In CRM-31265-2018-PUNJ HC- Presumption under Sections 118 and 139 of NI Act are in favour of holder of cheque but are rebuttable: P&H HC Justice Avneesh Jhingan [26-07-2022]

Read Order: Lal Singh v. Ram Mohan 

Monika  Rahar

Chandigarh, August 6, 2022: The High Court of Punjab and Haryana has held that the presumption under Sections 118 and 139 of NI Act are in favour of the holder of cheque but these presumptions are rebuttable. 

The Bench of Justice Avneesh Jhingan added, “The onus casted on the accused under Section 138 proceedings is not as strict as on the prosecution.”

The Court was called upon to decide an application for grant of leave to appeal against the judgement of acquittal of the accused in the complaint case under Section 138 of the NI Act. The application was accompanied by an application for condoning the delay of 88 days.

Essentially, Ram Mohan (the present respondent) borrowed a loan of Rs. 3,95,000/-. To discharge his liability, he issued a cheque but, on presentation, the cheque was dishonoured with the remarks ‘Account closed’. After serving a legal notice, the complaint was filed. 

The complainant to prove his case himself stepped into the witness box, filed his affidavit, produced original cheque, legal notice, postal receipt, statement of account of Bhag Singh.

The respondent took a defence that he had taken loan from the brother of the complainant. On repaying the amount, the cheques were not returned, and the security cheque was misused. To substantiate his defence, the respondent examined the Account Officer and the brother of the complainant. An application filed under Section 156(3) Cr.P.C. against the brother of the complainant for not returning the cheques was also placed on record.

The Court accepting the defence taken by the accused as probable and on failure of the applicant to prove the loan transaction, acquitted the respondent.

After hearing the parties, the Court held that the law is well settled that the presumption under Sections 118 and 139 of the Act are in favour of the holder of cheque but these presumptions are rebuttable. The onus casted on the accused under Section 138 proceedings is not as strict as on the prosecution, the Court held. 

Further, the Court held that the defence taken by the accused was to be tested on a reasonably probable defence. In the present case, it was observed by the Court that a specific defence was taken that the security cheques given to the brother of the applicant was misused, and to substantiate this plea, a complaint filed under Section 156(3) Cr.P.C. was produced. 

After the rebuttal of the presumptions, the Court added, the onus shifted upon the applicant. Also, it was observed that no document was produced to show a debt or other liability existing on the date of presentation of the cheque.

While rejecting the plea of the Counsel for the applicant that the cheque in question was handed over to the brother of the applicant, the Court observed, 

“The defence taken by the accused under Section 138 of the Act is to be tested on probability. After rebuttal of presumption, it was for the applicant to discharge the onus and prove that there was a loan transaction between the applicant and the respondent.”

Accordingly, while observing that no case for grant of leave was made out, the Court dismissed the application.