The Supreme Court of India, on August 12, held that the complaint proceeding under section 138 of the Negotiable under section 138 of the Negotiable Instruments Act (NI Act) was not required to explain the nature of transaction or the source of funds.
The Court Stated that the accused had the liability to prove that the cheque was issued not towards a debt or a liability as onus was upon the accused.
The Bench comprising Justice MR Shah and BV Nagarathna Observed that section 139 of the NI Act provided a statutory presumption. Court went on to note that when Cheque and signature were not in dispute, it had to be presumed that the cheque was issued for discharge of debt or liability.
The instant petition was a challenge to a judgment of Kerala High court whereby the respondent was acquitted for the offense Under Section 138 NI Act.
The Apex Court underscored that the High Court had reached at an acquittal on the basis that the complainant had not disclosed the kind of transactions as well as the source of funds.
Henceforth, the appeal was allowed and two months were granted to the accused persons to discharge their liability.
Judgement- P.Rasiya vs Abdul Nazer (2022)