Supreme Court of India

RAJESH JAINversusAJAY SINGH

Citation: 2023 INSC 888
Decided: 9 October 2023
Disposal: Appeal(s) allowed
Bench: ARAVIND KUMAR

Holding

The accused did not discharge the evidential burden; the presumption under Section 139 stands, warranting conviction under Section 138.

Summary

Rajesh Jain alleged that he had advanced loans to Ajay Singh, who later issued a post‑dated cheque for repayment that was dishonoured for insufficient funds. Jain filed a complaint under Section 138 of the Negotiable Instruments Act, 1881; the trial court acquitted Singh and the High Court upheld the acquittal. The Supreme Court was asked to consider whether the accused had discharged the evidential burden imposed by the statutory presumption under Section 139 of the NI Act. The Court held that the presumption was correctly triggered by the admitted signature and that Singh failed to produce any defence evidence or establish, on a pre‑ponderance of probabilities, that no debt existed at the time of cheque issuance. Consequently, the lower courts erred by shifting the burden back to the complainant. The appeal was allowed, the conviction under Section 138 was affirmed, and Singh was sentenced to a fine of twice the cheque amount and one year of simple imprisonment.

Issues considered

Whether the accused discharged the evidential burden to rebut the presumption under Section 139 of the Negotiable Instruments Act, 1881.
Whether the lower courts erred in shifting the burden of proof to the complainant after the presumption was raised.

Legislation cited

Code of Criminal Procedure, 1973s. 313
Indian Evidence Act, 1872s. 101, s. 102, s. 114
Negotiable Instruments Act, 1881s. 118, s. 138, s. 139

Subjects

Section 138 NI ActSection 139 NI ActPresumption of lawEvidential burdenCheque dishonourCriminal appealBurden of proofReverse onus

Judgment

[2023] 13 S.C.R. 788 : 2023 INSC 888

CASE DETAILS

RAJESH JAIN
v.
AJAY SINGH
(Criminal Appeal No. 3126 of 2023)
OCTOBER 09, 2023
[ARAVIND KUMAR AND S.V. N. BHATTI, JJ.]
HEADNOTES
Issue for consideration: Since the execution of the cheque is,
admittedly, not under dispute, the limited question to be considered, is (i)
whether the accused can be said to have discharged his ‘evidential burden’,
for the courts below to have concluded that the presumption of law supplied
by s.139 of the Negotiable Instruments Act, 1881 had been rebutted.
Negotiable Instruments Act, 1881 – s.139 – Respondent-accused
tried for oﬀence u/s. 138 of NI Act – Trial Court acquitted respondent
– Order of acquittal upheld by the High Court – Propriety:
Held: There is a fundamental ﬂaw in the way both the Courts below
have proceeded to appreciate the evidence on record – Once the presumption
u/s. 139 was given eﬀect to, the Courts ought to have proceeded on the
premise that the cheque was, indeed, issued in discharge of a debt/liability
– The entire focus would then necessarily have to shift on the case set up
by the accused, since the activation of the presumption has the eﬀect of
shifting the evidential burden on the accused – The nature of inquiry would
then be to see whether the accused has discharged his onus of rebutting
the presumption – In the instant case, when the courts concluded that the
signature had been admitted, the Court ought to have inquired into either of
the two questions (depending on the method in which accused has chosen
to rebut the presumption): Has the accused led any defense evidence to
prove and conclusively establish that there existed no debt/liability at the
time of issuance of cheque – In the absence of rebuttal evidence being led
the inquiry would entail: Has the accused proved the non-existence of debt/
liability by a preponderance of probabilities by referring to the ‘particular
788
RAJESH JAIN v. AJAY SINGH 789

circumstances of the case’ – There was perversity in the approach of the
trial Court as it framed the question ‘whether a legally valid and enforceable
debt existed qua the complainant and the cheque in question (Ex. CWI/A)
was issued in discharge of said liability/debt’ – When the initial framing of
the question itself being erroneous, one cannot expect the outcome to be
right – The onus instead of being ﬁxed on the accused has been ﬁxed on the
complainant – The High Court has also questioned the want of evidence on
part of the complainant in order to support his allegation of having extended
loan to the accused, when it ought to have instead concerned itself with the
case set up by the accused and whether he had discharged his evidential
burden by proving that there existed no debt/liability at the time of issuance
of cheque – On consideration of the record, the case set up by the accused
was riddled with contradictions – Answer of the question (i) is in negative
– Consequently, the complaint ﬁled u/s. 138 of the NI Act is allowed and
respondent-accused convicted. [Paras 55,56,57,62,63]
Evidence Act, 1872 – Negotiable Instruments Act, 1881 – Burden
of Proof and Presumptions: Conceptual Underpinnings – discussed
and elaborated.
Negotiable Instruments Act, 1881 – s.139 – Eﬀect of Presumption
and Shifting of Onus of Proof – discussed.

LIST OF CITATIONS AND OTHER REFERENCES

Mst. Dalbir Kaur and Ors. v. State of Punjab (1976) 4 SCC 158 :
[1977] 1 SCR 280; Gimpex Private Limited v. Manoj Goel (2022) 11 SCC
705; K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 : [1999]
3 Suppl. SCR 271; Kundanlal v. Custodian Evacuee Property AIR 1961 SC
1316; G.Vasu v. Syed Yaseen AIR 1987 AP 139; Bharat Barrel v. Amin Chand
(1999) 3 SCC 35 : [1999] 1 SCR 704; Kumar Exports v. Sharma Exports
(2009) 2 SCC 513 : [2008] 17 SCR 572; Bir Singh v. Mukesh Kumar (2019)
4 SCC 197 : [2019] 2 SCR 24; Rangappa vs. Mohan AIR 2010 SC 1898
: [2010] 6 SCR 507; Basalingappa v. Mudibasappa AIR 2019 SC 1983 :
[2019] 6 SCR 555 – referred to.
Rules of Evidence – The Hidden Origin of Modern Law – John Henry
Wigmore – referred to.
790 SUPREME COURT REPORTS [2023] 13 S.C.R.

OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
3126 of 2023.
From the Judgment and Order dated 01.02.2022 of the High Court of
Punjab & Haryana at Chandigarh in CRMA No.148 of 2020.
Appearances:
Petitioner-in-person
Yudhvir Dalal, Surender Singh, Himanshu Singroha, Ms. Sunaina,
Kailas Bajirao Autade, Advs. for the Respondent.

JUDGMENT / ORDER OF THE SUPREME COURT

JUDGMENT
ARAVIND KUMAR, J.
1. Leave Granted.
2. The respondent-accused was tried for the oﬀence under Section 138
of the Negotiable Instruments Act, 1881 (for short ‘NI Act’). The Trial Court
acquitted1 him. The High Court dismissed the appellant’s- complainant’s
appeal and upheld the order of acquittal2. Challenging the concurrent ﬁndings
passed by the Courts below, the complainant has preferred this appeal.
Case of the Complainant
3. Mr. Ajay Singh (respondent-accused), along with his wife, is said to
have approached the appellant-complainant (Mr. Rajesh Jain) on 01.03.2014
with a request for lending him money. The meeting is said to have been
facilitated by Ms. Gita Sunar the sister-in-law of Mr. Singh who had been
working as an employee under Mr. Rajesh Jain for nearly 15 years then. Mr.
Rajesh Jain, appellant appearing in-person contended that he had lent a sum
of Rs. 6 lacs on that day and has lent further sums thereafter, in the genuine

1
Judgment and Order dated 17.12.2019 in Crl. Complaint No. 221 of 2017
2
Criminal Appeal No.148 of 2020 was dismissed by Hon’ble High Court of Gujarat by
Judgment and Order dated 01.02.2021.
RAJESH JAIN v. AJAY SINGH 791
[ARAVIND KUMAR, J.]

belief that Mr. Ajay Singh would honour his promise of timely repayment
and return the sum borrowed with interest, as agreed.
4. The respondent-accused failed to repay as per the timeline agreed.
The complainant’s eﬀorts to recover his money were met with avoidance
tactics. The accused is said to have changed his cellular telephone number
without notice to the complainant, with the intent of evading his payment
obligations. It is only in the year 2017, that the complainant managed to
trace the accused-at which point, the accused sought for forgiveness and
promised to repay the amounts borrowed along with interest, within three
months. The accused had informed the complainant that he would source the
funds to clear his outstanding dues by selling two plots of land he owns in
Nepal, by taking a personal loan and from the 7th Pay Commission arrears
that he was to receive.
5. Yet again, the accused defaulted on his promise. He was not to be
found in his residential address. Having successfully concealed himself
for about 7 months, the complainant appears to have located him at a new
residential address. On direct confrontation, the accused is said to have
issued a post-dated cheque No.163044 (dated 19.10.2017) for a sum of
Rs.6,95,204/- towards part repayment of outstanding dues. The accused
assured the complainant that the balance dues would be repaid by issuing
a second cheque in the month of December 2017.
6. On its presentation, the cheque was returned with the endorsement
‘Funds Insuﬃcient. The complainant issued a demand notice through his
counsel on 26.10.2017 and called upon the accused to make repayment of the
cheque amount (Rs. 6,95,204) and other expenses incurred within 15 days.
Since the demand was not complied with, a complaint under Section 138
NI Act was instituted on 29.11.2017, before the Court of Judicial Magistrate
First Class (JMFC), Jind.
Proceedings before the Trial Court
7. The Trial Court took cognizance of the oﬀence, summoned the
accused and issued notice of accusation. The accused pleaded not guilty
and claimed to be tried.
8. In support of his case, the complainant had examined himself as CW-
1. Mr. Gulab Singh, a bank oﬃcial at SBI, Jind branch oﬃce was examined
792 SUPREME COURT REPORTS [2023] 13 S.C.R.

as CW-2 and Ms. Gita Sunar as CW3. The complainant had also produced
the relevant documentary evidence3 including the cheque in question, cheque
return memo, copy of the bank passbook, demand notice, postal register,
statement of accounts of the complainant and cheque returned register.
9. In his statement under Section 313 of the Code of Criminal Procedure
Code 1973, the accused admits of having borrowed money to the extent of
Rs.20 lakhs from the complainant. He admits of having paid some interest
amount and has pleaded that he could not pay the remaining amount since
complainant had started demanding higher amount. He further admits of
having received the legal notice but denies having issued any cheque.
10. No defense evidence has been led on behalf of the accused.
11. On a consideration of evidence on record, the Trial Court returned
a ﬁnding that the accused was not guilty.
12. The Trial Court found that (i) the complainant had discharged
his initial onus of proving the essential facts underlying the oﬀence under
Section 138 of the NI Act; (ii) the signature on the cheque [Exh. CW1/A)
was admitted by the accused and, hence, it rightly raised the statutory
presumption under Section 139 NI Act. It, then, rightly noted that the onus
of rebutting the presumption lay on the accused and said onus was to be
discharged by raising a ‘probable defence’ which would create a doubt as
to the existence of a legally enforceable debt.
13. It then framed the point for determination as follows:
“The only question remaining for determination is whether a legally
valid and enforceable debt existed qua the complainant and the cheque
in question (Ex. CWI/A) was issued in discharge of said liability/debt?”
14. The Trial Court answered the issue in the negative. It held that
the complainant had failed to prove his case beyond reasonable doubt. It

3
Ex.CW1/A-Cheque No.163044 dt.19.10.2017
Ex.CW1/B-Cheque return Memo dt. 01.11.2017 Ex.CWA/C- Copy of Bank passbook
of complainant Ex.CW1/D-Legal Notice dt. 26.10.2017
Ex.CW1/E-Postal Receipt dt. 28.10.2017
Ex.CW2/1-Statement of account of complainant Dr. Rajesh Jain w.e.f 01.10.2017 to
31.12.2017 Ex. CW2/2-Copy of Cheque Bonus Register
RAJESH JAIN v. AJAY SINGH 793
[ARAVIND KUMAR, J.]

has been observed that the defence led by the accused has created a doubt
regarding the truthfulness of the complainant’s case.
15. The conclusion of the Trial Court was based on the following
grounds:
(i) That the legal notice [Ex. CW1/D] dated 26.10.2017 was not a valid
legal notice since it was not signed by the complainant or his counsel.
(ii) In the complaint, legal notice as well as the aﬃdavit evidence, the
complainant has failed to mention the date, month and year on which
he advanced various sums of money towards loan.
(iii) The evidence on records indicates that the complainant is in the
business of money lending. Since he does not possess any valid license/
registration4 under the Punjab Registration of Money Lenders Act,
19385 (Money Lenders Act), he could not have ﬁled a suit for recovery
of money advanced as per Section 3 of the Money Lenders Act. The
Bombay High Court has in the case of Nanda v. Nandakishor6
interpreted the phrase ‘in any suit’ as found in Section 3, widely, to
include even a complaint under Section 138 of the NI Act. Relying
on the said decision, the Trial Court has concluded that the complaint
has been ﬁled in respect of an unenforceable claim.
(iv) The procedure set out in Section 138 has not been properly
followed in that the legal notice has been issued prematurely, even
before the complainant had received notice of the cheque return memo.
The date reﬂected on the cheque return memo is 1.11.2017 and the
date on which the legal notice was issued is 26.10.17. The legal notice
could not have been issued until the cheque had been dishonoured.
(v) The version of the complainant is doubtful since the cheque was,
admittedly, issued in part-payment of outstanding dues. Nowhere in
the complaint or demand notice has the complainant disclosed the total
amount loaned to the accused. The Court found it rather surprising

4
Section 4(2) postulates no money-lender shall carry on the business of advancing loans
unless he gets himself registered under sub-section (1)
5
Adaptation of Law Order 1968 – See Page 75
6
(2010) SCC OnLine Bombay 54
794 SUPREME COURT REPORTS [2023] 13 S.C.R.

that the complainant, an orthopaedic surgeon, would advance huge
amounts of loan to the accused, a Class IV employee, without any
formal agreement/acknowledgement of loan advanced.
16. The complainant was granted special leave to appeal under Section
378 (4) CrPC before the High Court of Punjab and Haryana.
Proceedings before the High Court
17. On reappreciating the evidence on record, the High Court has
found no merit in the appeal and has upheld the order of acquittal passed by
the Trial Court. The High Court has reasoned that accused had discharged
his onus in rebutting the statutory presumption raised under Section 139
NI Act. The onus, then, once again had shifted to the complainant to prove
that the cheque had been issued in respect of a legally enforceable debt and
complainant had failed in discharging the onus to prove that cheque was
issued in respect of a legally enforceable debt.
18. The underlying basis of the ﬁndings in the High Court judgment
can be summarised thus:
18.1 The presumption under Section 139 was rebutted by putting
questions to the appellant in his cross examination and explaining the
incriminating circumstances found in the statement recorded under Section
313 of Cr.P.C.
18.2 The cross examination of the appellant reveals that he had given
loan to accused commencing from 1st March, 2014 and on several dates
thereafter. The cheque was handed over to the accused only on 19.10.2017,
nearly three years thereafter. If the appellant had given loan on various
dates, he must have maintained some documents to evidence such loans.
He has remained silent as to the speciﬁc amounts loaned after 01.03.2014
and complainant ought to have tendered in evidence accounts, ledger,
statement to prove the debt amount. The stand of the accused was that he
did borrow money from the complainant but every month, the complainant
would enhance the outstanding dues by Rs 1 lakh. Therefore, the stand of
the respondent seems to be more probable than the case of the complainant.
18.3 There is a consistent allegation in the complaint, demand notice
and the aﬃdavit in evidence that the loan was given subject to payment of
RAJESH JAIN v. AJAY SINGH 795
[ARAVIND KUMAR, J.]

interest on the principal amount. The complainant ought to have mentioned
the principal amount borrowed and the interest charged thereon in order
to arrive at the cheque amount of Rs.6,95,204/-. Since the breakup of the
principal amount and interest charged is conspicuously absent in all the three
documents, the complaint is bereft of material particulars and deserved to
be dismissed at the very outset.
18.4 In so far as the Trial Court’s ﬁnding that the complaint was not
maintainable since the complainant was not registered under the Money
Lenders Act, the High Court has observed that there was no necessity
of evaluating such a ﬁnding since that question would only arise if the
complainant had succeeded in proving that the cheque was issued in respect
of a legally enforceable debt.
19. We have heard Mr. Rajesh Jain, appellant appearing in-person, and
Mr. Yudhvir Dalal, learned Counsel for the respondent.
20. Mr. Rajesh Jain, appearing in-person has contended that there is
a serious ﬂaw in the approach of the Courts below while appreciating the
evidence on record. According to him, the signature on the cheque not being
under dispute, and the presumption under Section 139 having been drawn
against the accused, there was nothing available on record to suggest that
the accused had discharged his onus of rebutting the presumption. He drew
our attention to the reasoning given in the orders of acquittal to contend that
courts below had erroneously proceeded to appreciate the evidence as though
the onus was on the complainant to prove that ‘the cheque was issued in
discharge of a debt’. Once the presumption operates, the onus rests on the
accused to prove the non- existence of debt/liability and the courts could
not have doubted the complainant’s case from any point of view. He ﬁnally
argued that the respondent cannot be said to have raised a ‘probable defence’
since the case set up in defence was full of inconsistencies and bereft of any
evidence. He, accordingly, prays that concurrent ﬁndings be set aside, and
an order of conviction be passed against the accused.
21. Mr. Yudhvir Dalal, learned counsel has contended that this Court,
while hearing an appeal by special leave, must be extremely slow to
interfere against concurrent ﬁndings. Merely because another view can be
taken on reappreciation of the evidence, is no ground to interfere; on the
merits, he contends that the accused has discharged the burden fastened by
796 SUPREME COURT REPORTS [2023] 13 S.C.R.

raising a ‘probable defence’, which meets the standard of ‘preponderance
of probabilities. He has relied on a few judgments to contend that the
presumption can be rebutted even without leading any rebuttal evidence.
In this regard, he submits that it is always open to the accused to rely on
the materials produced by the complainant for disproving the existence
of a legally enforceable debt or liability. He submits that the complaint is
lacking in material particulars-it fails to state the total sum loaned, the dates
on which the loans were given, the basis on which the demand was made
for a sum of Rs. 6,95,204/-. These facts coupled with other circumstances
has justiﬁably created a doubt in the mind of the court as to the genuineness
of the complainant’s case and therefore, courts below were justiﬁed in
disbelieving the complainant’s version. On these grounds he prays for
dismissal of the appeal.
22. We have taken note of the rival submissions canvassed and have
perused the record.
Question for Consideration
23. Since the execution of the cheque is, admittedly, not under dispute,
the limited question to be considered, is (i) whether the accused can be said
to have discharged his ‘evidential burden’, for the courts below to have
concluded that the presumption of law supplied by Section 139 had been
rebutted?
23.1 If the answer to this question is found in the aﬃrmative, the
next question to be considered is (i) whether the complainant has, in the
absence of the artiﬁcial force supplied by the presumption under Section 139,
independently proved beyond reasonable doubt that the cheque was issued
in discharge of a debt/liability? The necessity of dealing with point No. (ii)
will only arise if the answer to point No. (i) in the aﬃrmative. Hence, we
shall take up point (i) for consideration.
Applicable Legal Principles
Scope of Article 136 vis a vis Concurrent Finding of Fact
24. At the threshold, we must note that the challenge in this appeal calls
for an interference against concurrent ﬁndings by two Courts. The scope
of an appeal by special leave under Article 136 of the Constitution of India
RAJESH JAIN v. AJAY SINGH 797
[ARAVIND KUMAR, J.]

against the concurrent ﬁndings is well settled. In Mst. Dalbir Kaur and
Ors. vs. State of Punjab (1976) 4 SCC 158, this Court, on a consideration
of multiple authorities, has distilled the principles governing interference
by this Court in a criminal appeal by special leave, as follows:
(1) that this Court would not interfere with the concurrent ﬁnding of
fact based on pure appreciation of evidence even if it were to take a
diﬀerent view on the evidence.
(2) that the Court will not normally enter into a re- appraisement or
review of the evidence, unless the assessment of the High Court is
vitiated by an error of law or procedure or is based on error of record,
misreading of evidence or is inconsistent with the evidence, for
instance, where the ocular evidence is totally inconsistent with the
medical evidence and so on.
(3) that the Court would not enter into credibility of the evidence with
a view to substitute its own opinion for that of the High Court
(4) that the Court would interfere where the High Court has arrived
at a ﬁnding of fact in disregard of a judicial process, principles of
natural justice or a fair hearing or has acted in violation of a mandatory
provision of law or procedure resulting in serious prejudice or injustice
to the accused.
(5) this Court might also interfere where on the proved facts wrong
inferences of law have been drawn or where the conclusions of the
High Court are manifestly perverse and based on no evidence: It
is very diﬃcult to lay down a rule of universal application, but the
principles mentioned above and those adumbrated in the authorities
of this Court cited supra provide suﬃcient guidelines for this Court to
decide criminal appeals by special leave. Thus, in a criminal appeal by
special leave, this Court at the hearing examines the evidence and the
judgment of the High Court with the limited purpose of determining
whether or not the High Court has followed the principles enunciated
above. Where the Court ﬁnds that the High Court has committed no
violation of the various principles laid down by this Court and has made
a correct approach and has not ignored or overlooked striking features
in the evidence which demolish the prosecution case, the ﬁndings of
798 SUPREME COURT REPORTS [2023] 13 S.C.R.

fact arrived at by the High Court on an appreciation of the evidence in the
circumstances of the case would not be disturbed.
Section 138 of the NI Act - Necessary Ingredients
25. Essentially, in all trials concerning dishonour of cheque, the courts are
called upon to consider is whether the ingredients of the oﬀence enumerated in
Section 138 of the Act have been met and if so, whether the accused was able to
rebut the statutory presumption contemplated by Section 139 of the Act.
26. In Gimpex Private Limited vs. Manoj Goel7, this Court has unpacked
the ingredients forming the basis of the oﬀence under Section 138 of the NI Act
in the following structure:
(1) The drawing of a cheque by person on do account maintained by him
with the banker for the payment of any amount of money to another from
that account;
(i) The cheque being drawn for the discharge in whole or in part of any
debt or other liability;
(iii) Presentation of the cheque to the bank arranged to be paid from that
account,
(iv) The return of the cheque by the drawee bank as unpaid either because
the amount of money standing to the credit of that account is insuﬃcient to
honour the cheque or that it exceeds the amount
(v) A notice by the payee or the holder in due course making a demand for
the payment of the amount to the drawer of the cheque within 30 days of the
receipt of information from the bank in regard to the return of the cheque; and
(vi) The drawer of the cheque failing to make payment of the amount of
money to the payee or the holder in due course within 15 days of the receipt
of the notice.
27. In K. Bhaskaran v. Sankaran Vaidhyan Balan8 this Court had
summarised the constituent elements of the oﬀence in fairly similar terms by
holding:

7
(2022) 11 SCC 705
8
(1999) 7 SCC 510
RAJESH JAIN v. AJAY SINGH 799
[ARAVIND KUMAR, J.]

“14. The oﬀence Under Section 138 of the Act can be completed only
with the concatenation of a number of acts. The following are the acts
which are components of the said oﬀence: (1) drawing of the cheque,
(2) presentation of the cheque to the bank, (3) returning the cheque
unpaid by the drawee bank, (4) giving notice in writing to the drawer of
the cheque demanding payment of the cheque amount, (3) failure of the
drawer to make payment within 15 days of the receipt of the notice.”
28. The ﬁve (5) acts as set out in K Bhaskaran’s case (supra) are,
generally speaking, matters of record and would be available in the form
of documentary evidence as early as, at the stage of ﬁling the complaint
and initiating prosecution. Apart from the above acts, it is also to be proved
that cheque was issued in discharge of a debt or liability (Ingredient no.
(ii) in Gimpex’s case). The burden of proving this fact, like the other facts,
would have ordinarily fallen upon the complainant. However, through the
introduction of a presumptive device in Section 139 of the NI Act, the
Parliament has sought to overcome the general norm as stated in Section
102 of the Evidence Act and has, thereby ﬁxed the onus of proving the same
on the accused. Section 139, in that sense, is an example of a reverse onus
clause and requires the accused to prove the non-existence of the presumed
fact, i.e., that cheque was not issued in discharge of a debt/liability.
Burden of Proof and Presumptions: Conceptual Underpinnings
29. There are two senses in which the phrase ‘burden of proof’ is used
in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One is the
burden of proof arising as a matter of pleading and the other is the one which
deals with the question as to who has ﬁrst to prove a particular fact. The
former is called the ‘legal burden’ and it never shifts, the latter is called the
‘evidential burden’ and it shifts from one side to the other. [See Kundanlal
v. Custodian Evacuee Property (AIR 1961 SC 1316)]
30. The legal burden is the burden of proof which remains constant
throughout a trial. It is the burden of establishing the facts and contentions
which will support a party’s case. If, at the conclusion of the trial a party
has failed to establish these to the appropriate standards, he would lose to
stand. The incidence of the burden is usually clear from the pleadings and
usually, it is incumbent on the plaintiﬀ or complainant to prove what he
pleaded or contends. On the other hand, the evidential burden may shift from
800 SUPREME COURT REPORTS [2023] 13 S.C.R.

one party to another as the trial progresses according to the balance of
evidence given at any particular stage; the burden rests upon the party
who would fail if no evidence at all, or no further evidence, as the case
may be is adduced by either side (See Halsbury’s Laws of England,
4th Edition para 13). While the former, the legal burden arising on the
pleadings is mentioned in Section 101 of the Evidence Act, the latter,
the evidential burden, is referred to in Section 102 thereof. [G.Vasu V.
Syed Yaseen (AIR 1987 AP139) aﬃrmed in Bharat Barrel Vs. Amin
Chand [(1999) 3 SCC 35] ]
31. Presumption, on the other hand, literally means “taking as true
without examination or proof”. In Kumar Exports v. Sharma Exports9,
this Court referred to presumption as “devices by use of which courts
are enabled and entitled to pronounce on an issue notwithstanding that
there is no evidence or insuﬃcient evidence.”
32. Broadly speaking, presumptions are of two kinds, presumptions
of fact and of law. Presumptions of fact are inferences logically drawn
from one fact as to the existence of other facts. Presumptions of fact
are rebuttable by evidence to the contrary. Presumptions of law may
be either irrebuttable (conclusive presumptions), so that no evidence
to the contrary may be given or rebuttable. A rebuttable presumption
of law is a legal rule to be applied by the Court in the absence of
conﬂicting evidence (Halsbury, 4th Edition paras 111, 112]. Among
the class of rebuttable presumptions, a further distinction can be made
between discretionary presumptions (‘may presume’) and compulsive
or compulsory presumptions (‘shall presume’). [G. Vasu V. Syed Yaseen
(Supra)]
33. The Evidence Act provides for presumptions, which fit
within one of three forms: ‘may presume’ (rebuttable presumptions of
fact), ‘shall presume’ (rebuttable presumption of law) and conclusive
presumptions (irrebuttable presumption of law). The distinction between
‘may presume’ and ‘shall presume’ clauses is that, as regards the former,
the Court has an option to raise the presumption or not, but in the latter
case, the Court must necessarily raise the presumption. If in a case the

9
(2009) 2 SCC 513
RAJESH JAIN v. AJAY SINGH 801
[ARAVIND KUMAR, J.]

Court has an option to raise the presumption and raises the presumption,
the distinction between the two categories of presumptions ceases and
the fact is presumed, unless and until it is disproved, [G.Vasu V. Syed
Yaseen (Supra)]
Section 139 NI Act-Eﬀect of Presumption and Shifting of Onus
of Proof
34. The NI Act provides for two presumptions: Section 118 and Section
139. Section 118 of the Act inter alia directs that it shall be presumed, until
the contrary is proved, that every negotiable instrument was made or drawn
for consideration. Section 139 of the Act stipulates that ‘unless the contrary
is proved, it shall be presumed, that the holder of the cheque received the
cheque, for the discharge of, whole or part of any debt or liability’. It will be
seen that the ‘presumed fact’ directly relates to one of the crucial ingredients
necessary to sustain a conviction under Section 138. 10
35. Section 139 of the NI Act, which takes the form of a ‘shall presume’
clause is illustrative of a presumption of law. Because Section 139 requires
that the Court ‘shall presume’ the fact stated therein, it is obligatory on
the Court to raise this presumption in every case where the factual basis
for the raising of the presumption had been established. But this does not
preclude the person against whom the presumption is drawn from rebutting
it and proving the contrary as is clear from the use of the phrase ‘unless the
contrary is proved’.
36. The Court will necessarily presume that the cheque had been
issued towards discharge of a legally enforceable debt/liability in two
circumstances. Firstly, when the drawer of the cheque admits issuance/
execution of the cheque and secondly, in the event where the complainant
proves that cheque was issued/executed in his favour by the drawer. The
circumstances set out above form the fact(s) which bring about the activation
of the presumptive clause. [Bharat Barrel Vs. Amin Chand] [(1999) 3
SCC 35]

10
The rules discussed hereinbelow is common to both the presumptions under Section
139 and Section 118 and is hence, not repeated-Reference to one can be taken as
reference to another
802 SUPREME COURT REPORTS [2023] 13 S.C.R.

37. Recently, this Court has gone to the extent of holding that
presumption takes eﬀect even in a situation where the accused contends that
‘a blank cheque leaf was voluntarily signed and handed over by him to the
complainant. [Bir Singh v. Mukesh Kumar11]. Therefore, mere admission of
the drawer’s signature, without admitting the execution of the entire contents
in the cheque, is now suﬃcient to trigger the presumption.
38. As soon as the complainant discharges the burden to prove that
the instrument, say a cheque, was issued by the accused for discharge of
debt, the presumptive device under Section 139 of the Act helps shifting
the burden on the accused. The eﬀect of the presumption, in that sense, is
to transfer the evidential burden on the accused of proving that the cheque
was not received by the Bank towards the discharge of any liability. Until
this evidential burden is discharged by the accused, the presumed fact
will have to be taken to be true, without expecting the complainant to do
anything further.
39. John Henry Wigmore12 on Evidence states as follows:
“The peculiar eﬀect of the presumption of law is merely to invoke a
rule of law compelling the Jury to reach the conclusion in the absence
of evidence to the contrary from the opponent but if the opponent
does oﬀer evidence to the contrary (suﬃcient to satisfy the Judge’s
requirement of some evidence), the presumption ‘disappears as a rule
of law and the case is in the Jury’s hands free from any rule.”
40. The standard of proof to discharge this evidential burden is not as
heavy as that usually seen in situations where the prosecution is required
to prove the guilt of an accused. The accused is not expected to prove the
non-existence of the presumed fact beyond reasonable doubt. The accused
must meet the standard of ‘preponderance of probabilities’, similar to a
defendant in a civil proceeding. [Rangappa vs. Mohan (AIR 2010 SC 1898)]
41. In order to rebut the presumption and prove to the contrary, it is
open to the accused to raise a probable defence wherein the existence of a
legally enforceable debt or liability can be contested. The words ‘until the

11
(2019) 4 SCC 197
12
Rules of Evidence- The Hidden Origin of Modern Law
RAJESH JAIN v. AJAY SINGH 803
[ARAVIND KUMAR, J.]

contrary is proved’ occurring in Section 139 do not mean that accused must
necessarily prove the negative that the instrument is not issued in discharge
of any debt/liability but the accused has the option to ask the Court to
consider the non-existence of debt/liability so probable that a prudent man
ought, under the circumstances of the case, to act upon the supposition that
debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC
1983) See also Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513]
42. In other words, the accused is left with two options. The ﬁrst
option-of proving that the debt/liability does not exist-is to lead defence
evidence and conclusively establish with certainty that the cheque was
not issued in discharge of a debt/liability. The second option is to prove
the non-existence of debt/liability by a preponderance of probabilities by
referring to the particular circumstances of the case. The preponderance of
probability in favour of the accused’s case may be even ﬁfty one to forty
nine and arising out of the entire circumstances of the case, which includes:
the complainant’s version in the original complaint, the case in the legal/
demand notice, complainant’s case at the trial, as also the plea of the accused
in the reply notice, his 313 statement or at the trial as to the circumstances
under which the promissory note/cheque was executed. All of them can
raise a preponderance of probabilities justifying a ﬁnding that there was ‘no
debt/liability’. [Kumar Exports and Sharma Carpets, (2009) 2 SCC 513]
43. The nature of evidence required to shift the evidential burden
need not necessarily be direct evidence i.e., oral or documentary evidence
or admissions made by the opposite party; it may comprise circumstantial
evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the
instrument was not issued in discharge of a debt/liability and, if he adduces
acceptable evidence, the burden again shifts to the complainant. At the
same time, the accused may also rely upon circumstantial evidence and, if
the circumstances so relied upon are compelling the burden may likewise
shift to the complainant. It is open for him to also rely upon presumptions
of fact, for instance those mentioned in Section 114 and other sections of
the Evidence Act. The burden of proof may shift by presumptions of law or
fact. In Kundanlal’s case- (supra) when the creditor had failed to produce
his account books, this Court raised a presumption of fact under Section
804 SUPREME COURT REPORTS [2023] 13 S.C.R.

114, that the evidence, if produced would have shown the non-existence
of consideration. Though, in that case, this Court was dealing with the
presumptive clause in Section 118 NI Act, since the nature of the presumptive
clauses in Section 118 and 139 is the same, the analogy can be extended
and applied in the context of Section 139 as well.
45. Therefore, in ﬁne, it can be said that once the accused adduces
evidence to the satisfaction of the Court that on a preponderance of
probabilities there exists no debt/liability in the manner pleaded in the
complaint or the demand notice or the aﬃdavit-evidence, the burden shifts
to the complainant and the presumption ‘disappears’ and does not haunt
the accused any longer. The onus having now shifted to the complainant,
he will be obliged to prove the existence of a debt/liability as a matter of
fact and his failure to prove would result in dismissal of his complaint case.
Thereafter, the presumption under Section 139 does not again come to the
complainant’s rescue. Once both parties have adduced evidence, the Court
has to consider the same and the burden of proof loses all its importance.
[Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa
vs. Sri Mohan (2010) 11 SCC 441]
Our Analysis
46. It is against the backdrop of the afore-stated legal principles that
we proceed to consider if there is any interference that is called for. Point
No. (1):
47. The accused has neither replied to the demand notice nor has led
any rebuttal evidence in support of his case. The case set up by him needs
to be drawn from the suggestions put during the cross examination and
from his reply given in the statement recorded under Section 313 of Cr.P.C.
48. It has been suggested to the complainant that accused had not
borrowed any loan from him. It was suggested to him that no legal notice
had been issued on dishonor of cheque. It was further suggested that the
complainant has misused a blank cheque - the said cheque having been
obtained from his employee, Gita Sunar, who also happens to be the sister-
in law of the accused. It was suggested that Gita Sunar had some ﬁnancial
transactions with the complainant and towards that end, he had received a
blank cheque (signed by the accused) from Gita Sunar and misused it. It
RAJESH JAIN v. AJAY SINGH 805
[ARAVIND KUMAR, J.]

is pertinent to note that the suggestions mentioned above were denied by
the complainant.
49. In her cross examination, Gita Sunar (examined on behalf of
complainant as CW.3) has denied the suggestion that she has misused a blank
cheque in collusion with the complainant. She has also denied the suggestion
that a blank cheque was given to her by the brother-in law of the accused.
50. In the statement recorded under Section 313 of Cr.P.C., the ﬁrst
incriminating circumstance put to the accused was as follows:
“It has come in evidence against you that you along with your wife,
Jyoti visited the plaintiﬀ an Orthopaedic Surgeon on 1-3-14, and
availed friendly loan from plaintiﬀ from time to time through sister of
Jyoti namely Gita Sunar working there, on the plea of need for family
requirements, and promised to pay up the “interest moneys as also the
entire Principal amounts, what do you have to say about this?
He responded to said suggestion/question as follows:
“I had taken some money from the plaintiﬀ.
I have taken Rupees Twenty Lac from the plaintiﬀ.”
51. When it was put to him that he has reneged on his promise to pay
on several occasions and sought to avoid the complainant by changing his
telephone number, the accused denies that he had changed his number but
however, admits that he could not pay the entire sum at one go. He further
admits that he did pay some interest but could not pay the remaining sum
since the complainant would increase the outstanding amount every month
by one lakh rupees and had been demanding higher amount. As regards the
circumstance of return of the cheque, the legal notice and non-reply to the
demand notice, he admits of having received the demand notice. He states
that he had no knowledge about the dishonor of his cheque since his cheque
book and bank passbook were kept in his sister-in-law’s house.
52. On an overall consideration of the record, we ﬁnd that the case set
up by the accused is thoroughly riddled with contradictions. It is apparent on
the face of the record that there is not the slightest of credibility perceivable
in the defense set up by the accused.
806 SUPREME COURT REPORTS [2023] 13 S.C.R.

53. In his 313 statements, he admits of having taken a loan of Rs 20
lakh and having repaid some interest but in the cross examination of the
complainant, a suggestion is made that the accused had no ﬁnancial dealings
with the complainant. Whereas in his 313 statement, the accused states that
his cheque book and passbook is kept in his sister in law’s house, yet, in the
cross examination of Gita Sunar, the accused’s sister-in-law, no suggestion is
made to that eﬀect. In fact, she has plainly denied that any blank cheque was
given to her by her brother-in-law. We ﬁnd it highly unnatural to presume
that the accused would leave his signed cheque leaves and passbook in his
sister-in law’s house. Even if he did, there is no reason(s) or motive attributed
on part of his sister-in- law, for her to collude along with the complainant.
The accused has also not explained as to why he has not set up his defense
at the earliest point, that is, at the stage of receiving the demand notice, even
though he admits having received the demand notice in his 313 statement,
yet he makes a suggestion to the complainant in his cross examination
that no legal notice had been issued. The theory of ‘blank cheque’ being
misused has been suggested, only to be denied by both, the complainant
and Gita Sunar-CW-3. No action has been taken by way of registering a
police complaint in order to prosecute the alleged illegal conduct of his
blank cheque having been misused by CW-3.
54. Nothing signiﬁcant has been elicited in the cross-examination of
complainant to raise any suspicion in the case set up by the complainant.
Other than some minor inconsistencies, the case of the complainant has been
consistent throughout as can be noticed from a perusal of the complainant,
demand notice and aﬃdavit evidence. In fact, the signature on the cheque
having not been disputed, and the presumption under Section 118 and 139
having taken eﬀect, the complainant’s case stood satisﬁed every ingredient
necessary for sustaining a conviction under Section 138. The case of the
defense was limited only to the issue as to whether the cheque had been
issued in discharge of a debt/liability. The accused having miserably failed
to discharge his evidential burden, that fact will have to be taken to be
proved by force of the presumption, without requiring anything more from
the complainant.
55. As rightly contended by the appellant, there is a fundamental ﬂaw
in the way both the Courts below have proceeded to appreciate the evidence
RAJESH JAIN v. AJAY SINGH 807
[ARAVIND KUMAR, J.]

on record. Once the presumption under Section 139 was given eﬀect to,
the Courts ought to have proceeded on the premise that the cheque was,
indeed, issued in discharge of a debt/liability. The entire focus would then
necessarily have to shift on the case set up by the accused, since the activation
of the presumption has the eﬀect of shifting the evidential burden on the
accused. The nature of inquiry would then be to see whether the accused
has discharged his onus of rebutting the presumption. If he fails to do so,
the Court can straightaway proceed to convict him, subject to satisfaction
of the other ingredients of Section 138. If the Court ﬁnds that the evidential
burden placed on the accused has been discharged, the complainant would
be expected to prove the said fact independently, without taking aid of
the presumption. The Court would then take an overall view based on the
evidence on record and decide accordingly.
56. At the stage when the courts concluded that the signature had
been admitted, the Court ought to have inquired into either of the two
questions (depending on the method in which accused has chosen to rebut
the presumption): Has the accused led any defense evidence to prove and
conclusively establish that there existed no debt/liability at the time of
issuance of cheque? In the absence of rebuttal evidence being led the inquiry
would entail: Has the accused proved the nonexistence of debt/liability by a
preponderance of probabilities by referring to the ‘particular circumstances
of the case’?
57. The perversity in the approach of the Trial Court is noticeable from
the way it proceeded to frame a question at trial. According to the trial Court,
the question to be decided was ‘whether a legally valid and enforceable
debt existed qua the complainant and the cheque in question (Ex. CWI/A)
was issued in discharge of said liability/debt’. When the initial framing of
the question itself being erroneous, one cannot expect the outcome to be
right. The onus instead of being ﬁxed on the accused has been ﬁxed on the
complainant. Lack of proper understanding of the nature of the presumption
in Section 139 and its eﬀect has resulted in an erroneous Order being passed.
58. Einstein had famously said:
“If I had an hour to solve a problem, I’d spend 55 minutes thinking
about the problem and 5 minutes thinking about solutions”.
808 SUPREME COURT REPORTS [2023] 13 S.C.R.

Exaggerated as it may sound, he is believed to have suggested that
quality of the solution one generates is directly proportionate to one’s
ability to identify the problem. A well-deﬁned problem often contains its
own solution within it.
59. Drawing from Einstein’s quote, if the issue had been properly
framed after careful thought and application of judicial mind, and the onus
correctly ﬁxed, perhaps, the outcome at trial would have been very diﬀerent
and this litigation might not have travelled all the way up to this Court.
60. Coming to the ﬁnding of High Court, we ﬁnd again, there has been
fundamental error in the approach with which the High Court has proceeded
to consider the evidence on record. In paragraph 6 of the impugned order,
the High Court ﬁnds that the complainant has proved the issuance of cheque,
which means that the presumption would come into immediate eﬀect. In
paragraph 13, it rightly observes that the burden is on the accused to rebut
such presumption. In the very next paragraph, it ﬁnds that the accused
has rebutted the presumption by putting questions to the complainant and
explaining the circumstances under section 313 Cr.P.C.
61. There is no elucidation of material circumstances/basis on which
the Court reached such conclusion. It notes the allegation made in the
complaint that the complainant had given the loan on 01.03.2014 and on
several dates thereafter. Based on this averment, the High Court rather
shockingly concludes that: “If the complainant had given loans on various
dates, he must have maintained some document qua that, because it was not
a one-time, loan but loan along with interest accrued on the principal, which
made the amount to Rs.6,95,204/-.” Therefore, according to the High Court,
‘the burden was primarily on the complainant to prove the debt amount’.
62. The fundamental error in the approach lies in the fact that the High
Court has questioned the want of evidence on part of the complainant in
order to support his allegation of having extended loan to the accused, when
it ought to have instead concerned itself with the case set up by the accused
and whether he had discharged his evidential burden by proving that there
existed no debt/liability at the time of issuance of cheque.
63. In the teeth of the aforesaid analysis, we have not the slightest of
hesitation in concluding that this case calls for interference, notwithstanding
RAJESH JAIN v. AJAY SINGH 809
[ARAVIND KUMAR, J.]

that both the courts below have concurrently held in favour of the accused.
Since we have answered point No:(i) in the negative, the need to examine
point No:(ii) does not arise.
64. Hence, we proceed to allow the appeal by setting aside the judgment
of the High Court of Punjab and Haryana at Chandigarh rendered in CRM-A
No.148 of 2020 dated 01.02.2022 and allow the complaint ﬁled under Section
138 of Negotiable Instruments Act, 1881 and convict the respondent accused
with ﬁne of twice the amount of the cheque namely Rs.13,90,408/- (Rupees
thirteen lakh ninety thousand four hundred and eight only) failing which he
shall undergo simple imprisonment for one year.

Headnotes prepared by: Appeal allowed.
Ankit Gyan

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