Accused Can Rebut Presumption U/S 139 NI Act By Furnishing Evidence To Dispute Financial Capacity Of Complainant: Kerala High Court

The Kerala High Court recently upheld the trial court's finding of acquittal in an appeal preferred by the complainant in a case under Section 138 of the Negotiable Instruments Act, alleging dishonour of a cheque by the accused.Analysing the precedents laid down, Justice Johnson John observed that when the defence evidence to dispute the transaction as well as the financial capacity of the complainant was sufficient to rebut the presumption under Section 139 NI Act regarding existence of a valid debt.“It is well settled that the offence made punishable under Section 138 of the N.I Act is a regulatory offence for improving the credibility of negotiable instruments and therefore, the test of proportionality should guide the construction and interpretation of the statutory presumptions and the accused cannot be expected to discharge an unduly high standard of proof. Therefore, if the accused is able to raise a probable defence, which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.”The complainant/appellant had alleged that she had loaned to the accused/1st respondent an amount of Rs. 50,000/-, which was received by her for selling her property, and the latter had given her a cheque for the said amount. Later, the cheque was dishonoured due to insufficiency of funds and even after issuing statutory notice, the amount was not repaid. In cross examination before the trial court, the complainant stated that she sold her property to one Manilal and that another person named Raveendran had introduced the accused to her. She also stated that she had availed a loan of Rs. 90,000/- for her own personal needs.The accused examined Manilal as DW1 and brought in documentary evidence, which was a certified copy of an Exchange Deed between DW1 and the complainant. While being questioned under Section 313 Cr.P.C., he also stated that he gave a blank cheque to Raveendran in connection with a chitty transaction, which the latter claimed to have been lost but was misused by the complainant.The trial court acquitted the accused after finding that he successfully rebutted the statutory presumptions while the complainant failed to prove the offence. Aggrieved, she came before the High Court.The accused argued that the complainant's case does not stand since she specifically contended that she loaned the consideration received from selling her property while the defence evidence pointed out that no monetary consideration was received for the transaction shown as per Exhibit D1. Accepting the same, the Court observed:“On a careful re-appreciation of the entire evidence, I find that the view taken by the trial court is a possible view, as the evidence of DW1 and Exhibit D1 is sufficient to rebut the statutory presumption regarding consideration, especially in view of the fact that the accused has disputed the transaction and financial capacity of the complainant…”Thus, it dismissed the appeal.Case No: Crl. Appeal No. 2311/2007Case Title: Thangam v. V.V. Haridasan and Anr.Citation: 2025 LiveLaw (Ker) 723Counsel for the appellant: K.P. Sudheer, Priya VijayanCounsel for the respondents: P. Shrihari, P. Vani, Chelson Chembarathy – State Brief (R1), Alex M. Thombra – Senior Public ProsecutorClick to Read/Download Judgment

Accused Can Rebut Presumption U/S 139 NI Act By Furnishing Evidence To Dispute Financial Capacity Of Complainant: Kerala High Court

K. Salma Jennath

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Accused Can Rebut Presumption U/S 139 NI Act By Furnishing Evidence To Dispute Financial Capacity Of Complainant: Kerala High Court

K. Salma Jennath

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