Defence that “Cheques were given as Security” is not believable in absence of further evidence to rebut the presumption U/s 139 of NI Act: Supreme Court [Read Judgement]

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In a recent judgement, the Supreme Court has observed that the defence of the accused that the cheques were given by way of security is not believable in absence of further evidence to rebut the presumption.

The judgement came out in a case titled as APS FOREX SERVICES PVT.LTD. vs. SHAKTI INTERNATIONAL FASHION LINKERS & ORS.

CASE BACKGROUND

In the present case, the complainant is in the business of   sale and Purchase of   Foreign   Exchange. Accused approached Complainant for issuance of Foreign Exchange Currency/USD Travel Currency Card. And a total sum of Rs.19,01,320/­ was paid by the complainant to the accused through VTM (Visa Travel Money card). Accused Paid Rs6,45,807/, leaving a balance of Rs. 12,55,513/. According to thethe complainant, accused issued four cheques total amounting Rs.9,55,574/­, in   favour   of   the   complainant. However,   all   the aforesaid   cheques   when   presented,   came   to   be   dishonoured.

Thereafter the accused issued one another   cheque   bearing   No.374941   of   Rs.9,55,574/­ in favour of the Complainant and the same was again dishonoured.

Complainant filed a complaint u/s 138 of NI Act and In the present case accused has admitted that the cheque was issued but the same was issued as security and that the complainant misused the cheque. The Trial Court and the High Court acquitted the accused.

Aggrieved with the order, complainant filed the present appeal and the bench set aside the Judgement of HC and trial court and held:

Considering the fact that the accused has admitted the issuance of the cheques and his signatures on the cheque and that the cheque in question was issued for the second time, after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under section 139 of the N.I. Act that there exist a legally enforceable debt or liability. Of course such presumption is rebuttable in nature. However, to rebut the presumption the accused was required to lead the evidence that full amount due and payable to the complainant has been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time, after the earlier cheques were dishonoured. Therefore, Both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exist legally enforceable debt or liability as per section 139 of the N.I. Act. It appears that both, the Learned Trial court as well as the High Court, have committed error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under section 139 of N.I. Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the accused to rebut such presumption by leading evidence.

The judgement has been delivered by Justice Ashok Bhushan and  Justice M.R. Shah on 14-02-2020.

Read Judgement Here: