Dishonour Of Cheque-Presumption U/S 139 Of NI Act Can’t Be Rebutted By Mere Denial: SC Reiterates [Read Judgment]

The Supreme Court on Monday reiterated that mere denial of a debt or liability cannot shift the burden of proof from the accused in a case of dishounor of the cheque.

A bench of Justice A K Sikri and Justice Ashok Bhushan once again made it clear that Section 139 of the Negotiable Instruments Act, 1881, provides for drawing the presumption in favour of holder and a bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused.

The bench reiterated that the apex court has in various cases held that the accused may adduce evidence to rebut the presumption, but mere denial regarding the existence of debt shall not serve any purpose.

The bench said so while setting aside the judgment of the high court which cleared the man punished for dishonour of cheque by holding that he had been able to create doubt in the mind of the court with regard to the existence of debt/liability even as the accused had led no direct evidence to shift his burden.

In the instant case, the appellant (complainant) and the respondent (accused) were known to each other. The accused approached the complainant for a loan of Rs. 2 lakh for the purpose of his business expenses and promised to repay the same within one month. The complainant paid him the amount on December 25, 2005, as a loan. For its repayment, the accused issued a post-dated cheque dated January 25, 2006, in the name of the complainant for the amount. When the cheque was presented for collection at Bank of Maharashtra branch at Gulbarga, it could not be encashed due to insufficient funds.

In the reply to the notice which was sent by the complainant, the accused alleged that the said cheque was stolen by the complainant.

The offence having been found proved, the trial court convicted the accused under Section 138 of the Act, 1881 and sentenced him to pay a fine of Rs. 2.50 lakh and simple imprisonment for six months.

The appeal filed by the accused was dismissed.

He then moved a criminal revision petition in the High Court which set aside his conviction by holding that the accused has been successful in creating doubt in the mind of the court with regard to the existence of the debt or liability.

Aggrieved by the judgment of the high court, the complainant moved the apex court by way of the instant appeal and submitted that the presumption under Section 139 was rightly drawn against the accused and accused failed to rebut the said presumption by leading evidence. There was no ground for setting aside the conviction order.

The Supreme Court noted that the trial court after considering the evidence on record has returned the finding that the cheque was issued by the accused which contained his signatures. Although the complainant led oral as well as documentary evidence to prove his case, no evidence was led by the accused to rebut the presumption regarding the existence of debt or liability of the accused.

Referring to the case titled State of Kerala vs. Puttumana Illath Jathavedan Namboodiri, the court said of revisional jurisdiction of the high court, “…the said revisional power cannot be equated with the power of an appellate court nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its own conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to gross miscarriage of justice”.

“The High Court has not returned any finding that order of conviction based on evidence on record suffers from any perversity or based on no material or there is other valid ground for the exercise of revisional jurisdiction. There is no valid basis for the High Court to hold that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability,” said the court in the instant case.

“The appellant has proved the issuance of cheque which contained signatures of the accused and on presentation of the cheque, the cheque was returned with the endorsement “insufficient funds”. Bank official was produced as one of the witnesses who proved that the cheque was not returned on the ground that it did not contain signatures of the accused rather it was returned due to insufficient funds. We are of the view that the judgment of High Court is liable to be set aside on this ground alone,” it said.

The bench then proceeded to examine as to whether there was any doubt with regard to the existence of the debt or liability of the accused.

“In the present case, the trial court, as well as the Appellate Court, had found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did not come in the witness box to support his case,” it noted.

Referring to the apex court verdict in Kumar Exports vs. Sharma Carpets, the bench said, “…it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability”.

“To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist...,” it reiterated.

Read the Judgment Here