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The presumption under Section 139 of N.I. Act 1881 shifts the burden on the accused

Section 139 of the Negotiable Instruments Act, 1881 raises the presumption “unless the contrary is proved”. Once the complainant discharges the burden of proving that the instrument was executed by the accused; the presumption under Section 139 shifts the burden on the accused.

A Three-Judge Bench of the Supreme Court comprising Justices Dr. Dhananjaya Y. Chandrachud, Vikram Nath and B.V. Nagarathna was hearing appeals against the order of Madras High Court on the case of dishonour of cheques.

The expression “unless the contrary is proved” would demonstrate that it is only for the accused at the trial to adduce evidence of such facts or circumstances on the basis of which the burden would stand discharged.

The determination of whether a cheque pursuant to a settlement agreement arises out of legal liability would be dependent on various factors, such as the underlying settlement agreement, the nature of the original transaction and whether an adjudication on the finding of liability was arrived at in the original complaint, the defence raised by the accused, etc.

The Single Judge was in error in proceeding to quash the criminal complaint on a priori reasoning that the second set of cheques issued in pursuance of the deed of compromise were not in discharge of liability and on that basis proceeding to quash the proceedings under Section 482 CrPC. The mere fact that a suit has been instituted before the Madras High Court challenging the deed of compromise would furnish no justification for exercising the jurisdiction under Section 482. The deed of compromise would continue to be valid until a decree of the appropriate court setting it aside is passed.

The High Court has also failed to notice the true meaning and import of the presumption under Section 139 which can only be displaced on the basis of evidence adduced at the trial.

The Bench observed, "We are of the view that the Single Judge was in error in quashing the complaint CC No. 389/2017 pending on the file of the Seventh Metropolitan Magistrate, Chennai. The judgment of the Single Judge quashing the complaint is set aside."

View Judgment

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