2026 (3) TMI 1054 - HC - Indian Laws

Presumption of signature and consideration upheld, failure to rebut statutory presumptions led to conviction being restored.

Proof of the drawer's signature on a cheque and valid service of the statutory demand notice gives rise to the rebuttable presumptions that the cheque was ... Negotiable Instruments Act, 1881 - Dishonour of cheques - legally enforceable debt or liability - Presumption under Sections 118 and 139 - onus to rebut statutory presumption and adducing independent evidence - failure to reply to statutory demand notice as evidential inference - defence - lost cheque book and the complainant by preparing a forged cheque. Whether the cheque being proved to bear the accused's signature attracts the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act - HELD THAT:- The Court held that the cheque Ex.P/1 was established to be signed by the accused and, therefore, the statutory presumptions under Sections 118 and 139 arose in favour of the complainant. The Court rejected the lower appellate Court's reasoning that presentation of the cheque on the same day as its issuance or the accused's alleged bank balance/behavior negated those presumptions, observing that such reasoning was not the plea taken by the accused and was factually flimsy. The accused did not produce evidence to rebut the presumptions. [Paras 13, 18, 22] The statutory presumptions under Sections 118 and 139 are attracted and were not rebutted. Onus to rebut statutory presumption and adducing independent evidence - failure to reply to statutory demand notice as evidential inference - HELD THAT: - In the case of Sanjabij Tari [2025 (9) TMI 1634 - SUPREME COURT], the Hon'ble Apex Court in para 29, 30 & 31 has held that when the accused has failed to reply to the statutory notice under Section 138 of the NI Act that leads to an inference that there is merit in the complainant’s version, the accused has the initial burden to set up the defence in his reply to the demand notice that the complainant did not have the financial capacity to advance the loan. When a statutory notice is not replied, it has to be presumed that the cheque was issued towards the discharge of liability. The Court found that the accused did not lead any independent evidence or examine witnesses to demonstrate that the cheque was not issued in discharge of a debt or that the complainant lacked wherewithal to advance the amount. Service of the demand notice was established and no reply was given by the accused; the Court relied on the principle that failure to reply to the statutory notice permits an inference favouring the complainant and that the initial burden to set up a defence lies on the accused, who may rebut by producing independent materials. [Paras 16, 17, 21, 23] The accused failed to rebut the statutory presumptions and did not discharge the onus of adducing independent evidence. Assessment of appellate factual inferences - HELD THAT: - The High Court held that the appellate Court's inference (that issuance and presentation on the same day and the accused's bank behaviour negatived the complainant's case) was unsustainable. The High Court observed that presentation on the same day is not unnatural, the appellate reasoning went beyond the accused's pleaded case, and such inferences could not displace the statutory presumptions in the absence of rebuttal evidence. [Paras 10, 13] The appellate Court's factual inferences were rejected as baseless and incapable of displacing the statutory presumptions. Final Conclusion: The appeal is allowed; the High Court set aside the acquittal and restored the trial Court's conviction and sentence as the cheque was proved to bear the accused's signature, statutory presumptions under Sections 118 and 139 applied and were unrebutted, and the accused failed to reply to the demand notice or to adduce independent evidence to discharge the onus. Issues: Whether the lower appellate court was justified in acquitting the accused of the offence under Section 138 of the Negotiable Instruments Act, 1881; and whether the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arose and were rebutted.Analysis: Evidence on record establishes that cheque Ex.P/1 bears the accused's signature. Service of the statutory demand notice is proved by the acknowledgement (Ex.P/6) and the UPC receipt. The accused did not lead any independent evidence or witnesses to demonstrate lack of financial capacity of the complainant or to rebut the statutory presumptions. The lower appellate court's inference that the cheque being presented on the same day as issuance negated the presumption of debt lacks support in the pleadings and in the evidence, and does not contradict the complainant's case that the cheque was issued in discharge of an earlier advance. The accused's assertions in 313 Cr.P.C. statement about misplacement of the cheque book were not substantiated by documentary or witness evidence nor by cross-examination that undermines the complainant's proof.Conclusion: The presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arise on proof of the accused's signature and the holder's possession; the accused failed to rebut those presumptions. The acquittal by the lower appellate court is set aside and the trial court's conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881 are restored in favour of the appellant.Ratio Decidendi: Proof of the drawer's signature on the cheque and valid service of the statutory notice gives rise to rebuttable presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881; failure by the drawer to produce cogent independent evidence to rebut those presumptions warrants conviction under Section 138 of the Negotiable Instruments Act, 1881.