PRESUMPTION UNDER SECTION 139 OF NI ACT
An appeal was raised in the Supreme Court regarding the burden of proof under the cheque bounce matters which is dealt with by Section 138 of the Negotiable Instrument Act, 1881. The Section states that the once the cheque is issued Section 139 is purported towards the holder of the cheque. Section 139 deals with the statutory presumption which states if the cheque is drawn under Section 138 of the Negotiable Instruments Act, it will be presumed that is for the discharge in whole or in part of any debt or other liability.
In simpler words, the initial burden lies on the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt.
The burden of proof then shifts to the accused to rebut the presumption that such debt does not exist or that the cheque is not supported by consideration.
In the present case, the lower Court and the High Court acquitted the accused in a matter concerning two cheque bouncing complaints filed by the appellant/complainant. The lower Court gave the judgment on the basis that the complainant was not able to show that the cheques issued by the defendant were not supported by consideration.
But the Supreme Court did not pass the judgment in this regard. According to it, the complainant has discharged his initial burden once he showed evidence that there existed a legally enforceable debt. And in this case, this was proved by the fact that the three blank cheques were issued by the defendant, which had bounced when the complainant tried to encash the same.
However, in defence, the defendant claimed that he had already paid off his obligations with cash and that the blank cheques were only given as a form of security. Moreover, he further contended that the complainant had illegally neglected to return the blank cheques.
The lower Courts had ruled in the defendant’s favor after taking into consideration the cash receipts in his possession by which he claimed the discharge of the liability for which the cheques were given as security.
After examining the facts of the case, the Supreme Court found the defendant’s narrative unbelievable and also the payment of the consideration through cash does not discharge the accused from the onus to prove that there was no debt. It said that once the initial burden had been discharged by the complainant, the defendant was expected to prove his counterclaims.
The Supreme Court further contended that the oral and documentary evidence (in this case the blank cheques) specified as evidence by the complainant are sufficient to prove that the cheques were issued to discharge the legally enforceable debt. These cheques were insufficient to prove the presumption under section139 of the NI Act, 1881.
But the evidence (in this case the cash receipts) produced by the accused were not enough to rebut the presumption raised under Section 139. The impugned judgment of the High Court cannot be sustained and is liable to be set aside.
It, therefore, convicted the defendant. However, since the complaint dated back to 2003, the Court did not impose a prison sentence. Instead, it directed the defendant to pay a fine of Rs. 2,97,150/- within 12 weeks. If the defendant fails to pay the same, the Court directed that a penalty of six months rigorous imprisonment would follow.