Dishonour of Cheque: The presumption under section 139 is a rebuttal presumption and the onus is on accused to raise the probable defence. [Read Judgment]

On 14 July’ 2020, The Delhi District Court in the case of Vikas Khanna v. Gautam Kumar held that the presumption under section 139 is a rebuttal presumption and the onus is on accused to raise the probable defence and Section 27 of the General Clauses Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post.

Facts of the case

Accused approached the complainant for a friendly loan in the sum of Rs.2,00,000/- for expansion of his business. That on the basis of good faith, complainant had given a friendly loan of Rs.1,00,000/- in cash to the accused. accused expressed his inability to repay the amount at that point of time. After his much persuasion, accused in order to discharge his legal liability towards the repayment of the loan, the complainant presented the above mentioned cheque for encashment at his bank at Oriental Bank of Commerce and the same was dishonoured with remarks ' Funds Insufficient'. Being aggrieved with the conduct of the accused, complainant sent a legal notice u/s 138 NI Act, calling upon the accused to make the payment within 15 days of the receipt of the legal notice as prescribed u/s 138 of the N.I. Act. Even after the expiry of 15 days stipulated period, accused did not make the payment as required by the legal demand notice.

Contentions and Submissions by Petitioner

The Petitioner (Complainant) submits before the Court that the accused has failed to raise any probable defence to disprove the case of complainant and to rebut the presumption u/s 139 NI Act. Therefore, accused be convicted for the offence u/s 138 NI Act.

Contentions and Submissions by Respondent

The respondent (accused) has argued that accused had never taken any loan of amount of Rs.1,00,000/- from the complainant. A loan of Rs.15,000/- was only taken by the accused from complainant, for the security of which a blank signed cheque was given by the accused. He further argued that accused had already repaid the amount of Rs.25,000/- to the complainant but despite this the security cheque has not been returned and the same cheque has been misused in the present case in order to falsely implicate the accused. As such, since accused has no legal liability to make payment towards the impugned cheque, he be acquitted of the offence u/s 138 NI Act.

Court Findings and Judgment

The Delhi District Court relying on Section 139 and 118(a) of NIA Act, the court stated that:

“The accused can either prove that the liability did not exist or make the non-existence of liability so probable that a reasonable person ought under the circumstances of the case act on the supposition that it does not exist.”

The Court further stated that the:

1. Section 27 of the General Clauses Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post.
2. The virtue of section 20 NI act, it is immaterial as to who has filled in the contents of the cheque once, accused has admitted his signature but as the complainant had been shifting his version during his cross-examination, it makes his credibility questionable regarding his deposition with respect to Digitally signed.
3. The presumption under section 139 is a rebuttal presumption and the onus is on accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
4. Complainant in absence of any oral/documentary proof, has been unable to explain the transaction wherein he had lend Rs.1 Lakh to the accused
5. The alleged loan amount was paid in cash. There is no document executed to record the advancement of loan, neither any witness have been examined before the court who could corroborate the transaction wherein loan of Rs.1,00,000/- was extended to accused. Moreover , despite regular filing of the income tax returns by the complainant, the loan amount has not been mentioned in the income tax return. Thus, the complainant could not establish the fact of alleged loan being given to accused.

After, the scrutiny of the evidence, final argument and reasoning from the court, the court held that the,

“Thus, on evaluation of the entire evidence, this court finds the version of the complainant is not only improbable but the alleged transaction is also illegal. The complainant has not been able to establish that there was a legal debt or liability standing on the part of accused towards the complainant. Thus, the main ingredient of section 138 Negotiable Instrument Act, 1881 has itself not been fulfilled. In view of above discussion and reasoning, accused Gautam Kumar is acquitted for the offence u/s 138, Negotiable Instruments Act, 1881.”

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