Here are nine key cheque bounce case laws decided by trial and appellate courts. These rulings can provide essential guidance for proving your side against cheque bounce case under the Negotiable Instruments Act, 1881.
1. Cheque Issued as Security for a Loan
In Shriram Transport Finance Co. Ltd. v. Mahadevaiah, Laws (KAR) 2015 – 7 – 279, the complainant had to prove that the bounced cheque was issued to discharge a legal liability, whether in full or part. Under Sections 138 and 139 of the Negotiable Instruments Act, the law presumes the cheque was issued to settle a debt unless the accused proves otherwise. In this case, the accused claimed the cheque was issued as security for a loan back in 1999, which was repaid, but the cheque was not returned.
2. Loan Repaid, But Security Cheque Not Returned
In Vasanthakumar v. Vijayakumari, Laws (SC) 2015-4-79, the accused claimed they repaid the loan, but the complainant did not return the security cheque. The court found this defense weak, as it was unsupported by evidence. Merely having a printed date on the cheque did not conclusively prove it was issued in 1999. The court also ruled that if the complainant fails to prove the existence of a legally recoverable debt, the acquittal of the accused is justified, as seen in K. Subramani v. K. Damodara Naidu, (2015) 1 SCC 99.
3. Uncertainty About the Cheque Issuer
In John K. Abraham v. Simon C. Abraham, (2014) 2 SCC 236, the complainant was unsure who wrote the cheque and was unaware of the details of the transaction. Under these circumstances, the court ruled that convicting the accused would not be proper.
4. Failure to Provide Material Facts
In H. Manjunath v. A.M. Basavaraju, ILR 2014 Kar. 6572, the court acquitted the accused due to the complainant’s failure to provide essential details. The complainant did not clearly state when the loan was given. Additionally, inconsistencies in the handwriting and ink used in the cheque entries further justified the acquittal. Section 141 of the Negotiable Instruments Act also emphasizes corporate criminal liability, making companies liable under certain conditions.
5. Cheque as Evidence of Loan Recovery
In Late Patel v. Sharanbasappa, Laws (KAR) 2012-7-473, the court confirmed that a cheque issued in full or partial payment of a debt could be treated as a primary loan document. The presumption under Section 139 stands unless the accused provides evidence to rebut it. The Rangappa v. Mohan, AIR 2010 SC 1898 case reaffirmed this legal presumption in favor of the cheque holder.
6. Defenses Available to the Accused in Cheque Bounce Cases
In Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, the court clarified that an accused has two main defenses in cheque bounce cases. The accused can either:
- Argue that the consideration or debt did not exist, or
- Demonstrate that it is highly probable no debt or liability existed, making it unreasonable for anyone to assume otherwise.
The accused does not need to prove this beyond a reasonable doubt—only by the balance of probabilities. Once the accused provides rebuttal evidence, the burden of proof shifts back to the complainant.
7. No Proof of Lost Cheque
In Bangalore v. M/S. Uphar Fashions, Laws (KAR) 2008-9-6, the accused claimed they lost a cheque but failed to provide any evidence to support this claim. The court ruled in favor of the complainant, as the statutory presumption favored them.
8. Burden of Proof Lies with the Complainant
In John K. John v. Tom Varghese, 2007 AIR SCW 6736, the court stated that presumptions under Sections 118 and 139 of the Negotiable Instruments Act can only be rebutted by considering all material evidence. The accused does not need to prove their defense beyond a reasonable doubt, nor are they required to testify. In Krishna Janardhan Bhat v. Dattatreya G. Hegde, AIR 2008 SC 1325, the court noted that it can also consider the conduct of the parties.
9. Presumptions Under the Negotiable Instruments Act
In Hiten P. Dalal v. Bratindranath Banerjee, AIR 2001 SC 3897, the court emphasized that the presumptions under Sections 118(a) and 139 must be raised as soon as the cheque’s execution is admitted or proven by the complainant. The burden then shifts to the accused to prove otherwise, showing that the cheque was not issued to settle a debt. While these presumptions are rebuttable, they are crucial for the complainant’s case.
Conclusion
Successfully navigating cheque bounce cases requires a solid understanding of the law and the relevant case precedents. These landmark rulings offer insight into the defenses available to the accused and the burden of proof that applies to both parties. If you are involved in a cheque bounce case, seeking expert legal guidance is essentia
