I gave a blank signed cheque and it has been misused. What now?

The first thing to fix is the story, because the law treats two situations very differently. A signed blank cheque handed over willingly, later filled in by the holder, is a cheque the law will enforce unless you prove the amount is wrong. A signed blank cheque taken from you, or filled for a figure you never agreed, is a crime against you, and the steps are different. Our answer on security cheques deals with the argument that the cheque was only a guarantee. This answer is about the blank.

Does the law treat a blank signed cheque as a real cheque?

Yes. Section 20 of the Negotiable Instruments Act, 1881 deals with what it calls inchoate instruments. Where a person signs and delivers a paper that is wholly blank or carries an incomplete instrument, he gives prima facie authority to the holder to complete it, and is liable on it in the capacity in which he signed. The section has a proviso that matters to you: no person other than a holder in due course can recover more than the amount the signer intended to be paid. So the person you gave it to, as opposed to someone who took it from him for value without notice, is held to the sum you actually authorised, if you can prove what that sum was.

The Supreme Court settled the criminal side in Bir Singh v. Mukesh Kumar, decided on 6 February 2019. It held that even a blank cheque leaf, voluntarily signed and handed over by the accused towards some payment, attracts the presumption under Section 139 in the absence of cogent evidence that it was not issued in discharge of a debt. It added that the subsequent filling in of an unfilled signed cheque is not an alteration, and that where there is no finding that the cheque was not signed or not voluntarily handed over, it may be presumed the payee filled it with the drawer's acquiescence. That is the case that will be quoted against you, so plan around it rather than against it.

How do I rebut the presumption if I am prosecuted?

With paper, and with a reply sent in time. The presumption is rebuttable on a preponderance of probabilities, and the useful material is your bank statement showing what you actually received, the lender's own ledger or messages showing the balance, proof of repayments, and any writing in which the amount or purpose of the cheque was recorded when you handed it over. The argument is rarely that no liability existed. It is that the sum filled in exceeds it, which is exactly what the proviso to Section 20 contemplates. Put those documents in your reply to the demand notice within the fifteen days, because a defence first raised in evidence two years later is treated as an afterthought. The defences that have worked, and the evidence each needed, are collected in our note on Section 138 defences.

What if the cheque was stolen or filled in beyond what I allowed?

Then move on three fronts at once, and keep the paper for each.

1. Stop payment in writing, today. Give the bank the cheque number, the date you discovered the loss, and the reason, and take a stamped acknowledgement. A stop payment does not by itself defeat a Section 138 complaint, because courts have treated a payment stopped memo as within the section where a debt existed, but it fixes the date on which you raised the alarm.
2. Lodge a police complaint under Section 173 BNSS. Depending on the facts the offences are theft under Section 303 of the Bharatiya Nyaya Sanhita, criminal breach of trust under Section 316 where the cheque was entrusted for one purpose and used for another, and forgery. A cheque is a valuable security under Section 2(31) BNS, and forging one is punishable under Section 338 with imprisonment for life or up to ten years, while Section 340 punishes anyone who uses a forged document as genuine in the same way as the forger. Cheating that induces you to part with a valuable security falls under Section 318(4).
3. Write to the holder by registered post, stating that the cheque was lost or filled without authority and demanding its return, and send a copy to the bank.
4. Reply to any Section 138 notice within fifteen days, annexing the stop payment acknowledgement, the police complaint and your correspondence. Section 118(g) of the Negotiable Instruments Act has a proviso that where an instrument was obtained from its lawful owner by an offence or fraud, the burden of proving that he is a holder in due course lies on the holder, and a contemporaneous police complaint is what shifts that burden in practice.

What documents should I gather?

• Your bank statement for the period the money was received, showing the true principal
• Proof of every repayment, by transfer, receipt or message
• Any writing that records the amount or purpose of the cheque when you handed it over
• The stop payment instruction with the bank's stamped acknowledgement
• The police complaint and its acknowledgement, and the FIR if one is registered
• Your registered letter to the holder and the postal proof
• The demand notice you received and your reply, with the postal proof of dispatch

Where these cases go wrong is in the first fortnight. The drawer, humiliated at having signed a blank cheque, says nothing, ignores the notice, and only at trial announces that the cheque was misused. By then the presumption has done its work and there is nothing on record from the time of the events to support him. The reverse is also true. A reply sent within fifteen days, with a bank statement and a police complaint annexed, changes the complexion of the case before the Magistrate has read past the first page, and it is the single thing I would tell anyone in your position to do this week. If a complaint is already filed, the sequence of the trial is in our Section 138 procedure guide.