Part payment – Endorsement on cheque –Cheque cannot be presented for encashment without recording the part payment -- If the unendorsed cheque is dishonoured on presentation, the offence u/s 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment.

(SC) Decided on: 11.10.2022

Law summarised in following manner:- (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.

(SC) Decided on: 09.04.2019

Cheque bounce case -- Presumption of Complainant being holder of cheque and the signature on the cheque having not been denied by the accused, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability.

(SC) Decided on: 09.04.2019

Creation of doubt is not sufficient -- Trial Court proceeded to pass the order of acquittal on the mere ground of 'creation of doubt' -- Trial Court appears to have proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the appellant had successfully rebutted the presumption as envisaged by Section 139 of the NI Act -- In the scheme of the NI Act, mere creation of doubt is not sufficient.

(SC) Decided on: 15.03.2019

Presumption of – Source of fund for loan – Requirement of law – After purportedly drawing the presumption u/s 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused -- This approach of the Trial Court had been at variance with the principles of presumption in law -- After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant.

(SC) Decided on: 15.03.2019

Cheque bounce case -- Probable defence -- On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist.

(SC) Decided on: 15.03.2019

Agreement to sell – A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purposes of Section 138.

(SC) Decided on: 13.03.2019

Blank cheque leaf -- Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption u/s 139 of the Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.

(SC) Decided on: 06.02.2019

Fiduciary relation -- Existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption u/s 139 of the Act, in the absence of evidence of exercise of undue influence or coercion.

(SC) Decided on: 06.02.2019

Cheque bounce case -- Rebuttal of presumption -- Defence was that the cheque was issued to the complainant on an assurance of a loan which would be obtained from a financial institution – Entire amount alleged to have been paid without obtaining a receipt or document evidencing the payment of the amount – Complainant failed to establish the source of funds -- Nothing was stated by the complainant in regard to the fate of the earlier two cheques which were allegedly issued by the accused -- Non-disclosure of the facts pertaining to the earlier two cheques, and the steps, if any, taken for recovery was again a material consideration which indicated that there was a doubt in regard to the transaction – Presumption stands rebutted -- Order of acquittal passed by the first appellate court was justified.

(SC) Decided on: 18.01.2019

Cheque bounce case -- Rebuttal of presumption -- Standard of proof for rebuttal of the presumption u/s 139 of the Act is guided by a preponderance of probabilities.

(SC) Decided on: 18.01.2019

Cheque bounce case -- Rebuttal of presumption -- No document to show the loan transaction -- No particulars at which place and in whose presence the amount was given; whether it was given in cash or through cheque -- Nothing on record as to when the demand was raised; whether any security document was obtained -- Father of the accused filed a written complaint against the complainant to take action for breaking the glass of the car etc. -- When the relations between complainant and accused families were strained and the complaint was filed against the complainant and that was pending, it is improbable that the complainant will give a loan of Rs.3,63,000/- to the accused without even getting any receipt or security document -- Presumption u/s 139 of the NI Act can be rebutted by raising probable defence and the accused had raised a probable defence and the presumption was rebutted.

(P&H HC) Decided on: 03.08.2018

Cheque bounce case -- Complainant proved the issuance of cheque which contained signatures of the accused and on presentation of the cheque, the cheque was returned with endorsement “insufficient funds” -- Bank official-witnesses proved that the cheque was not returned on the ground that it did not contain signatures of the accused rather it was returned due to insufficient funds – Trial court as well as the Appellate Court found that cheque contained the signatures of the accused – Defence that cheque was stolen complainant – No evidence led by accused -- Defence taken that cheque was stolen rejected by the two courts below – No basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability.

(SC) Decided on: 02.07.2018

Cheque bounce case -- Complainant proved the issuance of cheque which contained signatures of the accused and on presentation of the cheque, the cheque was returned with endorsement “insufficient funds” -- Bank official-witnesses proved that the cheque was not returned on the ground that it did not contain signatures of the accused rather it was returned due to insufficient funds – Trial court as well as the Appellate Court found that cheque contained the signatures of the accused – Defence that cheque was stolen complainant – No evidence led by accused -- Defence taken that cheque was stolen rejected by the two courts below – No basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability.

(SC) Decided on: 02.07.2018

Cheque bounce case -- Limitation -- Admittedly loan was taken in the year 1990, the same could not be claimed by bringing an action through cheque dated 30.08.1997 for recovery of the amount of Rs.25,000/- -- Hence, action in question was clearly barred by law of limitation -- Consequently, the liability under cheque could not be said to be a legally enforceable liability, and, therefore the complaint was not maintainable.

(P&H HC) Decided on : 28.09.2017

Cheque bounce case -- Money lending license – Onus of proof -- Appeal against acquittal – From the receipt it is clear that cheque in question was issued for recovery of the moneys advanced to him by way of cash from time to time with interest @ 2% per month -- Burden of proof to show that the complainant was a money lender under licence to do the business of money lending was upon the complainant but no document was produced -- Section 138 of the Act contemplates legally enforceable liability -- In the wake of the above finding and reasons discussed above, the appellant could not have enforced his claim into the cheque in question which was issued in illegal money lending transaction -- Appeal against acquittal is therefore dismissed.

(P&H HC) Decided on : 25.09.2017

Cheque bounce case -- Rebuttal of presumption -- Giving no particulars of the loan amount, as to when it was advanced nor there being any document to support the loan transaction, corroborates the version that the accused has not borrowed the amount – Furthermore, the complainant in the evidence has stated that he himself borrowed the amount on interest @ 3 to 5% -- Defence of the accused is that he has given this cheque to son in 2008 -- Before issuing legal notice to the present accused, the complainant had issued legal notice to son of the accused – Presumption u/s 139 of the Act has been duly rebutted.

(P&H HC) Decided on : 19.09.2017

Cheque bounce case -- Admission of signature on cheque – Merely on the basis of the admission of signatures by the accused on the cheque in question, he cannot be held guilty for its dishonour without any proof of a legally enforceable liability.

(P&H HC) Decided on: 21.11.2016

Cheque bounce case -- Debt of Chit fund business – Maintainability of complaint u/s 138 of NI Act -- Applicant/ complainant in her statement has deposed that she is not aware of the fact that chit fund business has been banned in Haryana and admits that she has been running the chit fund business without any license – Held, the liability or debt will not come under the ambit of Section 138 of the Act – Acquittal order of Trial Court and dismissal of appeal on the ground of maintainability, upheld.

(P&H HC) Decided on: 04.09.2015

Cheque bounce case -- Presumption -- Accused has categorically admitted issuance of cheque to complainant, which on presentation stood dishonoured -- There is a presumption that cheque was issued in discharging of his legal liability.

(P&H HC) Decided on: 07.05.2015

Cheque bounce case – Leave to appeal -- In the complaint it is stated that the accused was on business terms with the complainant and used to borrow money from her from time to time, whereas during cross-examination she has deposed that she was not running any business and has no knowledge regarding the business of the accused – Complainant has failed to produce any accounts books or similar documents – Complainant has failed to establish any monetary liability of the accused towards her -- It is for the complainant to produce the statement of accounts, wherein transactions can be established between the complainant and the accused -- Interference in an appeal against acquittal would be called for only if the judgment under appeal is perverse or is based on misreading of evidence -- Complainant has failed to point out any misreading of evidence by the trial Court – Prayer for special leave to appeal is declined.

(P&H HC) Decided on: 09.04.2015

Cheque bounce case -- Rebuttal of presumption -- Cheques issued against alleged loss/damages -- Complainant failed to prove that he suffered any loss on account of alleged late supply of the machinery and was legally entitled to claim any damages from accused -- Even late supply of the machinery is not proved -- Therefore, accused has been successful in rebutting the presumption under Section 139 of the N.I. Act to prove that there was 'no legally enforceable debt', for which the cheques are stated to have been issued -- Disputed claim of damages, which are not determined by any authority cannot be called debt or legally recoverable debt – No offence u/s 138 of the Act – Accused acquitted.

(P&H HC) Decided on: 17.03.2015

Cheque bounce case -- Burdon of proof -- Provisions of the N.I.Act lay down that initially, the complainant has to prove the existence of debt and other liabilities and thereafter the burden shifts upon the accused to prove that the cheque was not issued towards discharge of a lawful debt but was issued by way of security or any other reason on account of some business transaction or was obtained unlawfully.

(P&H HC) Decided on: 03.03.2015

Cheque bounce case -- Rebuttal of presumption -- No averment in the complaint to show when the loan was given by the complainant to the accused, in whose presence the loan amount was given and at which place – No evidence on the record that what amount has been given as loan and whether any interest etc. was to be paid or not -- No document on the record to show the liability and capacity of the complainant to lend such a huge amount -- No evidence on record that such a huge amount was withdrawn from the bank -- Further, this loan amount is not paid through negotiable instrument, as per provisions of the Income-Tax Act, such a huge amount cannot be paid in cash – Held, it is for the complainant to show that the cheque was issued for legally enforceable debt -- Presumption u/s 139 of the NI Act has been rebutted from the evidence of the complainant itself -- Reasonable doubt exists in the prosecution case and the Courts below have ignored all these facts and convicted the accused/petitioner -- Petitioner is acquitted.

(P&H HC) Decided on: 22.01.2015