Presumption Under Section 139 NI Act Includes A Presumption That There Exists A Legally Enforceable Debt Or Liability: Supreme Court.

The Supreme Court reiterated that the presumption under section 139 of Negotiable Instruments Act includes a presumption that there exists a legally enforceable debt or liability.

In this case, the trial court dismissed a cheque bounce complaint on the ground that the complainant was not able to adduce sufficient evidence that he was in a position to advance a loan of Rs. 9 lakhs to the accused. The Kerala High Court upheld the Trial Court order relying on a decision in John K. Abraham v. Simon C. Abraham (2014) 2 SCC 236.

In appeal, the Apex Court bench noted that the accused had accepted his signature

on the subject cheque. We do not think that the High Court was right in holding

that the onus was not on the accused to show that the debt was neither due nor 

Payable, the bench of justices Sanjiv Khanna and J K Maheswari said.   

Referring to the decision in T.Vasanthakumar vs. Vijaykumar (2015) 8 SCC

378, The bench said.

“The decision, refers to an earlier judgment of this Court in “Rangappa vs. Sri.

Mohan” (2010) 11 SCC 441, which elucidating on the presumption under section 

139 of the NI Act, observes that this includes a presumption that there exists a 

Legally enforceable debt or liability. However, the presumption under section 139 

Of the NI Act is rebuttable and it is open to the accused to raise a defense wherein

the existence of a legally enforceable debt or liability can be contested”

The Court thus held that the complainant was entitled to the benefit of presumption

Section 139 of the NI Act. Allowing the appeal, the bench directed the High court

consider the evidence and the material on record to decide whether the offence

Under section 138 of the NI Act is established and made out.

It may be noted that the Supreme Court in Krishna Janardhan Bhat vs. Dattatraya G Hegde, (2008) 4 SCC 54 had held that the existence of legally recoverable debt is Not a matter of presumption under section 139 of the Act. This view was later overruled by a three judges bench in Rangappa vs. Sri. Mohan, (2010) 11 SCC 441.

Case Title: Jain P. Jose vs. Santosh 2022 SC 979 SLP (Crl) 541/016.