Upholds "Reverse Onus" Clause in Conviction of Director in Cheque Bounce Case: Kerala High Court

In a recent judgment handed down on Friday, the 29th day of September 2023, the High Court of Kerala at Ernakulam upheld the application of the "reverse onus" clause in a conviction under Section 138 of the Negotiable Instruments Act (N.I. Act). The case involved a director of a company who was accused of dishonoring cheques issued by the company. The court's ruling emphasized the significance of establishing the accused's signature on the negotiable instrument for the "reverse onus" clauses to become operative.

The Honorable Mr. Justice C.S. Dias presided over the bench and delivered the judgment. The case, known as CRL.REV.PET NO. 3051 OF 2010, originated from the IVth Additional Sessions Judge, Ernakulam, and the Judicial First Class Magistrate Court No. IV, Ernakulam.

The judgment affirmed the legal principles related to "reverse onus" under Section 139 of the N.I. Act. It held that once the signature(s) of the accused on the cheque or negotiable instrument are established, the "reverse onus" clauses come into effect. The court's decision highlighted that the accused must discharge the presumption imposed upon them in such cases.

In this particular case, the accused, a director of a company, was accused of issuing dishonored cheques. The complainant alleged that the accused had issued these cheques to discharge the company's liability. The accused failed to reply to the statutory lawyer notice issued under Section 138 of the N.I. Act.

The judgment reaffirmed the standard of proof required for rebutting the presumption under Section 139 as the "preponderance of probabilities." It emphasized that the accused can raise a probable defense that creates doubts about the existence of a legally enforceable debt or liability. Failure to raise such a defense can lead to a presumption in favor of the complainant.

In this case, the court found no error in the concurrent findings of the lower courts and dismissed the revision petition. The accused was directed to appear before the Trial Court, pay the fine amount, and undergo the substantive sentence as per the earlier conviction.

This judgment serves as a significant precedent in cheque bounce cases and underscores the importance of establishing the accused's signature on negotiable instruments for the application of "reverse onus" clauses. It also clarifies the burden of proof on the accused and the complainant in such cases.

Date of Decision: 29 September 2023

SHIBY POLY  Vs  MARY DEVACHAN