Presumption Under Section 139 NI Act Not Automatic—Complainant Must First Prove Legally Enforceable Debt: Madras High Court Affirms Acquittal in Cheque Bounce Case

“When Both Sides Rely on Self-Serving Documents Without Proof of Exchange, The Benefit of Doubt Must Go to The Accused” — Madras High Court declined to interfere with an appellate court’s acquittal of three accused persons in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881. Justice D. Bharatha Chakravarthy dismissed the criminal appeal by holding that the complainant had failed to establish a legally enforceable debt, which is a sine qua non for invoking the statutory presumption under Section 139.

The Court held that where the parties produce unauthenticated, self-serving documents and neither side establishes conclusive evidence of the transaction or debt, the criminal standard of proof mandates that the benefit of doubt must rest with the accused. This judgment reiterates the limited scope of appellate interference in acquittals and strengthens the jurisprudence around cheque dishonour cases.

“Absence of a Reply to Statutory Notice Is Not Conclusive; Complainant Must Still Prove the Debt”

The dispute arose out of a private complaint filed by K. Rathinasamy, who alleged that he had supplied export-quality garments worth ₹24.20 lakhs to the accused partnership firm, M/s G.K. Fashions, represented by partners M.S. Ganesan and G. Tamilselvi. In part discharge of that alleged liability, the firm issued two cheques—₹37,785 and ₹2,00,000—which were dishonoured due to insufficient funds.

The Judicial Magistrate, Tiruppur, convicted all three accused on 3rd May 2016 in C.C. No. 524 of 2012, sentencing them to rigorous imprisonment and directing them to pay the cheque amount as compensation. However, this conviction was reversed by the First Appellate Court on 14th November 2017, which granted the accused the benefit of doubt and acquitted them. Rathinasamy challenged this acquittal before the High Court in the present appeal.

The complainant contended that once the cheques were admitted and the signatures were not denied, the presumption under Section 139 of the NI Act must operate in his favour. He relied on documents such as invoices (Ex.P4, P5), delivery notes (Ex.P2, P3), and account statements (Ex.P6), claiming they established the supply of garments and the resulting liability.

However, the High Court rejected this contention, observing that merely marking documents without establishing their delivery or acceptance does not discharge the initial burden. The Court stated:

“The invoices were self-generated computer printouts with no proof of delivery, acknowledgment, or dispatch—there was no evidence whether they were sent by post, email, or hand delivery. Similarly, the running account statement was also unauthenticated and lacked any countersignature by the alleged debtor.”

The Court found no proof that Triune, the foreign buyer referred to by the complainant, had placed orders specifically with the complainant or routed the transactions through him. The trial documentation failed to show how or if the accused had ever accepted liability toward the complainant.

“When Evidence Hangs on a Thin Balance Between Two Commercially Disputed Versions, Criminal Courts Must Tilt in Favour of the Accused”

The defence case, on the other hand, was that the complainant had only performed job work and had no independent transaction giving rise to a debt. The accused placed reliance on Ex.D12 to Ex.D16, showing they had procured the raw materials, and on Ex.D3, a communication from foreign buyers addressed directly to them, evidencing that they were the ones handling the exports and receiving the benefits.

The cheques themselves were held to be suspicious. They were pre-printed cheques from before 2010, with “2012” overwritten manually. This, in the Court’s view, cast further doubt on the genuineness of the transaction.

Justice Bharatha Chakravarthy held:

“Both sides have placed reliance on self-serving documents, invoices, and statements which have no proof of service on the opposite party. In such a situation, where neither side has satisfactorily corroborated their version through credible evidence, and where the criminal case turns into a commercial civil dispute, the only course open to the Court is to give the benefit of doubt to the accused.”

Further rejecting the complainant’s argument that the accused had no valid defence, the Court clarified that:

“In a criminal prosecution under Section 138 of the NI Act, the complainant must stand on the strength of his own case. The weakness of the defence cannot substitute the requirement of proving the existence of a legally enforceable debt.”

Presumption Under Section 139 Is Not a Free Pass—Foundational Facts Must Be Proved First

The Court reaffirmed that the statutory presumption under Section 139 of the Negotiable Instruments Act is not automatic upon the mere issuance of a cheque. It can only be invoked once the complainant discharges the initial burden of establishing a legally enforceable debt.

In this case, the Court held that the complainant failed to satisfy that threshold. Accordingly, there was no error in the Appellate Court’s decision to acquit the accused, and the scope for interference in a criminal appeal against acquittal remained extremely limited.

“The Appellate Court’s finding cannot be termed either impossible or perverse. It falls within the zone of reasonableness and hence does not warrant interference by this Court,” Justice Chakravarthy concluded.

The Criminal Appeal was dismissed. The acquittal of the accused was upheld.

“In a criminal trial, when both sides have led evidence but the scales remain evenly balanced with no convincing proof of guilt, the law mandates that the benefit must tilt in favour of the accused,” the Court reiterated.

Date of Decision: 28 October 2025