Banking Law & Incidental matters part 5

Summary of Question -  SMS Alert sent to Bank’s customer as to withdrawal

Question  –  Whether  Bank is exonerated from liability  for unauthorized withdrawal on the ground that SMS alerts was sent by the Bank to the customer.

Answer- No.   Bank is liable for unauthorised withdrawal from customer's account if there is no junction of the customer with the fraudester , and mere SMS alerts cannot be the basis for determining the liability of the customer if  there does not exist a specific term in the contract between a bank and the customer to the effect that the bank would be exonerated from the liability in connection with the unauthorised transactions if the customer does not respond to the SMS alerts. 


In  the second Appeal RSA.No. 1087 of 2018 ( filed by STATE BANK OF INDIA,   who was defendant in the suit), decided on 19th. January 2019, the  Hon’ble Kerala High Court  observed and held:

"9........The relationship between a bank and its customer, in so far as it relates to the money deposited in the account of a customer, is that of debtor and creditor. The contractual relationship exists between a bank and its customers are founded on customs and usages. Many of these customs and usages have been recognized by courts and it is now an accepted principle that to the extent that they have been so recognized, they are implied terms of the contracts between banks and their customers. Duties of care is an accepted implied term in the contractual relationship that exists between a bank and its customer. It is impossible to define exhaustively the duties of care owed by a bank to its customer. It depends on the nature of services extended by the bank to its customers. But one thing is certain that where a bank is providing service to its customer, it owes a duty to exercise reasonable care to protect the interests of the customer. Needless to say that a bank owes a duty to its customers to take necessary steps to prevent unauthorised withdrawals from their accounts. As a corollary, there is no difficulty in holding that if a customer suffers loss on account of the transactions not authorised by him, the bank is liable to the customer for the said loss."

                                                                                                                                                      [Emphasis supplied]

"10. Coming to electronic banking regime, it is the obligation of the banks providing such services, to create a safe electronic banking environment to combat all forms of malicious conducts resulting in loss to their customers. The basis of the said obligation is the implied term in the contracts entered into by the banks with their customers to exercise care to protect their money from transactions not authorised by them. In developed countries, in the light of the said obligation, statutes are put in place to protect the interests of the customers of the bank by defining the liabilities and providing enforcement mechanism. The law that governs the area in this connection in the United States of America is Electronic Funds Transfer Act. The said statute provides that a consumer is liable for any unauthorised electronic fund transfer involving his account only if the card or other means of access utilised for such transfer is an accepted card or other means of access and if the issuer of such card or other means of access has provided a means whereby the user of such card or other means could be identified as the person authorised to use it such as by signature, photograph or fingerprint or by electronic or mechanical confirmation. In Canada, electronic banking consumers and card users are protected under the Canadian Code of Practice for Consumer Debit Card Services. Under the said Code, consumers are not liable for losses arising from unauthorised usage of a card. In the absence of any statutory provision in India, the Reserve Bank of India, excercising control over the banks has issued directions to the banks from time to time indicating the various steps to be taken as part of the duties owed by them to their customers. Considering the recent surge in customer grievances relating to unauthorised transactions in the accounts of the customers enjoying electronic banking facilities like ATM-cum-Debit Cards, net banking etc, in terms of circular No. RBI/2017 18/15 dated 6/07/2017, the Reserve Bank of India has directed all banks, among others, to put in place, appropriate systems and procedures to ensure safety and security of electronic banking transactions carried out by customers; robust and dynamic fraud detection and prevention mechanism; mechanism to assess the risks resulting from unauthorised transactions and measure the liabilities arising out of such events; appropriate measures to mitigate the risks and protect the banks against liabilities arising therefrom and a system of continually and repeatedly advising customers on how to protect themselves from electronic banking and payment related frauds. It is clarified in the said circular that the customer shall have no liability at all in the case of third-party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system. The only obligation which casts on the customers of the bank in terms of the circular is that the unauthorised transactions shall be brought to the notice of the bank forthwith so as to enable the bank to block the account. The circular aforesaid only reminds the banks, their obligations and responsibilities and it does not create any new rights or obligations. In short, there is also no difficulty in holding that if a customer suffers loss in connection with the transactions made without his junction by fraudsters, it has to be presumed that it is on account of the failure on the part of the bank to put in place a system which prevents such withdrawals, and the banks are, therefore, liable for the loss caused to their customers. All over the world, the courts are adopting the aforesaid approach to protect the interests of the customers of electronic banking...... "

                                                                                                                                                                                                                                                                                                 [Emphasis Supplied]

11.......... SMS alerts is one of the facility extended by most of the banks to their customers in connection with the savings bank accounts having electronic banking facilities including ATM- cum-Debit Card facilities. Such facilities are provided not only to those who specifically request for the same, but also to those who do not ask
for such facilities. Could such a facility voluntarily given by banks to their
customers determine the rights of parties, is the question. According to me, only if there exists a specific term in the contract between a bank and its customer to the effect that the bank would be exonerated from the liability in connection with the unauthorised transactions if the customer does not respond to the SMS alerts, SMS alerts cannot be the basis for determining the liability of the customer, for, there would be account holders who may not be in the habit of checking SMS alerts at regular intervals and account holders like the plaintiff in the instant case who is working in an offshore oil rig, who may not be able to access their mobile phones for several days having regard to the peculiarity of their avocation. The defendant has no case that there is a contract between them and the plaintiff to the effect that if the plaintiff does not respond to the SMS alerts given by them regarding the withdrawals from his accounts, they would not be liable for the loss, if any, caused to the plaintiff."



Summary of Question-   Director’s Liability in 138 complaint 

Question – Whether merely because a person is Director of a company, he/ she (Director of a company)  would also be liable if a 138 complaint is filed against the company.  

Answer- No.


1. Vide the  Hon’ble A.P High Court decision in a case reported in 2004 CRLJ 1029 , every director is not automatically, vicariously liable for the offence committed by the company ; Only the director incharge and responsible to the company for the conduct of the business at the material time when offence was committed would be liable.

2. Vide the  Hon’ble Karnataka High Court decision in a case reported in 2004 CRLJ 1029,   the liability of a Director of a Company for prosecution for an offence punishable under section 138, Negotiable Instruments Act, apart from the company and the person who signed the cheque is only if he was in-charge of and was responsible to the company for the conduct of the business of the company at the time the offence was committed and complainant makes an averment to that effect in the complaint.

3. A three Judge Bench of the Hon’ble Supreme Court in CRIMINAL APPEAL Nos  403 -405 of 2019 , decided on 28th February 2019, observed and held:

“………………………In a case pertaining to an offence under S. 138 and S. 141 of the Act, the law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’sbusiness at the time when the offence was  committed. The High Court, in deciding a quashing petition under S. 482, Cr.P.C., must consider whether the averment made in the complaint is sufficient  or if some unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and  responsible for  the conduct of the business of the company at the relevant time. While the role of a Director in a company is ultimately a question of  fact, and no fixed formula can be fixed for the same,  the High Court  must exercise its power under S. 482, Cr.P.C. when it is convinced,  from the material on record that allowing the proceedings to  continue would be an abuse of process of the Court. [See  Gunamala  Sales  Private  Limited  v. Anu Mehta and Ors .,  (2015) 1 SCC 103]"



Summary of Question- Presumption in case of cheque bouncing under  N.I. Act. 

Question – Whether  section 139 of the N.I. Act merely  raises a presumption, in favour of a holder of the cheque,  that the same has been issued for discharge of any debt or other liability.

Answer- No.  Existence of legally recoverable debt is also  a matter of presumption under Section 139 of the Act.


1. A two  Judge bench of the Hon'ble Supreme Court in the case  reported in  2008 (4) SCC 54 ( Krishna janardhan Bhat’s case)  held that the existence of legally enforceable debt is not a matter of presumption under Section 139 of the N.I. Act. However, the above finding  has been overruled by a three judge Bench of the Supreme Court in the case reported in  AIR 2010 SC 1898 (Rangappa’s case)

2. Observation of the Supreme Court made in one paragraph of the judgment in the case of Rangappa is quoted below:

In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.”

                                                                                                                                                      [Emphasis Supplied]



3. In this connection, it is also worthwhile to refer to the Hon’ble Supreme Court decision in Criminal Appeal No. 636 of 2019 , decided on 9th. April 2019, in which the  Court, after noticing the ratio laid down its earlier decisions, held:

“23. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:-

(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

 (ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

 (v) It is not necessary for the accused to come in the witness box to support his defence.”


Summary of Question- Sanction for  Prosecution of a Bank Employee

Question- Whether sanction for prosecution of a  Bank Employee is required.

Answer- Sanction for prosecution of a Bank  Employee is required under section 19 of the P.C. Act 1988 but not under section 197 of the Cr.P.C.


1.  Section 19 of the P.C. Act , 1988 (P.C.Act) as well as section 197 of  Cr.P.C deal with the matter of sanction for prosecution.  In the case of  A.K.Verma vs. State  [1999 ISJ(Banking) 214], the Hon'ble  Karnataka  High Court relied on the Supreme Court  judgment in the case reported in 1998(5)SCC 91 and held that for prosecution  of the Manager  of State Bank of  Bikaner and Jaipur,   no sanction is required  u/s  197 Cr.PC.


2.  " Public  servant "  has not been defined in the Cr.P.C but by virtue of Section  2(y)  thereof  " Public servant "  defined in section 21 of I.P.C will have the same  meaning in the Cr.P.C. Sanction under  section  197 of  Cr.P.C.  is required if all the   conditions  indicated  in that  section are fulfilled . In the other words, sanction under section  197 of Cr.P.C  is required if the Public  Servant is not removable  from office except  with the  sanction of Govt.   As  such, even though  an employee of  a  Bank  may be treated  as  “public Servant”   within the meaning of  sec.21 of  I.P.C, Bank's  employee  being  removable   without the  sanction of the central  or State Government,  section  197 of Cr.P.C is not attracted and as such no sanction under section 197 of Cr.P.C is required. 


3.  But, vide section  19(1) (c)   of  the  P. C. Act,   no court  shall  take  cognizance of  an offence  punishable under Section  7, 10,11, 13 and   15 alleged to have been committed  by  a Public Servant except with the previous sanction of the  authority  competent  to remove him from his office.  Applying the definition of  “Public Servant”  contained in  Section  2(c)  of the P.C.Act , employees of   SBI and other public sector  Banks  are  " Public servant”  and as such sanction  of the  authority  competent  to remove him from his office  is required for prosecution u/s  7,10,11,13& 15  of  P.C Act.


3.1. Vide the Hon’ble Supreme court decision reported in (2016) 3 SCC 788,  Private Banks’ Chairman/ Directors / Officers /  Employees are also  Public Servant for the purposes of P.C Act.


4. Another important point is that granting of sanction for prosecution requires  independent application of mind by the sanctioning authority.


4.1.   In this connection, it is relevant to refer to a decision of the Hon’ble Supreme Court in the case reported in AIR 1997 SC 3400 = (1997) 7 SCC 622. Short fact of this case was that  Govt. did not grant sanction for prosecution ; writ petition was filed to sanction prosecution;  the Hon’ble Court directed the secretary of the Department to accord sanction for prosecution. The Apex Court   observed and held at para 19 and 32  of the judgment:

 “19. Since the validity of "Sanction" depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not. The mind of the sanctioning authority should not be under pressure from any quarter nor should any external force be acting upon it to take a decision one way or the other. Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous consideration. If it is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be bad for the reason that the discretion of the authority "not to sanction" was taken away and it was compelled to act mechanically to sanction the prosecution.”

“32. By issuing a direction to the Secretary to grant sanction, the High Court closed all other alternatives to the Secretary and compelled him to proceed only in one direction and to act only in one way, namely, to sanction the prosecution of the appellant. The Secretary was not allowed to consider whether it would be feasible to prosecute the appellant; whether the complaint of Harshadrai of illegal gratification which was sought to be supported by "trap" was false and whether the prosecution would be vexatious particularly as it was in the knowledge of the Govt. that the firm had been black-listed once and there was demand for some amount to be paid to Govt. by the firm in connection with this contract. The discretion not to sanction the prosecution was thus taken away by the High Court.”


4.2.  The Hon’ble Supreme Court in (2012) 1 SCC 532 referred to the  said decision reported in  AIR 1997 SC 3400 and observed and held:

“ This Court has in Mansukhlal Vithaldas Chauhan  (1997) 7 SCC 622 considered the significance and importance of sanction under the P.C. Act. It has been observed therein that the sanction is not intended to be, nor is an empty formality but a solemn and sacrosanct act which affords protection to government servants against frivolous prosecutions and it is a weapon to ensure discouragement of frivolous and vexatious prosecution and is a safeguard for the innocent but not a shield for the guilty. This Court highlighted that validity of a sanction order would depend upon the material placed before the sanctioning authority and the consideration of the material implies application of mind.”


4.3.  However,  the Hon’ble Supreme Court in the case reported in 2007(1) SCC  49 at para 10  made distinction in the nature  of  granting sanction under 197 of Cr.P.C and that under section 19 of the P.C Act in the following words:

   "It   may be noted    that  Section  197 of  the code  and  Section 19    of  the Act  operate in conceptually  different  fields.  In cases  covered  under the Act,  in respect of public servants the sanction is a of automatic nature and thus  factual  aspects are of little  or no consequence.  Conversely,  in a case relatable   to section  197 of  the Code, the substratum and basic  features of the case   have  to be considered   to find out  whether  the alleged act has any  nexus  with  the discharge of duties. Position  is not   so in case of Section  19 of the Act. " 


4.4. In my opinion, the said observation of the Hon’ble Supreme Court –“ In cases  covered  under the Act,  in respect of public servants the sanction is  of automatic nature and thus  factual  aspects are of little  or no consequence.” appears to be  not in tune with earlier decision of the  Supreme Court  reported in AIR 1997 SC 3400 = (1997) 7 SCC 622 (supra).


5. In this connection, decision of the Hon'ble Supreme Court in CRIMINAL APPEAL No.744 of  2019, decided on 30th. April 2019, is also to be referred to in which the Apex Court has reiterated that no sanction under section 197 Cr.P.C is required for prosecution of a manager of a Public Sector Bank.  Paragraph  10 of the judgment is quoted below:

"10. The question as to whether a manager of nationalized bank can claim benefit of Section 197 Cr. .P.C. is not res integra. This Court in K. CH. Prasad Vs. Smt. J. Vanalatha Devi and Others, (1987) 2 SCC 52 had occasion to consider the same very question in reference to one, who claimed to be a public servant working in a nationalized bank. The application filed by appellant in above case questioning the maintainability of the prosecution for want of sanction under Section 197 Cr.P.C. was rejected by Metropolitan Magistrate and revision to the High Court also met the same fate. This Court while dismissing the appeal held that even though a person working in a nationalized bank is a public servant still provisions of Section 197 are not attracted at all. In paragraph No.6 of the judgment, following has been held:-
“6. It is very clear from this provision
that this section is attracted only in
cases where the public servant is such who
is not removable from his office save by
or with the sanction of the Government. It
is not disputed that the appellant is not
holding a post where he could not be
removed from service except by or with the
sanction of the government. In this view
of the matter even if it is held that
appellant is a public servant still
provisions of Section 197 are not
attracted at all.” "


6. One more issue is whether sanction is required at Pre-cognizance stage.


6.1. In this connection, it is worthwhile  to refer to the case reported in (2018) 5 SCC 557. Short facts of the case was that the Appellant submitted complaint before Special Judge under Sections 7 and 13 of  P.C Act and Sections 420, 467, 468 and 471 read with Section 120B of the IPC. The Appellant prayed for investigation of offences and registration of FIR against Respondents (who were Principal Secretary to the Government P.H.E.D. Chief Minister,  Superintending Engineer, Chief Engineer, ex Chief Minister , ex Minister of P.H.E.D., Finance Secretary, Deputy Accountant General and P.S.L. Company through its Managing Director). Special Judge closed complaint on the ground that the Respondents were either public servants or have remained as public servants  but  no prior sanction had been granted by Competent Authority under Section 19 of the PC Act read with Section 197 of the Code of Criminal Procedure. To support the conclusion, the learned Special Judge placed reliance  on the judgment  reported in  (2013) 10 SCC 705 opining that no complaint could be forwarded for investigation under Section 156(3) of the Code of Criminal Procedure nor could any proceedings be initiated under Sections 202 & 202 of the Code of Criminal Procedure in the absence of such sanction.  Appellant preferred revision petition in the High Court, and the High Court   dismissed the Revision petition . Aggrieved by the order of  the  High court , Appellant preferred  Appeal in the Supreme Court. 


6.2. The question of law sought to be raised in the appeal  was  whether prior sanction for prosecution qua allegation of corruption in respect of a public servants is required before setting in motion even the investigative process under Section 156(3) of the Cr.P.C.


6.3. Learned Counsel  for the Appellant sought to question the view taken in (2013) 10 SCC 705 and (2016) 9 SCC 598 ; the sub-stratum of his  argument was that the requirement of prior sanction for prosecution against  the public servant would arise only when cognizance is taken, while no such sanction was required at the stage of setting into motion an investigation under Section 156(3) of the Code of Criminal Procedure. It was, thus, contended that the observations in these two judgments are per incuriam or in conflict with the long line of earlier judgments on the question as to when the cognizance can be stated to have be taken.


6.4.The Hon’ble Supreme Court  after discussing  various judicial pronouncements    referred the said question of Law  to be  settled by a larger Bench.



Summary of Question- Release under Probation of Offenders Act  vis -a-vis Bank’s Service Rule   

Question- Whether a Bank’s Employee, who has been convicted for an Offence involving Moral Turpitude but has been released under Probation of Probation Act,  can claim  to continue in the Bank’s Employment.

 Answer –  No.  Release of  a Employee under section 12 of the Probation of Offenders Act, 1958 does not mean that the conviction ceased to  exist and as such the employee  is  NOT entitled to claim  to continue in the employment of the Bank.


1. The Hon'ble Supreme Court in CIVIL APPEAL No . 7011 of 2009 (State Bank of India Vs. P. Soupramaniane) ,decided on 26th. April 2019 , referred to the case reported in (2010) 8 SCC 573, and observed and held :

".... The release under probation does not entitle an employee to claim a right to continue in service. In fact the employer is under an obligation to discontinue the services of an employee nconvicted of an offence involving moral turpitude. The observations made by a criminal court are not binding  on the employer who has the liberty of dealing with his employees suitably."

2. In the above referred  case, reported in (2010) 8 SCC 573, the Hon’ble Supreme Court after referring to its several earlier decisions , had observed and held:

" ....the law on the issue can be summarized to the effect that the conviction of an employee in an offence permits the disciplinary authority to initiate disciplinary proceedings against the employee or to take appropriate steps for his dismissal/removal only on the basis of his conviction. The word `Disqualification' contained in section 12 of the Act, 1958 refers to a disqualification provided in other Statutes, as explained by this Court in the above referred cases, and the employee cannot claim a right to continue in service merely on the ground that he had been given the benefit of probation under the Act, 1958"

"... once a Criminal Court grants a delinquent employee the benefit of Act, 1958, its order does not have any bearing so far as the service of such employee is concerned. The word "disqualification" in Section 12 of the Act, 1958 provides that such a person shall not stand disqualified for the purposes of other Acts like the Representation of the People Act, 1950 etc. The conviction in a criminal case is one part of the case and release on probation is another. Therefore, grant of benefit of the provisions of Act, 1958, only enables the delinquent not to undergo the sentence on showing his good conduct during the period of probation. In case, after being released, the delinquent commits another offence, benefit of Act, 1958 gets terminated and the delinquent can be made liable to undergo the sentence. Therefore, in case of an employee who stands convicted for an offence involving moral turpitude, it is his misconduct that leads to his dismissal."



Summary of Question- Power of Attorney in Foreign Country

Question-  If a person  in a Foreign Country,   is in need to execute a Power of Attorney and / or Affidavit  to give to a Bank in India for some banking transaction, then how  should he/she move and act in the Foreign Country so  that such power of attorney  and  / or  Affidavit  be legally effectual in India.

Answer- The Power of Attorney / Affidavit be executed before the Diplomatic and Consular Officer vide section 3 of the DIPLOMATIC AND CONSULAR OFFICERS (OATHS AND FEES) ACT, 1948 , or  should be  in accordance with section 14 of the Notaries Act.



1.  Section 3 of the DIPLOMATIC AND CONSULAR OFFICERS (OATHS AND FEES) ACT, 1948 reads as under:-

“ Every diplomatic or consular officer may, in any foreign country or place where he is exercising his functions, administer any oath and take any affidavit and also do any notarial act which any notary public may do within a State; and every oath, affidavit and notarial act administered, sworn or done by or before any such person shall be as effectual as if duly administered, sworn or done by or before any lawful authority in a State”.   


1.1. By the said provision, the Diplomatic and Consular Officers have been empowered to administer oath and take any affidavit and also to do any notarial act in any foreign country which a Notary Public in India may do. The documents notarized by such officers would be considered as validly notarized in India. The notarial act of  the Diplomatic or Consular Officer of India in the foreign country is made as effectual as the notarial act of any Notary in India.  


1.2. In this connection, it is noteworthy that section 18 (1) of the Indian Stamp Act  (which reads:- “Every instrument chargeable with duty executed only out of India ………may be stamped within three months after it has been first received in India ) is  applicable if a document is executed outside India before  a Consular Officer thereat in terms of section 3(1) of the DIPLOMATIC AND CONSULAR OFFICERS (OATHS AND FEES) ACT, 1948. But the POA executed before or authenticated by Diplomatic or Consular Officer need not be stamped ; it can be on a plan paper.


2. In this connection 85 of the Evidence Act is also relevant which provides that if a power of attorney is executed before and authenticated by a notary public, the court shall presume as to  its execution and authentication. 


3.  If a power of attorney is executed before and authenticated by a Consular Officer in a foreign country  then  such POA shall be as effectual as it has been executed before and authenticated by a  notary public in India. But such POA need be stamped in India within 3 months the date of receipt of POA in India.


4. In this connection , section 14 of the Notaries Act, 1952 is also relevant to be referred  to  which  provides that if the Central Government is satisfied that by the law or practice of any country or place outside India, the notarial acts done by Notaries in India are recognized for all or any limited purposes in that country or place, the Central Government may, by notification in the Official Gazette, declare that the notarial acts lawfully done by the Notaries within that country or place shall be recognized within India for all purposes or, as the case may be, for such limited purposes, as may be specified in the notification.  


4.1. The said Section 14 of the Notaries Act is in addition to the provisions contained in section 3 of the DIPLOMATIC AND CONSULAR OFFICERS (OATHS AND FEES) ACT, 1948



Summary of Question-   Cheque bearing only signature of the drawer

Question – Can a person, to whom a blank cheque bearing only signature of the drawer is delivered,  fill the name of payee in the  cheque .

Answer- Yes, in certain fact-situations.


1.  The Hon’ble Madras High Court in a case reported in  II(2008) BC 614 observed as under :

“... there is no law which prescribes that a cheque shall be filled up by the drawer himself. If such proposition is accepted, no unlettered person, who knows only to sign his name, can ever be a drawer of a cheque. Further, a person who is physically incapacitated to fill up the cheque cannot also draw a cheque and negotiate it. Of course, as far as the other negotiable instruments viz., pronotes and bills of exchange, there is a clear mandate under Section 20 of the Negotiable Instruments Act to the effect that such an instrument can be negotiated by the maker thereof by simply signing and delivering the same to the holder in due course giving thereby ample authority to the latter to fill up the content of the instrument as intended by the maker thereof.

………. Even in case of a cheque, as there is no clear provision in the Negotiable Instruments Act, in the light of the above discussion, the court finds that if a drawer of a cheque gives authority to the payee or holder in due course or a stranger for that matter to fill up the cheque signed by him, such an instrument also is valid in the eye of law. There is no bar for the drawer of a cheque to give authority to a third person to fill up the cheque signed by him for the purpose of negotiating the same”

2. The  Hon’ble Gujarat High Court in a case of Hitenbhai Parekh  vs. State of Gujarat, decided on 6.10.2009,  observed  as under:

“.. The presumption under Section 139 is mandatory but rebuttable by proof of facts contrary to the receipt of cheque for discharge of any debt or other liability. The initial burden, however, of proving that the cheque was drawn by the drawee for payment of any amount of money and it being returned by the bank unpaid remains with the complainant. The presumptions under Section 118 are also mandatory but rebuttable and could be availed only until the contrary is proved. Even as a bill of exchange, by definition, requires signature of the maker as also direction to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument, the provisions of Section 20 permits signature and delivery of an incomplete negotiable instrument and provides that the maker thereby gives prima facie authority to the holder thereof to make or complete it into a negotiable instrument and makes the signatory of such instrument liable to any holder in due course to the extent of the amount intended to be paid thereunder. Therefore, harmonious reading of the provisions of Sections 5, 6, 20, 118 and 139 would clearly indicate that a cheque could be drawn, delivered and received by the payee or holder in due course and could legally be completed under a legal authority and when such inchoate instrument is completed to make it a negotiable instrument, it would fall within the definition of 'bill of exchange' and would render the signatory liable upon such instrument to the extent the amount mentioned therein is intended by him to be paid there under. Unless and until contrary is proved, such negotiable instrument would be presumed to be made or drawn for consideration and receipt thereof would be presumed to be for discharge, in whole or in part, of any debt or other liability. However, such debt or other liability is not by any legal presumption presumed to be a legally enforceable debt or other liability. Therefore, the onus of proving that the presumed or proved debt or legal liability was legally enforceable remains with the complainant. Consequently, in all given fact-situations, the Court is required to examine whether the presumptions regarding consideration and there being any debt or other liability are rebutted by the accused person by preponderance of probabilities and whether the complainant has proved that the debt or other liability, presumed or proved by overwhelming evidence, was legally enforceable. Although there is no presumption as regards any debt or other liability being legally enforceable, it would be found that once a debt or other liability is presumed and not properly rebutted, it would be legally enforceable, unless and until it is shown to be legally unenforceable. Such scheme of the provisions of law clearly indicates the object of serving the purpose of realization of the promise apparently contained in a negotiable instrument, which is that the amount for payment of which the bill of exchange was intended to be made will be paid to the payee or the holder in due course.


.. Any material alteration of a negotiable instrument, however, renders it void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless the alteration was made in order to carry out the common intention of the original parties. The provision to that effect contained in Section 87 has to be read in harmony with Section 20 which permits and authorizes the holder of a negotiable instrument to complete the instrument for any amount and renders the drawer liable to the holder in due course to the extent of the amount intended by the drawer to be paid under such instrument. It is clear from plain reading of provisions of Section 20 and 87 that the injunction, under the pain of invalidating a negotiable instrument, against alteration operates only after an inchoate instrument is completed or a complete instrument falls within the definition of 'negotiable instrument'. Therefore, the legally permissible completion of an inchoate instrument cannot be construed as material alteration of a negotiable instrument.”

3.  The Hon’ble Gujarat High Court in another case  reported in III (2016) BC 547 relied on the aforesaid observation of Madras High Court and  Gujarat High Court and   held as under:

“……..The collective reading of the various provisions of the N.I. Act shows that even under the scheme of the N.I. Act, it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and present the same for payment by the drawee.”



                                                                                                                                                      [Emphasis Supplied]


4. The Hon’ble  Supreme Court in the case reported in (2019) 4 SCC 197 observed and held:

“A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.”


If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the Accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

                                                                                                                                                      [Emphasis Supplied]


“Even a blank cheque leaf, voluntarily signed and handed over by the Accused, which is towards some payment, would attract presumption Under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”