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2019 (4) TMI 154 - SC - Indian LawsDishonor of cheque - insufficiency of funds - repayment of borrowed amount - Section 138 of NI Act - existence of legally enforceable debt or not - rebuttal of presumption - preponderance of probabilities - Held that:- Section 139 of the Act mandates that it shall be presumed, unless the contrary is proved, that the holder of a cheque received it, in discharge, in whole or in part, of a debt, or liability. The expression “unless the contrary is proved” indicates that the presumption under Section 139 of the Act is rebuttable. Terming this as an example of a “reverse onus clause” the three Judge Bench of this Court in Rangappa [2010 (5) TMI 391 - SUPREME COURT OF INDIA] held that in determining whether the presumption has been rebutted, the test of proportionality must guide the determination. The standard of proof for rebuttal of the presumption under Section 139 of the Act is guided by a preponderance of probabilities. The first appellate court held that the presumption under Section 139 of the Act stood rebutted and that the defence stood probabalised. From the judgment of the High Court, the significant aspect of the case which stands out is that there has been no appreciation of the evidence or even a reference to the reasons furnished by the first appellate court. Having regard to the law laid down by the three Judge Bench in Rangappa (supra) the appellant duly rebutted the presumption under Section 139 of the Act. His defence that there was an absence of a legally enforceable debt was rendered probable on the basis of the material on record. Consequently, the order of acquittal passed by the first appellate court was justified - Appeal allowed - decided in favor of appellant.
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