Standard of Rebuttal In Section 138 NI Act Cases Is Preponderance Of Probabilities: Andhra Pradesh HC

The Andhra Pradesh High Court has overturned the conviction of a company director in a cheque bounce case, emphasizing that an accused only needs to raise a 'probable defence' to shift the burden of proof back to the complainant. Reasserting that the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 is not absolute, the Court held that a 50% tilt in favor of the defense's version is sufficient to disbelieve the prosecution's case.

A Single Judge Bench of Justice Subhendu Samanta heard a Criminal Revision Case filed under Section 397/401 of Code Of Criminal Procedure, 1973 challenging the concurrent findings of a Trial Court and a Sessions Court. The petitioner sought to set aside the conviction for an offense punishable under Section 138 of the Negotiable Instruments Act, 1881.

Key Takeaways

Reverse Onus Standard

While Section 138 creates a criminal remedy, the bouncing of a cheque is largely a civil wrong, meaning the accused cannot be expected to meet an unduly high standard of proof.

Preponderance of Probabilities

Accused persons do not need to prove their innocence beyond reasonable doubt; they merely need to raise a probable defense that creates doubt about the existence of a legally enforceable debt.

Weight of Circumstantial Evidence

Formal documentation of previous transactions versus the lack of documentation for the 'final settlement' can be a decisive factor in favoring the defense's version.

Limited Revisional Jurisdiction

High Courts will interfere with concurrent findings if the lower courts ignore relevant evidence or if their findings are perverse and untenable in law.

Court's Observations on Statutory Presumption

The Court examined whether the petitioner successfully rebutted the statutory presumption under Section 139 read with Section 118 of Negotiable Instruments Act, 1881. Relying on Rangappa v. Sri Mohan ( "(2010) 11 SCC 441": 2010 CaseBase(SC) 1271), the Court noted that Section 139 is a device to prevent undue delay, but it imposes an evidentiary burden, not a persuasive one. The Court further noted that as per Basalingappa v. Mudibasappa ( "(2019) 5 SCC 418": 2019 CaseBase(SC) 2861) and Rajaram v. Maruthachalam, an accused can rely on the complainant's own materials to raise a probable defense.

The Court, in its reasoning, observed: "In the present facts and circumstances of the case, the probabilities of believing defence case have sufficiently narrated on following points; i) while the cheque was missed in the year 1996 and it was duly informed to the Bank, ii) complainant has initiated the proceedings, after the Bank has started recovery proceedings against A1/company and iii) there is no documentation on the date of issuance of the cheque regarding full and final settlement of the claim of complainant."

The Court has following directions:

"order of conviction and sentence against petitioner appears to be illegal and improper. Thus, the same is hereby set aside. In view of the above, the instant Criminal Revision Case is allowed. There shall be no order as to costs. Accordingly, the petitioner/accused is hereby acquitted from this case. The sureties standing in favour of the petitioner are also released."

Ratio

To rebut the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881, the accused is required to meet the standard of 'preponderance of probabilities'. A '50% tilting' or the existence of facts that would cause a prudent man to disbelieve the prosecution's case is sufficient. If the accused raises a probable defense through circumstantial evidence or by highlighting inconsistencies in the complainant's case, the burden shifts back to the complainant to prove the debt beyond reasonable doubt.

Background

The dispute began when the complainant, a shareholder, sought to withdraw from a company. It was alleged that the petitioner, as Managing Director, issued a post-dated cheque for Rs. 9,00,000/- in July 2000 towards a full and final settlement. The cheque was dishonored, leading to a complaint under Section 138 of Negotiable Instruments Act, 1881. The Trial Court convicted the petitioner, a decision later confirmed by the Sessions Court.

However, the petitioner argued that the cheque was part of a leaf misplaced in 1996, a fact reported to the bank at that time. The High Court, applying the principles from Kuntegowda v. Thurubaiah ( "(2026) SCC Online SC 1485": 2026 CaseBase(SC) 721) and State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand regarding revisional jurisdiction, found that the lower courts erred by ignoring the bank notification regarding the lost cheque and the lack of documentation for the alleged Rs. 9,00,000/- settlement. Citing Wright v. Wright, the Court defined the tilt of balance required for acquittal in such cases.

Case Details:
Case No.: CRIMINAL REVISION CASE NO: 1423/2009
Neutral Citation: 2026:APHC:41489
Case Title: Kambhamapati Madhusudhana Rao v. Jarugula Lokanarayana and Anr.
Appearances:
For the Petitioner(s): Sreenivasa Rao Velivela, Advocate
For the Respondent(s): Public Prosecutor; Venkata Rangadas Kanuri, Advocate

Source: 2026 CaseBase(AP) 17796