The accused is then required to prove that the check was not issued in satisfaction of any liability and, unless the accused meets this burden of proof, the alleged fact must be taken as true without expecting the complainant to do anything else. explained a bench of Justice Javed Iqbal Wani.

The court made these observations while dismissing an appeal filed by one Choudhary Piara Singh against an order of acquittal passed by the trial court in a check dishonor case under Section 138 of the NI Act.

The complainant, Singh, managing director of Good Luck Finance Corporation, alleged that the respondent Sat Pal had availed a loan for the purchase of a truck but had not repaid. Following this, a settlement reportedly took place in 2007, resulting in the issuance of the disputed check.

When the check bounced, Singh took legal action. However, the trial court acquitted Sat Pal, accepting his defense that the check was issued as a blank, signed document, held as security for the loan, rather than as final payment of any outstanding debt.

Aggrieved, Singh appealed and argued that Sat Pal’s admission of issuing the check, bearing his signature, created a presumption of liability under sections 118 and 139 of the NI Act. Conversely, Sat Pal contended that the check was blank, undated, provided merely as security in 1999 during loan disbursement and was subsequently misused by the complainant.

Court observations:

After considering the rival arguments, Justice Wani upheld the acquittal, basing his judgment on the statutory framework of Section 139 of the Act. He noted that “Article 139 of the 1881 law states that “Unless proven otherwise”, it is presumed that the holder of the check received the check for the settlement of all or part of a debt or commitment.

The Court further emphasized that the expression “presume” means a presumption of law, requiring the Court to uphold the presumption in every case where the factual basis has been established, although the accused can always rebut it by providing counter -evidence.

In support of the principles surrounding the burden of proof, Justice Wani cited Rangappa v. Sri Mohan And Basalingappa v. Mudibasappa which sets out the standard of proof required to rebut the presumption under section 139, which is below the strict threshold of “beyond reasonable doubt” and operates on the principle of “balance of probabilities”. The accused can challenge the existence of his liability by presenting circumstantial evidence that convinces the court of the improbability of the alleged debt, the court emphasized.

The Court also carefully examined the evidence indicating that the check in question was issued in blank form as security at the time of loan disbursement, which therefore meant no debt liability.

Justice Wani observed:

“The check in question was blank even though it was not dated, although it was signed by him and it was retained by the complainant/appellant herein at that time as security for the loan availed by the accused /respondent herein. »

Highlighting inconsistencies in the plaintiff’s testimony, the Court questioned the basis for the alleged debt amount, noting: “How the amount of Rs. 8,32,909/- covered by the check in question was calculated to be payable by the accused/respondent to the complainant/appellant herein, which is nothing less than a mystery .

The court pointed out that the complainant had failed to demonstrate how the outstanding amount would have reached the disputed figure of Rs. 8,32,909/-, especially in view of the absence of corroborating documents or any record of the claimed settlement of 2007.

In conclusion, Justice Wani observed that since both parties had presented substantial evidence, the trial court’s dismissal of the complaint was justified. He asserted that the plaintiff failed to convincingly establish the existence of a legally enforceable debt, concluding that it cannot, by any stretch of the imagination, be said that the trial court in this case has committed a fault or committed an illegality or perversity.

Accordingly, the appeal was dismissed.

Case Title: Chowdhary Piara Singh v Sat Pal

Citation: 2024 LiveLaw (JKL) 296

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