Defence That 'Cheque Issued As Security' Not Believable In Absence Of Further Evidence To Rebut Presumption U/s 139 NI Act : SC [Read Judgment]

The Supreme Court has observed that defence of the accused that the cheques were given by way of security is not believable in absence of further evidence to rebut the presumption.

The bench of Justices Ashok Bhushan and MR Shah reiterated that, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the accused to rebut such presumption by leading evidence.

In this case, the accused had admitted that cheque was issued, but the same was issued towards the security and that the complainant misused the cheque to recover the dues of business. The Trial Court and the High Court acquitted the accused.

In appeal filed by the complainant, the bench set aside the concurrent findings of acquittal and observed:

Considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question 17 was issued for the second time, after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the N.I. Act that there exists a legally enforceable debt or liability. Of course such presumption is rebuttable in nature. However, to rebut the presumption the accused was required to lead the evidence that full amount due and payable to the complainant has been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time, after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists legally enforceable debt or liability as per Section 139 of the N.I. Act. It appears that both, the Learned Trial Court as well as the High Court, have committed error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the 18 presumption under Section 139 of N.I. Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the accused to rebut such presumption by leading evidence.

Relying on Basalingappa vs. Mudibasappa, (2019) 5 SCC 418, the accused contended that as held by this Court once there is probable defence on behalf of the accused, thereafter the burden shifts on the complainant to prove his financial capacity and other facts. On this, the bench observed this:

"we are of the opinion that the said decision shall not be applicable to the facts of the case on hand and/or the same shall not be of any assistance to the accused. In that case before this Court, the defence by the accused was that the cheque amount was given by the complainant to the accused by way of loan. When the proceedings were initiated under Section 138 of the N.I. Act the accused denied the debt liability and the accused raised the defence 16 and questioned the financial capacity of the complainant. To that, the complainant failed to prove and establish his financial capacity. Therefore, this Court was satisfied that the accused had a probable defence and consequently in absence of complainant having failed to prove his financial capacity, this Court acquitted the accused. In the present case, the accused never questioned the financial capacity of the complainant. We are of the view that whenever the accused has questioned the financial capacity of the complainant in support of his probable defence, despite the presumption under Section 139 of the N.I. Act about the presumption of legally enforceable debt and such presumption is rebuttable, thereafter the onus shifts again on the complainant to prove his financial capacity and at that stage the complainant is required to lead the evidence to prove his financial capacity, more particularly when it is a case of giving loan by cash and thereafter issuance of a cheque. That is not a case here. " 

Case name: APS FOREX SERVICES PVT. LTD. vs. SHAKTI INTERNATIONAL FASHION LINKERS 
Case no.: CRIMINAL APPEAL NO. 271 OF 2020 J
Coram: Justices Ashok Bhushan and MR Shah  

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