Cheque Bounce-No Offence of Cheque Bounce in absence of Legally Recoverable Debt

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August 03, 2018

In a recent cheque bounce case, the Karnataka High Court quashed the case and stated that If the complainant himself does not plead the existence of legally recoverable debt, then there is no question of raising any initial presumption in favour of the complainant.

Case name: R Parimala Bai v. Bhaskar Narasimhaiah

In the present case, the Petitioner sought to quash criminal proceedings against her under Section 138 of NI Act. The Petitioner in the case alleged that there was no allegation in the complaint that there exists a legally recoverable debt from the accused and in the absence of such existence of legally recoverable debt, offence under Section 138 of the Act can’t be established.

Hence, the issue that fell for consideration before the High Court of Karnataka was whether on the basis of facts of the case, any legally recoverable debt was in existence or not?

Bench’s Verdict

In view of the facts and circumstances of the case and prevailing law, the High Court quashed the complaint against the Petitioner and made the following observations in the case:

  • That in order to attract Section 138 of the Negotiable Instruments Act, the ingredients of Section 138 have to be established primarily by the complainant by pleading in the complaint with regard to the existence of any legally recoverable debt or liability on the part of the accused.
  • That even a semblance of doubt is raised with regard to the existence or non-existence of legally recoverable debt, then also it should be established during the course of trial by means of pleading the facts and leading evidence.
  • That Section 138 of the Negotiable Instruments Act mandates that, there should be an existence of legally recoverable debt and in order to attract Section 138 of the Negotiable Instruments Act, the party has to plead with regard to the existence of legally recoverable debt.
  • That if the Complainant pleads with regard to the existence of the legally recoverable debt u/s.138 of the Act, then only presumption u/s.139 of the Act can be raised in favour of the complainant. If the complainant himself does not plead the existence of legally recoverable debt, then there is no question of raising any initial presumption in favour of the complainant. Therefore, even considering the provisions of Section 139 of the Negotiable Instruments Act, there is no question of accused rebutting the presumption unless the presumption is raised in favour of the complainant.

The entire case can be accessed here.

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