DEFENCES AVAILABLE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT OF 1881

The Section 138 Negotiable Instruments Act of 1881 creates penalty for matters in which holder has drawn a cheque in favour of drawee with insufficient funds to his corresponding account. However, there can be instances where such holder of cheque has not intentionally acted in such a manner.

 

Section 139 of Negotiable Instrument Act provides for presumption in favour of the holder that the cheque was issued for discharging an antecedent liability and presumption can be rebutted only by the person who drew the cheque. Hence, an accused under Section 138 matter can defend itself under Section 139 of the Act. The purpose of Section 139 of the Act is only for casting burden of proof as to who should advance evidence in the case. It is upon the accused to produce evidence and to prove the presumption under Section 139 of the Act. In a prosecution where both the drawer company and its office-bearers are arrayed as accused, and if the drawer company does not choose such rebuttal evidence it is open to the other office-bearers-accused to adduce such rebuttal evidence.

 

 

 

If that be so, even in a case where the drawer company is not made an accused but the office-bearers of the companyalone are made the accused such office-bearer-accused are well within their rights to adduce rebuttal evidence to establish that the company did not issue the cheque towards any antecedent liability. In Kishan rao v. Shankargouda, (2018) CRL Appeal No. 803 SC it was held that mere denial of debt or liability cannot shift the burden of proof from accused in case of dishonour of cheque. Thus, the presumption under Section 139 can be rebutted by the accused but by only adducing evidence.