Madras HC | Presumption under S. 139 NI Act in favour of holder of cheque arises once its execution is admitted by accused

Madras High Court: The Bench of P. Velmurugan J. convicted the accused under Section 138 of the Negotiable Instruments Act, 1881 (for dishonour of cheque) and sentenced him to undergo 6 months simple imprisonment and imposed a fine of Rs 1,50,000 to be paid to the complainant.

The complainant and the accused were running a partnership firm which was subsequently dissolved. The accused issued a cheque for a sum of Rs 1,50,000 in favour of the complainant in at the time of the settling of accounts. The cheque was presented in ICICI Bank and was returned due to insufficient funds. The complainant issued statutory notice to the accused but even after that repayment was not made. Therefore, the complainant initiated proceedings under Section 138. However, the trial court acquitted the accused. Aggrieved thereby, the present appeal was filed by the complainant.

The High Court noted that the accused admitted that the cheque was issued in favour of the complainant but contended that it was not for legally enforceable debt and was executed at the time of admitting him in the firm only for security purpose. The court observed, “once execution of cheque is admitted, it is a legal presumption under Section 139 of Negotiable Instrument Act. The cheque was issued for discharging legally enforceable debt. No doubt the presumption is rebuttable.” In the present case, the court found that the accused was not able to rebut the presumption in any manner known to law. The mere contention raised by him could not suffice. Finding the accused guilty for offence punishable under Section 138 , the Court set aside the impugned judgment of the trial court. The appeal was allowed and the accused was sentenced as mentioned above.[A.K. Mohammed Farook v. M. Syed Jaheer Hussain, 2019 SCC OnLine Mad 187, dated 19-1-2019]

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