IMPORTANT POINT
Burden of proving that there was no existing debt or liability lies on the accused in a complaint under Section 138 of Negotiable Instruments Act.

C.Y. Somayajulu, J.— Alleging that the cheque dated 15-3-1994 for Rs. 50,000/- drawn by the first respondent, in his favour, on Akonam Cooperative Urban Limited, Arkonam, towards part payment of the price payable by him for the chowke trees sold to the first respondent was returned with an endorsement of ‘insufficient funds’ and that he (first respondent) ended to receive the statutory notice sent to him under Section 138 of the Negotiable Instruments Act, 1881 (the Act), after knowing the contents therein and failed to pay the amount converted by the dishonoured cheque, appellant filed a private complaint under Section 138 of the Act against the first respondent and examined himself as P.W. 1 and marked Exs. P-1 to P-9 on his behalf. First respondent who denied the offence did not examine any witness on his behalf.

2. Negativing the contention of the first respondent that there is no proper service of the statutory notice on him, on the basis that appellant failed to establish that the dishonoured cheque was issued towards part payment of a legally enforceable debt, the learned Magistrate, acquitted the first respondent. Hence, this appeal by the complainant.

3. Though the case is being listed for hearing, neither the learned counsel for the appellant nor the learned counsel for the first respondent is present. Since an appeal admitted for hearing cannot be dismissed for default, and has to be disposed of on merits as held in Shyam Deo v. State of Bihar1 and Khaili v. State of U.P.2 I am considering the appeal on merits.

4. Since the finding of the learned Magistrate is that there is valid service of the statutory notice as contemplated by Section 138 of the Act on the first respondent, the only point for consideration is whether the dishonoured cheque was issued by the first respondent towards a legally enforceable debt or liability due to the appellant or

not.

5. A reading of the Judgment under appeal shows that the learned Magistrate placed the burden of proof to establish that the dishonoured cheque was issued towards discharge of a legally enforceable debt on the appellant, obviously without taking notice of Section 139 of the Act, which reads:

“Presumption in favour of holder.—It shall be presumed unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, or any debt or other liability.”

‘Shall presume’ as per Section 4 of Evidence Act means that the Court has to presume the fact as proved till it is disproved by the opposite party. The Apex Court had occasions to consider the effect Section 139 of the Act in a number of decisions.

In Maruti Udyog Ltd. v. Narender3, it is held:

“In view of the express provision of Section 139 of the Negotiable Instruments Act, 1881, a presumption must be drawn that the holder of the cheque received the cheque, of the nature referred to in Section 138, for the discharge of any debt or other liability unless the contrary is proved. Therefore, the High Court was not justified in entertaining and accepting the plea of the accused-respondent at the initial stage of the proceedings and quashing the complaints filed by the appellant.”

In M.M.T.C. v. Medchil Chemicals and Pharma4, it is held at page 240 as follows:

“There is therefore no requirement that the complainant must specifically allege in the complaint that there was subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial.”

(underlining mine)

In K.N. Beena v. Muniyappan5, it is held:

“Under Section 139 the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complaints under Section 138, the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable.”

In Anil Hada v. Indian Acryl