IMPORTANT POINT
It is not required that the accused must lead positive evidence to rebut the presumption. Presumption could be rebutted from the circumstances on record.

H.S. Bhalla, J.—This petition has been filed for leave to appeal to challenge acquittal of the respondent of the charge under Section 138 of the Negotiable Instruments Act, 1881.

2. Case of the complainant is that cheque bearing No. 627399 dated 08.11.2004 for an amount of Rs. 4,50,000/- was issued by the respondent in favour of the complainant, which was presented to the Banker but was dishonoured for insufficient funds. After serving notice and failure of the respondent to make the payment, complaint was filed.

3. Defence of the respondent was that the cheque had not been issued in discharge of his legal liability.

4. The Trial Court dismissed the complaint, holding that presumption that the cheque was issued by the accused in favour of the complainant in discharge of his liability, stood rebutted. The relevant finding is as under:

“The complainant firm which is dealing in the business of finance must be maintaining some cash books, day books, party ledger books, etc. Further, more the CW1 in his cross-examination admitted that loans are advanced to the loanees through cheques by the complainant firm. However in the cross-examination he claimed that no cheque was issued to the accused. He further stated that no loan account of accused is maintained by the complainant firm. He claimed that only loan agreement with regard to the loan advanced to the accused by the complainant firm was prepared. He further claimed that the loan agreement was returned to the accused at the time when the accused gave the cheques for the total amount of Rs.17 lacs including the cheques involved in the present case. However, the complainant failed to produce any receipt regarding the delivery of the alleged view that the overall circumstances of the case are such that a documentary proof was made available to the accused of the complainant firm to rebut the legal presumption of which heavy burden casts on the accused. I am of the considered view that given the overall facts and circumstances of the case, the entire case of the complainant regarding the accused owing a legally enforceable debt to the complainant appears to be highly doubtful.”

5. The Trial Court also held that the attorney was not a competent witness. Reliance was placed on judgment of the Andhra Pradesh High Court in K. Ramachandra Rao & others v. State of A.P. and another1 and judgment of the Madhya Pradesh High Court in Mahendra Kumar v. Armstrong and another.2

6. Learned Counsel for the applicant challenged the view taken by the Trial Court that the attorney was not competent to depose, relying on judgment of this Court in Satnam Channall v. Darshan Singh3 and judgment of Madras High Court in K. Gopalakrishnan v. Karunakarann.4

7. We find merit in the contention raised, for the reasons mentioned in the judgments relied upon. We will assume that attorney of the complainant was a competent witness. Still, we are unable to interfere with the finding that the respondent-accused rebutted the presumption that the cheque was for discharging legal liability; in view of the fact that the complainant did not produce any account in support of submission that loan was advanced to the accused. The complainant even failed to produce the loan agreement these circumstances, presumption in favour of the complainant stood rebutted. It is not required that the accused must lead positive evidence to rebut the presumption. Presumption could be rebutted from the circumstances on record. Reference may be made to a recent judgment of the Hon’ble Supreme Court in M.S. Narayana Menon @ Mani State of Kerala and another5 wherein after taking into account the earlier judgments as well as Section 4 of the Evidence Act, the Hon’ble Supreme Court concluded as under:

“Applying the said definitions of ‘proved’ or ‘disapproved’ to the principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it ei