Dishonour of Cheques and the Burden of Proof: Rebutting the Presumption u/s 139 of the Negotiable Instruments Act 2024 (8) TMI 468 - Supreme Court - SC

Deciphering Legal Judgments: A Comprehensive Analysis of Judgment of Apex Court on Rebutting the Presumption u/s 139 of the Negotiable Instruments Act: Reported as: 2024 (8) TMI 468 - Supreme Court INTRODUCTION 1. This case deals with the core legal question of whether the presumption u/s 139 of the Negotiable Instruments Act, 1881 ( NI Act ) regarding the issuance of a cheque towards discharge of a debt or liability can be rebutted by the accused, and if so, the standard of proof required for the same. 2. The factual context involves a cheque issued by the Respondent (accused) to the Appellant (complainant) which was dishonoured due to insufficient funds. The Appellant claimed that the cheque was issued against a loan advanced to the Respondent, while the Respondent disputed the existence of any such loan transaction. ARGUMENTS PRESENTED 3. The Appellant contended that since the Respondent's signature on the cheque was admitted, the presumption u/s 139 of the NI Act was successfully raised. The Respondent failed to rebut this presumption, and even on the standard of preponderance of probabilities, the Respondent did not discharge his onus. 4. The Respondent argued that the Appellant's case was riddled with contradictions and inconsistencies, casting doubt on the existence of any legally recoverable debt. The Respondent claimed to have successfully rebutted the presumption u/s 139 of the NI Act. COURT DISCUSSIONS AND FINDINGS 5. The Court discussed the provisions of Sections 138 , 139, and 140 of the NI Act, which deal with the offence of dishonour of cheques, the presumption in favour of the holder, and the inadmissibility of the defence of lack of reason to believe dishonour, respectively. 6. The Court analyzed the precedents on the presumption u/s 139 of the NI Act, including the decisions in Rangappa Versus Sri Mohan - 2010 (5) TMI 391 - Supreme Court , Hiten P. Dalal Versus Bratindranath Banerjee - 2001 (7) TMI 1172 - Supreme Court , Bir Singh Versus Mukesh Kumar - 2019 (2) TMI 547 - Supreme Court , and Rajesh Jain Versus Ajay Singh - 2023 (10) TMI 418 - Supreme Court . It emphasized that the presumption is rebuttable, and the accused can discharge the burden through preponderance of probabilities or by raising a reasonable doubt. 7. The Court evaluated the evidence presented by both parties, including the Appellant's contradictory statements, the absence of financial capacity or acknowledgement in the Appellant's Income Tax Returns, and the unexplained circumstances surrounding the issuance of the cheque. ANALYSIS AND DECISION 8. The Court concluded that while the Appellant was able to establish the Respondent's signature on the cheque, raising a presumption u/s 139 of the NI Act, the Respondent successfully rebutted this presumption through the preponderance of probabilities. 9. The Court affirmed the concurrent findings of the Trial Court and the High Court, which acquitted the Respondent based on the inability of the Appellant to establish the existence of a legally recoverable debt and the contradictions in the Appellant's case. 10. The Court dismissed the appeal, upholding the acquittal of the Respondent and affirming the principles governing the non-interference with concurrent findings of acquittal unless they are perverse, lacking in evidence, or involve a manifest error of law. DOCTRINAL ANALYSIS 11. The Court's decision reinforces the legal principles established u/ss 138 and 139 of the NI Act, particularly the rebuttable nature of the presumption in favour of the holder of a cheque and the standard of proof required to discharge the burden of rebuttal. 12. The Court's analysis of the principles governing the non-interference with concurrent findings of acquittal is a significant contribution to the evolution of criminal jurisprudence, emphasizing the fundamental essence of liberty and the presumption of innocence. 13. The decision highlights the application of the preponderance of probabilities standard in cases involving the rebuttal of the presumption u/s 139 of the NI Act, providing guidance on the evaluation of evidence and the circumstances in which the presumption can be successfully rebutted. Full Text : 2024 (8) TMI 468 - Supreme Court