"J&K High Court: Burden Shifts to Accused Once Cheque Issuance for Debt is Proven Under S.139 NI Act"

The Jammu and Kashmir and Ladakh High Court recently highlighted a key point under Section 139 of the Negotiable Instruments Act, 1881, which deals with the burden of proof in cheque bounce cases. According to the court, if someone claims that a cheque was issued to settle a debt, they only need to show that the cheque was given by the accused for that purpose. Once that is proven, the law assumes the cheque was given to pay off a debt, and it’s up to the accused to prove otherwise. In this case, a man named Singh, managing director of Good Luck Finance Corporation, claimed that another man, Sat Pal, had borrowed money to buy a truck. Singh said they agreed on a settlement in 2007, and Sat Pal issued a cheque. However, the cheque later bounced, so Singh took legal action. But the Trial Court sided with Sat Pal, who argued that the cheque was blank, signed only as security, and was never meant as a payment for any remaining debt. Singh appealed, saying that Sat Pal’s signature on the cheque meant there was a legal responsibility to pay. Sat Pal countered, saying the cheque was from 1999, left blank, and was only security when the loan was first issued. Justice Javed Iqbal Wani reviewed the case and agreed with the Trial Court's original decision, stating that under Section 139, the court has to assume a debt exists only if there’s evidence to back it up. Justice Wani cited past cases, explaining that although Section 139 assumes a debt exists, the accused doesn’t need to prove this “beyond a reasonable doubt.” Instead, they just need to present enough evidence to show that it’s likely the debt doesn’t exist. The court found evidence that the cheque was likely given as blank security when the loan was disbursed, not to pay off a debt. Justice Wani also pointed out gaps in Singh's claims, especially about how the outstanding amount was calculated, as there was no proof or documents from the alleged 2007 settlement. In the end, Justice Wani upheld the original ruling and dismissed Singh’s appeal. The court concluded that Singh hadn’t shown a clear, legally enforceable debt, and thus, the Trial Court’s decision to dismiss the complaint was justified. Case Title: Chowdhary Piara Singh Vs Sat Pal www.legalmeet.in