Section 138 NI Act - If Signature On Cheque Is Admitted, Presumption Under Section 139 Will Be Raised : Supreme Court

 The Supreme Court has observed that if the signature on the cheque is admitted, then presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued in discharge of a legally enforceable debt will be raised. Upon such presumption being raised, it is incumbent upon the accused to rebut the same. "..it is clear that signature on the cheque having been admitted, a presumption shall be raised under Section 139that the cheque was issued in discharge of debt or liability", a bench comprising Chief Justice of India NV Ramana, Justices Surya Kant and AS Bopanna

The bench was considering the case Thriyambak S Hegde v. Sripad, which was an appeal against a judgment of the Karnataka High Court setting aside the the conviction ordered by the Magistrate for the offence under Section 138 of the Negotiable Instruments Act. The bench referred to the precedent in  in Basalingappa vs. Mudibasappa (2019), where the principles on Sections 118 (a) and 139 of the NI Act were summarized in the following manner

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

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. 

To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference 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 reference to the circumstances upon which they rely.

That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. It is not necessary for the accused to come in the witness box to support his defence.

Applying the principles to the facts of the case, the Court set aside the High Court's acquittal and restored the conviction. Facts: In the present matter, the case of the appellant is that the respondent who was known to him for the past few years approached him and informed that due to his financial difficulty he intends to sell the house situate in Sirsi town. The appellant agreed to purchase the same for the negotiated total sale consideration of four lakhs.

An agreement dated 6th June 1996 was executed by the respondent while receiving the advance amount of Rs.3,50,000/, however the appellant learnt later that the house stood in the name of the father of the respondent and he did not have the authority to sell it. 

The appellant then demanded the return the return of Rs. 3,50,000/­ which he had paid as advance amount, and the respondent instead of paying the entire amount, issued a cheque of part amount of Rs. 1,50,000. When the appellant presented the cheque for realisation on it came to be dishonoured with the endorsement 'insufficient funds'

This was followed by the appellant getting a notice issued informing the respondent about the cheque being dishonoured and demanding payment of the cheque amount, to which the respondent failed to respond. 

The appellant then filed a complaint under Section 200 of CrPC on 14th July 1998 before the Judicial Magistrate, First Class at Sirsi seeking prosecution of the respondent under Section 138 of the Negotiable Instrument act 1881