Cheque Bounce : The complainant is expected to prove his case to the hilt

In Ramakrishna B.K. vs Narayana Bhat.P., appeal was filed before the Kerala High Court by the Appellant against the order of the magistrate rejecting the complaint filed by the appellant.

The High Court observed that the appellants alleged to have loaned money to the accused against which a cheque was issued by the accused which bounced. Lawyer notice was served upon the accused demanding money which was never replied to. However, before the court the accused challenged the financial capacity of the Appellants and his capability of lending the amount claimed. The accused claimed that the cheque in question was a signed blank cheque. No evidence was tendered by the 1st respondent. 

 Sections 20, 87 and 139 of the Act make it clear that unless the presumption is rebutted, it can be taken that the cheque was issued in discharge of a legally enforceable liability. Referring to the decision in Bir Singh v. Mukesh Kumar [AIR 2019 SC 2446], it must be stated that even if a signed blank cheque is issued towards a payment, the payee is entitled to fill up the amount and other particulars, that will not invalidate the cheque. But here, the 1st respondent has a clear case that the appellant had no capacity to arrange so much money. Now the question is whether, the reason that he did not respond the lawyer notice nor did enter the box, should an adverse inference be drawn against him. Similarly, in such circumstances, cannot the borrower deny the financial capacity of the lender? There is no inviolable position that after having admitted issuance of the cheque, the drawer cannot challenge the capacity of the lender to pay the sum.

In Basalingappa v. Mudibasappa [2019 (2) KHC 451 SC], the SC referring ratio laid down by the Supreme Court on Sections 118(a) and 139,  summarised the principles enumerated by this Court in following manner:-

(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

(v) It is not necessary for the accused to come in the witness box to support his defence.

In other words, once execution of the promissory note is admitted, or proved, the presumption under Section 118(a) of the Act would arise that it is supported by consideration. It is a rebuttable presumption. The accused can prove non-existence of consideration by raising a probable defence. If he proves to have discharged the initial onus of proof that the existence of consideration was improbable or doubtful, the onus shifts back to the complainant, who will be obliged to prove it as a matter of fact, and on his failure to discharge the burden, he will be disentitled to get a relief.

The trial court is required to start with statutory presumption until the contrary is proved that the cheque was issued or drawn for consideration and that the complainant had received it for the discharge of existing debt or liability. Then the burden is on the accused, in view of the statutory presumption, to rebut the presumption by leading an adequate and satisfactory evidence to substantiate his contention in defence to the prosecution. Merely for the reason that he did not adduce any evidence to prove a negative fact, no adverse inference can be drawn against him. The degree of proof expected from the accused is not as rigorous as that of the complainant. He can discharge his onus by making dents in the case of the complainant. 

The financial capacity of the appellant stands disputed by the 1st respondent, the appellant has not taken care in adducing evidence supporting his ability to pay so much money. The complainant is expected to prove his case to the hilt.