Burden of Proof on accused to prove Cheque was not issued for discharge of Debt or Liability: Supreme Court interprets NI Act [Read Judgment]

The Supreme Court has reaffirmed that under the Negotiable Instruments Act (NI Act), the burden of proof is on the accused to show that a cheque was not issued for discharge of any debt or liability under Section 138 of the Act.

The appellant Sumeti VIJ purchased non­woven fabric from M/s Paramount Tech FAB industries in its factory at Moginand. In lieu thereof, two cheques were issued by the appellant from her account of the Punjab National Bank, Karnal in order to meet the legal existing and enforceable liabilities. The cheques on presentation were returned from Punjab National Bank, Karnal with a note of “insufficient funds” in the account of the appellant.  Subsequently, Two legal notices were sent by the complainant to the appellant but she neither responded to the notices nor made any payment in furtherance thereto within the statutory period. Hence, two separate complaints were filed by the complainant­ respondent under Section 138 of the Act against the appellant­ accused.

Justice Indu Malhotra and Justice Ajay Rastogi concluded that, “ . . . the prosecution has to prove the case and these cases being quasi ­criminal in nature are to be proved on the basis of the principles of “preponderance of probabilities”, and not on the principles as being examined in the criminal case to prove the guilt of the accused beyond reasonable doubt.  . . . In the given circumstances, the High Court, in our view, has not committed any error in recording the finding of guilt of the appellant and convicting her for an offence being committed under Section 138 of the Act under its impugned judgment, which in our considered view, needs no further interference. Consequently, the appeals are without any substance, and are accordingly dismissed.”

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