Negotiable Instruments Act, Section 139

Negotiable Instruments Act, Section 139: Presumption in Favour of Holder

Section 139 of the Negotiable Instruments Act, 1881 creates a statutory presumption that the holder of a cheque received it for the discharge, wholly or partly, of a debt or other liability, unless the contrary is proved.

The provision plays a crucial role in proceedings under Section 138 by shifting the burden of proof to the drawer once the issuance of the cheque is established.

1. Purpose of Section 139

The primary object of Section 139 is to strengthen the effectiveness of Section 138 and ensure the credibility of cheque transactions by supporting the holder of the cheque.

The provision protects the payee, prevents dishonest denial by the drawer, promotes confidence in banking transactions, and reduces difficulty in proving liability in commercial dealings.

2. Nature of the Presumption

Section 139 creates a rebuttable presumption that a cheque was issued for discharge of a debt or liability, relieving the holder of the initial burden of proof while allowing the accused to disprove it.

3. Meaning of Unless the Contrary is Proved

The phrase “unless the contrary is proved” allows the drawer to rebut the presumption by showing absence of debt or liability, after which the benefit of Section 139 may cease to apply.

4. Applicability of the Presumption

The presumption under Section 139 applies to cheques covered by Section 138, relating to discharge of a debt or liability, and is closely linked with cheque dishonour litigation.

5. Meaning of Holder

The holder refers to the person legally entitled to possess the cheque and receive the amount payable under it, including the original payee or a holder in due course, thereby protecting lawful holders of negotiable instruments.

6. Presumption Regarding Debt or Liability

The law presumes that a cheque was issued for discharge of a debt or other liability, whether full or partial, and therefore even cheques issued towards part payment are covered.

7. Meaning of Legally Enforceable Liability

The liability under Section 139 must generally be a legally enforceable obligation consistent with Section 138, meaning it must be recognized by law and not unlawful or unenforceable, as the presumption applies only to valid legal obligations.

8. Burden of Proof on Drawer

Once execution or issuance of the cheque is admitted or proved, the burden shifts to the drawer to rebut the statutory presumption, marking a departure from the ordinary criminal law principle where the prosecution bears the entire burden of proof.

9. Mode of Rebutting the Presumption

The drawer may rebut the presumption by showing absence of debt or liability through direct or documentary evidence, surrounding circumstances, or cross-examination, and is not required to prove his defence beyond reasonable doubt.

10. Standard of Rebuttal

The drawer needs to raise a probable defence creating reasonable doubt about the existence of debt or liability, thereby rebutting the statutory presumption on an evidentiary standard rather than by proving his case beyond all doubt.

11. Importance in Cheque Dishonour Cases

Section 139 is important because it strengthens enforceability of cheque obligations by presuming debt in transactions where formal written agreements are often absent and proof would otherwise be difficult and burdensome.