[Section 138 NI Act cases] Complainant not required to show nature of transaction or source of fund due to Section 139 presumption: Supreme Court

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The Supreme Court recently held that in a cheque-bounce case under Section 138 of the Negotiable Instruments Act (NI Act), the complainant is not required to spell out in the complaint, the nature of transaction or source of fund since the onus is on the accused to prove that the cheque was issued not towards a debt or liability [P Rasiya vs Abdul Nazer and anr].

A Bench of Justices MR Shah and BV Nagarathna noted that the presumption under Section 139 of the NI Act is a statutory presumption and once the signature and cheque are not in dispute, it will be presumed that the cheque was issued for discharge of any debt or other liability in favour of the complainant/holder of the cheque

It will then be up to the accused to prove to the contrary, the Court made it clear.

“As per Section 139 of the N.I. Act, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the complainant that the cheque was issued by the accused and the signature and the issuance of the cheque is not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability,” the Court said.

The top court was hearing an appeal against a 2017 judgment of the Kerala High Court that acquitted the respondent-accused for the offence under Section 138 after reversing findings of the courts below.

The trial court and sessions court had convicted the respondent and ordered him to pay ₹5,00,000 to the complainant and also sentenced him to three months in prison.

The Supreme Court at the outset noted that the High Court had acquitted the accused only on the ground that, in the complaint, the complainant had not specifically stated the nature of transactions and the source of funds.

The High Court had not dealt with the statutory presumption underlined in Section 139 of the NI Act in exercising its revisional jurisdiction, the apex court said.

The Court, therefore, allowed the appeal and gave the original accused two months time to pay the necessary amount.

Advocates Shinoj K Narayanan, Niveditha R Menon, Aditya Verma, K Rajeev represented the appellants.

Advocates Sriram Parakkat, Mohammed Sadique TA, Alim Anvar and Nishe Rajen Shonker appeared for the respondents.

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