Once the Signature on the Cheque is Admitted, Presumption of Legal Liability Arises and Mere Denial Cannot Rebut Statutory Presumption: Himachal Pradesh High Court

“Section 139 of the NI Act Imposes Evidentiary Burden on Accused, Which Cannot Be Discharged by Mere Statement Under Section 313 CrPC”, High Court of Himachal Pradesh, upheld the conviction and sentence of the petitioner under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), emphasizing the binding statutory presumptions under Sections 118(a) and 139 of the NI Act. Justice Rakesh Kainthla dismissed the criminal revision petition filed by the accused, reiterating that once the issuance of the cheque and signature is admitted, the burden shifts to the accused to rebut the presumption of liability with credible evidence, which the petitioner failed to discharge. The Court affirmed the two-month imprisonment and ₹2,90,000/- fine, of which ₹2,85,000/- is to be paid to the complainant.

The complainant, Amit Kumar, filed a complaint before the Judicial Magistrate, Hamirpur, under Section 138 of the NI Act against Bindu Rajput, alleging that she took a financial loan totalling ₹2,30,000/- for house construction—₹1,50,000/- via bank transfer and ₹80,000/- in cash—and issued a cheque for repayment. Upon presentation, the cheque was dishonoured for “insufficient funds,” leading to statutory notice under Section 138 NI Act, which remained unpaid.

The Trial Court convicted the petitioner, awarding two months' imprisonment and a fine of ₹2,90,000/- (₹2,85,000/- to be paid as compensation). The conviction was upheld by the Sessions Judge, Hamirpur. In revision, the petitioner contested the conviction primarily on the grounds of lack of enforceable debt and disputed the complainant’s version of events, claiming the cheque was given to one Anu Kumari and not to the complainant.

Applicability of Statutory Presumption under Section 139 NI Act

Justice Rakesh Kainthla observed: “Once the accused admits the issuance of cheque, as recorded under Section 313 CrPC, the statutory presumption under Section 139 NI Act comes into play, shifting the burden upon the accused to rebut the presumption.”

Referring to landmark rulings including Triyambak S. Hegde v. Sripad (2022) 1 SCC 742 and Basalingappa v. Mudibasappa (2019) 5 SCC 418, the Court reiterated: “Presumption under Section 139 is a rebuttable presumption, but the burden on the accused is evidentiary and can’t be discharged by mere denial.”

Standard of Proof for Rebutting the Presumption

The Court followed the Supreme Court's settled view in Kalamani Tex v. P. Balasubramanian (2021) 5 SCC 283 and Sumeti Vij v. Paramount Tech Fab Industries (2022) 15 SCC 689, which emphasized that: “Mere statement under Section 313 CrPC, without any defence evidence, is insufficient to rebut the presumption under Section 139 NI Act.”

In this case, the accused neither examined herself nor produced Anu Kumari, nor provided any credible evidence to substantiate her version.

Validity of Service of Demand Notice

The Court invoked Section 27 of the Indian Evidence Act and C.C. Alavi Haji v. Palapetty Muhammed (2007) 6 SCC 555, holding:

“The presumption of valid service arises once notice is dispatched to the correct address. The accused failed to rebut this presumption by acceptable evidence.”

Non-requirement of Initial Proof of Complainant’s Financial Capacity

Citing Ashok Kumar v. State of U.P., 2025 SCC OnLine SC 706, the Court clarified:

“It is erroneous to demand proof of financial capacity at the threshold. The onus only shifts to the complainant if the accused raises a credible challenge, which was absent in this case.”

Appropriateness of Sentence

Justice Kainthla upheld the sentence observing:

“In light of the deterrent object of Section 138 NI Act, and the prolonged litigation since 2019, a sentence of two months' imprisonment and fine is justified.”

The High Court meticulously applied settled legal principles:

• Citing Malkeet Singh Gill v. State of Chhattisgarh (2022) 8 SCC 204, the Court restated that revisional jurisdiction is limited to correcting gross errors or jurisdictional defects—not reappreciation of evidence.

• The accused’s bare denial without any corroborative evidence failed to dislodge the legal presumptions.

• The dishonour memo (Ex CW1/C) indicating “funds insufficient” was accepted as proof of dishonour in terms of Section 146 NI Act as per Mandvi Cooperative Bank Ltd. v. Nimesh B. Thakore (2010) 3 SCC 83.

• The complainant’s evidence of monetary transactions was found credible, supported by deposit receipts and absence of rebuttal.

Court held that: “The petitioner’s version was rightly rejected by the lower courts. The presumption under Sections 118(a) and 139 NI Act remained unrebutted. The conviction and sentence call for no interference.”

The criminal revision was accordingly dismissed.

Date of Decision: 14th July 2025