S.138 of N.I. Act, 1881 : An Important Principle by Supreme Court

Negotiable Instruments Act, 1881 : An Important Principle by Supreme Court

Many interesting Judgments were pronounced by Hon'ble Supreme Court on 7 May 2010. 

In context of Negotiable Instruments Act, 1881, it has been commented at page 21 and 22 of Rangappa v Sri Mohan [2010] GCtR 1697 (SC) thus : - 

"Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof."

"In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail."

"The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost from the official website at the link https://main.sci.gov.in/judgments - Then entering the date of Judgment, for example, as 17 May 2010.

Written by 

Vishal

Delhi

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