The Supreme Court recently held that in cases concerning dishonour of cheques under section 138 of the Negotiable Instruments Act, the burden cannot be placed on the complainant to prove the debt .
According to Section 138 of the Act, dishonour of cheque is a criminal offence and if the conditions stated are fulfilled, it will be punishable by imprisonment up to two years or with monetary penalty or with both.
According to Section 139—It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
In Pavan Dilprao Dike v Vishal Narendrabhai Parmar, the trial court dismissed the complaint filed by the plaintiff on the basis of failing to prove the existence of debt. After an appeal made to the Bombay high court the Nagpur bench reversed the order of the magistrate and convicted the accused stating, “The cheque was of the account of the accused and the accused has not been able to show that the signature on the cheque is not of the accused. The learned Magistrate has committed an error by dismissing the complaint filed by the complainant on the ground that the complainant has not been able to p prove that the cheque in question was given to the complainant to discharge the legal debt/liability.”
The accused appealed to the Supreme Court against the decision of the High Court, which required him to deposit Rs. 1,20,000 within two months, failing which he would have to undergo imprisonment for a year. The Supreme Court bench consisting of justices L Nageswara Rao and Hemant Gupta upheld the high courts judgement and dismissed the appeal stating section 138, 139 of the negotiable instruments act saying “We are of the opinion that the High Court has rightly reversed the order of acquittal passed by the trial court wherein the presumption under Section 138 has not been taken into account. The trial court committed an error in placing heavy burden on the complainant to prove the debt. “