138 NI Act | Unless Existence Of Debt Is Proved, Statutory Presumption Does Not Arise: Delhi High Court Upholds Acquittal in ₹8.5 Lakh Cheque Bounce Case

Presumption Under Section 139 Is Not Conclusive: Delhi High Court has emphatically reiterated that the presumption under Section 139 of the Negotiable Instruments Act, 1881, though statutory, is not absolute, and must be preceded by credible proof of a legally enforceable debt. Upholding the acquittal of the accused in a cheque bounce case involving a claim of ₹8.5 lakhs, Justice Neena Bansal Krishna refused to grant leave to appeal, citing the complainant’s failure to discharge the foundational burden of proving the existence of a loan.

“Unless the foundational basis is established, there is no question of the presumption under Section 118 of the N.I. Act being attracted,” observed the Court.

Cheques Admitted, But Source of Debt Unproven

The petitioner, Geeta, had filed a complaint under Section 138 of the NI Act, asserting that she had extended a friendly loan of ₹8.5 lakhs to her friend Anita in September 2012, repayable by April 2013. Allegedly, three post-dated cheques were issued by Anita — two for ₹1 lakh each and one for ₹6.5 lakhs — all of which were dishonoured upon presentation, either for insufficient funds or mismatched signatures.

Despite the admission of signature on the cheques by Anita, she claimed they were handed over for a completely different purpose — to aid Geeta in unrelated litigation involving another person of the same name. Anita never cross-examined Geeta nor led any evidence in her defence.

Complainant Must Prove Existence of Debt: Court

The Court held that merely because the cheques were signed by the accused, the presumption under Sections 118(a) and 139 of the NI Act does not automatically secure a conviction.

Citing M.S. Narayana Menon v. State of Kerala (2006) 6 SCC 39, the Court clarified:

“It is for the complainant to first establish the existence of a debt for which the impugned cheques were issued. If that foundational fact is not proved, the presumption cannot arise.”

No Specific Date, No Documentation, No Financial Capacity

In a stern critique of the evidence led by the complainant, the Court noted: “There is no mention of the specific date on which the alleged ₹8.5 lakh loan was given, neither in the complaint, nor in the legal notice, nor in the affidavit of evidence.”

Moreover, Geeta failed to provide any documentation or receipts, and the bank statements of both her and her husband did not reflect sufficient financial capacity to extend such a loan.

“Certainly, ₹8.5 lakhs is not a small amount. No prudent person would lend such a sum without any documentation,” the Court remarked.

Presumption Not Conclusive; Reasonable Doubt Sufficient

Justice Bansal Krishna referred to Kali Ram v. State of Himachal Pradesh (1973) 2 SCC 808, affirming the principle that:

“Even where statutory presumptions arise, they cannot override the requirement of foundational facts. A presumption under law is not equivalent to conclusive proof.”

Thus, despite the accused not leading any evidence, the burden never shifted to her, as the complainant failed to prove the initial existence of debt or liability.

Decision and Legal Implications

The Court denying leave to appeal against the order of acquittal dated 26.07.2020 in Complaint Case No. 10930/2016.

“There is no ground for granting Leave to Appeal. The complainant failed to prove the existence of a legally recoverable debt,” concluded the Court.

This ruling further fortifies the legal threshold under Section 138 NI Act, reminding complainants that cheque dishonour alone is not sufficient for conviction — especially in the absence of corroborative evidence of debt or liability.

Date of Decision: May 26, 2025