Cheque Dishonour and Presumptions of Law under Negotiable Instruments Act, 1881

Cheque Dishonour and Presumptions of Law under Negotiable Instruments Act, 1881

In case of N. Vijay Kumar v. Vishwanath Rao N. [2025] GCtR 1626 (SC) it was held that "the Negotiable Instruments Act, 1881 raises two presumptions, one under Section 118; and the other in Section 139 thereof.  Section 118 (a) assumes that every negotiable instrument is made or drawn for consideration, while Section 139 creates a presumption that the holder of a cheque has received the cheque in discharge of a debt or liability. Presumptions under both are rebuttable, meaning they can be rebutted by the accused by raising a probable defence." Once a defence is established by accused, the burden again shifts upon the complainant to now establish his case beyond a reasonable doubt, for after all, the effect of Section 138 of the N.I. Act is a criminal conviction.