Supreme Court Clarifies Burden of Proof and Presumption of Liability Under Section 139 of the Negotiable Instruments Act.
The Supreme Court Bench of Justice B.V. Nagarathna and Justice Augustine George Masih was hearing an appeal and observed that the presumption of liability under Section 139 of the Negotiable Instruments Act, 1881, can be rebutted by the accused through the presentation of evidence that creates a reasonable doubt about the presumption, and when the complainant fails to provide sufficient evidence to meet this burden, the Supreme Court upheld the acquittal of the accused.
In the case under review, the Supreme Court granted leave to appeal against the impugned judgment dated 03.03.2023 in Criminal Appeal No. 200139 of 2019 from the High Court of Karnataka at Kalaburagi. The High Court had affirmed the acquittal of the Respondent in Complaint Case No. 468 of 2014, which was filed under Section 138 of the Negotiable Instruments Act, 1881 (NI Act 1881).
The appeal stemmed from a dispute where the Appellant, who was the original complainant, claimed that the Respondent borrowed INR 2,00,000/- from him and issued a cheque as security for the loan. The cheque, however, was dishonoured due to insufficient funds. The Appellant's subsequent demand notice was met with a reply from the Respondent denying the loan and disputing the validity of the transaction.
The Appellant's complaint was dismissed by the Trial Court on 18.10.2019, which found that the cheque was issued as security and not for a debt as per Section 138 of the NI Act 1881. This decision was based on contradictions in the Appellant's statements, the lack of evidence of the loan's existence, and discrepancies in documentation. The High Court upheld this decision, finding that the Appellant had not effectively rebutted the presumption under Section 139 of the NI Act 1881.
The Supreme Court, in reviewing the case, considered the established legal principles regarding Section 138 of the NI Act 1881. It examined the presumption of liability established under Section 139, which shifts the burden to the accused to disprove the presumed liability. The Court noted that the Appellant had not met this burden convincingly, as evident from the inconsistencies and lack of supporting evidence.
The Court also reviewed the standards of proof required to rebut the statutory presumption and emphasized that an accused must only meet the standard of preponderance of probabilities, not beyond reasonable doubt. The concurrent findings of the Trial Court and the High Court were upheld, affirming that the acquittal of the Respondent was not based on a manifest error or perversity.
Thus, the Supreme Court found no grounds to overturn the concurrent findings of the lower courts. The appeal was deemed to lack merit, leading to the decision to affirm the acquittal of the Respondent. The judgment concludes with the recognition of the stringent evidentiary requirements and the principles guiding the judicial review of acquittals, underscoring the importance of establishing a clear and substantiated case to overcome the presumption of innocence and achieve a reversal of acquittal.
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