Methods To Rebut Section 139 NI Act Presumption : Karnataka HC Explains
The Karnataka High Court explained the methods that can be adopted by the accused to rebut the presumption under Section 139 of the Negotiable Instruments Act (NI Act).
They are: a) By issuing a reply to the notice issued by the complainant, b) By way of conducting cross-examination c) By way of leading evidence and producing the documents.
Simply denying the transaction is not enough to prove that the presumption is not valid and must provide strong and convincing evidence to rebut the presumption, added the Court.
The Court made these observations while dismissing a Criminal Appeal challenging the order of the Appellate Court whereby the Appellant’s Aunt was acquitted. The Court observed that since the Complainant failed to prove facts concerning the loan transaction, the accused's contention that the cheques were issued for security through the chit transaction is more likely to be true.
Justice S Rachaiah observed, “It appears from the evidence of DW.1 that the presumption raises under Section 139 of N.I. Act has been rebutted and the burden lies on the complainant to prove that she had lent the amount to the accused. In the cross examination of PW.1, it appears that she had issued a loan on two different occasions. She further admitted that the amount of Rs.3.00 lakhs was lent at the first instance and thereafter, Rs.5.00 lakhs was paid. However, it is contrary to the stand taken in the legal notice and in the examination-in-chief. This contradiction has been construed as material contradiction and the complainant has failed to prove the loan transaction. When the contention of the complainant fails in respect of the loan transaction, the contention of the accused that the cheques were issued for security through the chit transaction certainly prevails”.
Advocate Nithin Gowda K C appeared for the Appellant and Advocate Rohith Gowda appeared for the Respondent.
An Individual filed a complaint against her aunt alleging that she had borrowed Rs. 8.00 lakhs and promised to repay it within two months. However, the aunt did not repay the loan but she gave the Complainant two cheques. When the cheques were presented for encashment, they bounced due to insufficient funds. Statutory notices were issued but despite receiving the notices, the accused (said aunt) did not repay the amount. Therefore, separate complaints were lodged and the Trial Court convicted the accused in both cases, but the Appellate Court later overturned the decision. The Criminal Appeal was filed challenging the judgment of the Appellate Court acquitting the accused.
The Court ascertained the following issues: “i) Whether the findings of the Appellate Court in recording the acquittal of the respondent for the offence under Section 138 of the N.I Act are sustainable?
ii) Whether the appellant herein made out grounds to interfere with the findings of acquittal passed by the Appellate Court?”.
The Court noted that only in rare or exceptional circumstances can an Appellate Court interfere in an appeal against the acquittal while referring to the Supreme Court Judgment in the case of Basalingappa v Mudibasappa [(2019) 5 SCC 418]. The Court reiterated that the Appellate Court, though, is empowered to reappraise the evidence and law where it appears that the judgment of the Trial Court was perverse.
“On careful reading of the dictum of the Hon’ble Supreme Court, it makes it clear that the Appellate Court can interfere in an appeal against the acquittal only in rare and exceptional circumstances. It is also a settled principle of law that the Appellate Court can reappraise the evidence and law where it appears that the judgment of the Trial Court is stated to be perverse”, the Court noted.
Furthermore, the Court observed that when the holder of the cheque is protected by the presumption mentioned in Section 139 of the NI Act, the accused has the burden to prove that the presumption is not valid.
Additionally, the Cort noted that the presumption raised under Section 139 of the NI Act was challenged, and the burden has shifted onto the Complainant to prove that she had lent the accused the amount. The Court held that the findings of the Appellate Court in recording the acquittal appear to be appropriate and the appellant herein has not made out a ground to interfere with the findings of the Appellate Court.
Accordingly, the Court dismissed the Appeal and affirmed the impugned order.
Cause Title: Pavithra v Sheela V
