Mere Admission Of Accused's Signature On Cheque Won’t Attract Presumption U/S.139 Of Negotiable Instruments Act: Manipur High Court

The High Court was considering an appeal filed against the Judgment of the Chief Judicial Magistrate, acquitting the accused/ respondent. An application under Section 378 CrPC seeking leave to appeal was filed against the impugned judgment of acquittal.

The Single Bench of Justice A. Guneshwar Sharma held, “In the cash in hand, the complaint could not establish the existence of legally recoverable debt, i.e., payment of a sum of Rs.24,00,000/- lakh to the accused by cash as he could not produce any document as proof of such payment. Mere admission of signature of the accused on the cheque will not attract the presumption under Section 139 of NI Act. It is for the complainant who is, at first, to establish the existence of debt or liability and the statutory presumption will operate only after such establishment. Further, when the accused denied receipt of money and delivery of cheque, the presumption will not be attracted.”

“It is the settled proposition of law that the existence of debt and liability cannot be presumed and it has to be first established under Section 138 NI Act and only after that the statutory presumption under Section 139 of the Act will come into play”, it added.

Advocate M. Tapan Sharma represented the Appellant while Advocate Leo Rommel S represented the Respondent.

Factual Background

In the beginning of December 2015, the respondent (cousin of the Appellant’s father) approached the appellant complainant and expressed his desire to sell out his land for his financial needs. The appellant had given a sum of Rs 24 lakh in cash by collecting from his family members and a sum of Rs 1.8 core by way of cheques to the Respondent as an advance in regard to the sale of land. Thereafter in 2016, the respondent returned the said sum of Rs. 1,80,00,00, which was taken from the appellant through cheques, saying that the respondent was not willing to sell the said land. In respect of the money that the respondent received in cash, the respondent issued a Cheque for a sum of Rs 24 lakh in favour of the Appellant.

The appellant presented the said cheque for realisation; however, it was dishonoured with the remark "Insufficient Funds” and the same was intimated to the Appellant, i.e. the same day of presentation for realisation. The appellant sent a demand/legal notice to the Respondent as per Section 138 of Negotiable Instruments Act but the respondent failed and neglected to pay the Cheque amount within a period of 15 days from the receipt of said notice. The appellant then filed a complaint under Section 138 of the Negotiable Instruments Act, against the Respondent. The Chief Judicial Magistrate dismissed the Complaint and acquitted the respondent by the impugned Judgment. Aggrieved thereby, the appellant approached the Apex Court.

Reasoning

On a perusal of the facts and circumstances of the case, the Bench noted that the accused had denied the receipt of a sum of Rs 24 lakh by cash from the complainant and further denied the issuance of the cheque of the said amount to the complainant. However, he admitted his signature on the cheque. It was further noticed that the accused never admitted the issuance of the cheque-in-question except for the admission of his signature.

“It was rightly held by the trial Court that the complainant failed to establish existing legally recoverable debt or liability in absence of any proof of payment to the accused. The PWs did not support the case of the complainant. Even if the existence of the debt and liability is presumed to be established, the accused has able to dislodge the statutory presumption as none of the PWs supported the case of the complainant and in absence of any document to prove the payment of Rs.24,00,000/- in cash to the accused”, it added.

Reference was also made to the judgment in Ranjit Sarkar v. Ravi Ganesh Bhardwaj (2025), where the Apex Court has held that the existence of a legally recoverable debt of liability under Section 138 of the Negotiable Instruments Act has to be established by the complainant at first instance and is not a matter of presumption under Section 139.

The Bench concluded that the complainant had failed to establish the existence of a legally recoverable debt or liability within the meaning of Section 138 of NI Act, and hence the trial Court had rightly held that the presumption under Section 139 would not be attracted. “Since the complainant has failed to discharge the initial burden on him under Section 138 and in view of denial of execution of cheque by the accused, the acquittal order rendered by learned CJM, Imphal West does not suffer from any illegality”, the Bench held while dismissing the appeal.

Cause Title: Shri Manoj Kumar Jain v. Shri Mahendra Kumar Jain (Case No.: Cril. Appeal No. 24 of 2023)

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