138 NI Act | Presumption Under Section 139 NI Act Can Be Rebutted Without Direct Evidence of Repayment: Madras High Court Dismisses Appeal Against Acquittal

“A Statutory Presumption Is Not Infallible — Even Probable Defence Can Shift the Burden Back to the Complainant”, In a significant reaffirmation of the rebuttable nature of statutory presumptions under the Negotiable Instruments Act, the Madras High Court dismissed a criminal appeal challenging the acquittal of an accused in a cheque dishonour case, holding that the presumption under Section 139 of the NI Act stood rebutted through circumstantial and plausible defence evidence.

Delivering the judgment in K. Balasubramani v. N. Saravanan (Crl.A.No. 649 of 2022), Justice D. Bharatha Chakravarthy upheld the concurrent findings of the Judicial Magistrate, Fast Track Court, Vellore, and the Principal District & Sessions Judge, Vellore, both of whom had concluded that the accused had successfully rebutted the presumption and that the complainant had failed to prove a legally enforceable debt beyond doubt.

The judgment underscores that an appeal against acquittal under Section 378 CrPC will not lie unless the view taken by the trial court is perverse, unreasonable, or unsupported by evidence.

"Rebuttal of Presumption Does Not Require Mathematical Certainty — Probabilities Are Enough"

The case arose from a private complaint under Section 138 of the Negotiable Instruments Act, 1881, wherein the appellant-complainant alleged that the respondent had borrowed Rs. 5,40,000 and issued a cheque for Rs. 2,50,000 dated 18.09.2017 in partial discharge of that loan. The cheque, however, was dishonoured with the remark “payment stopped by drawer.”

The complainant, claiming the loan was without interest and backed by a promissory note executed on 27.04.2015, filed the complaint after issuing statutory notice and receiving an allegedly evasive reply. The evidence included the promissory note (Ex.P1), the cheque (Ex.P2), the dishonour memo (Ex.P3), and supporting oral testimony by the complainant and a witness to the borrowal (P.W.2).

The trial court, after full trial, acquitted the accused, holding that the defence had rebutted the presumption under Section 139 NI Act to the level of preponderance of probabilities. This finding was confirmed by the Sessions Court on appeal, and the matter came up before the High Court in a renumbered criminal appeal.

“Once the Presumption Is Rebutted, the Burden Reverses — Complainant Must Prove the Liability Like Any Other Criminal Offence”

In appeal, counsel for the complainant argued that the trial court erred in concluding that the burden had been discharged by the accused. It was submitted that the promissory note and witness testimony reinforced the borrowal and the cheque was issued in partial repayment. The complainant stressed that the accused had not produced any receipt of discharge and that the stop payment letter (Ex.D1) was a general letter without explanation, issued only to escape liability.

However, the High Court declined to accept these contentions, holding that the presumption is not conclusive, and the accused had raised a plausible defence that was consistent and supported by evidence on record. Justice Bharatha Chakravarthy remarked:

“When the loan is said to be a sum as high as Rs.5,40,000/-, when there is no explanation on the side of the complainant regarding the difference in ink and handwriting with reference to the amount, name and date… the finding of the Trial Court that the presumption stands rebutted cannot be termed as perverse.”

The Court further observed that the accused’s defence — that the cheque was issued in 2016 for an earlier loan of Rs. 2.5 lakhs, and had already been repaid — had not been discredited. The variation in ink and handwriting on the cheque, the dubious execution of the promissory note, and the testimony of the accused’s brother (DW-1) all strengthened the defence.

“Even before the cheque was presented, the accused had already issued a stop payment instruction to the bank. Though it may have covered multiple cheques, the timing supports the accused’s version.”

“Appeal Against Acquittal Cannot Be Used to Re-Appreciate Evidence Like a First Trial”

The High Court cautioned against overstepping its jurisdiction in appeal against acquittal under Section 378 CrPC, observing:

“When the view taken by the trial court is plausible and supported by evidence, even if another view is possible, interference is unwarranted.”

Noting that no perversity, illegality, or material irregularity could be found in the trial court's analysis, the High Court dismissed the appeal and affirmed the acquittal. The Court emphasised that once the accused raised credible doubts regarding the complainant’s version, the burden reverted to the complainant to prove the legally enforceable liability. This burden, the Court found, remained undischarged.

Presumption Can Be Rebutted Without Proof of Repayment — Circumstantial Credibility Is Enough

The judgment serves as a strong reiteration that in proceedings under Section 138 NI Act, the initial statutory presumption is powerful but not conclusive. If the defence can cast reasonable doubt or establish circumstances that make the complainant’s story improbable, the presumption stands rebutted.

Justice Bharatha Chakravarthy’s observations draw a clear line for future litigants:

“All the above evidence let in on behalf of the accused can be considered as evidence to the level of preponderance of probability in rebutting the presumption.”

The case underscores the importance of meticulous documentation in monetary transactions and the limited scope of presumption when faced with substantive defence evidence.

Date of Decision: 25 November 2025