Authored By: Marufa Akter Simran
East West University
1. Case Citation and Basic Information
Case Name: Md Abul Kaher Shahin v Emran Rashid and another
Citation: Criminal Appeal Nos 63–66 of 2017, (2020) 14 SCOB (AD) 56
Court: Appellate Division, Supreme Court of Bangladesh
Decision Date: 18 February 2020
Bench: Syed Mahmud Hossain CJ, Hasan Foez Siddique J (delivering the judgment), Zinat Ara J and Md Nuruzzaman J
Area of Law: Criminal Law (Negotiable Instruments Act 1881), with contract-law concepts arising incidentally
Relevant Provisions: Sections 43, 118 and 138 of the Negotiable Instruments Act 1881
2. Introduction
At first glance, this looks like an ordinary cheque dishonour dispute under section 138 of the Negotiable Instruments Act 1881. It is not. The Appellate Division used the case to settle a question with real commercial and criminal stakes: can liability under section 138 arise where the consideration for the dishonoured cheque has since failed?
The Court said no. It drew a principled line between criminal liability and ordinary civil liability for breach of contract, holding that section 138 exists to protect the credibility of cheques in commerce, not to criminalise contractual disputes between parties who never received what they bargained for.
3. Facts of the Case
The appellant, Md Abul Kaher Shahin, was the holder of four post-dated cheques worth a combined Tk 4.5 crore, issued to him by the respondent, Emran Rashid, on 1 July 2013 pursuant to an agreement (No. 1897 of 2012) registered at the Gulshan Sub-Registry Office on 13 March 2012. The cheques were not issued to settle an existing debt; they represented a commission, payable only if the appellant secured, within 90 working days, a purchaser willing to pay market price for a parcel of land in Gulshan, Dhaka, belonging to the respondent’s family.
The appellant did not bring forward a qualifying purchaser within the stipulated period. The respondent, together with his brother and sister, instead sold the property directly to the United States Embassy for approximately USD 5.25 million, with the sale deed executed and registered at the Tejgaon Sub-Registry Office on 3 July 2013; the appellant was not present at the execution. The respondent then instructed his bank to stop payment on the cheques, and all four were dishonoured with the endorsement “payment stopped by drawer.”
The appellant served statutory legal notices on the respondent and, when payment was not made, filed four separate complaints under section 138 of the Act, registered as Sessions Case Nos 3079 of 2013, 172 of 2014, 174 of 2014 and 3080 of 2013. On 17 February 2016, the Metropolitan Sessions Judge, Sylhet, convicted the respondent in all four cases, sentencing him to simple imprisonment for one year in each case and imposing fines of Tk 2 crore, Tk 2 crore, Tk 3 crore and Tk 2 crore respectively, totalling Tk 9 crore.
The respondent appealed to the High Court Division, which heard the four appeals together and acquitted him, reversing the trial court’s convictions in a judgment dated 31 August 2016. The appellant then appealed to the Appellate Division with leave, arguing that the High Court Division had wrongly gone behind the cheques into the underlying commercial arrangement. It was this appeal that the Appellate Division ultimately dismissed on 18 February 2020.
4. Legal Issues
The Court was required to address the following questions of law:
Issue 1: Whether a cheque issued as advance consideration for a contractual obligation that later fails gives rise to liability under section 138?
Issue 2: Whether the total failure of “consideration” under section 43 of the Act extinguishes the drawer’s criminal liability?
Issue 3: Whether the rebuttable presumption of consideration under section 118 was discharged on the facts, and what consequence follows?
Issue 4: Whether section 138 is properly invoked at all where the underlying dispute is, in substance, a civil commercial one?
5. Arguments Presented
5.1 Appellant’s Arguments
The appellant argued that dishonour of a validly issued cheque suffices to attract liability under section 138, regardless of the underlying contractual circumstances. Whether the dishonour followed stop-payment instructions or insufficient funds made no difference; the penal provision was triggered either way, since the cheques themselves were validly issued instruments.
Any contractual dispute between the parties, he submitted, was a separate civil matter, incapable of defeating the criminal character of the dishonour once it had occurred. Appearing for the appellant, Mansurul Haque Chowdhury, Senior Advocate, argued that the 2002 amendment to section 138, removing the requirement that a cheque be issued “for the discharge in whole or in part of any debt or other liability,” confined the court’s inquiry to the face of the cheque, relying on Alauddin (Md) v State. He also invoked the presumption of consideration under section 118, arguing that the respondent had not discharged the burden of rebutting it.
5.2 Respondent’s Arguments
The respondent maintained that the cheques were issued solely as an advance linked to the appellant’s performance of a specific contractual duty. Since the appellant had failed to perform that duty within the agreed period, the consideration for which the cheques were drawn had wholly failed, and no enforceable obligation arose under them.
He further argued that his stop-payment instructions were issued because of this contractual failure, not dishonesty, and that section 138 was never designed to penalise commercially justified conduct. Appearing for the respondent, Moudud Ahmed, Senior Advocate, submitted that section 138 opens with the words “without prejudice to any other provisions of this Act,” so sections 43, 58 and 118 remained applicable notwithstanding the 2002 amendment, relying on Shahidul Islam v Bangladesh. He also invoked section 43 for the proposition that a cheque issued without, or for failed, consideration creates no enforceable obligation.
6. Court’s Reasoning and Analysis
The Appellate Division read sections 43, 118 and 138 of the Act together, rejecting the appellant’s submission that the 2002 deletion of the debt-or-liability language confined the court’s enquiry to the face of the cheque. The Court held that the opening words of section 138, “without prejudice to any other provisions of this Act,” preserved rather than excluded the Act’s other provisions. Section 138 serves a protective function: it deters the dishonest issuance of cheques that the drawer knows, or has reason to believe, will not be honoured, so as to preserve cheques as reliable instruments of commerce. Drawing on Alauddin (Md) v State, the Court characterised the offence as a legal fiction, a civil liability transformed into a criminal one under restricted conditions. It was not designed to punish parties to a genuine contractual dispute.
On section 43 and failure of consideration, the Court held that an instrument made without consideration, or for a consideration that fails, creates no obligation between the parties. Here, the appellant’s obligation to procure a purchaser was a condition precedent to the respondent’s obligation to honour the cheques, and that condition was never fulfilled. Consideration failed, and imposing criminal liability would have been inconsistent with the provision’s purpose.
Turning to the section 118 presumption, the Court confirmed that a cheque is presumed to be drawn for consideration, but that this presumption is rebuttable. Once an accused raises a probable defence that consideration never existed or later failed, the evidentiary burden shifts to the complainant to prove that consideration was present and subsisting. Drawing on Indian authority in Bharat Barrel and Drum Manufacturing Co v Amin Chand Payrelal and Kundan Lal Rallaram v Custodian Evacuee Property, Bombay, the Court held that a preponderance of probability suffices to shift the onus back to the complainant, without requiring proof beyond reasonable doubt. The Court found that the respondent had raised a credible and probable defence, sufficient to displace the presumption.
Nor are stop-payment instructions inherently suspect. The Court rejected the idea that they are automatic evidence of criminal intent. Stopping payment because an underlying contractual condition was unmet is a legitimate commercial act, not the dishonesty section 138 is meant to punish. As the Court put it, on facts of this kind, “dishonesty or fraud cannot be attributed to the respondent in giving stop payment instructions”.[1]
Finally, the Court addressed the wider boundary between criminal and civil liability. Section 138 was not enacted to give complainants a criminal forum for contractual disputes, and courts should remain vigilant against its use as a tool of commercial pressure. Where a dispute is contractual in substance, the appropriate remedy ordinarily lies in the civil courts, not the criminal process.
7. Judgment and Ratio Decidendi
The Decision
The Appellate Division dismissed the appellant’s appeals, upholding the High Court Division’s acquittal. It held that criminal liability under section 138 cannot arise where the cheque was issued for a consideration that has subsequently failed. Because the condition attached to the commission, securing a purchaser at market price, was never fulfilled, the consideration for the cheques wholly failed, and no criminal liability attached to the respondent’s dishonour.
Ratio Decidendi
A cheque dishonoured after a total failure of the consideration for which it was issued does not give rise to criminal liability under section 138 of the Negotiable Instruments Act 1881. The presumption of consideration under section 118 is rebuttable, and once an accused raises a probable defence of failure of consideration, the burden shifts to the complainant to establish that consideration was present. Section 138 is penal and cannot be extended to what is, in substance, a contractual dispute.
8. Critical Analysis
8.1 Significance of the Decision
The judgment matters on more than one front. Read narrowly, it clarifies how sections 43, 118 and 138 of the Act fit together. Read more broadly, it reaffirms where civil liability ends and criminal liability begins, and that boundary has real consequences for commercial certainty and personal liberty alike.
There is also an immediate practical dimension: section 138 proceedings are common in Bangladesh’s commercial landscape, and the accessibility of the process, combined with the threat of imprisonment, makes it attractive to parties seeking leverage in an ordinary commercial dispute. This judgment gives courts a principled basis to resist such misuse.
8.2 Implications and Impact
Two things follow from the ruling in practice. One is that the presumption of consideration under section 118 is not irrebuttable: an accused who shows, on a balance of probabilities, that consideration was absent or failed shifts the burden back to the complainant. The other is that stop-payment instructions are not automatically criminal – their lawfulness turns on whether they reflect a genuine commercial response rather than an attempt to dodge a subsisting debt.
Post-dated cheques are widely used in Bangladeshi commercial transactions as commissions, advances, and instalment payments, not only to settle existing debts, so the decision carries practical significance for businesses, financial institutions, and legal practitioners going forward.
8.3 Critical Evaluation
The judgment, while principled, is not without complications. The Court does not explain how a lower court should distinguish a genuine failure of consideration from a defence manufactured after the fact, and further elaboration may be needed to prevent misuse by dishonest drawers who invent a contractual dispute to avoid payment.
The holding also turns heavily on characterisation: had the cheques discharged a pre-existing liability rather than a future commission, the defence would presumably not have been available. Commentators have long noted that the presumption under section 118 sits uneasily between civil and criminal standards of proof, since an accused need only raise a probable defence.
The decision also sits within a wider regional pattern: India’s substantially identical Act produced a similar conclusion in Rangappa v Sri Mohan, which likewise treated the presumption as rebuttable by a merely probable defence.
Its influence is already visible at home: the Appellate Division itself applied the same reasoning in Mahmudul Hasan v The State and another when considering the prosecution’s burden of proof under section 138.
9. Conclusion
Md Abul Kaher Shahin v Emran Rashid is an important judgment, both for the law it settles and the practical problem it addresses. By holding that criminal liability under section 138 cannot arise where the consideration for a cheque has failed, the Appellate Division drew a clear and principled boundary between criminal liability and civil liability arising from contractual breach, while clarifying how the presumption of consideration under section 118 operates.
Its lasting significance lies in reaffirming that criminal law should not be used to resolve disputes that properly belong to contract law. That principle carries real weight in a jurisdiction where cheque dishonour proceedings are often used as a tool of commercial pressure rather than genuine grievance. Criminal law, the judgment insists, should remain a remedy against genuine wrongdoing, not a mechanism for enforcing unsuccessful commercial bargains. Whether courts will consistently distinguish a genuine failure of consideration from a pretextual defence, given the unresolved tension with the narrower 2002 amendment, remains to be tested in future litigation.
10. References
Table of Cases
Alauddin (Md) v State, 24 BLC (AD) 139 (Appellate Division, Supreme Court of Bangladesh)
Bharat Barrel and Drum Manufacturing Co v Amin Chand Payrelal, AIR 1999 SC 1008 (Supreme Court of India)
Kundan Lal Rallaram v Custodian Evacuee Property, Bombay, AIR 1961 SC 1316 (Supreme Court of India)
Mahmudul Hasan v The State and another, Criminal Appeal No 10468 of 2017 (Appellate Division, Supreme Court of Bangladesh)
Md Abul Kaher Shahin v Emran Rashid and another, Criminal Appeal Nos 63–66 of 2017, (2020) 14 SCOB (AD) 56 (Appellate Division, Supreme Court of Bangladesh)
Rangappa v Sri Mohan (2010) 11 SCC 441 (Supreme Court of India)
Shahidul Islam v Bangladesh, 2 SCOB (2015) HCD-1 (High Court Division, Supreme Court of Bangladesh)
Table of Legislation
Negotiable Instruments Act 1881 (Bangladesh), ss 43, 118, 138
Bibliography
Avtar Singh, Negotiable Instruments: An Introduction (Deepa Paturkar rev edn, Eastern Book Company 2022)
[1] Md Abul Kaher Shahin v Emran Rashid and another, Criminal Appeal Nos 63–66 of 2017, (2020) 14 SCOB (AD) 56, para 24.
