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by sayum
09 May 2026 2:28 PM
“Presumption Under Section 139 N.I. Act Is Rebuttable on Preponderance, Not Proof Beyond Doubt” - On November 5, 2025, the Madras High Court (Justice D. Bharatha Chakravarthy) dismissed a criminal appeal filed under Section 378(4) CrPC challenging the acquittal of an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881, affirming the principle that presumptions under Sections 118 and 139 of the Act are rebuttable by establishing a probable defence, even without proof beyond reasonable doubt.
Complainant—a housewife—had alleged that she advanced ₹6,00,000 in cash to the accused, who was merely her brother’s friend, and received a post-dated cheque that later bounced. The Trial Court, while acquitting the accused, held that the defence of misuse of a signed security cheque for ₹3,00,000 appeared probable. The High Court upheld that conclusion, emphasizing the inherent improbability of the complainant’s version and the lack of foundational evidence of the alleged loan transaction.
The Case Against the Accused: A Loan of ₹6 Lakhs or Misused Security Cheque?
The complainant had filed a private complaint under Section 200 CrPC, asserting that the accused borrowed ₹6 lakhs in December 2015 for business purposes and issued a cheque dated 15.02.2016 in repayment. The cheque bounced for “insufficient funds.” She issued a statutory notice, and upon non-payment, proceeded with a complaint under Section 138 N.I. Act.
At trial, she marked the dishonoured cheque (Ex.P1), bank memo (Ex.P2), statutory notice (Ex.P3), and acknowledgement (Ex.P4). The accused, while admitting his signature on the cheque, contended that the cheque was issued as security for a much smaller amount—₹3,00,000—borrowed at the behest of the complainant’s brother, and that the same had already been repaid. The cheque, he alleged, was being misused.
The Trial Court acquitted the accused, finding his defence probable and the complainant’s story improbable.
“Foundational Facts Must Be Proved by Complainant Even if Signature Is Admitted”
The High Court began by reiterating a core principle under Sections 118 and 139 of the Negotiable Instruments Act—that presumptions of issuance in discharge of a debt arise only after the complainant proves basic foundational facts.
The Court observed:
“Though the signature on the cheque is admitted, the complainant must prove foundational facts regarding existence of legally enforceable debt.”
Justice Chakravarthy held that the complainant’s inability to prove her financial capacity, the source of funds, and the absence of documentation, were serious blows to her claim:
“The complainant was a housewife with no income tax records. She claimed to have raised ₹6 lakhs by aggregating wedding funds, personal savings and pledging jewels. That defies any logic or reasoning especially when the accused is not even her friend or relative.”
The Court questioned the plausibility of the complainant’s version that she would raise such a sum, including pledging her jewellery, and lend it without interest or documentation to a man who was only her brother’s acquaintance.
“Cheque Not Filled in by Accused—Supports Defence of Security Cheque Misuse”
A significant factor weighed by both the Trial Court and the High Court was the state of the cheque itself. While the accused admitted his signature, none of the particulars—amount, date, or payee name—were filled in by him.
“It is not the case of the complainant that the accused has filled up the entire cheque… It is only the signature which is said to be that of the accused,” the Court noted.
This, in the Court’s view, lent support to the accused’s defence that the cheque was issued blank, as a security instrument, and was being misused.
“Defence Under Section 138 N.I. Act Need Not Be Proved Beyond Reasonable Doubt”
Rejecting the complainant’s contention that the accused had failed to discharge the burden of rebutting the statutory presumption, the High Court reaffirmed the well-settled law:
“Presumption stands rebutted when accused establishes a probable defence not beyond reasonable doubt but on preponderance of probabilities.”
The accused had produced a photocopy of a bond (Ex.D2) for ₹3,00,000 to show the actual amount borrowed, and explained the repayment. Though this document was objected to and was a photocopy, and his defence had minor inconsistencies, the Court observed:
“Minor inconsistencies in defence do not negate overall probability.”
What mattered was the cumulative effect of the improbability in the complainant’s version and the reasonable plausibility of the accused’s defence.
“Unless Trial Court’s View Is Perverse or Impossible, Appellate Court Cannot Interfere”
The High Court underscored that in an appeal against acquittal, interference is warranted only if the trial court’s view is perverse or wholly unreasonable.
Justice Chakravarthy held:
“The approach by the Trial Court in holding that by due cross-examination the accused has rebutted the presumption... cannot be said to be a perverse view or an impossible view to be upturned in an appeal against acquittal.”
The High Court found the trial court’s reasoning to be “reasonable and justified,” and declined to substitute its own opinion.
Holding that the complainant’s version lacked credibility, and that the defence raised by the accused was probable and consistent with the evidence on record, the Madras High Court dismissed the appeal and upheld the acquittal. The Court reiterated:
“In a case under Section 138 of the Negotiable Instruments Act, mere raising of a doubt itself is not enough... Accused need not prove his defence beyond a shadow of doubt.”
The judgment stands as a significant reaffirmation of the standard of “preponderance of probabilities” for rebutting presumptions under the Negotiable Instruments Act and a caution against blind reliance on presumptions in cheque dishonour cases where the complainant's story lacks foundational support.
Date of Decision: November 5, 2025
