Kerala High Court Upholds Acquittal in Cheque Dishonor Case, Validating Defense's Probable Claim

Presumption under Section 139 of the Negotiable Instruments Act, 1881 Rebutted; Accused's Version of Misused Cheque Accepted

In a significant judgment, the Kerala High Court has upheld the acquittal of an accused in a cheque dishonor case, emphasizing the rebuttable nature of presumptions under the Negotiable Instruments Act, 1881. The case, Jose v. Jose, revolved around the alleged dishonor of a cheque for Rs. 3,00,000 issued by the accused, Jose, purportedly in discharge of a debt. The complaint was initially filed by the appellant, also named Jose, under Section 138 of the Negotiable Instruments Act.

Presided over by Justice Bechu Kurian Thomas, the High Court ruled that the presumption under Section 139-which assumes that a cheque received by the holder is for the discharge of a debt or liability-is rebuttable. The accused, who had been acquitted by the Judicial First Class Magistrate Court-II, Chalakudy, successfully demonstrated the non-existence of the alleged debt through a preponderance of probabilities, a standard less rigorous than proving beyond reasonable doubt.

During the trial, it was revealed through Exhibit D1 that the accused had already settled part of the debt with a payment of Rs. 20,000, reducing the liability to Rs. 1,64,000, contrary to the complainant's claim of Rs. 3,00,000. The High Court noted several inconsistencies in the complainant's testimony, which aligned with the accused's defense that the cheque was issued in connection with another transaction and had been misused.

The defense's claim was further corroborated by a reply notice, Exhibit P7, where the accused detailed having handed over a signed document and a blank signed cheque under specific circumstances, which was later misused. Given these findings, the High Court concluded that the complainant's evidence inadvertently supported the accused's defense, making it more probable.

Justice Thomas, referring to past Supreme Court judgments, elucidated that the presumption under Section 139 is not absolute and can be contested through circumstantial evidence and the materials presented by the complainant. The judgment reaffirms that in cases involving the dishonor of cheques, defendants can challenge the existence of a legally enforceable debt or liability without necessarily taking the stand themselves.

This ruling underscores the importance of examining the context and circumstances surrounding financial transactions in cases involving negotiable instruments. It also highlights the judiciary's role in ensuring that statutory presumptions do not override the factual matrix presented in individual cases.

The High Court's decision is expected to have broader implications for similar cases across the country, reinforcing the legal principle that presumptions under the Negotiable Instruments Act can be effectively rebutted through a demonstration of probable circumstances.

Bottom Line:

Section 139 of the Negotiable Instruments Act, 1881 creates a presumption that the holder of a cheque received it in discharge of debt or liability, but such presumption is rebuttable - The accused can rebut the presumption either by proving the non-existence of debt/liability conclusively or by showing a preponderance of probabilities based on circumstances and evidence presented.

Statutory provision(s): Section 118, Section 138, Section 139 of the Negotiable Instruments Act, 1881

Jose v. Jose, (Kerala) : Law Finder Doc Id # 2805233