Presumption available under Section 139 of the Negotiable Instruments Act, 1881 has to be rebutted only at the stage of leading evidence and not at the stage of taking cognizance

The Apex Court in the matter of Shiv Kumar Alias Jawahar Saraf vs Ramavtar Agarawal (Cr. App. No. 1688 of 2017) decided on 19.02.2020 upheld the order of the High Court which stated that the rebuttal presumption cannot be looked into at the stage of the Court taking cognizance of the offence and registering the case. Hence, the Court would have to see “whether there is a prima facie case made out meeting the conditions precedent as envisaged under Section 138 of NI Act at the stage of cognisance”.

Facts:
The appeal was filed against the judgment of the High Court, wherein the High Court dismissed the Criminal Miscellaneous Petition filed by the appellant, praying for quashing the order passed by Sessions Judge in Criminal Revision. The said Criminal Revision was filed for quashing the order passed by the Judicial Magistrate of First Class by which, the Magistrate based on material on record took cognizance of offence against the appellant under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the NI Act”) and registered a criminal complaint.

Ratio:
It was the contention of the appellant before the Apex Court that Judicial Magistrate of First Class could have examined the materials filed along with the complaint. As per the appellant from the materials on record, it was clear that there was no legally enforceable debt hence there was no case for taking cognizance of the offence and registering the criminal complaint. Appellant also relied upon the agreement between the parties, to dispute the liability.

The Apex Court dismissed the appeal and upheld the order of the High Court. The High Court had observed that the presumption available under Section 139 of the NI Act has to be rebutted and that rebuttal can only be done after adducing evidence. The rebuttal presumption cannot be looked into at the stage of the Court taking cognizance of the offence and registering the case. Hence, the Court would have to see “whether there is a prima facie case made out meeting the conditions precedent as envisaged under Section 138 of NI Act”, which in the instant case, in the opinion of the Court, the Respondent was able to establish.

In conclusion, the Apex Court held that the rebuttal can be made with reference to the evidence of the prosecution as well as of defence. Since it is a rebuttal presumption, therefore, all the contentions and averments made by the appellant can be raised at the stage of leading evidence including the defence of the existence of the legally enforceable debt or liability.