Under Negotiable Instruments Act, burden of proof on accused to prove cheque was not issued for discharge of debt or liability: Supreme Court

The Supreme Court reaffirmed on Tuesday that under the Negotiable Instruments Act (NI Act), the burden of proof to show that a cheque was not issued for discharge of any debt or liability in terms of Section 138 of the Act is on the accused. .Towards this end, Section 139 of the NI Act creates presumption in favour of the holder of the cheque that the same was received in discharge of a debt or liability, a Bench of Justices Indu Malhotra and Ajay Rastogi ruled..“There is a mandate of presumption of consideration in terms of the provisions of the Act and the onus shifts to the accused on proof of issuance of cheque, to rebut the presumption that the cheque was issued for discharge of any debt or liability in terms of Section 138 of the Act,” the Court said..The Court was hearing an appeal filed against an April 2019 judgment of the Himachal Pradesh High Court holding the appellant guilty of offences under Section 138 of the Negotiable Instruments Act..The appellant had brought non-woven fabric from the complainant. The goods were delivered to the appellant by a public carrier truck. The appellant issued two cheques in the name of the complainant from her account of the Punjab National Bank, Karnal in order to meet the legal existing and enforceable liabilities.The cheque bounced and the complainant sent two legal notices to the appellant but did not receive any response within the statutory period..Hence, two separate complaints were filed by the complainantrespondent under Section 138 of the Act against the appellant-accused.During the trial, the complainant examined three witnesses and placed reliance on the documentary evidence..The statement of the appellant-accused was recorded under Section 313 of the Code of Criminal Procedure (CrPC) by the trial Judge wherein the appellant-accused claimed innocence and pleaded false implication in the case. However, the appellant did not lead any evidence in defence.After examining the evidence, the trial Judge returned a finding that the complainant failed to establish that the material/goods were delivered to the appellant in lieu of which, the cheques were issued. In the absence of burden being discharged by the complainant, the onus to disprove or rebut the presumption could not be shifted to the appellant as referred under Section 139 of the Act, the trial court held and acquitting the accused..On appeal, the High Court overturned the decision of the trial court and found the appellant guilty. It said that the primary burden to prove that the cheques were issued by the appellant in lieu of the material supplied was discharged by the complainant.It was then for the appellant-accused to discharge her burden to rebut in defence as required under Section 139 of the Act which was not done in the present case, the High Court ruled..The accused then approached the Supreme Court in appeal..The burden of proof, the top court said, was on the accused in view of presumption under Section 139 of the Act and the standard of proof was of “preponderance of probabilities”.It is well settled that the proceedings under Section 138 of the Act are quasi criminal in nature, and the principles which apply to acquittal in other criminal cases are not applicable in the cases instituted under the Act..“Under Section 139 of the Act, a presumption is raised that the holder of a cheque received the cheque for the discharge, in whole or in part, of any debt or other liability. To rebut this presumption, facts must be adduced by the accused which on a preponderance of probability (not beyond reasonable doubt as in the case of criminal offences), must then be proved,” the Court made it clear..In the case at hand, the Court concluded, the complainant was able to prove that the appellant placed the order for purchasing non-woven fabric, the said goods were delivered and in lieu of the same, cheques were issued by the appellant to discharge her liability. The said cheques were dishonoured on the ground of “insufficient funds” in the account of the appellant.On the other hand, there is no evidence led by appellant to rebut the presumption that the cheques were issued for consideration..The Court, therefore, upheld the conviction and dismissed the appeal..[Read Judgment]