Negotiable Instruments Act, 1881 – s.139 – Presumption as to legally enforceable debt or liability – Dishonour of four cheques issued by accused – Fresh consolidated cheque issued – Dishonour of the said cheque on presentation due to Stop Payment – Complaint under s.138 – Admission of accused of issuance of cheque as well as the signature on the cheque – Acquittal by courts below – Appeal by complainant – Plea of original accused that cheque was issued towards the security and the complainant misused the cheque – Held: The issuance of cheque by the accused and the signature of the accused on the said cheque were not disputed by the accused – The accused also not disputed that there were transactions between the parties – Even as per the statement of the accused, which was recorded at the time of the framing of the charge, he admitted that some amount was due and payable – In the reply to the statutory notice, no plea was taken by accused that the cheque was given by way of security – The cheque in question was issued for the second time – Therefore, once the accused admitted the issuance of cheque which bore his signature, there was presumption that there existed a legally enforceable debt or liability under s.139 Act – However, such a presumption is rebuttable in nature and the accused is required to lead the evidence to rebut such presumption – The accused was required to lead evidence that the entire amount due and payable to the complainant was paid – The story put forward by the accused that the cheques were given by way of security 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 – Both, the trial court as well as High Court, committed error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under s.139 of N.I. Act – Order of acquittal is set aside – Respondents are guilty for the offence under s.138 of the Act.
Negotiable Instruments Act, 1881 – s.139 – Presumption under – s.139 of the Act is an example of reverse onus clause and, therefore, once the issuance of the cheque is admitted and even the signature on the cheque is admitted, there is always a presumption in favour of the complainant that there existed legally enforceable debt or liability and thereafter it is for the accused to rebut such presumption by leading evidence.
Negotiable Instruments Act, 1881 – s.139 – Financial capacity of the complainant – When the accused questions the financial capacity of the complainant in support of his probable defence, despite the presumption under s.139 of the Act about the presumption of legally enforceable debt and that such presumption is rebuttable, the onus shifts 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 – In the instant case, the accused never questioned the financial capacity of the complainant.
Allowing the appeals, the Court
HELD: 1. It was the case on behalf of the accused that the cheque was given by way of security and the same was misused by the complainant. However, nothing is on record that in the reply to the statutory notice it was the case on behalf of the accused that the cheque was given by way of security. Earlier the accused issued cheques which came to be dishonoured on the ground of ‘insufficient funds’ and thereafter a fresh consolidated cheque was given which has been returned unpaid on the ground of “STOP PAYMENT”. Therefore, the cheque in question was issued for the second time. Therefore, once the accused has admitted the issuance of cheque which bears his signature, there is presumption that there exists a legally enforceable debt or liability under Section 139 of the N.I. Act. However, such a presumption is rebuttable in nature and the accused is required to lead the evidence to rebut such presumption. The accused was required to lead evidence that the entire amount due and payable to the complainant was paid. [Para 5.2][818-F-H; 819-AB]
2. In the instant case, the accused never questioned the financial capacity of the complainant. 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. [Para 6.4][822-B-D]
3. 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 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 was 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. Both, the trial court as well as the High Court committed error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of N.I. Act. 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. The original accused - respondents are held guilty for the offence under Section 138 of the N.I. Act. [Paras 7, 8][822-D-H; 823-AC] Rangappa v. Sri Mohan (2010) 11 SCC 441 : [2010] 6 SCR 507; Kisan Rao v. Shankargouda (2018) 8 SCC
165 : [2018] 5 SCR 69; K.N. Beena v. Muniyappan (2001) 8 SCC 458 : [2001] 4 Suppl. SCR 374; Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 : [2008]
17 SCR 572 – referred to.
Basalingappa v. Mudibasappa (2019) 5 SCC 418 –
held inapplicable.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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