Existence of Legally Enforceable Debt in Cases of Cheque Dishonour and Application of S.139 of Negotiable Instruments Act, 1881

Existence of Legally Enforceable Debt in Cases of Cheque Dishonour and Application of S.139 of Negotiable Instruments Act, 1881 

Section 139 - Presumption - Existence of Legally Enforceable Debt - Burden of Proof - Probable Defence of Accused - Complainant "C" was owner of factory - "C" agreed with accused "A"  for demolition of wall - "A" gave some amount in cash and also issued a cheque - Cheque was dishonoured after 3 days of issuance with the remarks "funds insufficient" - "A" requested "C" to present cheque again before 1 December 2006 but on 2nd occasion as well, cheque remained unpaid - "A" has filed a civil suit - "C" filed complaint under S.138 - "A" argued that total transaction was of Rs. 8.21 lacs but it was increased to Rs. 10.21 lacs - Trial Court acquitted "A" - "C" argued that cheque was given towards discharge of liability in part - "C" argued that presumption under S.139 ought to have been applied - "A" argued that the goods here were sold to 3rd party and there was no legal debt - It emerged that the demolition work was given to another person "D" - It has emerged that "A" had given the cheque as deposit which was to be returned to "A" - No agreement could be proved to establish transaction between parties - In such background, it becomes doubtful that cheque was issued towards such work - Held, "under  section   139   of   the   Act,   it   shall   be   presumed that unless the contrary is proved that holder of a cheque receive the cheque for the discharge in whole or   in   part   of   any   debt   or   other   liability" - "It   is settled   proposition   that   presumption   in   the   said provision   is   rebuttable   presumption   and   when   the accused has to rebut the presumption 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 existence   of   legally   recoverable   debt   or   liability, the prosecution can fail and it is not necessary that in order to prove the defence the accused is required to   enter   into   witness   box   or  lead   evidence.     The accused   can   rely   on   the   materials  submitted   by   the complainant" - Burden in this case was on the complainant "C" to establish that there was agreement and cheque was given for such work - Held, "it   is   also   settled   proposition   that presumption raised in favour of holder of cheque does not extend to the extent that the cheque was given for discharge of any debt or liability, it is required to be proved by the complainant" - Held, "A" has been able to raise a probable defence which creates doubt about existence of legally enforceable debt in this case - Acquittal of accused "A" despite dishonour of cheque would be justified. - Amit Chandbhan Mehta v. Rehman Mohammad Ishahak Shaikh [2012] GCtR 6488 (Gujarat)