Nature of presumption drawn for Negotiable Instrument

Nature of presumption drawn under Section 139 of Negotiable Instrument Act : Basalingappa v. Mudibasappa SLP (Crl.) No. 8641/2018


  1. The Complainant gave a notice to the accused( the appellant in the present matter) complaining of dishonour of cheque dated 27.02.2012 for an amount of Rs. 6,00,000 for want of sufficient funds.
  2. On non-payment of the amount, a complaint was filed by complainant under Section 138 of Act, 1881. Trial court held that, if accused was able to raise a probable defense which created doubts about existence of a legally enforceable debt or liability, prosecution could fail.
  3. Trial court acquitted the accused for offence under Section 138.
  4. Complainant aggrieved by said judgment filed a Criminal Appeal under Section 378(4) of Code of Criminal Procedure, 1973 (CrPC). High Court set aside judgment of trial court and convicted the accused for offence under Section 138.
  5. The accused being aggrieved by the decision of the High Court filed the SLP before the Supreme Court.

The present case notes the legal principles regarding nature of presumptions to be drawn Under Section 139 of the Act and the manner in which it can be rebutted by an Accused.

  • Section 139. Presumption in favour of holder.—It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
  • Section 118 of the Negotiabel Instrument Act 1881 provides for presumptions as to negotiable instruments. Section 118 is as follows:

Section 118. Presumptions as to negotiable instruments. –Until the contrary is proved, the following presumptions shall be made:

(a) of consideration –that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date –that every negotiable instrument bearing a date was made or drawn on such date;

The 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. The presumption under Section 139 is a rebuttable presumption.

The honorable court relied on the following decisions of the court:

  1. Bharat Barrel & Drum Manufacturing Co. v. Amin Chand Pyarelal, (1999) 3 SCC 35. The honorable Supreme Court held that once the execution of the promissory note is admitted, the presumption Under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable and defendant can prove the non-existence of a consideration by raising a probable defence.
  2. Kumar Exports v. Sharma Carpets, (2009) 2 SCC While relying on the aid decision the relevant paragraphs are quoted as follows. In paragraph Nos. 18 to 20 of this decision it has been laid down that:

Quote …… Applying the definition of the word “proved” in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial Under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the Accused, the Rules of presumptions Under Sections 118 and 139 of the Act help him shift the burden on the Accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the Accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

……The use of the phrase “until the contrary is proved” in Section 118 of the Act and use of the words “unless the contrary is proved” in Section 139 of the Act read with definitions of “may presume” and “shall presume” as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.

 ……The Accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the Accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Unquote

The Honorable Supreme Court has laid down the following principles in the present matter:

(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 defense, 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 defense.

— Advocate Ravindra Vikram, Ph: +91-94100-22521

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