Imp. Rulings - NIA Section 139, Principles of Rebuttal
Index;
HC Karnataka (2026.08.28) in Smt. Ramadevi vs Kum. Dhanalakshmi [2026:KHC:46609, Criminal Appeal No. 110 Of 2017 (A)]
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HC Karnataka (2026.08.28) in Smt. Ramadevi vs Kum. Dhanalakshmi [2026:KHC:46609, Criminal Appeal No. 110 Of 2017 (A)] held that;
# 21. How the accused can rebut the said presumption and what is the standard of proof has been considered by the Hon'ble Apex Court in the case of Basilingappa (supra) wherein it is held as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the on us is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
# 28. On perusal of the judgment of the trial Court, it is noticed that the trial Court proceeded to pass the order of acquittal on the mere ground of creation of doubt. The trial Court appears to have proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the accused had successfully rebutted the presumption as envisaged by Section 139 of N.I. Act. In the scheme of N.I. Act, mere creation of doubt is not sufficient.
# 29. With regard to financial capacity to be disputed by the accused the Hon'ble Apex Court in the case of Tedhi Singh Vs. Narayan Dass Mahant, 2022 (6) SCC 735 has observed thus:
"10. The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence."
# 30. The Hon'ble Apex Court in another decision, in the case of Kunte Gowda Vs. Thurubaiah, 2026 INSC 790 has observed thus:
"6.7. Furthermore, the failure of the accused to respond to the statutory notice issued under Section 138 of the NI Act gives rise to an inference that the complainant's version carries merit. The initial burden of raising a defence that the complainant lacked the financial capacity to advance the loan rests upon the accused and ought to have been specifically pleaded in the reply to the demand notice. In the absence of such a plea, the complainant cannot be expected, to adduce evidence establishing his financial capacity to pay the loan to the accused while leading his evidence. The accused may discharge this burden by producing independent witnesses or documentary evidence to demonstrate the complainant's lack of financial means. Alternatively, he may rely upon the materials produced by the complainant himself or establish the same through an effective cross-examination of the complainant and his witnesses. In the facts of the present case, no such contra material has been placed on record before us to further the case of the accused that the complainant did not have any means to extend the hand loan and therefore the argument and defence of the accused on this aspect falls flat."
# 34. What is the effect of non-rebutting the presumption drawn under Section 139 of N.I. Act has been considered by the Hon'ble Apex Court in the case of Rajesh Jain Vs. Ajay Singh, AIR 2023 Online SC 807 has held as under:
"55. As rightly contended by the appellant, there is a fundamental flaw in the way both the Courts below have proceeded to appreciate the evidence on record. 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 entire focus would then necessarily have to shift on the case set up by the accused, since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the Court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138. If the Court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking aid of the presumption. The Court would then take an overall view based on the evidence on record and decide accordingly."
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