Landmark Judgment on Presumption in Case of Cheque Bounce Amaresh Patel LANDMARK JUDGMENT Tue, Oct 08, 2019, at ,06:57 PM Title of the Case – Presumption in Case of Cheque Bounce Name of the case – Kishan Rao vs. Shankargouda., Crl. A. No. 803 of 2018 (@SLP (Crl.) No. 10030 of 2016) (Supreme Court) Date of Judgment – 02nd July, 2018 Judges: Justice A Bhushan and Justice A Sikri Subject and sections involved – Section 139 of Negotiable Instruments Act, 1881 Issue: What is the extent of section 139 NI Act? Does the appellant follows the limitation u/s 139 NI Act? Fact of the Case: The appellant(complainant) and the respondent (accused) were known to each other and had good relations. Accused approached the complainant for a loan of 2 lakhs for the purpose of his business expenses and promised to repay the same within one month. On 25.12.2005, complainant had paid sum of Rs.2,00,000/- as a loan. For repayment of the loan accused issued post dated cheque dated 25.01.2006 in the name of complainant for the amount of Rs.2,00,000/-. The cheque was presented for collection at Bank of Maharashtra Branch at Gulbarga which could not be encashed due to insufficient funds. At the request of the accused the cheque was again represented on 01.03.2006 for collection which was returned on 02.03.2006 by the Bank with the endorsement “insufficient funds”. Click Here to Get All Important Judgment of the Month Ratio of the Case: The division bench of Supreme Court has came-up with two legal position. Firstly, High Court’s scope of revisional jurisdiction and secondly, presumption in favour of holder of cheque under Section 139 of NI Act. The presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat, (2008) 4 SCC 54, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Click Here to Get Into Legal World Magazine for Advocates and Law Students Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof.” Scope of Revisional Jurisdiction of High Court- That the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. With reference to the facts of the present case, the Court observed that in the instant case also conviction of the accused was recorded, the High Court set aside the order of conviction by substituting its own view. That the High Court did not returned any finding that order of conviction based on evidence on record suffers from any perversity or based on no material or there is other valid ground for exercise of revisional jurisdiction. Presumption u/ Section 139 of NI Act– While referring to the case of Kumar Exports vs. Sharma Carpets, the Supreme Court held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve any purpose. With reference to the facts of the present case, the Court noted that the trial court as well as the Appellate Court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. It was also stated that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail.