Accused Can Rebut S.139 NI Act Presumption by Questioning Complainant's Financial Capacity; Direct Evidence Not Mandatory: J&K&L High Court - 2025-05-07

J&K&L High Court Upholds Acquittal in Cheque Bounce Case, Stresses on "Preponderance of Probabilities" for Defence

Jammu, J&K – The High Court of Jammu and Kashmir and Ladakh, in a significant judgment, has upheld the acquittal of an individual in a Rs. 20 lakh cheque bounce case, reinforcing the principle that an accused can rebut the statutory presumption under the Negotiable Instruments (NI) Act, 1881, without stepping into the witness box. The bench, presided over by Justice Rajesh Sekhri, ruled that creating doubt about the complainant's financial capacity and the existence of a legally enforceable debt through a "preponderance of probabilities" is sufficient for the accused to shift the burden of proof back to the complainant.

The court dismissed the appeal filed by Jagdish Raj Gupta against the 2014 acquittal of his cousin, Parshotam Gupta, by a trial court in Jammu.

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Background of the Case

The case originated from a complaint filed by Jagdish Raj Gupta, who alleged that Parshotam Gupta had borrowed Rs. 20 lakhs from him and issued a cheque in May 2007 to discharge this liability. The cheque was subsequently dishonoured due to "insufficient funds." Despite a legal notice, the amount was not paid, leading to the filing of a criminal complaint under Section 138 of the NI Act.

While the respondent, Parshotam Gupta, admitted to signing and issuing the cheque, he consistently denied that it was for a legally enforceable debt. His defence from the outset was that the cheque was related to a property transaction that never materialized and that the complainant refused to return it.

Arguments Before the High Court

The appellant, represented by Senior Advocate R.S. Thakur, argued that once the issuance of the cheque is admitted, a statutory presumption under Sections 118 and 139 of the NI Act arises in favour of the complainant. He contended that the respondent had failed to rebut this presumption as he did not enter the witness box or provide a reply to the demand notice.

Conversely, the respondent's counsel, Rahil Raja, argued that an accused is not required to prove their defence "beyond a reasonable doubt." He asserted that the respondent had successfully raised a probable defence by consistently maintaining his stand about the land deal and by adducing defence evidence, thereby shifting the burden back to the complainant to prove the existence of the loan.

Court's Analysis: Shifting the Burden of Proof

Justice Rajesh Sekhri's judgment provides a detailed analysis of the nature of presumptions under the NI Act and the methods available to an accused for rebuttal. The court clarified that the standard of proof for an accused is not as high as that for the prosecution.

The High Court held that an accused can rebut the presumption by showing a "preponderance of probabilities" in several ways, including: - Adducing direct or circumstantial evidence. - Relying on inconsistencies in the complainant's own case and evidence. - Creating doubt about the existence of the debt.

A pivotal excerpt from the judgment states:

> "The accused may adduce direct evidence... However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence... Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant."

Complainant's Financial Capacity and Inconsistencies Prove Fatal

The court found that the respondent had successfully created sufficient doubt to rebut the presumption. Key factors that weakened the complainant's case included:

1. Failure to Prove Source of Funds: The complainant, who claimed his monthly income was only Rs. 15,000-20,000 from a ration shop, could not convincingly explain the source of a massive Rs. 20 lakh cash loan. The court noted, "it was not possible for a man having a monthly income of around Rs. 15,000/- to advance a huge sum of Rs. 20.00 lacs."
2. Inconsistent Statements: The complainant initially claimed the loan was given in the presence of his brothers and a friend but failed to produce them as witnesses. Later, during re-examination, he changed his story, stating he was alone when he gave the money.
3. Failure to Produce ITR: Despite claiming to be an income-tax payee and promising to produce his returns, the complainant failed to do so, further casting doubt on his financial capacity.
4. No Specific Date of Loan: The complainant never specified the exact date on which the loan was advanced, which the court, citing Supreme Court precedents like Vijay v. Laxman , termed a "glaring loophole."

The judgment emphasized, referencing the Supreme Court in * Rangappa v. Sri Mohan : > "if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail... the accused may not need to adduce evidence of his/her own."*

Final Decision and Its Implications

Finding no "illegality or impropriety muchless perversity" in the trial court's judgment, the High Court dismissed the appeal and upheld the acquittal.

This decision serves as a crucial reminder that while the NI Act provides strong presumptions in favour of the complainant, these are not absolute. A complainant in a cheque bounce case must be prepared to prove their financial capacity and the genuineness of the transaction, especially when the accused raises a probable and consistent defence challenging the existence of the underlying debt.