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Mere denial cannot create doubt with regard to the existence of a debt or liability under NI Act

In Kishan Rao vs Shankargouda, a loan of Rs. 2 Lacs was given by the complainant to the accused against which a postdated repayment cheque was provided which bounced. Before the trial court the accused denied the claim stating that the cheque had been stolen and signature forged.The trial court found that the accused have failed rebut the presumption under Section 139 of the NI Act and sentenced him. The Appellate Court dismissed the appeal but the High Court allowed the revision by setting aside the conviction order. The High Court held that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. Hence the complainant took the matter to Supreme Court.

The Supreme Court referring to the judgment of the Supreme Court on grounds for exercising the revisional jurisdiction by the High Court in State of Kerala vs. Puttumana Illath Jathavedan Namboodiri and  Sanjaysinh Ramrao Chavan vs. Dattatray Gulabrao Phalke and others, found that the High Court has merely stated that the accused has been sucessfull in creating doubt  in the mind of the Court with regard to the existence of the debt or liability but has not returned any finding that order of conviction based on evidence on record suffers from any perversity or based on no material or there is other valid ground for exercise of revisional jurisdiction.

Further on the issue of presumption in favour of the complainant under Section 139 of the NI Act, the  Supreme Court referring to Kumar Exports vs. Sharma Carpets and Rangappa vs. Sri Mohan held that  in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail which probably had influenced the decision of the High Court but no evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted has not been explained by the High court.

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