Tuesday, October 10, 2023

Cheque Dishonour Cases - What Should Courts Ask Accused Once Presumption Under S.139 NI Act Is Applicable? Supreme Court Explains

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Reiterating the principles relating to the presumption under Section 139 of the Negotiable Instruments Act 1881, the Supreme Court reversed the acquittal of an accused in a case for cheque dishonour.

A bench comprising Justices Aravind Kumar and SVN Bhatti observed that there was a "fundamental flaw" in the approach taken by both the Trial Court and the High Court.

Summarising the law relating to the presumption under Section 139 NI Act and the mode of its rebuttal, the Court stated :

"Once the presumption under Section 139 was given effect, the Courts ought to have proceeded on the premise that the cheque was, indeed, issued in discharge of a debt/liability. The entire focus would then necessarily have to shift to the case set up by the accused since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the Court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138. If the Court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking the aid of the presumption. The Court would then take an overall view based on the evidence on record and decide accordingly".

Two questions that the Courts should ask?

When the Courts have concluded that the signature in the cheque has been admitted and its execution has been proved, then the Courst should inquire into either of the two questions :

1. Has the accused led any defence evidence to prove and conclusively establish that there existed no debt/liability at the time of issuance of the cheque?

2. In the absence of rebuttal evidence being led the inquiry would entail: Has the accused proved the nonexistence of debt/liability by a preponderance of probabilities by referring to the ‘particular circumstances of the case’?

Referring to a catena of precedents, the Court reiterated that as soon as the complainant proves the execution of the cheque, the burden of proof shifts to the accused by virtue of Section 139. "Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further." the Court explained.

The standard of proof to discharge this burden of proof on the accused is not heavy and can be established through the preponderance of probabilities. The accused can either adduce direct evidence or through circumstantial evidence.

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