Cheque Issued For Another's Debt Still Attracts Liability If Dishonoured: Punjab And Haryana High Court

The Punjab & Haryana High Court has recently held that a person who issues a cheque to discharge another person's debt, including that of a spouse, cannot escape liability if the cheque is dishonored, even if the debt was not personally incurred by him, while upholding the conviction of two accused in a cheque dishonour case.

A single-judge bench of Justice Subhas Mehla reduced the sentence of imprisonment to one year rigorous imprisonment while maintaining the enhanced compensation of Rs. 1.75 crore and Rs. 4 crore as awarded by the appellate court. The court also directed that the sentences imposed upon Sunaina Chauhan in both complaints shall run concurrently.

The court observed, “Permitting a person to issue a cheque in discharge of another's liability and thereafter escape liability upon its dishonour by claiming absence of a legally enforceable debt, would create a significant loophole in law.”

Cautioning against such a defence, the bench added, “Such an interpretation would not only enable evasion of liability, but would also undermine the legislative intent behind the provision of Section 138 of NI Act. It would erode public confidence in cheques as a reliable and legally enforceable mode of payment, thereby defeating the object of ensuring credibility and sanctity in commercial transactions.”

The dispute arose from a loan of Rs. 2.07 crore advanced in 2015. Multiple cheques were issued towards repayment, some by Sunaina Chauhan, the borrower, alone and others jointly with her husband. When the cheques were dishonoured, two separate complaints were filed. These proceedings resulted in conviction by the trial court on June 9, 2023.

The appellate court later reconsidered the matter after it was remanded by the High Court. By its order dated April 22, 2025, it upheld the conviction and enhanced the compensation.

The court did not accept the plea that the cheques were issued only as security. It also rejected the argument that the husband could not be held liable. Noting that the signatures on the cheques were admitted, the court held that the statutory presumption under Section 139 of the NI Act stood attracted. In that situation, a mere denial, unsupported by evidence, was insufficient to rebut the presumption.

On the question of multiple complaints, the court observed that each dishonoured cheque constitutes a separate offence. Each therefore gives rise to an independent cause of action. It found no legal infirmity in the complainant filing separate complaints on that basis.

The accused have been directed to surrender before the trial court within two weeks. In case of default, the trial court has been asked to proceed in accordance with law and issue a fresh warrant of conviction.