Section 139 of the Negotiable Instruments lays presumption in favour of the holder of the cheque that the cheque has been duly received by the holder and the cheque is of the nature as described under Section 138 of the Negotiable Instruments Act. Merely denying the existence of a debt or liability by the accused does not shift the burden of proof from the accused.

In the matter of Kishan Rao Versus Shankargouda, the Respondent borrowed a sum of Rs. 2,00,000/- from the Appellant for the purpose of a business loan but failed to repay the amount after the post dated cheque issued by the Respondent to the Appellant was dishonoured. The trial court found the Respondent guilty and accordingly imposed a fine of Rs. 2.50 Lakhs along with a simple imprisonment for a period of 6 months. After the immediate appeal to the trial Court’s judgment was dismissed, the Respondent approached the High Court vide a Criminal Revisions Petition which set aside the judgment of conviction on the Respondent. Challenging the order of the High Court, the Appellant approached the Hon’ble Supreme Court which delivered its decision in the favour of the Appellant.

The Hon’ble Justice Ashok Bhushan, who was presiding over the said appeal, observed that the trial court rightly noted that the cheque issued by the Respondent to the Appellant contained the signatures of the Respondent. Further, the presumption under Sectionn 139 was applicable to the Respondent as he had issued the said dishonoured cheques to the Appellant and the Respondent failed to rebut the aforesaid presumption. The Respondent also did not appear in the witness box to support his said of the case.

Referring to the apex court verdict in Kumar Exports vs. Sharma Carpets, the Apex Court said,

“…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”.

The Apex Court further iterated that,

“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…,”

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Judgment: Kishan Rao Versus Shankargouda