Presumption Under Section 139 NI Act Includes A Presumption That There Exists A Legally Enforceable Debt Or Liability : Supreme Court

The Supreme Court reiterated that the presumption under Section 139 of Negotiable Instruments Act includes a presumption that there exists a legally enforceable debt or liability.

In this case, the Trial Court dismissed a cheque bounce complaint on the ground that the complainant was not able to adduce sufficient evidence that he was in a position to advance a loan of Rs. 9 lakhs to the accused. The Kerala High Court upheld the Trial Court order relying on a decision in John K. Abraham v. Simon C. Abraham (2014) 2 SCC 236.

In appeal, the Apex Court bench noted that that the accused had accepted his signature on the subject cheque. We do not think that the High Court was right in holding that the onus was not on the accused to show that the debt was neither due nor payable, the bench of Justices Sanjiv Khanna and J K Maheshwari said.

Referring to the decision in T. Vasanthakumar Vs. Vijaykumari (2015) 8 SCC 378, the bench said:

"This decision, refers to an earlier judgment of this Court in "Rangappa vs. Sri Mohan" (2010) 11 SCC 441, which elucidating on the presumption under Section 139 of the N.I. Act, observes that this includes a presumption that there exists a legally enforceable debt or liability. However, the presumption under Section 139 of the N.I. Act is rebuttable and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested."

The court thus held that the complainant was entitled to the benefit of presumption under Section 139 of the N.I. Act. Allowing the appeal, the bench directed the High Court to consider the evidence and the material on record to decide whether the offence under Section 138 of the N.I. Act is established and made out.

It may be noted that the Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 had held that the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. This view was later overruled by a three judges bench in Rangappa vs Sri Mohan , (2010) 11 SCC 441. 

Case details

Jain P. Jose vs Santhosh | 2022 LiveLaw (SC) 979 | SLP(Crl) 5241 OF 2016 | 10 Nov 2022 | Justices Sanjiv Khanna and J K Maheshwari

For Petitioner(s) Mr. Romy Chacko, AOR Mr. Sudesh Kumar Singh, Adv. For Respondent(s) Mr. Biju P Raman, AOR Ms. Usha Nandini V., Adv. Ms. Yogamaya M.G., Adv. Mr. John Thomas Arakkal, Adv. Mr. Nishe Rajen Shonker, AOR Ms. Anu Roy, Adv. Mr. A. Anwar, Adv.

Headnotes

Negotiable Instruments Act, 1881 ; Section 139 - Presumption under Section 139 includes a presumption that there exists a legally enforceable debt or liability. However, the presumption under Section 139 of the N.I. Act is rebuttable and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested - Referred to T. Vasanthakumar Vs. Vijaykumari  (2015) 8 SCC 378 , Rangappa vs. Sri Mohan (2010) 11 SCC 441 and Kalamani Tex vs. P. Balasubramanian  (2021) 5 SCC 283.

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