The Case of the Contradictory Cheque: How the Defence Rebutted Statutory Presumption

Introduction

In the intricate tapestry of commercial transactions, a cheque is often seen as the undisputed affirmation of a debt, backed by the formidable legal framework of the Negotiable Instruments Act, 1881 (N.I. Act). But what happens when this presumed guarantee is challenged, and the very foundation of the claim—the existence of a legally enforceable debt is shaken by the accused’s defence? Can an accused person, without stepping into the witness box or presenting a barrage of his own evidence, effectively discharge the evidentiary burden imposed by the statute and persuade the court that the complainant’s claim of a debt is improbable? The recent judgment by the High Court of Kerala in Jose v. Jose and Anr¹. offers a compelling narrative on this exact legal quandary, affirming the delicate balance between statutory presumption and the principle of preponderance of probabilities in proceedings under Section 138 of the N.I. Act.

The crux of the matter in Jose v. Jose and Anr. revolved around a complaint filed alleging an offence under Section 138 of the N.I. Act. The complainant claimed that the accused borrowed Rs. 3,00,000/- on June 12, 2011, and issued a cheque dated September 12, 2011, which was subsequently dishonoured due to ‘funds insufficient’. The Trial Court, however, acquitted the accused by the judgment dated 30.09.2014, finding that the complainant had failed to prove the execution and issuance of cheque and, crucially, that the cheque was not supported by consideration. 

The Legal Framework: Presumption and its Rebuttal

The challenge in any Section 138 proceeding lies in the application and subsequent rebuttal of the statutory presumption enshrined in Section 139 of the N.I. Act. This provision mandates that “the holder of a cheque shall be presumed to have received the cheque in discharge of any debt or other liability, either in whole or in part”. This presumption, while powerful, is rebuttable. The burden rests on the accused to raise a probable defence, and the standard of proof required is that of preponderance of probabilities, not proof beyond a reasonable doubt.

The High Court meticulously reviewed the principles established by the Supreme Court on how this presumption can be rebutted. The accused has two main option:

1. Conclusively establishing with certainty that the cheque was not issued in discharge of a debt/liability by leading defence evidence.
2. Proving the non-existence of debt/liability by a preponderance of probabilities, often by referring to the particular circumstances of the case or relying on materials produced by the complainant.

Rationale and Interlinking with Supreme Court Precedents

The court’s decision in present judgement is to find the defence version more probable hinged on significant inconsistencies arising from the complainant’s own evidence. This is the crucial takeaway, the accused successfully discharged their burden of proof without necessarily introducing extensive, independent evidence.

During cross-examination, the complainant admitted to the existence of a prior document that reflected the ongoing financial arrangement and liability between the parties. Crucially, the liability acknowledged in this document was substantially lower than the amount claimed in the dishonoured cheque and the complaint. This direct contradiction severely undermined the complainant’s core assertion that a distinct, larger sum was borrowed and was the consideration for the cheque in question.

The accused had consistently maintained a counter-narrative, asserting that the cheque was not issued to cover the debt claimed, but was a pre-signed, blank instrument given during an earlier, separate transaction. This version was supported by the reply notice sent by the accused, which detailed the circumstances under which the blank signed cheque was handed over and subsequently misused. The Court also noted the improbability of the complainant lending the large sum alleged, given that the accused already had an existing and acknowledged, though lesser, outstanding liability to the complainant’s wife.

The cumulative effect of these facts—especially the complainant’s own documentary admission—rendered the defence version demonstrably more probable. Consequently, the Court found itself compelled to act under the belief that the legally enforceable debt or liability alleged by the complainant did not exist.

This rationale aligns perfectly with the principles laid down by the Supreme Court in:

• Basalingappa v. Mudibasappa²: The Supreme Court clearly stated that the accused can rely on materials submitted by the complainant to raise a probable defense, and that inference of preponderance of probabilities can be drawn from the circumstances.
• Rajesh Jain v. Ajay Singh³: This case reaffirmed that the accused is not expected to prove the non-existence of the presumed fact beyond reasonable doubt, but must meet the standard of ‘preponderance of probabilities’, similar to a defendant in a civil proceeding. The present judgement directly applied this standard.

The High Court acknowledged the warning from the Supreme Court in Sanjabij Tari v. Kishor S. Borcar⁴, which cautioned against treating N.I. Act proceedings as mere civil recovery suits when the presumption is intact. However, in present matter, the presumption was successfully rebutted through the establishment of a probable defence based on the record, justifying the Trial Court’s acquittal.

Conclusion

The appeal in present matter was ultimately dismissed, with the High Court finding no reason to interfere with the Trial Court’s findings. This case serves as a powerful reminder that the presumption under Section 139 of the N.I. Act, while a bedrock of the law, is not insurmountable. A probable defence, even if woven primarily from the threads of inconsistency and contradiction found within the complainant’s own evidence, can be sufficient to shift the scales of justice. It underscores the critical legal principle that the evidentiary burden on the accused is met when the facts and surrounding circumstances, assessed on a preponderance of probabilities, make the non-existence of a legally enforceable debt a more believable proposition.

Citations

1. Jose v. Jose and Anr. Crl.A No. 222 of 2015
2. Basalingappa v. Mudibasappa AIR 2019 SUPREME COURT 1983
3. Rajesh Jain v. Ajay Singh 2023INSC888
4. Sanjabij Tari v. Kishor S. Borcar 2025 INSC 1158

Expositor(s):  Adv. Archana Shukla