S.138 NI Act | Complainant Can Claim Benefit Of Presumptions After Proving Transaction, Execution Of Cheque In Convincing Manner: Kerala HC

Justice A. Badharudeen delivered the judgment, while considering an appeal against an acquittal in a cheque bounce case under Section 138 of the Negotiable Instruments Act (NI Act).

The prosecution was launched after the dishonour of a cheque dated March 9, 2004, for ₹4,50,000, allegedly issued by the accused towards repayment of the money borrowed from the complainant. The trial court acquitted the accused, prompting the complainant to challenge the verdict before the High Court.

The complainant argued that once execution of the cheque was shown, he was entitled to the presumptions under Sections 118 and 139 of the NI Act, which presume consideration and legally enforceable debt.

The Court noted that during the cross-examination, the complainant had admitted that the alleged loan amount had actually been advanced by the father of the complainant in five installments. It was also submitted that the father maintained records of those payments in a notebook, but neither the notebook nor the father was produced as evidence. The complainant also conceded that he lacked knowledge regarding several material aspects of the transaction.

The Court held that in a prosecution under Section 138, the complainant receives the benefit of the presumptions under Sections 118 and 139 only after proving the transaction and execution of the cheque in a convincing manner. This includes proving the passing of consideration. The Court observed that such evidence, must ordinarily come from a person with direct knowledge of the transaction.

“It is the well settled law that in a prosecution alleging commission of offence punishable under Section 138 of the NI Act, the complainant would get the benefit of twin presumptions under Sections 118 and 139 of the NI Act and the pre condition for the same is proof of the transaction and execution of the cheque in a convincing manner. The same would definitely include passing of consideration covered by the cheque. Indubitably such evidence shall be given by the person, who had direct knowledge regarding the transaction and execution of the cheque and the evidence of a person, who does not know the same is insufficient to prove the transaction and the execution of the cheque.” the Court said.

The Court noted that the complainant's own testimony showed that the dealings were between his father and the accused, making the father the competent witness to prove the transaction. However, the father was not examined.

The counsel for the complainant, has submitted that the father did not opt to give evidence since he was engaged in money lending business while working as a police officer and the Conduct Rules applicable to Government servants prohibited him from engaging in money lending business.

The Court thus concluded that the complainant had "miserably failed" to discharge the initial burden of proving the transaction that allegedly resulted in the issuance of the cheque. As a consequence, he was not entitled to invoke the presumptions under Sections 118 and 139 of the NI Act.

The Court thus upheld the acquittal and dismissed the appeal.

Case Title: Shijosh v The State of Kerala

Case No: Crl.A 1403/ 2008

Citation: 2026 LiveLaw (Ker) 321

Counsel for Appellant: Rajeev V. Kurup, Ajith Kathiranthara

Counsel for Respondents: S. Nidheesh, Sabu S Kallaramoola, Vipin Narayan A (Sr. PP)