Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Source of Money - The complainant proved the source of funds for the withdrawal by establishing the existence of a legally enforceable debt or liability, often supported by bank records, loan agreements, or correspondence. The presumption under Section 139 of the Negotiable Instruments Act (N.I. Act) is that the cheque was received for discharging such debt or liability, unless the accused proves otherwise ["Abdul Husain Vanak S/o. Shri Kutubuddin Vanak VS Jeeshan Ahmed S/o. Saleem Ahmed - Chhattisgarh"], ["Kathadbhai Lakshmanbhai Sorathiya VS State Of Gujarat - Gujarat"], ["Budh Dev VS Parveen Sharma - Himachal Pradesh"], ["Satyaveer Singh VS Suraj - Himachal Pradesh"].
Presumption of Consideration - Under Sections 118 and 139 of the N.I. Act, once the signature on the cheque is admitted or proved, the court presumes that the cheque was issued for consideration and for the discharge of a debt or liability. The burden then shifts to the accused to rebut this presumption with evidence showing the source of funds was not connected to a legally enforceable debt ["Amarjeet Singh VS Om Pal - Punjab and Haryana"], ["Kathadbhai Lakshmanbhai Sorathiya VS State Of Gujarat - Gujarat"], ["Budh Dev VS Parveen Sharma - Himachal Pradesh"].
Evidence of Source of Funds - The complainant's proof typically involves presenting bank statements, loan documents, or transaction records that demonstrate the funds' origin. Courts have held that the complainant need not initially prove capacity or source, as the presumption under Sections 118 and 139 suffices until challenged ["Abdul Husain Vanak S/o. Shri Kutubuddin Vanak VS Jeeshan Ahmed S/o. Saleem Ahmed - Chhattisgarh"], ["Usha Khare W/o A. K. Khare VS Harpal Singh Chhabda, S/o Harbansh Singh Chhabda - Chhattisgarh"], ["Budh Dev VS Parveen Sharma - Himachal Pradesh"].
Rebuttal by Accused - The accused can rebut the presumption by providing evidence that the funds were not from a legal debt or that the cheque was issued for a different purpose. Failure to do so often results in conviction under Section 138, as the source of money is deemed established by the presumption ["Gian Chand Garg vs Harpal Singh - Punjab and Haryana"], ["M.Star Janet Joy vs T.Justin Dhas - Madras"].
Analysis and Conclusion:The complainant successfully proved the source of money withdrawal by establishing that the cheque was issued in connection with a legally enforceable debt or liability, supported by bank and transaction evidence. The statutory presumptions under Sections 118 and 139 of the N.I. Act shifted the burden onto the accused to disprove the source of funds, which in most cases they failed to do. Consequently, courts have consistently upheld convictions where the source of money was proved or presumed to be linked to the debt, fulfilling the requirements under Section 138 of the Negotiable Instruments Act ["Amarjeet Singh VS Om Pal - Punjab and Haryana"].
Cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) are common in India, often arising from business transactions or personal loans gone sour. A frequent defense raised by the accused is questioning the legitimacy of the funds used by the complainant to advance the loan or issue the cheque. But does the complainant need to prove the source of money withdrawal from the bank? This question lies at the heart of many disputes: Has the complainant proved the source of money withdrawal from bank under section 138 Negotiable Instrument Act?
This blog post breaks down the legal framework, burden of proof, essential evidence, and judicial precedents. While presumptions favor the complainant, courts typically require proof of the transaction and funds' legitimacy. Note: This is general information based on judicial trends and not specific legal advice. Consult a lawyer for your case.
Section 138 criminalizes cheque dishonor due to insufficient funds or exceeding arrangement, creating a presumption of debt or liability. Key provisions include:
These presumptions shift the initial burden to the accused to rebut them. However, they do not absolve the complainant from proving the existence of the debt and transaction. Courts have clarified that mere issuance of a cheque does not prove the debt unless the plaintiff proves the transaction and source of money. Suni Chacko W/o. Saji Chacko VS Annamma Alex W/o. K L Alexander - 2025 0 Supreme(Ker) 36
As noted in precedents, the presumption of consideration attached to a cheque does not absolve the complainant from proving the existence of a debt. ABDULKHADER VS ZUBAIR - 2015 0 Supreme(Ker) 1394
The complainant bears the initial burden to establish:
Documentary evidence is crucial:- Loan agreements, receipts, bank statements showing money withdrawal or transfer.- Proof of income, assets, or business transactions funding the loan.
Testimonial evidence from witnesses strengthens the case. Without this, the presumption weakens, especially if the accused raises doubts about financial capacity. Discrepancies or lack of evidence regarding the financial capacity or transaction weaken the case, reinforcing the importance of proving the source of money. Jungsher vs Anita Devi - 2025 0 Supreme(HP) 463
Once the complainant meets this threshold, the burden shifts to the accused to rebut via probable defense, such as fraud, non-existent transaction, or illegitimate funds. If rebutted, the complainant must prove beyond reasonable doubt. ABDULKHADER VS ZUBAIR - 2015 0 Supreme(Ker) 1394Suni Chacko W/o. Saji Chacko VS Annamma Alex W/o. K L Alexander - 2025 0 Supreme(Ker) 36
Courts consistently emphasize proving the source of money:
Contrasting views exist. For instance, failure to disclose the source fully doesn't always absolve the accused: If at all, the complainant had failed to account his source of money it is for the Income Tax Department to take note of this failure and proceed against the complainant. P. Govindaraj VS R. Vellaiangiri - 2019 Supreme(Mad) 895 The accused cannot escape liability solely on this ground if the debt is otherwise proven.
Presumptions are rebuttable on preponderance of probabilities: The statutory presumptions under Sections 118 and 139 NI Act can be rebutted by the accused through evidence demonstrating non-existence of legal debt or liability. - 2025 Supreme(Online)(J&K) 833
In money-lending scenarios, unlicensed operations can invalidate claims: Carrying on money lending without a license renders the loan transaction not enforceable under Section 138. B. B. Sharma, S/o. Late R. R. Sharma VS Luxman Bharti, S/o. Brijlal Bharti - 2024 Supreme(Chh) 47
Other cases highlight robust proof leading to conviction: So with this findings I have to hold that complainant has proved the commission of offence punishable under Section 138 of Negotiable Instrument Act. Tarachand VS Unique Agro Processors (India) Limited - 2019 Supreme(Bom) 1456 Here, bank memos, notices, and acknowledgments sufficed.
To succeed, complainants should gather:
Accused can counter with evidence of fraud or no transaction. In company cases, Section 141 compliance is mandatory, averring directors' roles. Non-compliance quashes proceedings against individuals. VIMLA DEVI VS STATE OF UTTAR PRADESH - 2017 Supreme(All) 2574
Vague document requests under CrPC Section 91 fail; specifics are needed. Vinod Kumar Sharma VS Satpura Narmada Kshetriya Gramin Bank - 2014 Supreme(MP) 1560
In Section 138 NI Act cases, proving the source of money withdrawal is pivotal to validate the debt. While presumptions aid complainants, courts demand concrete evidence, as seen in rulings like Suni Chacko W/o. Saji Chacko VS Annamma Alex W/o. K L Alexander - 2025 0 Supreme(Ker) 36 and ABDULKHADER VS ZUBAIR - 2015 0 Supreme(Ker) 1394. Defendants can challenge via rebuttal, but mere doubts aren't enough. Santhosh Eapen vs State of Kerala - 2025 0 Supreme(Ker) 2755
Build a strong evidentiary foundation to navigate these cases successfully. For tailored guidance, seek professional legal counsel.
References:- Suni Chacko W/o. Saji Chacko VS Annamma Alex W/o. K L Alexander - 2025 0 Supreme(Ker) 36- ABDULKHADER VS ZUBAIR - 2015 0 Supreme(Ker) 1394- Jungsher vs Anita Devi - 2025 0 Supreme(HP) 463- Santhosh Eapen vs State of Kerala - 2025 0 Supreme(Ker) 2755- B. B. Sharma, S/o. Late R. R. Sharma VS Luxman Bharti, S/o. Brijlal Bharti - 2024 Supreme(Chh) 47- - 2025 Supreme(Online)(J&K) 833- P. Govindaraj VS R. Vellaiangiri - 2019 Supreme(Mad) 895- Tarachand VS Unique Agro Processors (India) Limited - 2019 Supreme(Bom) 1456- VIMLA DEVI VS STATE OF UTTAR PRADESH - 2017 Supreme(All) 2574- Vinod Kumar Sharma VS Satpura Narmada Kshetriya Gramin Bank - 2014 Supreme(MP) 1560
#Section138, #ChequeBounce, #NIACT
The petitioner was convicted under Section 138 of the Negotiable Instrument Act. ... Negotiable Instrument Act - Conviction under Section 138 - Section 118, Section 139 Fact of the Case: The petitioner ... Based on the preliminary evidence lead, the accused/petitioner came to be summoned to face trial under Section 138 of the Negotiable Instrument Act. 4. ... Based on the evidence lead the petitioner was convicted and sentenced to ....
The complainant filed a complaint under Section 138 of the N.I. ... Negotiable Instrument Act - Acquittal Appeal - Section 138 - 138 - 139 - 118 - The court discussed the presumption ... Final Decision: The court set aside the acquittal and convicted the respondent under Section 138 of the N.I ... punishable under Section 138 of the Negotiable Instrument Act, 1881 (for short ‘the N.I#HL....
.2 under Section 138 of the Negotiable Instruments Act, 1881 (‘the N.I.Act’ hereinafter). ... Applying the defence of the word ‘prove’ in Section 3 of the EVIDENCE ACT to the provision of Sections 118 and 139 of the N.I.Act, it becomes evident that trial under Section 138 of the N.I.Act a presumption will have to be made that every Negotiable Instrument was ... Section#....
138 of the Negotiable Instruments (hereinafter referred as 'NI') Act. ... The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act is not a civil suit. ... The appellant, who is the complainant, filed a complaint under #HL_ST....
Negotiable Instrument Act - Acquittal Appeal - Section 138 of the Negotiable Instrument Act, 1881 - Section ... 11-H, Section 11-F of the Chhattisgarh Money Lenders Act, 1934 - [Section 138 of the Negotiable Instrument Act, 1881, Section 11 ... -H, Section 11-F of the Chhattisgarh Money Lenders Act, 1934] - The court discussed the application of Section 138 of the Negotiable ... Learned counsel for the complainant/appellant would submit that the complainant#....
138. ... 138 for issuing a cheque without sufficient funds - The appellate court modified the sentence from 6 months’ RI to 3 months’ ... Instruments Act, 1881 - Sections 138, 118, and 139 - Revision against conviction for dishonor of cheque - Applicant convicted under Section ... under Section 138 of the Act of 1881. ... Section 118 of the Act of 1881 envisages “Presumptions as to negotiable instruments. ... The object of #HL_S....
It is manifest from the aforesaid provisions that while Section 118 of the NI Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was drawn for consideration, Section 139 stipulates that unless the contrary is proved, it shall be presumed ... Presumption as to negotiable instruments.- Until the contrary is proved, the following presumptions shall be made (a) of considerat....
139 of Negotiable Instrument Act and Section 20 of Negotiable Instrument Act. ... This appeal is directed against the dismissal of the complaint under Section 138 of Negotiable Instrument Act by the spirit of Section 20 of Negotiable Instrument Act, the Lower complaint is file....
Term "official mark' has not been defined under the Negotiable Instrument Act. This provision was inserted by the Act 55 of 2002 w.e.f. 06.02.2003 with the purpose to relieve the bank official from the burden of giving statement, as witnesses to prove such bank slip or memo. ... Presumptions as to negotiable instruments. - Until the contrary is proved, the following presumptions shall be made:- (a) of consideration. - that every negotiable#....
The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved, that every negotiable instrument was made or drawn for consideration. ... An advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act falls in category (g) of the exceptions to the definitio....
The cheques were issued on the account of accused No.1 Company and they are signed by accused Nos.3 and 4. So with this findings I have to hold that complainant has proved the commission of offence punishable under Section 138 of Negotiable Instrument Act. So they are certainly aware about the liability of the company.
On that score, the accused who borrowed money from the complainant cannot escape from the criminal liability under section 138 of Negotiable Instrument Act. If at all, the complainant had failed to account his source of money it is for the Income Tax Department to take note of this failure and proceed against the complainant.
Therefore the appellant/complainant filed this case under section 138 of Negotiable Instrument Act. Hence the appellant/complainant issued a lawyer notice on 29.5.1999 to the respondent and the notice was served.
A notice dated 8.9.2005 was sent to the accused which was duly served upon them on or about 20.9.2005 but they neither replied the notice nor complied the notice nor made any payment, rather sent a reply dated 22.9.2005 through counsel. Thereafter a complaint under Section 138 Negotiable Instrument Act was filed by the complainant.
On behalf of the petitioner/accused, it is submitted that for the loan against receipts of the warehouse, no cheque was issued by him for construction of warehouse. As these cheques were dishonoured, the complainant/bank has filed this complaint against the petitioner under Section 138 of Negotiable Instrument Act. He obtained a loan of Rs.15,00,000/- which was duly paid by him.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
