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SUPREME COURT OF INDIA
PANKAJ MITHAL, SANJAY KAROL, JJ.
N. Vijay Kumar – Appellant
Versus
Vishwanath Rao N. – Respondent
Criminal Appeal No. 5305 of 2024
Decided on : 22-04-2025
Negotiable Instruments Act, 1881 – Sections 138 read with Sections 118(a) and 139 – Criminal Procedure Code, 1973 – Section 200 – Dishonour of cheque – Reversal of acquittal by High Court – Once execution of cheque is admitted, Section 139 of N.I. Act mandates a presumption that cheque was for discharge of any debt or other liability – However, presumption under Section 139 is a rebuttable presumption and onus is on accused to raise probable defence – Standard of proof for rebutting presumption is that of preponderance of probabilities – In present case, cheques issued were against enforceable debt even though there was no paperwork to that effect – There is no official record, such as income tax documents which would show that such an amount was extended by way of a loan to accused, neither have the books of account, which complainant allegedly maintained, being produced to evidence seven or eight transactions inter se parties totalling claimed amount – Probable defence on part of accused has been established – Complainant has failed to discharge this burden – Judgment of High Court set aside and that of Trial Court restored. (Paras 6.3, 6.6, 11, 12 and 15)
Facts of the case:
Present appeal is filed assailing judgment dated 21st December 2020 passed by High Court of Karnataka at Bengaluru in Criminal Appeal No. 94 of 2011, whereby High Court reversed the order of acquittal passed by Trial Court and convicted appellant-accused under Section 138 of Negotiable Instruments Act, 1881.
Findings of Court:
Trial Court was correct in recording a finding of acquittal in favour of accused and reversal thereof by High Court in terms of impugned judgment, was unjustified.
Result : Appeal allowed.
Certainly. Based on the provided legal document, here are the key points:
Presumption of Debt and Rebuttal: When a cheque is dishonoured, there is a presumption that the cheque was issued for consideration and in discharge of a debt or liability. However, this presumption is rebuttable, and the accused has the burden to raise a probable defence to disprove the existence of consideration or liability. The standard of proof for rebutting this presumption is the preponderance of probabilities (!) (!) (!) .
Burden of Proof and Probable Defence: Once the execution of the cheque is admitted, the onus shifts to the accused to establish a probable defence that questions the existence of a debt or consideration. The accused can rely on evidence, including circumstantial evidence, to create doubts about the debt's existence. If the accused successfully raises such doubts, the presumption in favour of the complainant disappears, and the burden shifts back to the complainant to prove the debt beyond a reasonable doubt (!) (!) (!) .
Evidence and Defence Establishment: The accused need not prove his defence beyond reasonable doubt; it is sufficient to raise a probable defence that creates doubts about the debt or liability. The accused can rely on their own evidence or the materials submitted by the complainant to establish this probable defence. Once such a defence is established, the burden of proof reverts to the complainant to prove the debt beyond a reasonable doubt (!) (!) .
Standard of Proof: The standard of proof required for rebutting the presumption is the preponderance of probabilities, not proof beyond reasonable doubt. This means the accused must show that it is more probable than not that no debt or consideration exists (!) (!) .
Effect of Probable Defence: If the accused successfully raises a probable defence, the presumption in favour of the complainant is rebutted, and the case against the accused cannot be sustained unless the complainant can prove the debt or liability beyond a reasonable doubt. The court must then evaluate the evidence to determine whether the presumption is sufficiently rebutted (!) (!) .
Evidence in the Case: In the specific case, the accused issued blank signed cheques for a smaller loan, which was later settled, and the accused had lodged a police complaint regarding the loss of these cheques. The evidence suggested that the cheques were against an enforceable debt, but the accused had established a probable defence that questioned the existence of the debt, including the prior settlement and the police complaint. This shifted the burden back to the complainant to prove the debt beyond a reasonable doubt (!) (!) (!) .
Court’s Conclusion: After considering the evidence and the defence, the court found that the accused had successfully raised a probable defence, and the presumption in favour of the debt was rebutted. Consequently, the initial acquittal of the accused was upheld, and the conviction was set aside. The burden on the complainant to prove the debt beyond a reasonable doubt was not met, leading to the reversal of the High Court's decision (!) (!) .
Legal Principles: The law clearly states that the presumption of consideration and liability is rebuttable, and the accused need only establish a probable defence based on the preponderance of probabilities. Once such a defence is established, the burden shifts back to the complainant to prove the debt beyond a reasonable doubt for a conviction (!) (!) (!) (!) .
These points summarize the legal principles and the case-specific findings regarding the presumption, the burden of proof, and the importance of establishing a probable defence in cases of dishonoured cheques under the relevant statutes.
JUDGMENT :
SANJAYKAROLJ.
1. The present appeal is filed assailing the judgment dated 21st December 2020 passed by the High Court of Karnataka at Bengaluru in Criminal Appeal No.94 of2011, whereby the High Court reversed the order of acquittal passed by the Court of XV Additional Chief Metropolitan Magistrate, Bangalore City1[Hereinafter referred to as 'Trial Court'] and convicted the appellant-accused under Section 138 of the Negotiable Instruments Act, 18812[Hereinafter the ‘N.I. Act’].
2. The factual matrix giving rise to the present appeal is as follows :
2.1. The appellant3[Hereinafter referred to as the ‘Accused’] and the respondent4[Hereinafter referred to as the ‘Complainant'] had known each other for over a decade and shared a friendly relationship. The case of the complainant is that he extended a hand loan of Rs.20,00,000/- (twenty lakh rupees) to the accused, to help him produce a Kannada feature film titled ‘Indian Police History’. In discharge of this alleged loan, the accused issued a cheque bearing No.015138, dated 14th October 2008, in favour of the complainant. However, upon presentation for encashment, the cheque was dishonoured on 20th October 2008 with an endorsement ‘Refer to Drawer’, indicating insufficient funds in the accused’s account.
2.2. Consequently, the complainant issued a statutory legal notice dated 25th October 2008, demanding repayment of the amount. The accused, through his reply dated 7th November 2008, denied any liability and raised the following contentions:
(ii) At the time of availing the said loan of Rs.3,50,000/-, the accused had handed over two blank signed cheques to the complainant as security. However, when the accused sought their return upon signing the MoU, the complainant informed him that the cheques had been misplaced but assured that they would not be misused. The same was also recorded in the MoU. It was only upon receiving the legal notice, that the accused became aware that the complainant had allegedly misused one of these cheques.
(iii) The accused had lodged a police complaint, being NCR No.256/2008 dated 24th July 2008, reporting the loss of the two cheques at the instance of the complainant and alleging that the complainant had failed to return them despite repeated requests.
2.3. Since the alleged amount remained unpaid, the complainant preferred a complaint against the accused under Section 200 of the Code of Criminal Procedure 19735[For short ‘CrPC’], being CC No.1191 of 2009, before the Trial Court, in relation to an offence punishable under Section 138 of the N.I. Act.
2.4. After considering the oral and documentary evidence, the Trial Court vide judgment dated 20th November 2010, acquitted the accused, holding that the accused had successfully rebutted the presumption under Section 139 of the N.I. Act. To hold the same, reliance was placed on Rangappa v. Sri Mohan, (2010) 11 SCC 441. The relevant extract of the Trial Court judgment in the instant case is as follows :
Dishonour of cheque – Presumption of debt is a rebuttable presumption and onus is on accused to raise probable defence – Standard of proof for rebutting presumption is that of preponderance of probab....
Dishonour of cheque – Whereas prosecution must prove guilt of an accused beyond all reasonable doubt, standard of proof so as to prove a defence on part of accused is preponderance of probabilities.
The presumption of liability under the NI Act is rebuttable, and the burden of proof lies on the complainant to establish the existence of a legally enforceable debt.
The presumption under Section 139 of the Negotiable Instruments Act is rebuttable, and the burden of proof lies on the accused to provide a probable defense.
The main legal point established in the judgment is the significance of the accused raising a probable defense to rebut the presumption under Section 139 of the N.I. Act, and the requirement for the ....
The presumption in favor of the complainant under the N.I. Act is rebuttable, and the standard of proof required to prove a defense in a criminal case is preponderance of probabilities.
The presumption under Section 139 of the Negotiable Instruments Act is mandatory, placing the burden on the accused to rebut the existence of a legally enforceable debt.
Dishonour of cheque – Appeal against acquittal – Presumption under Section 139 read with Section 118 of NI Act is essentially based on pure common sense – Statement of accused under Section 313 Cr.P.....
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