In a significant legal development, the Supreme Court has reversed the acquittal of an accused in a case involving cheque dishonour. The apex court, consisting of Justices Aravind Kumar and SVN Bhatti, highlighted a “fundamental flaw” in the approach taken by both the Trial Court and the High Court.

Presumption Under Section 139 of the Negotiable Instruments Act

The Supreme Court reaffirmed the principles related to the presumption under Section 139 of the Negotiable Instruments Act, 1881. According to this section, the law presumes that a cheque has been issued in discharge of a debt or liability. The Court stressed that once this presumption is activated, the burden of proof shifts to the accused, making it their responsibility to rebut the presumption effectively.

Crucial Questions for the Courts

The Court outlined two key questions that the Courts should consider when handling cases where the signature on the cheque is admitted, and its execution is proven:

1. Has the accused presented any defense evidence conclusively establishing the nonexistence of a debt or liability at the time of issuing the cheque?


2. In the absence of evidence rebutting the presumption, has the accused proven the absence of debt or liability through the preponderance of probabilities by referring to specific circumstances in the case?

Burden of Proof Shifts to the Accused

The Supreme Court emphasized that when the complainant successfully proves the execution of the cheque, Section 139 shifts the burden of proof to the accused. Until the accused discharges this evidential burden, the presumed fact (debt or liability) is considered true without further requirements from the complainant.

Standard of Proof for the Accused

The Court clarified that the standard of proof for the accused to discharge this burden is not heavy and can be achieved through the preponderance of probabilities. The accused can provide either direct or circumstantial evidence to support their case.

Presumption “Disappears” After Accused Provides Evidence

Moreover, the Court clarified that once the accused presents evidence to satisfy the Court that there probably was no debt or liability as alleged in the complaint or demand notice, the presumption under Section 139 “disappears” and no longer affects the accused. The complainant is then obliged to prove the existence of the debt or liability as a matter of fact, and failure to do so results in the dismissal of the complaint case. Once both parties present evidence, the importance of the burden of proof diminishes.

Case-Specific Analysis

Applying these principles to the case at hand, the Supreme Court noted that the Trial Court’s framing of issues was flawed as it failed to apply the presumption under Section 139. The Court also found that the accused had not effectively discharged the burden of proof. Simply raising suggestions during cross-examination was insufficient to meet this burden. The Court stressed that a probable defense had to be presented.

High Court Error

The Supreme Court identified a fundamental error in the High Court’s approach. It noted that the High Court had questioned the lack of evidence on the complainant’s part regarding the loan extension to the accused when it should have instead examined the accused’s case and determined if they had met their evidential burden of proving the absence of debt or liability at the time of issuing the cheque.

Supreme Court’s Verdict

In light of these considerations, the Supreme Court set aside the judgments of both the Trial Court and the Punjab and Haryana High Court. Consequently, the Supreme Court convicted the respondent-accused, imposing a fine of twice the amount of the cheque, totaling Rs. 13,90,408 (Rupees thirteen lakh ninety thousand four hundred and eight). Failure to pay the fine will result in simple imprisonment for one year.

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