The case revolves around a cheque bounce matter under Section 138 of the Negotiable Instruments Act, 1888 (NI Act). Amit Jain, the appellant, had extended a friendly loan of โน3,60,000 to his friend Sanjeev Kumar Singh, who is the Director of M/s Naina Packing Private Limited. The loan was agreed to be repaid by April 30, 2017. However, upon repeated requests, Sanjeev Kumar Singh issued a cheque for โน1,80,000 as part payment, which was later dishonoured due to insufficient funds.
Following the dishonour of the cheque, Amit Jain initiated legal proceedings against Sanjeev Kumar Singh by filing a complaint under Section 138 of the NI Act. The Trial Court, after examining the case, acquitted the respondents, leading Amit Jain to file an appeal before the Delhi High Court.
Legal Issues Involved:
The core legal issue in this case pertains to the presumption of liability under Section 139 of the NI Act, which states that once the execution of a cheque is admitted, it is presumed to have been issued for the discharge of a debt or liability. The question was whether Sanjeev Kumar Singh had successfully rebutted this presumption.
The Trial Court had acquitted the respondents on the grounds that the appellant had failed to prove the existence of a loan or an enforceable debt. The court noted the absence of written documentation of the loan, the lack of interest on the loan, and the failure to prove the financial capacity of the appellant to extend such a loan.
Court’s Decision:
The Delhi High Court, presided over by Justice Anish Dayal, critically analyzed the Trial Court’s decision and found fundamental flaws in its approach. Justice Dayal emphasized that the Trial Court erred by focusing on the inconsistencies in the appellant’s case rather than first examining whether the respondents had rebutted the presumption under Section 139 of the NI Act.
The High Court pointed out that once the respondent admitted his signature on the cheque, the presumption under Sections 118(a) and 139 of the NI Act came into effect, placing the burden on the accused to rebut this presumption. The court noted that the respondent had not led any defence evidence and had only made bare denials in his statement under Section 313 of the Code of Criminal Procedure (CrPC).
Citing the Supreme Court’s decisions in Bir Singh v. Mukesh Kumar and Basalingappa v. Mudibasappa, the High Court reiterated that the presumption under Section 139 is a rebuttable presumption, and the burden of proof lies on the accused to establish a probable defence. The mere absence of documentation or the complainant’s financial capacity does not suffice to rebut the presumption.
Important Observations:
Justice Dayal observed, “Presumption under Section 139 of the NI Act cannot be rebutted by mere denials or by taking advantage of inconsistencies in the complainant’s case. The accused must provide cogent evidence to prove that the cheque was not issued for the discharge of any debt or liability.”
The High Court concluded that the Trial Court had wrongly acquitted the respondents by placing the burden of proving the existence of the debt on the complainant, contrary to the statutory presumption in favour of the cheque holder.
In light of the above, the Delhi High Court allowed the appeal, set aside the Trial Court’s order, and directed that the matter be remanded to the Trial Court for further proceedings in accordance with the law. This judgment reaffirms the principle that the presumption under Section 139 of the NI Act is a significant burden on the accused, and it cannot be rebutted without substantial evidence.
Also Read
Case Details:
– Case Title: Amit Jain vs. Sanjeev Kumar Singh & Anr.
– Case Number: CRL.A. 1248/2019
– Bench: Justice Anish Dayal
– Lawyers:
– For Appellant: Mr. Nitin Kumar Jain
– For Respondents: Mr. Kunwar Arish Ali, Mr. Yamin, Mr. Yasser Wali, Mr. Zubair Ali, Mr. Abrar Ali, Mr. Tayyab Ali, and Mr. S.M. Prasad
– Date of Judgment: August 16, 2024
