Section 138 NI Act - If Signature On Cheque Is Admitted, Presumption Under Section 139 Will Be Raised : Supreme Court

The Supreme Court has observed that if the signature on the cheque is admitted, then presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued in discharge of a legally enforceable debt will be raised. Upon such presumption being raised, it is incumbent upon the accused to rebut the same."..it is clear that signature on the cheque having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability", a bench comprising Chief Justice of India NV Ramana, Justices Surya Kant and AS Bopanna observed. The bench was considering the case Thriyambak S Hegde v. Sripad, which was an appeal against a judgment of the Karnataka High Court setting aside the conviction ordered by the Magistrate for the offence under Section 138 of the Negotiable Instruments Act.The bench referred to the precedent in Basalingappa vs. Mudibasappa (2019), where the principles on Sections 118 (a) and 139 of the NI Act were summarized in the following manner :Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.It is not necessary for the accused to come in the witness box to support his defence. Applying the principles to the facts of the case, the Court set aside the High Court's acquittal and restored the conviction.Facts:In the present matter, the case of the appellant is that the respondent who was known to him for the past few years approached him and informed that due to his financial difficulty he intends to sell the house situate in Sirsi town. The appellant agreed to purchase the same for the negotiated total sale consideration of four lakhs. An agreement dated 6th June 1996 was executed by the respondent while receiving the advance amount of Rs.3,50,000/, however the appellant learnt later that the house stood in the name of the father of the respondent and he did not have the authority to sell it.The appellant then demanded the return of Rs. 3,50,000/ which he had paid as advance amount, and the respondent instead of paying the entire amount, issued a cheque of part amount of Rs. 1,50,000. When the appellant presented the cheque for realisation on it came to be dishonoured with the endorsement 'insufficient funds'.This was followed by the appellant getting a notice issued informing the respondent about the cheque being dishonoured and demanding payment of the cheque amount, to which the respondent failed to respond.The appellant then filed a complaint under Section 200 of CrPC on 14th July 1998 before the Judicial Magistrate, First Class at Sirsi seeking prosecution of the respondent under Section 138 of the Negotiable Instruments Act, 1881.Order of Judicial Magistrate: The JMFC convicted the respondent through the judgment dated 09.06.2005 for the offence punishable Section 138 the N.I. Act and sentenced him to undergo simple imprisonment for six months and to pay the fine of two lakhs, out of which 1,95,000 was to be paid to the appellant as compensation.The Judicial Magistrate took note that the signature on the agreement and more particularly on the cheque being admitted, it raised presumption under Section 118 and 139 of the the N.I. Act, which had not been rebutted. Therefore, the respondent was convicted. Appeal Against Judicial Magistrate's Order Before Sessions Judge:The respondent filed an appeal before the District & Sessions Judge, Uttara Kannada, Karwar against Judicial Magistrate's order. The Sessions Judge dismissed the appeal through judgment dated 22.04.2006.Before High Court:The respondent challenged the order of the Sessions judge and filed a Revision Petition before the High Court. The Single Judge, allowed the Revision Petition and set aside the conviction order passed by the JMFC, which had been confirmed by the learned Sessions Judge.Before the High Court, the respondent put forth the contention in his Revision Petition only at the time of argument, that the appellant did not pay the amount but his signature had been secured on the cheque and the agreement under peculiar circumstances. It was contended on his behalf that he was a party to a case in the Court of...

Section 138 NI Act - If Signature On Cheque Is Admitted, Presumption Under Section 139 Will Be Raised : Supreme Court

Srishti Ojha

The Supreme Court convicted the accused noting that accused had not replied to the demand notice and had raised his defence for the first time before the High Court.

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