Unraveling Section 139 of the Negotiable Instruments Act: Presumption in Favor of Holder

Shivendra Pratap Singh

Advocate

High Court Lucknow

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While Section 138 of the Negotiable Instruments Act, 1881, is often cited in discussions around dishonoured cheques, the subsequent section, Section 139, plays an equally pivotal role in the legal proceedings that follow such an event. In this blog, we’ll take a closer look at Section 139, its implications, and its significance in maintaining the integrity of cheque transactions.

Understanding Section 139 of the Negotiable Instruments Act

Section 139 deals with the presumption in favor of the holder. In legal terms, it establishes a presumption that the cheque was issued for the discharge, in whole or in part, of any debt or other liability.

Key Elements of Section 139

  1. Presumption of Liability: If the cheque is presented to the bank but is returned by the bank unpaid, it is presumed that the cheque was received by the holder for the discharge of any debt or other liability.
  2. Drawer’s Rebuttal: The onus is on the drawer of the cheque to prove that the cheque was not issued for the discharge of any debt or other liability.
  1. Strengthening the Holder’s Position: By establishing a presumption in favor of the holder, Section 139 strengthens the position of the complainant. In other words, once the cheque bounce is established, the law assumes that it was for a debt or liability.
  2. Shift of Burden of Proof: Ordinarily, in legal proceedings, the burden of proof lies with the complainant. However, with the presumption under Section 139, this burden shifts to the drawer of the dishonored cheque. This means the drawer has to provide evidence that the cheque was not issued for a debt or liability.

Significance in Cheque Bounce Cases

  1. Facilitating Quicker Resolutions: Given that the drawer has the onus to disprove liability, cases can often reach resolutions faster, especially if the drawer cannot provide substantial evidence to rebut the presumption.
  2. Protecting the Interests of the Holder: This section acts as a protective measure for the cheque holder, ensuring they don’t undergo prolonged legal battles to prove the reason for cheque issuance.
  3. Deterring Malicious Intent: Knowing that the presumption is in favor of the holder, this provision acts as a deterrent for individuals who might issue cheques without the intent of honoring them.

Conclusion

Section 139 of the Negotiable Instruments Act, 1881, complements the provisions of Section 138, ensuring that justice is not only swift but also leans in favor of protecting the interests of innocent parties. By reversing the burden of proof and making it incumbent on the drawer to disprove liability, it ensures that the sanctity and trust reposed in cheque-based transactions remain intact.

Tags: #Section139 #NegotiableInstrumentsAct #ChequeBounce #FinancialLaw #IndianLaw