[Cheque Dishonour] Accused Must Take 'Probable Defence' To Rebut Adverse Presumption U/S 139 NI Act: Karnataka High Court Reiterates

The Karnataka High Court has reiterated that to rebut the presumption under Section 139 Negotiable Instruments Act that cheque has been issued in discharge of a debt or liability, the accused must raise 'probable defence'.Faced with accused's mere denial regarding the existence of debt, Justice S Rachaiah remarked, “If the defence taken by the accused is not acceptable obviously the presumption prevails upon the failure of the defence.”The bench thus allowed the appeal filed by R Pramod and set aside the order of appellate court acquitting Gangadharaiah for offences punishable under section 138 of the Negotiable Instruments Act. It restored the trial court order convicting him and sentenced him to pay fine of 20 lakhs.The complainant argued that the appellate court failed to take note of the transaction whereas the accused contended that mere possession of the cheques is not sufficient to justify the loan transactions and complainant must prove that he had lent such a huge amount. Accused further submitted that he made transactions with complainant's father and the case has been lodged at his behest.The bench referred to Supreme Court judgments dealing with presumption against the accused under Section 139 of the Act and said, “The presumption under Section 139 of the N.I Act provides that Court shall presume that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I Act for the discharge, in whole or in part of any debt or other liability. The burden lies on the accused to rebut the presumption. The probable defence raised by the accused would be a matter to be decided on the facts of each case and the circumstances that existed.”Further it noted that notice has not been received by the accused and there is a shara on the returned legal notice that door lock, unclaimed etc. Then it said “It is settled principles of law that if the notice is issued to the correct address of the accused and if the notice is not able to serve due to the reasons assigned in the said shara, it is deemed that the notice is served to the accused in terms of Section 27 of General Clause Act read with Section 114 of the Indian Evidence Act. Moreover, the accused has not disputed that he was not residing in the said address.” Taking into account the cross examination of the accused the bench said “In the cross-examination, a specific question was put to DW.1 that whether it is possible to say when five cheques were issued to Sri.Ramakrishnaiah who is the father of the complainant, he did not answer the same.” It cited Kishan Rao v Shankargouda (2018) wherein Supreme Court held that to rebut the presumption under Section 139 of NI Act, mere denial regarding the existence of debt shall not serve any purpose and that accused has to raise probable defence regarding existence of debt or liability.Accoridngly the bench held, “On considering the proposition of law, the stand taken by the accused in his evidence and also in the cross-examination of PW.1 that there was seven cheques issued to the father of the complainant as a security for transactions having been made between them appeared to be untrue and not proved.” Accordingly, it allowed the appeal and set aside the acquittal order. Appearance: Advocate M K Sandeep for Advocate B Roopesh for Appellant.Advocate Suresh D Deshpande for Respondent. Citation No: 2023 LiveLaw (Kar) 445Case Title: R Pramod v Gangadharaiah Case No: CRIMINAL APPEAL NO. 2000 OF 2022Click Here To Read/Download Order

[Cheque Dishonour] Accused Must Take 'Probable Defence' To Rebut Adverse Presumption U/S 139 NI Act: Karnataka High Court Reiterates

Mustafa Plumber

Tags