Mathew John v. Sadasivan & State of Kerala: Cheque Bounce Case – Accused Rebutted Presumption.

Headnote:

The Kerala High Court dismissed the appeal filed by the complainant challenging the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881. The Court held that the accused had successfully rebutted the statutory presumption under Section 139 of the Act by establishing a probable defence. The complainant failed to prove that the accused had issued the cheque in question for the repayment of a legally enforceable debt, as required under law.

Background:

1. The accused allegedly borrowed Rs. 15,000 from the complainant on 03-08-2004.
2. The accused issued a cheque dated 11-09-2004, which was dishonoured due to insufficient funds.
3. The trial court acquitted the accused after finding that the statutory presumption under Section 139 of the NI Act was rebutted.
4. The complainant appealed, arguing that the accused did not dispute the signature and the presumption of debt should apply.

Court’s Observations:

1. The complainant failed to specify the date and place of execution of the cheque in the complaint or statutory notice.
2. PW1 (complainant) could not identify the signature on the cheque, even in cross-examination.
3. The accused (DW1) demonstrated that the cheque was a blank security cheque obtained during a prior gold loan transaction, and no Rs. 15,000 loan existed.
4. Evidence of PW2 regarding prior criminal cases was irrelevant under Section 54 of the Indian Evidence Act.
5. The Court relied on established Supreme Court principles (M.S. Narayana Menon, Basalingappa v. Mudibasappa, APS Forex Services, Shree Daneshwari Traders) regarding rebutting the statutory presumption:
6. Accused need only establish a probable defence based on preponderance of probabilities.
7. Direct proof of non-existence of debt is not mandatory; circumstantial evidence and inference suffice.
8. The Court found that the accused successfully rebutted the presumption and that the complainant’s case lacked credibility.

Legal Provisions Discussed:

1. Section 138, Negotiable Instruments Act, 1881 – Dishonour of cheque for insufficiency of funds.
2. Section 139, Negotiable Instruments Act, 1881 – Presumption in favour of the holder.
3. Section 54, Indian Evidence Act, 1872 – Irrelevance of previous bad character.

Result:

1. Appeal dismissed; acquittal of the accused under Section 138 upheld.

Citation: 2025:KER:87961

Case: Mathew John v. Sadasivan & State of Kerala

Court: High Court of Kerala at Ernakulam

Coram: Hon’ble Mr. Justice Johnson John

Date of Decision: 18 November 2025

Crl. Appeal No.: 2293 of 2007 | Against: Order dated 29.10.2007 in Crl.L.P. No. 632 of 2007 (HC Kerala)