The High Court of Kerala has issued a significant ruling addressing the evidentiary burden on a complainant in cheque-dishonour cases under the Negotiable Instruments Act, 1881 (NI Act), particularly with regard to Section 139 which creates a presumption in favour of the holder of a cheque. In a recent decision, the Court held that while Section 139 presumes that a cheque was issued for the discharge of a debt or liability, the complainant must still establish, at least prima facie, the factual basis of the transaction and his capacity to have advanced the amount alleged, if specifically challenged.
In the case before the Court, the complainant had presented a cheque to the accused-drawer which was subsequently dishonoured. The accused raised the defence that the complainant lacked the financial wherewithal to have advanced the amount claimed, and that the transaction lacked documentation or explanation. The High Court examined whether mere issuance of the cheque along with its dishonour memo sufficed to sustain prosecution under Section 138 of the NI Act in the absence of independent proof of the underlying transaction and financial capacity of the complainant.
The bench observed that Section 139 operates as a rebuttable presumption: once the cheque is discharged and dishonoured, the onus shifts to the drawer to rebut the presumption by showing that it was not issued for the discharge of any debt or liability. However, the Court held that if the accused raises a plausible defence specifically challenging the complainant’s capacity or the existence of the transaction, then the complainant must place on record some material — documentary or oral — to demonstrate that he was in a position to advance the amount claimed, that the transaction genuine took place, and that the cheque drawn was in discharge thereof. Without such material, the presumption under Section 139 might be shaken.
The judgment emphasised that criminal proceedings under Section 138 are not mere civil recovery suits, and that courts must ensure that claims rest on credible evidence of an enforceable debt or liability. The Court further held that inability to establish financial capacity or the absence of any credible proof of the loan or advance may render the prosecution unsafe. It cautioned that a criminal court must be satisfied, on the evidence as it stands, that there was at least some credible groundwork for the claim, especially when the defence attacks the veracity of the transaction.
In its reasoning, the Court underscored that the appellant could not be condemned solely on the cheque dishonour and bank memo, without any corresponding documentation of the underlying liability or indication that the complainant had advanced funds or had legal entitlement to the amount. The Court held that mere bare assertions by the complainant of having lent monies, without corroboration or explanation of his means, were inadequate to maintain the case once challenged.
Ultimately, the High Court directed that in instances where the accused raises a real triable issue concerning the complainant’s capacity or the transaction’s existence, the matter must be remitted for full trial. It emphasised that the prosecution’s case must withstand scrutiny of such contentions before conviction. This decision thus clarifies that although Section 139 affords a strong presumption in favour of the cheque-bearer, it does not operate as an absolute mandate for conviction without regard to the factual matrix.
The judgment serves as an important guide in cheque-bounce litigation, illustrating that complainants should be prepared to support their claims with credible evidence of the underlying transaction and financial capacity when required, and that courts must examine such challenges with due care even at early stages.
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