Accused Can Rebut Presumption Under Section 139 NI Act By Questioning Complainant’s Financial Capacity; Kerala High Court Upholds Acquittal In Cheque Dishonour Appeal
Safiya Malik
The High Court of Kerala Single Bench of Justice Johnson John recently upheld the trial court’s decision acquitting the accused in a cheque dishonour case brought under Section 138 of the Negotiable Instruments Act. The appeal, filed by the complainant, alleged that the accused had failed to honour a cheque issued towards repayment of a loan. Examining the legal precedents governing presumptions under the Act, the Court held that the defence evidence disputing the transaction and questioning the complainant’s financial capacity was sufficient to rebut the presumption under Section 139 concerning the existence of a legally enforceable debt.
The complainant filed a case alleging that the accused had borrowed a sum of Rs.50,000 on 06.05.2006. It was asserted that on 07.08.2006, the accused issued a cheque dated 09.08.2006 for the same amount in discharge of the liability. When the cheque was presented for collection, it was dishonoured due to insufficiency of funds. Despite statutory notice issued thereafter, the amount was not repaid.
During trial, the complainant was examined as PW1, and Exhibits P1 to P6 were marked. The accused examined DW1, and Exhibit D1, the certified copy of Exchange Deed No. 355 of 2006, was produced. The complainant maintained that the loan amount was sourced from consideration received from the sale of her property. PW1 also stated during cross-examination that loans had been taken from Cheruvannoor Co-operative Bank and Thiruvannur KDC Bank for personal purposes.
The accused contended that no financial transaction had occurred between the complainant and himself. He stated that he had given a blank cheque as security to one Raveendran in connection with a chitty transaction. According to him, when he sought the cheque’s return after the chitty period ended, he was informed that it could not be traced and alleged that the complainant misused that cheque.
The trial court evaluated the oral and documentary evidence and concluded that the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act stood rebutted. Consequently, the accused was acquitted of the charge under Section 138 of the Act.
The complainant then filed the present appeal before the High Court challenging the acquittal, contending that the trial court had not properly appreciated the evidence and that the signature on the cheque remained undisputed, thereby maintaining the presumption in her favour.
The Court stated that “the accused has succeeded in rebutting the presumption regarding consideration in favour of the complainant.”
Referring to the evidentiary burden under Sections 118 and 139 of the N.I. Act, the Court relied upon the principles laid down in Basalingappa v. Mudibasappa, noting that “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.” It further observed that “the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence.” The Court recorded that “the standard of proof for rebutting the presumption is that of preponderance of probabilities” and 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.”
Justice Johnson John also referred to Shree Daneshwari Traders v. Sanjay Jain, observing that “the accused in a trial under S.138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed.” The Court recorded that “to rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial.”
Addressing the complainant’s evidence, the Court noted that “when evidence elicited from complainant during cross examination creates serious doubt about the existence of debt and about the transaction and the complainant fails to establish the source of funds, the presumption under Section 139 is rebutted and the defence case stands probabilised.”
Importantly, the Court recorded that “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.”
In assessing the appellate power, the Court cited Chandrappa v. State of Karnataka, recording that “in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence… Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced.”
Concluding the matter, Justice Johnson John observed 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,” and therefore held that “this appeal is liable to be dismissed.
The Court held that it found “no reason to interfere with the finding of the trial court” and concluded that the appeal was “liable to be dismissed. The view taken by the trial court is a possible view” after considering the evidence. “This appeal is dismissed.”
Advocates Representing the Parties
For the Appellant/Complainant: Shri. K.P. Sudheer, Advocate; Smt. Priya Vijayan, Advocate
For the Respondents: Shri. P. Shrihari, Advocate; Smt. P. Vani, Advocate; Shri. Chelson Chembarathy, State Brief; Shri. Alex M. Thombra, Senior Public Prosecutor
Case Title: Thangam v. V.V. Haridasan & State of Kerala.
Neutral Citation: 2025: KER:79324
Case Number: Crl. Appeal No. 2311 of 2007
Bench: Justice Johnson John
