument, there was no enforceable debt, and that “Account Blocked” dishonour does not attract Section 138.

Main Issue: Whether dishonour due to “Account Blocked” and defence of blank or security cheque can rebut presumption under Section 138 of the NI Act.

HC’s Decision: The High Court upheld the conviction involving non-payment of Chartered Accountant’s professional fees, providing important clarity on the scope of Section 138 of the Negotiable Instruments Act. The Court observed that once the issuance and signature on the cheque are admitted, the statutory presumption operates against the accused, and mere denial is insufficient to rebut the same. The defence that the cheque was issued as security and misused was rejected for lack of cogent evidence. Relying on Bir Singh v. Mukesh Kumar, the Court reiterated that it is immaterial who fills the contents of a signed cheque.

The Court further held that dishonour on the ground of “Account Blocked” would attract liability under Section 138 NI Act, being analogous to insufficiency of funds. It was also emphasized that revisional jurisdiction under Section 397 CrPC is limited and cannot be exercised to re-appreciate evidence in the absence of perversity or illegality in the findings of lower courts. Therefore, the revision application was dismissed, and the conviction upheld, with a six-week stay granted on the operation of the order to enable the petitioner to approach the Supreme Court.

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