Negotiable Instruments Act, 1881 – s.139 – Statutory presumption under –Operation of – Appellants after being inducted as Directors in respondent’s company infused capital therein by way of deposits and shares – Subsequently, they resigned from the company and demanded re-payment of their dues – Respondent issued a promissory note and two cheques in favour of appellants for discharge of their liability – Cheques dishonoured – Trial court convicted respondent u/s.138 – Conviction affirmed by District and Sessions Court – High Court reversed the conviction – On appeal, held: Once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability – This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan – In the present case, the respondent has failed to produce any credible evidence to rebut the statutory presumption – Appellants have proved their case by over-whelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt – Respondent having admitted that the cheques and Pronote were signed by him, the presumption u/s.139 would operate – Impugned order set aside – Order of conviction passed by the trial court, restored. Allowing the appeals, the Court
HELD: 1.1 Under Section 139 of the Negotiable
Instruments Act, 1881 once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan. In the present case, the respondent has failed to produce any credible evidence to rebut the statutory presumption. [Para 8] [360-G-H; 361-A]
1.2 The appellants have proved their case by
over-whelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt. The respondent having admitted that the cheques and Pronote were signed by him, the presumption under Section 139, NI Act would operate. The respondent failed to rebut the presumption by adducing any cogent or credible evidence. [Para 9] [361-G-H]
Rangappa v. Shrimohan (2010) 11 SCC 441 : [2010] 6 SCR 507 ; K.N. Beena v. Muniyappan and Anr.
(2001) 8 SCC 458 : [2001] 4 Suppl. SCR 374 ;
T. Vasanthakumar v. Vijayakumari (2015) 8 SCC 378 : [2015] 5 SCR 342– referred to.
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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