RANGAPPA versus SRI MOHAN

Citation: [2010] 6 S.C.R. 507 · Decided: 07-05-2010 · Supreme Court of India · Bench: K.G. BALAKRISHNAN · Disposal: Disposed off

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Judgment (excerpt)

(2010] 6 S.C.R. 507 
RAN GAPPA 
v. 
SRI MOHAN 
(Criminal Appeal No. 1020 of 2010) 
MAY 07, 2010 
[K.G. BALAKRISHNAN, CJI., P. SATHASIVAM AND J.M. 
PANCHAL, JJ.] 
. 
Negotiable Instruments Act, 1881: 
ss. 139 and 138 - Presumption in favour of holder -
Manner of rebuttal of statutory presumption -
Held: 
A 
B 
c 
Presumption mandated bys. 139 includes existence of 
legally enforc_eable debt or liability -
It is in nature of 
rebuttable presumption - Accused can raise a defence 
D 
wherein existence of legally enforceable debt or liability can 
be contested - However, initial presumption favours the 
complainant - Reverse onus clause is included and the same 
is guided by the test of proportionality - Accused cannot be 
expected to discharge an unduly high standard of proof -
E 
Standard of proof for rebutting presumption is of 
'preponderance of probabilities' - If accused is able to raise 
a probable defence which creates doubts about the existence 
of legally enforceable debt or liability, prosecution can fail -
On facts, dishonour of cheque on account of 'stop payment' 
instructions sent by accused - Complaint uls. 138 - Acquittal F 
by trial court in view of discrepancies in the complainant's 
version - Conviction by High Court since accused ·did not 
raise a probable defence to rebut the statutory presumption, 
does not call for interference - Complaint disclosed prima 
facie existence of a legally enforceable debt or liability """' 
G 
Accused failed to reply to the statutory notice uls. 138. 
s. 138 - Applicability of - Held: s. 138 is applicable when 
cheque is dishonoured on account of 'stop payment' 
507 
H 
508 
SUPREME COURT REPORTS 
[2010) 6 S.C.R. 
A instructions sent by accused to his bank in respect of post-
dated cheque, irrespective of insufficiency of funds. 
The appellant engaged the services of the 
respondent-engineer for supervising the construction of 
8 his house. The appellant requested the respondent for a 
hand loan to meet the construction expenses. In view of 
the acquaintance, the respondent paid the same by way 
of cash. The appellant issued a cheque for repayment of 
the said amount. The respondent presented the cheque 
for encashment. The bank issued a return memo stating 
C that the payment had been stopped by the drawer. 
Thereafter, the appellant did not honour the cheque 
within the statutorily prescribed period and also did not 
reply to the notice u/s. 138 of the Negotiable Instruments 
. Act, 1881. The respondent filed a complaint against the 
D appellant for offence punishable u/s.138 of the Act. The 
trial court acquitted the appellant u/s.138 in view of some 
discrep·ancies in the complainant's version. The High 
Court holding that the appellant did not raise a probable 
. defence to rebut the statutory presumption, convicted the 
E appellant for commission of offence u/s. 138 of the Act 
and directed to pay fine of Rs. 75,000/-. Hence the present 
appeal. 
F 
Disposing of the appeal, the Court 
HELD: 1. Ordinarily in cheque bouncing cases, what 
the courts have to consider is whether the ingredients of 
the offence enumerated in s.138 of the Negotiable 
Instruments Act, 1881 have been met and if so, whether 
the accused was able to rebut the statutory presumption 
G contemplated by s.139 of the Act. With respect to the facts 
of the instant case, it must be clarified that contrary to the 
trial court's finding, s.138 of the Act can indeed be 
attracted when a cheque is dishonoured on account of 
'stop payment' instructions sent by the accused to his 
H 
RANGAPPA v. SRI MOHAN 
509 
bank in respect of a post-dated cheque, irrespective of A · 
insufficiency of funds in the account. [Para 9] [518-D-F] 
Goa P/ast (Pvt.) Ltd. v. Chico Ursula D'Souza (2003) 3 
sec 232, referred to. 
2.1. The presumption mandated by s.139 of the Act 
8 
does indeed include the existence of a legally enforceable 
debt or liability. This is .in the nature of a rebuttable 
presumption and it is open to the accused to raise a 
defence wherein the existence 'of a legally enforceable 
debt or liability can be contested. However, there can be 
C 
no doubt that there is ar. initial presumption which. 
favours the complainant. Section 139 of the Act is an 
example of a reverse onus clause that has been included 
in furtherance of the legislative objective of improving the 
credibility of negotiable instruments. While s.138 of the 
D 
Act specifies a strong criminal remedy in relation to the 
dishonour of ch

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