REPORTABLE  

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION  

CRIMINAL APPEAL NO.  1020 OF  2010  [Arising out of SLP (Crl.) No. 407 of 2006]  

Rangappa                                 … Appellant  

Versus

Sri Mohan                                                        … Respondent   

J U D G M E N T  

K.G. Balakrishnan, C.J.I.  

1. Leave granted.     

2.  In  the  present  case,  the  trial  court  had  acquitted  the  

appellant-accused  in  a  case  related  to  the  dishonour  of  a  

cheque under Section 138 of the Negotiable Instruments Act,  

1881  [Hereinafter  ‘Act’].  This  finding  of  acquittal  had  been  

made  by  the  Addl.  JMFC  at  Ranebennur,  Karnataka  in  

Criminal  Case  No.  993/2001,  by  way  of  a  judgment  dated  

30-5-2005.  On  appeal  by  the  respondent-complainant,  the  

High  Court  had  reversed  the  trial  court’s  decision  and  

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recorded  a  finding  of  conviction  while  directing  that  the  

appellant-accused  should  pay  a  fine  of  Rs.  75,000,  failing  

which  he  would  have  to  undergo  three  months  simple  

imprisonment (S.I.). Aggrieved by this final order passed by the  

High Court of Karnataka [in Criminal Appeal No. 1367/2005]  

dated 26-10-2005, the appellant-accused has approached this  

Court by way of a petition seeking special leave to appeal. The  

legal question before us pertains to the proper interpretation of  

Section 139 of the Act which shifts the burden of proof on to  

the  accused  in  respect  of  cheque  bouncing  cases.  More  

specifically, we have been asked to clarify the manner in which  

this statutory presumption can be rebutted.    

3.  Before  addressing  the  legal  question,  it  would  be  apt  to  

survey  the  facts  leading  up  to  the  present  litigation.  

Admittedly,  both the appellant-accused and the respondent-

claimant  are  residents  of  Ranebennur,  Karnataka.  The  

appellant-accused is a mechanic who had engaged the services  

of the respondent-complainant who is a Civil Engineer, for the  

purpose  of  supervising  the  construction  of  his  house  in  

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Ranebennur. The said construction was completed on 20-10-

1998 and this indicates that the parties were well acquainted  

with each other.  

4.  As  per  the  respondent-complainant,  the  chain  of  facts  

unfolded  in  the  following  manner.  In  October  1998,  the  

accused had requested him for a hand loan of Rs. 45,000 in  

order  to  meet  the  construction  expenses.  In  view  of  their  

acquaintance, the complainant had paid Rs. 45,000 by way of  

cash.  On receiving  this  amount,  the  appellant-accused  had  

initially assured repayment by October 1999 but on the failure  

to  do  so,  he  sought  more  time  till  December  2000.  The  

accused  had  then  issued  a  cheque  bearing  No.  0886322,  

post-dated for  8-2-2001 for Rs. 45,000 drawn on Syndicate  

Bank,  Kudremukh Branch.  Consequently,  on 8-2-2001,  the  

complainant  had  presented  this  cheque  through  Karnataka  

Bank,  Ranebennur  for  encashment.  However,  on 16-2-2001  

the said Bank issued a return memo stating that the ‘Payment  

has been stopped by the drawer’ and this memo was handed  

over to the complainant on 21-2-2001. The complainant had  

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then issued notice to the accused in this regard on 26-2-2001.  

On  receiving  the  same,  the  accused  failed  to  honour  the  

cheque within the statutorily prescribed period and also did  

not reply to the notice sent in the manner contemplated under  

Section  138  of  the  Act.  Following  these  developments,  the  

complainant had filed a complaint (under Section 200 of the  

Code  of  Criminal  Procedure)  against  the  accused  for  the  

offence punishable under Section 138 of the Act.  

5.  The  appellant-accused  had  raised  the  defence  that  the  

cheque in question was a blank cheque bearing his signature  

which had been lost and that it had come into the hands of  

the  complainant  who  had  then  tried  to  misuse  it.  The  

accused’s case was that there was no legally enforceable debt  

or liability between the parties since he had not asked for a  

hand loan as alleged by the complainant.   

6.  The trial  judge found in favour of  the accused by taking  

note of some discrepancies in the complainant’s  version. As  

per the trial judge, in the course of the cross-examination the  

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complainant  was  not  certain  as  to  when  the  accused  had  

actually  issued  the  cheque.  It  was  noted  that  while  the  

complaint  stated  that  the  cheque  had  been  issued  in  

December  2000,  at  a  later  point  it  was  conceded  that  the  

cheque had been handed over when the accused had met the  

complainant to obtain the work completion certificate for his  

house in March 2001. Later, it was stated that the cheque had  

been  with  the  complainant  about  15-20  days  prior  to  the  

presentation of the same for encashment, which would place  

the  date  of  handing  over  of  the  cheque  in  January  2001.  

Furthermore, the trial judge noted that in the complaint it had  

been submitted that the complainant had paid Rs. 45,000 in  

cash  as  a  hand  loan  to  the  accused,  whereas  during  the  

cross-examination it appeared that the complainant had spent  

this amount during the construction of the accused’s house  

from time to time and that the complainant had realised the  

extent of the liability after auditing the costs on completion of  

the construction. Apart from these discrepancies on part of the  

complainant, the trial judge also noted that the accused used  

to pay the complainant a monthly salary in lieu of his services  

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as a building supervisor apart from periodically handing over  

money which was used for the construction of the house. In  

light  of  these  regular  payments,  the  trial  judge  found  it  

unlikely  that  the  complainant  would  have  spent  his  own  

money  on  the  construction  work.  With  regard  to  these  

observations, the trial judge held that there was no material to  

substantiate  that  the  accused  had  issued  the  cheque  in  

relation to a legally enforceable debt. It was observed that the  

accused’s failure to reply to the notice sent by the complainant  

did not attract the presumption under Section 139 of the Act  

since the complainant had failed to prove that he had given a  

hand loan to the accused and that the accused had issued a  

cheque  as  alleged.  Furthermore,  the  trial  judge  erroneously  

decided that the offence made punishable by Section 138 of  

the Act had not been committed in this case since the alleged  

dishonour of  cheque was not on account of  insufficiency of  

funds  since  the  accused  had  instructed  his  bank  to  stop  

payment. Accordingly, the trial judge had recorded a finding of  

acquittal.    

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7.  However,  on  appeal  against  acquittal,  the  High  Court  

reversed  the  findings  and  convicted  the  appellant-accused.  

The High Court in its order noted that in the course of the trial  

proceedings, the accused had admitted that the signature on  

the  impugned  cheque  (No.  886322,  dated  8-2-2001)  was  

indeed  his  own.  Once  this  fact  has  been  acknowledged,  

Section  139  of  the  Act  mandates  a  presumption  that  the  

cheque pertained to a legally enforceable debt or liability. This  

presumption is of a rebuttal nature and the onus is then on  

the accused to raise a probable defence. With regard to the  

present facts, the High Court found that the defence raised by  

the  accused  was  not  probable.  In  respect  of  the  accused’s  

stand that he had lost a blank cheque bearing his signature,  

the  High  Court  noted  that  in  the  instructions  sent  by  the  

accused to his Bank for stopping payment, there is a reference  

to cheque No. 0886322, dated 20-7-1999. This is in conflict  

with the complainant’s version wherein the accused had given  

instructions  for  stopping  payment  in  respect  of  the  same  

cheque, albeit one which was dated 8-2-2001. The High Court  

also noted that if the accused had indeed lost a blank cheque  

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bearing his signature, the question of his mentioning the date  

of the cheque as 20-7-1999 could not arise. At a later point in  

the order, it has been noted that the instructions sent by the  

accused to his bank for stopping payment on the cheque do  

not  mention  that  the  same  had  been  lost.  However,  the  

correspondence  does  refer  to  the  cheque  being  dated  

20-7-1999. Furthermore, during the cross-examination of the  

complainant, it was suggested on behalf of the accused that  

the complainant had the custody of the cheque since 1998.  

This suggestion indicates that the accused was aware of the  

fact that the complainant had the cheque, thereby weakening  

his  claim  of  having  lost  a  blank  cheque.  Furthermore,  a  

perusal of the record shows that the accused had belatedly  

taken up the defence of having lost a blank cheque at the time  

of  his  examination  during  trial.  Prior  to  the  filing  of  the  

complaint, the accused had not even replied to the notice sent  

by  the  complainant  since  that  would  have  afforded  an  

opportunity to raise the defence at an earlier stage. All of these  

circumstances  led  the  High  Court  to  conclude  that  the  

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accused  had  not  raised  a  probable  defence  to  rebut  the  

statutory presumption. It was held that:  

‘6. Once the cheque relates to the account of the accused  and he accepts and admits the signatures on the said  cheque, then initial presumption as contemplated under  Section 139 of the Negotiable Instruments Act has to be  raised  by the  Court  in  favour  of  the  complainant.  The  presumption referred to in Section 139 of the N.I. Act is a  mandatory presumption and not a general presumption,  but  the  accused  is  entitled  to  rebut  the  said  presumption. What is required to be established by the  accused in order  to rebut the  presumption is  different  from each case under given circumstances. But the fact  remains  that  a  mere  plausible  explanation  is  not  expected from the accused and it must be more than a  plausible  explanation  by  way  of  rebuttal  evidence.  In  other  words,  the  defence  raised  by  way  of  rebuttal  evidence must be probable and capable of being accepted  by the Court. The defence raised by the accused was that  a blank cheque was lost by him, which was made use of  by the complainant. Unless this barrier is crossed by the  accused,  the  other  defence  raised  by  him whether  the  cheque was issued towards the hand loan or towards the  amount  spent  by  the  complainant  need  not  be  considered. …’  

Hence,  the  High  Court  concluded  that  the  alleged  

discrepancies  on  part  of  the  complainant  which  had  been  

noted by the trial court were not material since the accused  

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had  failed  to  raise  a  probable  defence  to  rebut  the  

presumption  placed  on  him  by  Section  139  of  the  Act.  

Accordingly, the High Court recorded a finding of conviction.  

8.  In  the  course  of  the  proceedings  before  this  Court,  the  

contentions  related  to  the  proper  interpretation  of  Sections  

118(a),  138 and 139 of  the  Act.  Before  addressing them, it  

would  be  useful  to  quote  the  language  of  the  relevant  

provisions:  

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,  endorsed,  negotiated  or  transferred,  was  accepted,  endorsed,  negotiated or transferred for consideration;  …  

138. Dishonour of cheque for insufficiency,  etc.,  of  funds in the account. – Where any cheque drawn by a  person on an account maintained by him with a banker  for payment of any amount of money to another person  from out of that account for the discharge, in whole or in  part,  of  any debt  or  other  liability,  is  returned  by  the  bank  unpaid,  either  because  of  the  amount  of  money  standing to the credit of that account is insufficient to  honour  the  cheque  or  that  it  exceeds  the  amount  

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arranged to be paid from that account by an agreement  made with that bank, such person shall  be deemed to  have committed an offence and shall, without prejudice  to  any  other  provision  of  this  Act,  be  punished  with  imprisonment for a term which may extend to two years,  or with fine which may extend to twice the amount of the  cheque, or with both:  

Provided  that  nothing  contained  in  this  section  shall  apply unless-  

(a)the  cheque  has  been  presented  to  the  bank  within  a  period of six months from the date on which it is drawn  or within the period of its validity, whichever is earlier.  

(b)the payee or the holder in due course of the cheque, as  the case may be, makes a demand for the payment of the  said amount of money by giving a notice, in writing, to  the drawer of the cheque, within thirty days of the receipt  of information by him from the bank regarding the return  of the cheque as unpaid; and  

(c) the drawer of such cheque fails to make the payment of  the said amount of money to the payee or, as the case  may be, to the holder in due course of the cheque, within  fifteen days of the receipt of the said notice.  

Explanation. –  For  the  purposes  of  this  section,  ‘debt  or  other  liability’  means  a  legally  enforceable  debt  or  other  liability.   

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.  

9. Ordinarily in cheque bouncing cases, what the courts have  

to  consider  is  whether  the  ingredients  of  the  offence  

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enumerated in Section 138 of the Act have been met and if so,  

whether  the  accused  was  able  to  rebut  the  statutory  

presumption  contemplated  by  Section  139  of  the  Act.  With  

respect to the facts of the present case, it must be clarified  

that contrary to the trial court’s finding, Section 138 of the Act  

can  indeed  be  attracted  when  a  cheque  is  dishonoured  on  

account of ‘stop payment’ instructions sent by the accused to  

his  bank  in  respect  of  a  post-dated  cheque,  irrespective  of  

insufficiency  of  funds  in  the  account.  This  position  was  

clarified by this Court in Goa Plast (Pvt.) Ltd. v. Chico Ursula  

D’Souza, (2003) 3 SCC 232, wherein it was held:  

“Chapter  XVII  containing  Sections  138  to  142  was  introduced in the Act by Act 66 of 1988 with the object of  inculcating faith in the efficacy of banking operations and  giving credibility  to negotiable  instruments in business  transactions.  These  provisions  were  intended  to  discourage people from not honouring their commitments  by way of payment through cheques. The court should  lean in favour of an interpretation which serves the object  of the statute. A post-dated cheque will lose its credibility  and acceptability if its payment can be stopped routinely.  The purpose of a post-dated cheque is to provide some  accommodation to the drawer of the cheque. Therefore, it  is all the more necessary that the drawer of the cheque  should not be allowed to abuse the accommodation given  to him by a creditor by way of acceptance of a post-dated  cheque. In view of Section 139, it  has to be presumed  

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that a cheque is issued in discharge of any debt or other  liability. The presumption can be rebutted by adducing  evidence and the burden of proof is on the person who  wants  to  rebut  the  presumption.  This  presumption  coupled with the object of Chapter XVII of the Act leads  to the conclusion that by countermanding payment of a  post-dated cheque, a party should not be allowed to get  away from the penal provision of Section 138. A contrary  view would render S. 138 a dead letter and will provide a  handle to persons trying to avoid payment under legal  obligations undertaken by them through their own acts  which in other words can be said to be taking advantage  of one’s own wrong. …”     

10. It has been contended on behalf of the appellant-accused  

that the presumption mandated by Section 139 of the Act does  

not  extend to  the  existence  of  a  legally  enforceable  debt  or  

liability and that the same stood rebutted in this case, keeping  

in mind the discrepancies in the complainant’s version. It was  

reasoned that it is open to the accused to rely on the materials  

produced by the complainant for disproving the existence of a  

legally enforceable debt or liability. It has been contended that  

since the  complainant  did not  conclusively  show whether  a  

debt was owed to him in respect of a hand loan or in relation  

to  expenditure  incurred  during  the  construction  of  the  

accused’s house, the existence of a legally enforceable debt or  

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liability  had  not  been  shown,  thereby  creating  a  probable  

defence for the accused. Counsel appearing for the appellant-

accused has relied on a decision given by a division bench of  

this  Court  in  Krishna  Janardhan  Bhat v.  Dattatraya  G.  

Hegde,  (2008)  4  SCC  54,  the  operative  observations  from  

which are reproduced below (S.B. Sinha, J. at Paras. 29-32,  

34 and 45):    

“29. Section 138 of the Act has three ingredients viz.:  (i) that there is a legally enforceable debt (ii) that the cheque was drawn from the account  

of bank for discharge in whole or in part of any  debt  or  other  liability  which  presupposes  a  legally enforceable debt; and  

(iii) that the cheque so issued had been returned  due to insufficiency of funds.  

30. The proviso appended to the said section provides for  compliance  with legal  requirements  before  a  complaint  petition can be acted upon by a court of law. Section 139  of the Act merely raises a presumption in regard to the  second  aspect  of  the  matter.  Existence  of  legally  recoverable debt is not a matter  of presumption under  Section 139 of the Act. It merely raises a presumption in  favour of a holder of the cheque that the same has been  issued for discharge of any debt or other liability.    

31. The courts below, as noticed hereinbefore, proceeded  on the basis that Section 139 raises a presumption in  regard to existence of a debt also. The courts below, in  our opinion, committed a serious error in proceeding on  the  basis  that  for  proving  the  defence  the  accused  is  required to step into the witness box and unless he does  

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so  he  would  not  be  discharging  his  burden.  Such  an  approach on the part of the courts, we feel, is not correct.  

32.  An  accused  for  discharging  the  burden  of  proof  placed  upon  him  under  a  statute  need  not  examine  himself. He may discharge his burden on the basis of the  materials already brought on record. An accused has a  constitutional right to maintain silence. Standard of proof  on the part of the accused and that of the prosecution in  a criminal case is different.   ...  34.  Furthermore,  whereas  prosecution  must  prove  the  guilt  of  an  accused  beyond  all  reasonable  doubt,  the  standard of proof so as to prove a defence on the part of  the accused is ‘preponderance of probabilities’. 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 he  relies.”                     

(emphasis supplied)  

Specifically  in  relation  to  the  nature  of  the  presumption  

contemplated by Section 139 of the Act, it was observed;  

“45.  We  are  not  oblivious  of  the  fact  that  the  said  provision  has  been  inserted  to  regulate  the  growing  business, trade, commerce and industrial activities of the  country  and  the  strict  liability  to  promote  greater  vigilance in financial matters and to safeguard the faith  of  the  creditor  in  the  drawer  of  the  cheque  which  is  essential to the economic life of a developing country like  India. This however, shall not mean that the courts shall  put a blind eye to the ground realities. Statute mandates  raising of presumption but it stops at that. It does not  say how presumption drawn should be held to have been  

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rebutted.  Other  important  principles  of  legal  jurisprudence,  namely,  presumption  of  innocence  as  a  human  right  and  the  doctrine  of  reverse  burden  introduced by Section 139 should be delicately balanced.  Such balancing acts, indisputably would largely depend  upon  the  factual  matrix  of  each  case,  the  materials  brought on record and having regard to legal principles  governing the same.”      

                                                                (emphasis supplied)  

11. With respect to the decision cited above, counsel appearing  

for  the  respondent-claimant  has  submitted  that  the  

observations  to  the  effect  that  the  ‘existence  of  legally  

recoverable debt is not a matter of presumption under Section  

139 of  the Act’  and that ‘it  merely raises a presumption in  

favour of a holder of the cheque that the same has been issued  

for discharge of any debt or other liability’  [See Para. 30 in  

Krishna  Janardhan  Bhat (supra)]  are  in  conflict  with  the  

statutory  provisions  as  well  as  an  established  line  of  

precedents of this Court. It will thus be necessary to examine  

some of  the  extracts  cited  by  the  respondent-claimant.  For  

instance, in Hiten P. Dalal v. Bratindranath Banerjee, (2001)  

6 SCC 16, it was held (Ruma Pal, J. at Paras. 22-23):   

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“22. Because both Sections 138 and 139 require that the  Court  ‘shall  presume’  the liability  of  the drawer  of  the  cheques  for  the  amounts  for  which  the  cheques  are  drawn,  …,  it  is  obligatory  on  the  Court  to  raise  this  presumption in every case where the factual basis for the  raising  of  the  presumption  has  been  established.  It  introduces  an  exception  to  the  general  rule  as  to  the  burden of proof in criminal cases and shifts the onus on  to the accused (…). Such a presumption is a presumption  of law, as distinguished from a presumption of fact which  describes provisions by which the court may presume a  certain  state  of  affairs.  Presumptions  are  rules  of  evidence  and  do  not  conflict  with  the  presumption  of  innocence, because by the latter all that is meant is that  the prosecution is obliged to prove the case against the  accused beyond reasonable doubt. The obligation on the  prosecution  may  be  discharged  with  the  help  of  presumptions of law or fact unless the accused adduces  evidence  showing  the  reasonable  probability  of  the  non-existence of the presumed fact.  

23. In other words, provided the facts required to form  the basis of a presumption of law exists, the discretion is  left with the Court to draw the statutory conclusion, but  this  does  not  preclude  the  person  against  whom  the  presumption is drawn from rebutting it and proving the  contrary.  A  fact  is  said  to  be  proved  when,  after  considering  the  matters  before  it,  the  Court  either  believes it to exist, or considers its existence so probable  that a prudent man ought, under the circumstances of  the particular case, to act upon the supposition that it  exists.  Therefore,  the  rebuttal  does  not  have  to  be  conclusively  established  but  such  evidence  must  be  adduced before the Court in support of the defence that  the  Court  must  either  believe  the  defence  to  exist  or  consider  its  existence  to  be  reasonably  probable,  the  standard of reasonability being that of the prudent man.”                                                          (emphasis supplied)

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12. The respondent-claimant has also referred to the decision  

reported as Mallavarapu Kasivisweswara Rao v. Thadikonda  

Ramulu Firm & Ors.,  2008 (8)  SCALE 680, wherein it was  

observed:  

“Under Section 118(a) of the Negotiable Instruments Act,  the  court  is  obliged  to  presume,  until  the  contrary  is  proved,  that  the  promissory  note  was  made  for  consideration. It is also a settled position that the initial  burden in this regard lies on the defendant to prove the  non-existence  of  consideration  by  bringing  on  record  such  facts  and  circumstances  which  would  lead  the  Court  to believe the non-existence of  the consideration  either  by  direct  evidence  or  by  preponderance  of  probabilities showing that the existence of consideration  was improbable, doubtful or illegal. …”  

This decision then proceeded to cite an extract from the earlier  

decision in Bharat Barrel & Drum Manufacturing Company  

v. Amin Chand Pyarelal, (1993) 3 SCC 35 (Para. 12):    

“Upon  consideration  of  various  judgments  as  noted  hereinabove, the position of law which emerges is that  once 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. The defendant can prove the non-existence of  a  consideration  by  raising  a  probable  defence.  If  the  defendant is proved to have discharged the initial onus of  proof  showing  that  the  existence  of  consideration  was  

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improbably or doubtful or the same was illegal, the onus  would shift to the plaintiff who will be obliged to prove it  as a matter of fact and upon its failure to prove would  disentitle him to the grant of relief on the basis of the  negotiable instrument. The burden upon the defendant of  proving  the  non-existence  of  the  consideration  can  be  either direct or by bringing on record the preponderance  of probabilities by reference to the circumstances upon  which he relies. In such an event, the plaintiff is entitled  under law to rely upon all the evidence led in the case  including that of the plaintiff as well. In case, where the  defendant fails to discharge the initial onus of proof by  showing  the  non-existence  of  the  consideration,  the  plaintiff would invariably be held entitled to the benefit of  presumption arising under Section 118(a) in his favour.  The court may not insist upon the defendant to disprove  the existence of consideration by leading direct evidence  as the existence of negative evidence is neither possible  nor contemplated and even if  led, is to be seen with a  doubt. The bare denial of the passing of the consideration  apparently does not appear to be any defence. Something  which is probable has to be brought on record for getting  the benefit of shifting the onus of proving to the plaintiff.  To disprove the presumption, the defendant has to bring  on  record  such  facts  and  circumstances  upon  consideration of which the court may either believe that  the consideration did not exist or its non-existence was  so  probable  that  a  prudent  man  would,  under  the  circumstances of the case, act upon the plea that it did  not exist.”    

(emphasis supplied)  

Interestingly, the very same extract has also been approvingly  

cited in Krishna Janardhan Bhat (supra).  

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13. With regard to the facts in the present case, we can also  

refer to the following observations in M.M.T.C. Ltd. and Anr.  

v.  Medchl Chemicals & Pharma (P) Ltd., (2002) 1 SCC 234  

(Para. 19):  

“… The authority shows that even when the cheque is  dishonoured by reason of stop payment instruction, by  virtue of Section 139 the Court has to presume that the  cheque was received by the holder for the discharge in  whole or in part, of any debt or liability. Of course this is  a rebuttable presumption.  The accused can thus show  that  the  ‘stop  payment’  instructions  were  not  issued  because  of  insufficiency  or  paucity  of  funds.  If  the  accused shows that in his account there was sufficient  funds to clear the amount of the cheque at the time of  presentation of the cheque for encashment at the drawer  bank and that the stop payment notice had been issued  because of other valid causes including that there was no  existing  debt  or  liability  at  the  time of  presentation of  cheque for encashment, then offence under Section 138  would not be made out. The important thing is that the  burden of so proving would be on the accused. …”   

                                                         (emphasis supplied)   

14.  In light of these extracts, we are in agreement with the  

respondent-claimant  that  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 (supra)  

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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.  

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  

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test  of  proportionality  should  guide  the  construction  and  

interpretation  of  reverse  onus  clauses  and  the  

accused/defendant cannot be expected to discharge an unduly  

high  standard  or  proof.  In  the  absence  of  compelling  

justifications,  reverse  onus  clauses  usually  impose  an  

evidentiary burden and not a persuasive burden. Keeping this  

in view, it is a settled position that when an accused has to  

rebut  the  presumption  under  Section  139,  the  standard  of  

proof for doing so is that of ‘preponderance of probabilities’.  

Therefore, if the accused is able to raise a probable defence  

which  creates  doubts  about  the  existence  of  a  legally  

enforceable  debt  or  liability,  the  prosecution  can  fail.  As  

clarified in the citations, the accused can rely on the materials  

submitted by the complainant in order to raise such a defence  

and it is conceivable that in some cases the accused may not  

need to adduce evidence of his/her own.      

15. Coming back to the facts in the present case, we are in  

agreement with the High Court’s view that the accused did not  

raise a probable defence. As noted earlier, the defence of the  

loss of a blank cheque was taken up belatedly and the accused  

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had  mentioned  a  different  date  in  the  ‘stop  payment’  

instructions  to  his  bank.  Furthermore,  the  instructions  to  

‘stop payment’ had not even mentioned that the cheque had  

been lost.  A perusal of  the trial  record also shows that the  

accused appeared to be aware of the fact that the cheque was  

with  the  complainant.  Furthermore,  the  very  fact  that  the  

accused  had  failed  to  reply  to  the  statutory  notice  under  

Section 138 of the Act leads to the inference that there was  

merit in the complainant’s version. Apart from not raising a  

probable  defence,  the  appellant-accused  was  not  able  to  

contest the existence of a legally enforceable debt or liability.  

The fact that the accused had made regular payments to the  

complainant in relation to the construction of his house does  

not preclude the possibility of the complainant having spent  

his own money for the same purpose. As per the record of the  

case,  there  was  a  slight  discrepancy  in  the  complainant’s  

version, in so far as it was not clear whether the accused had  

asked  for  a  hand  loan  to  meet  the  construction-related  

expenses or whether the complainant had incurred the said  

expenditure over a period of time. Either way, the complaint  

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discloses the prima facie existence of a legally enforceable debt  

or  liability  since  the  complainant  has  maintained  that  his  

money  was  used  for  the  construction-expenses.  Since  the  

accused did admit that the signature on the cheque was his,  

the statutory presumption comes into play and the same has  

not been rebutted even with regard to the materials submitted  

by the complainant.  

16. In conclusion, we find no reason to interfere with the final  

order of the High Court, dated 26-10-2005, which recorded a  

finding of conviction against the appellant.  The present appeal  

is disposed of accordingly.   

         ……….………………………. CJI  (K.G. BALAKRISHNAN)

………….………………………J.                                               (P. SATHASIVAM)

                                             …………………………………J.                                                (J.M. PANCHAL)

NEW DELHI  MAY 07, 2010

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