Supreme Court: Standard of proof for rebutting the presumption U/S 139 of NI Act is that of preponderance of probabilities

Supreme Court: Standard of proof for rebutting the presumption U/S 139 of NI Act is that of preponderance of probabilities

The Supreme Court by its division bench comprising of Justices B.R. Gavai and M.M. Sundresh observed that as per Section 139 of the Negotiable Instruments Act, 1881 (in short NI Act)- the standard of proof for rebutting the presumption is that of preponderance of probabilities.

In the present criminal appeals the case was arising out of cheque bounce complaint, the accused was acquitted by the Trial Court. The High Court reversed the acquittal and convicted the accused.

In the appeal, filed by the appellant- Rajaram Sriramulu Naidu (D) vs. Maruthachalam, the Apex Court noted that the accused had examined the Income Tax Officer who produced certified copies of the Income Tax Returns of the complainant for the relevant financial year to show that the complainant had not declared that he had lent Rs.3 lakh to the accused and that the complainant(s) did not have financial capacity to lend money as alleged.

The learned Trial Court found that the Income Tax Returns of the complainant did not disclose that he lent amount to the accused, and that the declared income was not sufficient to give loan of Rs.3 lakh. Therefore, the case of the complainant that he had given a loan to the accused from his agricultural income was found to be unbelievable by the learned Trial Court. The learned Trial Court found that it was highly doubtful as to whether the complainant had lent an amount of Rs.3 lakh to the accused.

The Apex Court agreed with the decision of the Trial Court view and observed that the defense raised by the appellant satisfies the standard of "preponderance of probability."

"The standard of proof for rebutting the presumption is that of preponderance of probabilities. Applying this principle, the learned Trial Court had found that the accused had rebutted the presumption on the basis of the evidence of the defense witnesses and attending circumstances," added the Court.

The Apex Court also placed reliance on the case of Bir Singh vs. Mukesh Kumar in which though the accused was convicted by the learned Trial Court, which conviction was maintained by the Appellate Court, the High Court in its revisional jurisdiction interfered with the same and acquitted the accused.

The Apex Court in its judgment stated that, "in exercise of revisional jurisdiction under Section 482 of the Code of Criminal Procedure, 1973, the High Court could not, in the absence of perversity, upset concurrent findings of fact. In any case, in the said case, the accused had not led evidence with regard to the financial capacity of the complainant. This Court held that once a cheque was signed and handed over by the accused, it would attract presumption under Section 139 of the N.I. Act in the absence of any cogent evidence to show that the cheque was not issued in the discharge of a debt."

Further referring to observations made in Baslingappa v. Mudibasappa (2019) 5 SCC 418, the Court added, "this Court has held that once the execution of cheque was for the discharge of any debt or other liability. It has however been held that the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defense. The standard of proof for rebutting the presumption is that of preponderance of probabilities. It has further been held that to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defense. It has been held that inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely."

The Supreme Court was thus of the view that the defense raised by the appellant satisfied the standard of "preponderance of probability" and affirmed acquittal.