Merely Pleading Not Guilty Not Sufficient To Rebut Presumption U/S 139 NI Act; Accused's Statement U/S 313 CrPC Can't Be Read As Evidence If No Defence Evidence Was Led: Delhi HC

The Court said that the law and its application are turned on its head when instead of having the accused prove to the contrary, the accused is acquitted, without having led any defence evidence and purely relying upon the inconsistencies in the affirmative proof provided by the complainant.

The Court was hearing an appeal against the judgment where the respondent was acquitted of an offence under Section 138, Negotiable Instruments Act, 1881.

The bench of Justice Anish Dayal observed, “Thus, respondent no. 1 having not led defence evidence, his statement under Section 313 CrPC cannot be read as evidence for the purpose of rebutting presumption raised under Section 139 NI Act. In this light, merely pleading not guilty would not suffice to rebut this presumption either."

Advocate Nitin Kumar Jain appeared for the Appellant and Advocate Kunwar Arish Ali appeared for the Respondent.

Brief Facts-

It is the case of the Appellant that he gave a friendly, interest-free loan to respondent no.1. Respondent no.1, the Director of Naina Packing Private Limited (respondent no.2), issued a cheque as part of payment, but it bounced due to insufficient funds. After repeated requests and a legal demand notice, the appellant filed a complaint under Section 138 of the NI Act. The trial Court framed charges, and while respondent no.1 admitted to signing the cheque, he denied liability. The Court ultimately acquitted the respondents.

The Court mentioned the Supreme Court decision in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148, where while discussing the correct approach in dealing with presumption under Section 139 the Court observed, “Once the presumption under Section 139 was given effect to, the courts ought to have proceeded on the premise that the cheque was, indeed, issued in discharge of a debt/liability.”

The Court further mentioned the decision in V.S. Yadav v. Reena 2010 SCC OnLine Del 3294 and quoted, “Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313, Cr. P.C. or under Section 281, Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption under Section 139, N.I. Act.”

The Court said, “It would be unwise for the court to not acknowledge that friendly cash loans are provided by parties, sometimes based on small savings of the lender. In these circumstances rather than focussing on the question as to why the accused gave the cheque in the first place (which he or she admits), the complainant is left unhinged for inability to provide any documentation. Often when the accused is asked by the court, as to for what purpose they gave the cheque in the first place, a cogent and rational answer is not forthcoming.”

“Presumption under Section 139 read with Section 118 of the NI Act is essentially based on pure common sense.”, the Court remarked.

The Court set aside the impugned order.

Accordingly, the Court allowed the Appeal.