To Rebut Presumption u/Sec 139 of NI Act-Accused has to Establish Preponderance of Probabilities-Supreme Court

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March 22, 2019

Case name: Anss Rajashekar v. Augustus Jeba Ananth

The present appeal assails High Court of Karnataka’s order, whereby the Court reversed Lower Court’s order acquitting the appellant of an offence under Section 138 of the Negotiable Instruments Act, 1881

The Appellant in appeal has averred that was no legally enforceable debt and that the appellant discharged the burden which is cast by the provisions of Section 139 and established a defence on a preponderance of probabilities.

Hence, the issue which fell for consideration of the Supreme Court was whether in view of the facts and circumstances of the case, the presumption under Section 139 of NI Act stands rebutted by the accused-appellant?

Bench’s Verdict

The Two-Judge Bench of the Supreme Court in view of that facts and circumstances of the case and the law as laid down by the Supreme Court in the case of Rangappa v. Sri Mohan[1] allowed the appeal and made the following observations in the case:

  • The Court noted that on a totality of the facts and circumstances and based on the evidence on the record, the Lower Court held that the presumption under Section 139 of the Act stood rebutted and that the defence stood probabalised. From the judgment of the High Court, the significant aspect of the case which stands out is that there has been no appreciation of the evidence by the High Court while reversing the order of acquittal. Thus, the Supreme Court remarked the High Court’s order to be unsatisfactory.
  • The Supreme Court while passing it’s verdict in the present case relied on it’s judgement in the Rangappa case, wherein it was held that the standard of proof for rebuttal of the presumption under Section 139 of the Act is guided by a preponderance of probabilities. That when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.

In view of the aforesaid reasons, the Apex Court held that the Appellant in the case duly rebutted the presumption under Section 139 of the Act as his defence that there was an absence of a legally enforceable debt was rendered probable on the basis of the material on record.

The entire case can be accessed here.

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[1] (2010)11 SCC 441