Section 139 of the Negotiable Instruments Act, 1881 (NI Act), serves as a cornerstone in ensuring the credibility and reliability of negotiable instruments, particularly cheques. This provision introduces a presumption in favor of the holder of a cheque that it was issued for the discharge of a debt or other liability. The article delves into the legislative intent behind Section 139, its relationship with other provisions of the NI Act, and the judicial interpretation that has evolved over time. Additionally, it explores the rebuttal of the presumption and its implications for both the drawer and the holder of the cheque.

Key Terms

• Presumption: A legal assumption that must be accepted as true unless proven otherwise.
• Rebuttable Presumption: A presumption that can be challenged with evidence to the contrary.
• Debt or Liability: The obligation or duty for which the cheque was issued.
• Section 138: Provision penalizing the dishonor of cheques for insufficiency of funds or other reasons.

Introduction
Negotiable instruments such as cheques have long been a vital part of commercial transactions. The Negotiable Instruments Act, 1881, was enacted to regulate the use of these instruments and to enhance their legitimacy as a means of settling financial obligations. Section 139 of the NI Act plays a pivotal role in protecting the interests of the cheque holder by presuming that the cheque was issued in the discharge of a debt or liability, unless the contrary is proved. This presumption significantly shifts the burden of proof to the drawer, making it a potent tool for combating instances of dishonored cheques.

Text of Section 139

Section 139 of the NI Act states: "It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."

Legislative Intent

The primary objective of Section 139 is to provide a statutory presumption in favor of the holder of a cheque, which aligns with the purpose of Section 138, dealing with the dishonor of cheques. By creating this presumption, the legislature aims to foster trust in the negotiability of cheques and reduce the number of frivolous defenses raised by drawers of dishonored cheques.

Key Judicial Interpretations

The interpretation of Section 139 has evolved through various judgments by Indian courts, including the Supreme Court, which have clarified the scope and application of this provision. Some of the landmark judgments include:

• Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513: In this case, the Supreme Court highlighted that the presumption under Section 139 is a rebuttable presumption. The drawer of the cheque can rebut the presumption by providing evidence that the cheque was not issued for the discharge of any debt or liability. However, the onus of proof on the drawer is of the nature of a "preponderance of probability" and not beyond a reasonable doubt.
• Rangappa v. Sri Mohan, (2010) 11 SCC 441: The Supreme Court extended the scope of Section 139 by holding that the presumption applies not only to the existence of a debt but also to the issuance of the cheque itself. The court clarified that once the signature on the cheque is admitted, the presumption under Section 139 applies, and it is up to the drawer to rebut the presumption by presenting cogent evidence.
• Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: This judgment reiterated the strength of the presumption under Section 139, stating that a mere denial or a bald assertion by the drawer that the cheque was not issued for the discharge of a debt or liability would not suffice. The presumption can only be rebutted by producing substantial evidence.

Rebuttal of the Presumption

While Section 139 creates a presumption in favor of the holder, it does not completely absolve the holder from scrutiny. The drawer of the cheque has the right to rebut the presumption by raising plausible defenses, such as:

• Absence of Debt or Liability: The drawer can demonstrate that there was no subsisting debt or liability at the time the cheque was issued.
• Cheque Issued as Security: If the drawer proves that the cheque was issued merely as security and not for the discharge of a debt, the presumption may be rebutted.
• Forgery or Coercion: The drawer can rebut the presumption by proving that the cheque was obtained through fraud, coercion, or other unlawful means.

However, it is important to note that the burden of proof lies heavily on the drawer, and mere denial of liability will not suffice. Interplay with Section 138
Section 138 of the NI Act penalizes the dishonor of cheques issued for the discharge of debts or liabilities. Section 139 complements Section 138 by providing a presumption that the cheque was issued for a valid debt or liability. Together, these sections create a robust legal framework to address instances of cheque dishonor and to instill confidence in the use of cheques as a negotiable instrument.

The holder, however, must comply with the procedural requirements laid out under Section 138, such as presenting the cheque within its validity period, issuing a legal notice within 30 days of dishonor, and giving the drawer 15 days to make the payment before initiating legal action. Failure to comply with these steps can nullify the presumption under Section 139.

Impact of the Presumption
The introduction of a statutory presumption under Section 139 has significantly shifted the balance in cheque dishonor cases. The holder of a dishonored cheque is placed in a relatively stronger position, with the legal assumption in their favor. This creates an effective deterrent against the casual issuance of cheques without sufficient funds or intent to honor them.

For the drawer, however, Section 139 presents a challenge, as they must present credible evidence to refute the presumption. If the drawer fails to produce convincing evidence, they risk being held liable under Section 138, which may result in penalties, imprisonment, or both.

Conclusion
Section 139 of the Negotiable Instruments Act, 1881, plays a crucial role in maintaining the sanctity of negotiable instruments, particularly cheques, in commercial transactions. By placing the burden of proof on the drawer of a dishonored cheque, this provision seeks to discourage frivolous defenses and ensure that cheques are not issued lightly. However, the presumption is rebuttable, and the drawer has an opportunity to defend themselves by raising legitimate defenses. Indian courts have consistently upheld the importance of this provision while balancing the rights of both the holder and the drawer, making it a significant tool in the enforcement of cheque liabilities.