A cheque returned due to a “signature mismatch” can attract criminal liability under Section 138 of the Negotiable Instruments Act, 1881, as held by the Supreme Court of India in M/s Laxmi Dyechem v. State of Gujarat & Ors. [(2012) 13 SCC 375].
The Court’s Reasoning
The Court held that the phrase “amount of money… is insufficient” in Section 138 is a genus, of which reasons like “account closed,” “payment stopped,” and “signature mismatch” are merely species. Reading the section literally to insufficiency of funds would let a dishonest drawer defeat a lawful debt simply by altering his signature in such a way it does not match the bank’s specimen.
The Court observed that there is no qualitative difference between a drawer changing his own signature, closing the account, or issuing stop-payment instructions in cheque dishonour. In each case, the cheque bounces because of the drawer’s own lackadaisical act or omission.
An Exceptional Situation
The Court notes that a mismatch can occur even when the drawer never intended the cheque to be dishonoured in situation where an authorised signatory is replaced.
Whether a given mismatch was a deliberate act to defeat payment, or a genuine, unintended circumstance, is a question of fact to be examined at trial — not something resolved at the quashing stage on the strength of the bank’s return memo alone.
The 15-day period provided in Section 138 proviso (c) — during which the drawer must pay after receiving a demand notice — is the standard statutory window that applies to every cheque dishonoured under Section 138, regardless of the reason for dishonour. The issue of cheque with altered signature becomes an offence only if the drawer fails to make payment within 15 days of receiving the notice.
Quashing of Proceedings Not Possible
Following this ruling, an accused cannot get a Section 138 complaint quashed by a High Court merely by pointing to a bank return memo marked “signature differs.”
Whether the mismatch was intentional or genuinely inadvertent is a matter for trial, not to be decided by the court approached for quashing.
Section 139 Presumption and Proving of Signature
Under Section 139 of the NI Act, once execution of the cheque is admitted or proved, the court presumes it was issued in discharge of a debt or liability.
If the accused claims the cheque was forged, stolen, or that the signature genuinely wasn’t his, the burden shifts to him to raise a probable defence at trial through handwriting expert opinion, bank records, or other evidence rather than a bare denial.
