What You Must Know Before Handing One Over.
Rohit takes a loan from his friend and as “security,” signs a blank cheque and
hands it over. Later, disputes arise and his friend fills in a huge amount on the
cheque and presents it to the bank. The cheque bounces because Rohit doesn’t
have that balance.
Shockingly, Rohit can now face criminal charges under Section 138 of the
Negotiable Instruments Act, 1881, even though he never wrote the amount
himself!
THE LEGAL STANDPOINT
Under Section 138 of the Negotiable Instruments Act, 1881, if a cheque is
dishonoured due to insufficient funds or if it exceeds the arranged limit, the
drawer (the person who issued the cheque) is liable for criminal prosecution.
● Even a blank signed cheque, when voluntarily given, is considered a
valid instrument. The liability is on the person who signed it.
● Punishment: Imprisonment up to 2 years, or fine up to twice the cheque
amount, or both.
SUPREME COURT’S VIEW
The Supreme Court has repeatedly clarified this issue:
● In case of ICDS Ltd. v. Beena Shabeer (2002): Even if a cheque is
issued as security, once it is dishonoured, liability under Section 138
arises.
● In case of Bir Singh v. Mukesh Kumar (2019): A signed blank cheque
voluntarily handed over gives implied authority to the payee to fill it. The
drawer cannot later escape liability by claiming it was blank when given.
RISK MANAGEMENT CHECKLIST
1. Never hand over a blank cheque unless absolutely unavoidable.
2. If you must, mention the purpose in writing (like a loan/security agreement).
3. Keep a written record of the transaction (amount, purpose, repayment terms).
4. Use other forms of security like promissory notes, written contracts, or digital transfers.
5. Think twice before signing that blank cheque, your signature is more powerful than you think!
LEGAL RECOURSE IN CASE OF MISUSE
If someone misuses your blank cheque:
● You can challenge the complaint in court, arguing misuse or lack of
consideration (no real transaction).
● File a police complaint for cheating or criminal breach of trust if the
cheque was misused beyond agreed purpose.
● Present documentary evidence (like agreements, WhatsApp chats, bank
transfers) to prove your side.
CONCLUSION
A cheque whether filled or blank carries legal weight. Handing over a blank
cheque might feel like a quick solution, but it can become a legal nightmare if
misused. Always exercise caution, document your transactions, and explore
safer alternatives.
