Section-138: how you can get an acquittal in cheque bounce cases

Supreme Court has laid down the principles for rebuttal of presumptions in cheque bounce cases and opined that raising of probable defence by the accused is sufficient.

April 10, 2019: Supreme Court has held that to rebut the presumption, it is open for the accused to rely on evidence led by him or 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.

Justice Bhushan speaking for a two judges bench has passed the judgment tilted as BASALINGAPPA vs MUDIBASAPPA on 09.04.2019.

The complainant gave a notice dated 12.03.2012 to the accused, the appellant stating dishonour of cheque dated 27.02.2012 for an amount of Rs.6,00,000/- for want of sufficient funds. Thereafter, on non-payment of the amount, a complaint dated 25.04.2012 was filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “Act, 1881). 2.2 Allegation in the complaint was that the accused requested the complainant to lend a hand loan to meet out urgent and family necessary for a sum of Rs.6,00,000/-. Complainant lent hand loan of Rs.6,00,000/- dated 27.02.2012 in favour of the accused. A cheque dated 27.02.2012 for Rs.6,00,000/- was given by the accused, but the same was returned by the bank with the endorsement “Funds Insufficient” on 01.03.2012. 2 2.3 After notice dated 12.03.2012, which was served on the accused on 13.03.2012, a complaint was filed.

The trial court after considering the evidence and material on record held that if the accused is able to raise a probable defense which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. However, in the appeal, High Court set aside the judgment of the trial court and convicted the accused for the offence under Section 138. Accused aggrieved by judgment of the High Court has come up in this appeal before the Supreme Court.

Taking note of certain earlier judgments, the Supreme Court observed “This Court held that what is needed is to raise a  probable defence, for which it is not necessary for the accused to disprove the existence of consideration by way of direct evidence and even the evidence adduced on behalf of the complainant can be relied upon”.

The court further observed “This Court held that where the fact of signature on the cheque is acknowledged, a presumption has to be raised that the cheque pertained to a legally enforceable debt or liability, however, this presumption is of a rebuttal nature and the onus is then on the accused to raise a probable defence”.

(i) 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.

(ii) 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.

(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or 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. (iv) 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. (v) It is not necessary for the accused to come in the witness box to support his defence.

In view of its discussion on earlier judgments, the Supreme Court then posed the question to itself As “The question to be looked into is as to whether any probable defence was raised by the accused”.

The Court then considered that due to other alleged financial transactions of the complainant as appearing from the record, his capacity to advance the present loan was doubtful and despite being questioned the complainant did not explain the financial capacity. Supreme Court set aside the judgment of High Court and acquitted the accused.

Read the judgment here:

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