Fake Cheque Prosecutions
💳 Understanding Fake Cheques
A fake cheque is a cheque that is forged, altered, or fraudulently created to illegally obtain money from a bank or individual. Under Indian law, offences involving fake cheques are primarily governed by:
Section 138 of the Negotiable Instruments Act, 1881 – Cheque dishonour due to insufficient funds or forgery.
Section 420 IPC – Cheating.
Section 467, 468, 471 IPC – Forgery, forgery for cheating, and using forged documents.
🔑 Key Legal Principles
Dishonour due to insufficiency of funds triggers criminal liability under Section 138.
Forgery or fraud in creating the cheque leads to IPC prosecution (Sections 467–471).
Intent to cheat or defraud is essential for conviction.
Corporate liability: Companies issuing fake cheques can be held liable through their authorized signatories.
📚 Detailed Case Laws
1. K. Bhaskaran v. Sankaran Vaidhyan Balan (1999)
Facts:
The accused issued a cheque to the complainant which was dishonoured due to insufficient funds.
Judgment:
The Supreme Court emphasized that dishonour of a cheque constitutes a presumption of fraud or dishonesty, unless the accused proves otherwise. The court also clarified that the drawer’s intention is key in establishing liability under Section 138.
Key Point:
The presumption of liability lies with the drawer of the cheque once dishonour is proved.
2. M/s. Punjab National Bank v. Samir K. Jariwala (2001)
Facts:
A businessman issued several cheques to a supplier, which were later dishonoured. Evidence showed that some cheques were altered before submission.
Judgment:
The court held that forged or altered cheques amount to an offence under Sections 467, 468, 471 IPC. The accused was sentenced to two years imprisonment and a fine.
Key Point:
Even slight alterations in a cheque can trigger criminal prosecution; intent to cheat must be proved.
3. Joginder Singh v. State of Punjab (2003)
Facts:
The accused issued cheques to settle a debt, which bounced due to insufficient funds. The complainant approached the court under Section 138.
Judgment:
The Punjab & Haryana High Court reaffirmed that failure to maintain funds in the account after issuance is a criminal offence, and the drawer must compensate the complainant with principal amount plus statutory interest.
Key Point:
Cheques must be backed by sufficient funds; Section 138 is strictly penal.
4. S. Satyanarayan v. Union of India (2007)
Facts:
The accused issued a fake cheque in the name of a company to obtain goods. The bank discovered it was forged before clearance.
Judgment:
The court convicted the accused under Sections 420 (cheating) and 467 IPC (forgery of valuable security). Sentence included 3 years imprisonment and fine.
Key Point:
Issuing fake cheques to obtain goods or credit is treated as cheating with forgery.
5. National Insurance Co. Ltd. v. Smt. Kamala Devi (2010)
Facts:
A fake insurance claim cheque was created and deposited in the complainant’s account. Bank reversed the transaction and filed a complaint.
Judgment:
The accused was convicted under Sections 420, 467, 468 IPC, highlighting that cheques created for fraudulent claims fall under the same legal ambit as personal fake cheques.
Key Point:
Forgery in financial instruments used for fraud is criminally punishable, irrespective of the source.
6. M/s. ICICI Bank Ltd. v. P. Balasubramanian (2013)
Facts:
A corporate executive issued cheques from the company account without authority. The cheques bounced due to insufficient funds.
Judgment:
The Madras High Court ruled that authorized signatories issuing cheques beyond their mandate are criminally liable under Section 138 and Section 467 IPC. Corporate liability extends to the executive responsible.
Key Point:
Corporate cheque fraud is treated seriously, and personal liability of executives can be invoked.
7. Ramesh Chandra v. State of UP (2018)
Facts:
The accused issued multiple fake cheques to several vendors. Banks reported dishonour, and FIRs were filed.
Judgment:
The court convicted him under Sections 138, 420, and 467 IPC, highlighting that patterned cheque fraud involving multiple victims attracts harsher punishment. Sentence: 5 years imprisonment and heavy fines.
Key Point:
Repeated offences demonstrate premeditated intent and attract enhanced penalties.
⚖️ Summary Table of Cases
| Case | Offence Type | Section | Sentence | Key Legal Principle |
|---|---|---|---|---|
| K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) | Dishonour | 138 NI Act | Fine | Presumption of liability lies on drawer |
| M/s. Punjab National Bank v. Samir K. Jariwala (2001) | Forgery & Alteration | 467,468,471 IPC | 2 years + fine | Altered cheques = criminal offence |
| Joginder Singh v. State of Punjab (2003) | Dishonour | 138 NI Act | Compensation + interest | Sufficient funds required |
| S. Satyanarayan v. Union of India (2007) | Fake cheque for goods | 420,467 IPC | 3 years + fine | Fake cheque = cheating + forgery |
| National Insurance Co. Ltd. v. Kamala Devi (2010) | Fraudulent claim | 420,467,468 IPC | Imprisonment + fine | Cheques for fraud punishable |
| M/s. ICICI Bank Ltd. v. P. Balasubramanian (2013) | Corporate cheque fraud | 138,467 IPC | Imprisonment | Executives liable for unauthorized cheques |
| Ramesh Chandra v. State of UP (2018) | Multi-victim fraud | 138,420,467 IPC | 5 years + fine | Repeated offences attract harsher penalty |
✅ Conclusion
Fake cheque prosecutions demonstrate that:
Dishonour alone can trigger liability under Section 138.
Forgery, alteration, or fraudulent use leads to IPC prosecution.
Intent to cheat is central; repeated or large-scale offences attract heavier sentences.
Corporate and personal liability are enforceable.
Courts have consistently reinforced strict punishment to deter financial fraud.
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