1. Civil suit for recovery of money based on credit purchases of jewellery, guarantee, and dishonoured cheques. (Para 3 , 4 , 5 )
Back
Next 
2026 Supreme(Online)(HP) 3184
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE SUSHIL KUKREJA
Krishna Jewellers – Appellant
Versus
Satya Jewellers – Respondent
RFA/347/2014
Advocates:
For the Appellants/Petitioners: Y.P. Sood
For the Respondents: Bhupinder Gupta, Janesh Gupta
For the Appellants/Petitioners: Y.P. Sood
For the Respondents: Bhupinder Gupta, Janesh Gupta
The presumption under Section 139 of the Negotiable Instruments Act is a rebuttable presumption of law. Rebuttal requires proving a probable defense based on a preponderance of probabilities; inconsistent claims or mere denials are insufficient to displace the presumption that a cheque was issued for a legally enforceable debt.
Headnote:(A) Negotiable Instruments Act, 1881 - Sections 118 and 139 - Presumption in favour of holder - Recovery of money - Once the execution of a cheque is admitted and signatures are accepted, the presumption under Section 139 mandates that the cheque was issued for the discharge of any debt or other liability - This is a presumption of law, as distinguished from a presumption of fact, which shifts the evidentiary burden to the drawer to prove the contrary (Paras 17, 18 and 23).
(B) Rebuttal of Presumption - Standard of proof - The presumption under Section 139 is rebuttable, and the standard for doing so is a 'preponderance of probabilities' - The drawer does not need to prove the defense beyond reasonable doubt but must provide evidence that a prudent man would consider the existence of the defense to be reasonably probable - Mere denial of the complainant's case without sufficient supporting material is not enough to rebut the statutory presumption (Paras 18, 21 and 23).
Facts of the case:
The plaintiffs filed a suit for recovery of money against the defendants for the purchase of jewellery on credit. The plaintiffs relied on an acknowledgment letter, a guarantee bond, and two dishonoured cheques. The defendants contested the suit, claiming that the goods were paid for in cash, signatures were obtained on blank papers under threat, and the cheques had been lost and misused. During cross-examination, the defendants admitted their signatures on the acknowledgment letter, the account statements, and the cheques.
Findings of Court:
The court found that business dealings existed and that the defendants had purchased goods on credit. The admission of signatures on the acknowledgment letter and cheques rendered those documents genuine. The defendants' contradictory pleas—claiming both that signatures were taken on blank papers and that the cheque books were lost—were deemed an afterthought and concocted, failing to rebut the statutory presumption under the Negotiable Instruments Act.
Issues: The main issues were whether the defendants purchased jewellery on credit, whether the acknowledgment letter and guarantee bond were duly executed, and whether the defendants succeeded in rebutting the presumption that the dishonoured cheques were issued for a legally enforceable debt.
Ratio Decidendi: When the factual basis for the presumption under Section 139 of the Negotiable Instruments Act is established (i.e., the signature on the cheque is admitted), the court must presume the cheque was issued for a debt. To rebut this, the defendant must lead evidence showing the non-existence of the debt is probable. Inconsistent defenses and mere denials do not meet the threshold of 'preponderance of probabilities' required to displace the statutory presumption.
Result: Appeal dismissed.
Legal Category Hierarchy
- practice and procedure
- commercial law
Table of Contents
2. Appellants argued acknowledgment unproved and presumption rebutted; respondents contended liability acknowledged and cheques valid. (Para 7 , 8 )
3. Appeal under Section 96 CPC dismissed; decree for recovery of outstanding amount with interest affirmed. (Para 25 )
4. What standard of proof is required to rebut the presumption under Section 139 of the Negotiable Instruments Act?
The accused must prove a probable defence by preponderance of probabilities; mere denial is insufficient. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 )
5. Does the presumption under Section 139 of the NI Act include the existence of a legally enforceable debt or liability?
Yes, the presumption includes that the cheque was issued for a legally enforceable debt; it is rebuttable but the initial burden shifts to the drawer. (Para 17 , 21 )
6. Can an acknowledgment of debt be proved by admission of signatures on the document and supporting evidence?
Yes, if the defendant admits signatures on the acknowledgment and the document is supported by other evidence, it is considered proved. (Para 13 , 14 , 15 )
7. Are contradictory pleas by the defendant sufficient to rebut the presumption under Section 139 of the NI Act?
No, contradictory and unsubstantiated pleas do not rebut the presumption; the defendant must provide cogent evidence to raise a probable defence. (Para 24 )
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
Neutral Citation No. (2026:HHC:21056)
RFA No. 347 of 2014
Reserved on: 12.05.2026
Date of decision: 02.06.2026
Date of uploading on website: 02.06.2026
M/s Krishna Jewellers & others …..Appellants.
Versus M/s Satya Jewellers & another ……Respondents.
Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge.
1 Whether approved for reporting?
For the appellants: Mr. Y.P. Sood, Advocate.
For the respondents: Mr. Bhupinder Gupta, Senior Advocate, with Mr. Janesh Gupta, Advocate.
Sushil Kukreja, Judge.
1. The instant appeal has been preferred by the appellants, who were defendants before the learned Court below (hereinafter referred to as “the defendants”) under Section 96 of the Code of Civil Procedure (for short “CPC”) against judgment and decree, dated 02.08.2014, passed in Civil Suit No. RBT 16-S/1 of 2014/07 by learned Additional District Judge-II Shimla (hereinafter referred to as “the learned Trial Court”), with prayer that the impugned judgment and decree be set-aside by allowing the instant appeal.
2. The plaintiffs, i.e., M/s Satya Jewellers and Shri Shelender Kumar, who are respondents herein (hereinafter referred to as “the plaintiffs”), had filed a civil suit for recovery of Rs.24,34,450/- on account of principal and interest against the defendants before this Court. The said suit, due to enhancement of pecuniary jurisdiction was transferred to the learned Trial Court.
3. The facts giving rise to the instant appeal can be encapsulated as under:
3(a). Plaintiff No. 2-Shri Shelender Kumar, sole proprietor of plaintiff No. 1, was running the business of jewellery in the name and style of M/s Satya Jewellers (plaintiff No. 1) and defendant No. 2, sole proprietor of defendant No. 1-M/s Krishna Jewellers, was running the business of jewellery at Rohru. The defendants used to purchase business articles from the plaintiff from time to time on credit and part payment(s) used to be paid by them from time to time. As per the plaintiff, Smt. Naina Kotvi (defendant No. 3), wife of defendant No. 2-Shri Krishan Kumar Kotvi, stood guarantee for the outstanding amount and it was agreed by her that in case defendant No. 2 failed to make the payment, she would liquidate the entire liability.
3(b). The plaintiff averred in their suit that after the settlement of accounts, defendants No. 2 and 3 admitted a sum of Rs.21,91,224/- due from them to the plaintiff and in this respect, on 14.02.2006 a document was executed. The defendants could not pay the above amount and on 18.08.2006 defendant No. 2 issued a cheque bearing No. 520241, in favour of the plaintiffs, drawn at H.P. State Co-operative Bank, Rohru, however, the said cheque was dishonoured for the reason “payment stopped by drawer”. The defendant approached the plaintiff and assured that payment would be arranged so as to honour the aforesaid cheque. He sought some time and also admitted and acknowledged a sum of Rs.21,91,224/-. Defendant No. 2-wife of defendant No. 1 requested the plaintiff not to initiate the legal proceedings after acknowledging the amount of Rs.21,91,224/- to be the correct amount due from the defendant to the plaintiff for valuable consideration and issued a cheque bearing No. 763309, dated 07.11.2006, in favour of the plaintiff, drawn at UCO Bank, Shimla. However, the said cheque was also dishonoured due to insufficient funds, thus another legal notice was issued to the defendant, which was duly replied.
3(c). As per the plaintiffs, the story portrayed by the defendants that cheque book was misplaced was false. The plaintiffs time and again requested the defendant to clear the outstanding amount and the defendant also duly acknowledged it. However, the defendant despite notices or oral requests, took lame excuses by taking false and baseless stand.
3(d). On the basis of the above averments, the plaintiffs made the following substantive prayer at the footnote of their plaint:
“It is, therefore, prayed that a decree for
