Karnataka High Court: Raising Doubt Alone Insufficient To Rebut Presumption Under Section 113 Of NI Act

Karnataka High Court: Raising Doubt Alone Insufficient To Rebut Presumption Under Section 113 Of NI Act

The Karnataka High Court has said that the presumption against an accused under Section 113 of the Negotiable Instruments Act is rebuttable. However, to rebut this presumption effectively, credible evidence must be presented, and merely raising doubts is insufficient.

Justice Ramachandra D. Huddar made this observation while granting the appeal filed by Parvathamma M. and overturning the trial court's acquittal of accused Chandrakala V under Section 138 of the Act.

Accused Chandrakala V. approached the complainant in early November 2012 and borrowed Rs. 4,50,000 to address urgent commitments and family needs. Six months later, when the complainant requested repayment, the accused issued a cheque for Rs. 4,50,000 drawn on Syndicate Bank as payment for the loan.

The cheque was presented for encashment but was dishonoured by the bank with the notation "Payment stopped by the Drawer" in a memo dated August 31, 2013. Subsequently, on September 5, 2013, the complainant issued a legal notice to the accused, demanding payment of the cheque amount. Despite receiving the notice, the accused neither paid the amount nor responded.

Consequently, the accused was alleged to have committed an offense under Section 138 of the Negotiable Instruments Act. However, the trial court acquitted the accused after considering the evidence, noting that the facts revealed during cross-examination and the accused's testimony cast doubt on the prosecution's version of events. Therefore, based on these grounds, the trial court issued the acquittal judgment.

The Karnataka High Court emphasized that, despite multiple opportunities, the respondent failed to appear before the court through her counsel.

The appellant contended that since the accused admitted issuing the cheque, acknowledging her signature on it, and receiving the legal notice, there remained no requirement for the complainant to prove these aspects. It was argued that under the provisions of the Negotiable Instruments Act (NI Act), there exists a presumption favouring the complainant regarding the issuance of the cheque.

The court noted, "Under Section 139 of the NI Act, in conjunction with Section 118, it is presumed until proven otherwise that every negotiable instrument was made for consideration. This presumption directly supports one of the essential elements for convicting under Section 138 of the NI Act."

Regarding the accused's defense that the cheque was issued as security for a Rs. 50,000 loan, the court found this defense unsupported by evidence. It stressed that the accused failed to discharge her evidential burden adequately. The court reiterated that while the accused could rebut the presumption, merely asserting a defense without proof was insufficient. Despite admitting to signing and issuing the cheque, the accused's actions triggered the presumption in favour of the complainant.

In overturning the trial court's acquittal, the High Court deemed it erroneous, citing fundamental errors in factual assessment and approach. Consequently, the court convicted the accused under Section 138 of the NI Act, imposing a fine double the amount of the cheque. Failure to pay the fine within one month would result in one year of simple imprisonment.