Presumption Under Section 139 NI Act Cannot Be Rebutted By Mere Assertions: Delhi High Court Affirms Conviction In 32-Year-Old Cheque Bounce Case

“The defence that cheques were blank and goods were never supplied remains an unsubstantiated narrative” – In a significant judgment Delhi High Court upheld the conviction of H.C. Gupta, a businessman convicted for dishonour of five cheques totalling ₹1.41 lakhs, while modifying the sentence in light of the accused’s advanced age of 83 years and the passage of over two decades since the conviction.

Justice Manoj Kumar Ohri ruled that once the issuance and dishonour of cheques are proven, the presumption of legally enforceable liability under Section 139 of the Negotiable Instruments Act, 1881 squarely arises and cannot be rebutted by "bald, unsupported defences."

“The defence that the cheques were issued blank or that the complainant failed to supply goods is a mere assertion, unsupported by cogent evidence, and is insufficient to rebut the statutory presumption,” the Court categorically held while affirming the trial court’s finding of guilt.

“Stop Payment Was Not a Shield, But a Signal of Default” – Court Rejects Defence, Says Admission in 313 CrPC Statement Supports Prosecution

The case stemmed from commercial dealings between H.C. Gupta and M/s J.K. Iron & Steel Mfg. Co., where five cheques were issued by the appellant towards outstanding dues for conduit pipes. These cheques were dishonoured in August 1993 with the remarks “Stop Payment” and “Funds Insufficient”, leading to the filing of a complaint under Section 138 of the NI Act.

The appellant’s primary defence was that the cheques were issued blank in advance, that no goods were supplied, and that payment was deliberately stopped. However, in a detailed analysis, the Court found this version to be devoid of evidentiary backing.

“The complainant... proved the outstanding liability by producing the bill raised for ₹1,00,380 and the corresponding statement of account. The bank witnesses conclusively proved that the cheques were returned unpaid with the remarks ‘Stop Payment’ and that there were insufficient funds,” the Court noted.

The Court also drew adverse inference from the appellant’s own admission in his statement under Section 313 CrPC, where he acknowledged issuing the cheques and stopping the payment. This, the Court held, lent credence to the prosecution’s case rather than rebutting it.

Cheque Dishonour Was Proved Beyond Reasonable Doubt – Presumption Under Section 139 Fully Applies

Refusing to accept the appellant’s plea that there was no legally enforceable liability, Justice Ohri reiterated the settled legal position:“It is well settled that once the issuance of the cheque and its dishonour are established, the statutory presumption under Section 139 of the Negotiable Instruments Act arises in favour of the complainant that the cheque was issued towards discharge of a legally enforceable debt or liability.”

Rejecting the defence evidence, including vague oral testimonies and a hand-written ledger entry marked as “Mark-X”, the Court observed, “Bald assertions and unverifiable records cannot dislodge the presumption of liability under Section 139.”

The Court further found no irregularity in the trial court's appreciation of evidence and held that all essential ingredients under Section 138 NI Act – including issuance of cheque, its dishonour, service of statutory notice, and failure to pay within 15 days – stood duly proved.

Sentence Reduced in View of Age and Delay – “Ends of Justice Would Be Met by Releasing Appellant for Time Already Served”

Despite affirming the conviction, the High Court took a compassionate view of the sentence. Referring to the appellant's age (now over 83 years), the five months of actual incarceration already undergone, and the inordinate delay in disposal, the Court modified the sentence to the period already served.

“In the peculiar facts of the case... the ends of justice would be met by modifying the sentence of imprisonment to the period already undergone, while maintaining the conviction,” the Court said.

It noted that Section 138 of the NI Act permits the awarding of sentence, fine, or both, and exercised discretion in light of the “mitigating circumstances”.

The sentence of six months' rigorous imprisonment and fine of ₹1,60,000, awarded by the trial court in October 2002, was thus reduced to time already served, with the bail bonds and sureties discharged.

Court Appoints Counsel For Both Sides After Two Decades of Dormancy – "A Duty to Ensure Fairness Survives Even Long Silence"

The Court noted that the appeal had remained dormant for more than twenty years, during which the appellant was untraceable despite issuance of bailable and non-bailable warrants. His legal representation was arranged through the Delhi High Court Legal Services Committee.

Further, the complainant firm had also remained unrepresented, as its Managing Partner had passed away in 2022. The Court, therefore, appointed Mr. Himanshu Anand Gupta as Amicus Curiae, acknowledging his assistance in concluding the case.

“This Court records its appreciation for the assistance rendered by the learned Amicus Curiae, Mr. Himanshu Anand Gupta, Advocate,” the Court noted.

While affirming the conviction under Section 138 of the Negotiable Instruments Act, the Delhi High Court modified the sentence to the period already undergone, bringing finality to a long-pending criminal appeal involving cheque dishonour dating back to 1993.

Date of Decision: 16 December 2025