Person In Physical Possession Of Bearer Cheque Is Deemed To Be Its Beneficiary Owner, Unless Proved Otherwise: Rajasthan HC Quashes Cheating FIR

The Jodhpur bench of the Rajasthan High Court has quashed an FIR against three people booked for cheating and forgery, after the complainant claimed that the former wrongfully used a blank signed cheque that was given to his money-lender as security, and passed it to someone else by filling in a fake value.

A single judge bench of Justice Arun Monga ruled that "bearer cheques are negotiable instruments and the one who was in physical possession" of these cheques is  "deemed to be its beneficiary owner", unless proved otherwise. 

The complainant claimed that as he was in need of money, he had approached his brother-in-law who introduced the former to a money lender. The complainant took money from the money lender and gave two blank signed cheques as security. Eventually, the complainant returned the money to the lender with only Rs. 35,000 of interest remaining outstanding.

One day the complainant received a message on his phone that one of those security cheques had "been presented" by an entity. The complainant alleged that he got to know that his brother-in-law and the sister-in-law (“petitioners”) had made the outstanding payment to the money lender to release the security cheques and after filling in fake amount, gave the cheques to some other person.

Subsequently, the cheque bounced and a case under Section 138 Negotiable Instruments Act, was filed against the complainant by the entity. In this background, the complainant filed a complaint before the learned before the Additional Chief Judicial Magistrate under Section 156 Cr.P.C., pursuant to which the FIR in question was registered against the petitioners for cheating and forgery. Against this the petitioners moved the high court seeking quashing. 

After perusing the records of the case, the Court observed that the only contention of the complainant was that the bearer cheques were not issued to the petitioners but to some other person. However, since bearer cheques assume beneficial ownership of the possessor, no criminal culpability could be made out. 

"Whether or not complainant owed any legitimate debt qua the cheques in question, will be adjudicated in the proceedings already subjudice under Section 138 of N.I. Act. I am of the view that upon the complainant initially approaching the police officials, correct view was taken by them to not register the FIR. Not to be undone, the complainant approached the learned Additional Chief Judicial Magistrate under Section 156 Cr.P.C. filed and a complaint and managed to mislead the Court to issue directions to get the FIR registered against the petitioners," the high court further said. 

The court said that the contents of the allegations in the FIR "exfacie do not make out any case of commission" of offences as alleged in it. It thereafter allowed the petitions and quashed the FIR. 

Case Title: Vinay Suri v State of Rajasthan and other connected petition

Citation: 2024 LiveLaw (Raj) 303

Click Here To Read/Download Order