1 Neutral Citation No. (2026:HHC:21056) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 347 of 2014 Reserved on: 12.05.2026 Date of decision: 02.06.2026 Date of uploading on website: 02.06.2026 _____________________________________________ M/s Krishna Jewellers & others …..Appellants. Versus M/s Satya Jewellers & another ……Respondents. _____________________________________________ Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting? For the appellants: Mr. Y.P. Sood, Advocate. For the respondents: Mr. Bhupinder Gupta, Senior Advocate, with Mr. Janesh Gupta, Advocate. Sushil Kukreja, Judge. The instant appeal has been preferred by the appellants, who were defendants before the learned Court below (hereinafter referred to as “the defendants”) under Section 96 of the Code of Civil Procedure (for short “CPC”) against judgment and decree, dated 02.08.2014, passed in Civil Suit No. RBT 16-S/1 of 2014/07 by learned Additional District Judge-II Shimla (hereinafter referred to as “the learned Trial Court”), with 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Neutral Citation No. (2026:HHC:21056) prayer that the impugned judgment and decree be set- aside by allowing the instant appeal. 2. The plaintiffs, i.e., M/s Satya Jewellers and Shri Shelender Kumar, who are respondents herein (hereinafter referred to as “the plaintiffs”), had filed a civil suit for recovery of Rs.24,34,450/- on account of principal and interest against the defendants before this Court. The said suit, due to enhancement of pecuniary jurisdiction was transferred to the learned Trial Court. 3. The facts giving rise to the instant appeal can be encapsulated as under: 3(a). Plaintiff No. 2-Shri Shelender Kumar, sole proprietor of plaintiff No. 1, was running the business of jewellery in the name and style of M/s Satya Jewellers (plaintiff No. 1) and defendant No. 2, sole proprietor of defendant No. 1-M/s Krishna Jewellers, was running the business of jewellery at Rohru. The defendants used to purchase business articles from the plaintiff from time to time on credit and part payment(s) used to be paid by them from time to time. As per the plaintiff, Smt. Naina Kotvi (defendant No. 3), wife of defendant No. 2-Shri Krishan Kumar Kotvi, stood guarantee for the 3 Neutral Citation No. (2026:HHC:21056) outstanding amount and it was agreed by her that in case defendant No. 2 failed to make the payment, she would liquidate the entire liability. 3(b). The plaintiff averred in their suit that after the settlement of accounts, defendants No. 2 and 3 admitted a sum of Rs.21,91,224/- due from them to the plaintiff and in this respect, on 14.02.2006 a document was executed. The defendants could not pay the above amount and on 18.08.2006 defendant No. 2 issued a cheque bearing No. 520241, in favour of the plaintiffs, drawn at H.P. State Co-operative Bank, Rohru, however, the said cheque was dishonoured for the reason “payment stopped by drawer”. The defendant approached the plaintiff and assured that payment would be arranged so as to honour the aforesaid cheque. He sought some time and also admitted and acknowledged a sum of Rs.21,91,224/-. Defendant No. 2-wife of defendant No. 1 requested the plaintiff not to initiate the legal proceedings after acknowledging the amount of Rs.21,91,224/- to be the correct amount due from the defendant to the plaintiff for valuable consideration and issued a cheque bearing No. 763309, dated 07.11.2006, 4 Neutral Citation No. (2026:HHC:21056) in favour of the plaintiff, drawn at UCO Bank, Shimla. However, the said cheque was also dishonoured due to insufficient funds, thus another legal notice was issued to the defendant, which was duly replied. 3(c). As per the plaintiffs, the story portrayed by the defendants that cheque book was misplaced was false. The plaintiffs time and again requested the defendant to clear the outstanding amount and the defendant also duly acknowledged it. However, the defendants despite notices or oral requests, took lame excuses by taking false and baseless stand. 3(d). On the basis of the above averments, the plaintiffs made the following substantive prayer at the footnote of their plaint: “It is, therefore, prayed that a decree for a sum of Rs.24,34,450/- may be passed in favour of the plaintiffs against the defendants jointly and severally alongwith future interest @ 18% per annum from the date of institution of the suit till the entire payment. The cost of the suit may also be awarded in favour of the plaintiffs against the defendants.” 4. The defendants (appellants herein) contested the suit by filing written statement, wherein preliminary objections of maintainability, cause of action, estoppel, bad for mis-joinder of necessary parties, not properly 5 Neutral Citation No. (2026:HHC:21056) valued for the purpose of Court fee and jurisdiction. On merits, the defendants denied purchase of jewellery articles from the plaintiffs from time to time and it was averred that the articles were purchased on payment of price. It was also denied that defendant No. 3 stood guarantee for repayment of alleged outstanding amount. The defendants denied that any accounts were settled between the parties and also denied that defendant had admitted and acknowledged a sum of Rs.21,91,224/- outstanding against them. 4(a). As per the defendant, he started his business in Shimla, during the month of March, 2006, in partnership with one Shri Jaswinder Singh, under the name and style of M/s J.K. Jewellers and ordered gold jewellery worth Rs.31,81,000/- from the plaintiff and made payment of Rs.22,40,000/-, through bank draft No. 137/2006 and payment of Rs.9,41,000/- was made vide draft No. 144/2006. Thus, the plaintiff received full payment for the sale of 3404.250 gms of gold items, but he refused to deliver the goods and started threatening the defendant. Therefore, the defendant had to approach Superintendent of Police for not delivering the 6 Neutral Citation No. (2026:HHC:21056) goods. The defendants were called by the plaintiff in his house, where their signatures on blank papers were obtained under threat. Thus, the plaintiff got the documents forged and fabricated by misusing the signatures of the defendants on blank papers. As per the defendants, the cheque book, issued by H.P. State Co-operative Bank and UCO Bank were lost on 10.08.2006 and report, dated 12.08.2006 was lodged with the police for these lost cheques. The defendants never issued any cheque in favour of the plaintiff for lawful and valuable consideration, thus the cheques were not required to be honoured. The defendants averred that as the cheque books were lost, therefore, there was possibility that some person might have tried to misuse those cheques. Defendant No. 3 neither acknowledged the amount of Rs.21,91,224/- nor issued a cheque in favour of the plaintiff for clearing all outstanding liability. The defendants prayed for dismissal of the suit. 5. On the basis of the pleadings of the parties, the learned Trial Court framed the following issues: “1. Whether defendants No. 1 and 2 were 7 Neutral Citation No. (2026:HHC:21056) purchasing jewellery on credit from the plaintiff, as alleged? OPP 2. If issue No. 1 is proved in affirmative, whether defendants No. 1 and 2 settled any accounts with plaintiff and admitted a sum of Rs.21,91,224/- to be correctly due and executed document dated 14.2.2006, as alleged? OPP 3. Whether defendant No. 2 for and on behalf of defendants No. 1 and 2 issued cheque bearing No. 5202417, dated 18.08.2006, in favour of the plaintiff for valuable consideration, for liquidating the aforesaid outstanding liability, as alleged? OPP 4. Whether defendant No. 3 stood guarantee for defendants No. 1 and 2 for repayment of aforesaid outstanding amount, as alleged? OPP 5. Whether the respective aforesaid cheques issued by defendant No. 1 to 3 were dishonoured, as alleged? OPP 6. Whether the plaintiffs are entitled for the suit amount from the defendants and the liability of the defendants is joint and several, as alleged? OPP 8. Whether the plaintiffs are entitled to interest on the suit amount from the defendants, if so, at what rate? OPP 9. Whether the suit in the present form is neither competent not maintainable, as alleged, if so, its effect? OPD 10. Whether the plaintiffs have no cause of action for filing the suit, as alleged, if so, its effect? OPD 11. Whether the plaintiffs are stopped to file the present suit on account of their acts, deeds, conduct, lapses etc., as alleged, if so, its effect? OPD 12. Whether the suit is bad for non-joinder 8 Neutral Citation No. (2026:HHC:21056) of necessary parties, as alleged, if so, its effect? OPD 13. Whether the suit had not been properly valued for the purpose of court fee and jurisdiction, as alleged, if so, its effect? OPD 14. Whether the suit is barred by limitation, if so, its effect? OPD 14. Relief.” 6. After hearing the learned counsel for the parties and examining the records, the learned Trial Court decreed the suit of the plaintiffs and the defendants were held jointly and severally liable to make the payment of outstanding balance of Rs.21,91,224/- alongwith costs and interest @ 9% per annum from the date of institution of the suit, i.e., 02.04.2007 till actual and final realization and liquidation of the entire decreetal amount. Hence, the instant appeal preferred by the appellants (defendants). 7. The learned counsel for the appellants contended that the learned Court below has committed grave illegality in relying upon document, Ex. P-2, execution of which has not been proved by the plaintiffs in accordance with law. He further contended that there is no mention of the document, Ex.P2, in 9 Neutral Citation No. (2026:HHC:21056) the legal notice sent by the plaintiffs with respect to dishonor of the cheques in question. He also contended that the learned Court below has erred in drawing presumption that the cheques were issued for the discharge of legally enforceable debt, which presumption was duly rebutted by the appellants. 8. Conversely, the learned Senior Counsel for the respondents supported the impugned judgment passed by the learned Trial Court and contended that the defendants not only acknowledged the liability on their part by way of execution of document, Ex. P-2, but also issued cheques in favour of the plaintiffs in order to liquidate the liability on their part. 9. I have heard learned counsel for the appellants, learned Senior Counsel for the respondents and carefully examined the entire records. 10. Plaintiff Shri Shalender Kumar, appeared in the witness-box as PW-1 and testified the averments made in the plaint in verbatim. As per this witness during the course of business dealings, payments were made towards the purchases made by the defendants No. 2 and 3. He further deposed that a sum of Rs.21,91,224/- 10 Neutral Citation No. (2026:HHC:21056) remained due/outstanding payable by the defendant No. 2 and he acknowledged and accepted that the amount was due and outstanding payable by him. He also deposed that defendant No.1 issued cheque for liquidating his liability, but the same was dishonoured. A legal notice was issued calling upon them to pay the amount due and outstanding. He also deposed that on assurance, the wife of the defendant No. 2 stood surety for the liability of her husband and she issued cheque in the sum of Rs.21,91,224/-, which on presentation at UCO Bank, was dishonoured for insufficient funds. The defendants did not pay any amount even after institution of the suit. This witness testified that the accounts are being maintained by him in his computer in the regular course of business. He tendered the account of M/s J.K. Jewellers, Ex. P-16, and stated that defendant No. 2 lodged a complaint against him, which was later on withdrawn by him. 11. On the other hand, Shri Krishan Kumar (defendant No. 2), appeared in the witness-box as DW-1 and deposed that he never purchased any jewellery on credit basis from the plaintiff and he never issued 11 Neutral Citation No. (2026:HHC:21056) cheque in favour of the plaintiff. He further deposed that the cheque was not in his in handwriting and he never signed the documents. He also deposed that his wife never stood guarantee for the purpose of jewellery on credit basis. As per this witness, the plaintiff obtained his signatures on blank papers and he reported the matter to the police. He paid a sum of Rs.32 lacs to the plaintiff. Smt. Naina Kotvi (defendant No. 3) appeared in the witness-box as DW-2 and stated that the accounts were never settled between the plaintiff and her husband (defendant No. 2). She further deposed that she never executed any guarantee bond with the plaintiff and she denied the execution of documents, Ex.P1, Ex.P8 and Ex.P9. She also deposed that signatures on Ex.P8 were obtained forcibly on 31.08.2006. This witness identified her signatures on guarantee bond, Ex.P1, which were allegedly obtained by the plaintiff on his receipts. She stated that neither she nor her husband had purchased the jewellery from the plaintiffs on credit. 12. I have minutely scrutinized the entire evidence on record led by both the parties. From the perusal of the entire evidence on record, it has become 12 Neutral Citation No. (2026:HHC:21056) clear that there were business dealings between the plaintiffs and defendants on account of purchase of jewellery by the defendants from the plaintiffs from time to time. 13. Now, the first question which arises for consideration before this Court is as to whether the acknowledgment letter, Ex. P2, has not been proved by the plaintiff in accordance with law, as contended by the learned counsel for the appellants/defendants. While appearing in the witness-box as DW-1, defendant No. 2- Shri Krishan Kumar Kotvi, admitted his signatures on Ex.DE, which is the statements of accounts of M/s Krishna Jewellers, maintained by the plaintiffs, which demonstrate that a total sum of Rs.21,91,224/- was outstanding against the defendant no.1 as on 14.02.2006. The perusal of Ex.DE shows that it refers to two sale vouchers, i.e., Ex.DC, for a sum of Rs.1,31,527/- and Ex.DD for a sum of Rs.12,19,377/-. Both DW-1 as well as DW-2 denied the purchase of jewellery from the plaintiff on credit basis. However, from the perusal of the sale vouchers, Ex.DA to DD, it cannot be inferred that these vouchers were issued on payment 13 Neutral Citation No. (2026:HHC:21056) of cash to the plaintiffs. In fact, these documents, Ex. DA to DD, are not cash receipts but are merely sale/credit vouchers and the word “credit” appearing on Ex. DA to Ex. DC has been scored off. Though the defendants had denied the scoring off of the word “credit”, however, as these documents have appeared from the custody of the defendants, therefore, they have to prove that these sale vouchers were cash receipts. However, no cogent and satisfactory evidence has been led by the defendants that documents, DA to Ex. DD, were only cash receipts. The scoring off of the word “credit” on Ex.DA to Ex.DC by the defendants appears to be with an intention to remove the word “credit” from vouchers. Therefore,in the absence of any cogent and satisfactory evidence on record, it cannot be concluded that the defendants used to get the jewellery from the plaintiff on cash and not on credit. 14. The wife of defendant No. 2, i.e., defendant No. 3-Smt. Naina Kotvi, had executed a guarantee bond, Ex. P1, dated 28.10.2004, in favour of the plaintiff. The relevant para of the aforesaid guarantee bond, Ex.P1, is as under: 14 Neutral Citation No. (2026:HHC:21056) “2. That all goods supplied by the said Creditor to the said Shri Krishna Kotvi shall be paid for by him within 6 months after delivery by Shri Krishna Kotvi and on his failure by the Surety together with interest thereon at 18% per month from the date of default. 3. That the Surety also accepts liability for all amounts which may be presently outstanding against Shri Krishan Kotvi and agrees that this guarantee shall be irrevocable for a minimum period of two years from this date and shall be a continuing one.” 15. During cross-examination, DW-1 had duly admitted his signatures on acknowledgment letter Ex.P2, cheque, Ex.P-3, and statement of accounts, Ex.DE. Similarly, defendant No. 3-Smt. Naina Kotvi, also admitted her signatures on guarantee bond, Ex.P1. This Court is of the opinion that guarantee bond, Ex.P-1, cheques, Ex.P-3 and, Ex P-9 and letter Ex.P-8 are the genuine documents and the execution of the same cannot be denied. The appearance of signatures of defendant No.2 across the revenue stamp on acknowledgment letter, Ex. P-2, is, in fact, acknowledgment in writing by the defendant No.2 admitting that a sum of Rs.21,91,224/- was due and payable to the plaintiffs by him vide acknowledgement letter, Ex. P2. Therefore, it cannot be said that the acknowledgment letter, Ex. P2, has not been proved by the plaintiff in accordance with law, as contended by the 15 Neutral Citation No. (2026:HHC:21056) learned counsel for the appellants/defendants. The guarantee bond, Ex.P-1, cheques Ex.P-3 and Ex.P9, further clearly show that the defendants had confirmed the amount due, as per the ledger maintained by the plaintiffs. Therefore, it does not lie in the mouth of the defendants that the aforesaid documents were prepared at the instance of the plaintiff. From the perusal of guarantee bond, Ex.P1, acknowledgment letter, Ex. P-2, cheques, Ex. P-8 and Ex.P9, it cannot be said that the defendants never purchased jewellery from the plaintiff on credit basis. 16. The next contention of the learned counsel for the appellants is that there is no mention of document, Ex.P2, in the legal notice sent by the plaintiffs with respect to dishonor of the cheques in question. He also contended that the learned Court below has erred in drawing presumption that the cheques were issued for the discharge of legally enforceable debt, which presumption was duly rebutted by the appellants. 17. The perusal of the record reveals that both the defendants issued cheques Ex.P-3 and Ex.P9, in the 16 Neutral Citation No. (2026:HHC:21056) sum of Rs.21,91,224/- each and both the cheques were dishonoured. In the opinion of this Court, there was no necessity of mentioning of acknowledgement letter, Ex.P2, in the legal notice sent by the plaintiffs with respect to dishonor of the cheques in question. As per section 139 of the Negotiable Instruments Act, there is a presumption in favour of holder of the cheque that he received it for the discharge in whole or in part of any debt or other liability. For the sake of ready reference, Section 139 of the Negotiable Instruments Act, 1881, is extracted hereunder: “139. Presumption in favour of holder.— 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.” 18. It is a settled proposition of law that presumption under Section 139 of NI Act is a presumption of law, as distinguished from a presumption of fact, such a presumption is a rebuttable presumption and the drawer of the cheque may dispel the same. The rebuttal does not have to be conclusively established, but such evidence must be adduced in support of the 17 Neutral Citation No. (2026:HHC:21056) defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable; the standard of reasonability being that of a 'prudent man'. The aforesaid position in law stands settled in the judgment of the Hon'ble Supreme Court in the matter of Hiten P. Dalal Vs. Bratindranath Banerjee, (2001) 6 SCC 16. While dealing with the aspect of presumption in terms of Section 139 of NI Act, the Hon'ble Supreme Court observed as under:- “21.The appellant's submission that the cheques were not drawn for the 'discharge in whole or in part of any debt or other liability' is answered by the third presumption available to the Bank under Section 139 of the Negotiable Instruments Act. This section provides that "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". The effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability. 22. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer AIR 1958 SC 61, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The 18 Neutral Citation No. (2026:HHC:21056) obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces 7 of 36 evidence showing the reasonable possibility of the non- existence of the presumed fact. 23. In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists". Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'. 24. Judicial statements have differed as to the quantum of rebutting evidence required. In Kundan Lal Rallaram vs Custodian, Evacuee Property, Bombay AIR 1961 SC 1316, this Court held that the presumption of law under Section 118of Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of fact raised under Section 114 of the Evidence Act. The decision must be limited to the facts of that case. The more authoritative view has been laid down in the subsequent decision of the Constitution Bench in Dhanvantrai Balwantrai Desai vs State of Maharashtra AIR 1964 SC 575, where this Court reiterated the principle enunciated in State of Madras vs Vaidyanath Iyer (Supra) and clarified that the distinction between the two kinds of presumption lay not only in the mandate to the Court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory 8 of 36 presumption "the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under S.114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be 19 Neutral Citation No. (2026:HHC:21056) rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted...…" 19. In the matter of Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513, it has been held by the Hon'ble Supreme Court that Section 118 of the NI Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. The relevant portion of the aforesaid judgment is reproduced as under:- “13. In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This Section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. Section 118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance,(iv) as to time of transfer, (v) as to order of indorsements,(vi) as to appropriate stamp and (vii) as to holder being a holder in due course. 14. Section 139 of the Act provides that 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. 19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the 20 Neutral Citation No. (2026:HHC:21056) Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.” 20. In the instant case, from the perusal of the evidence of the plaintiffs, it has become clear that the cheque, Ex. P3 was dishonoured on account of “Payment stopped by Drawer” and cheque, Ex.P9, was dishonoured on account of “insufficient funds” in the bank account of the defendant No.3. In light of the evidence on record, the plaintiffs have discharged their initial burden and it is required to be presumed that the cheques in question were drawn for consideration and the plaintiffs received the same in discharge of the existing debt. The onus, therefore, shifts upon the defendants to establish probable defence so as to rebut such presumption. 21. The law is well settled that in order to rebut the statutory presumption, the defendant is not expected to prove his defence beyond reasonable doubt as is expected of the prosecution in a criminal trial. The defendant may adduce direct evidence to prove that the 21 Neutral Citation No. (2026:HHC:21056) cheque in question was not supported by consideration and that there was no debt or liability to be discharged by him. On the aspects relating to preponderance of probabilities, the defendant has to bring on record such facts and such circumstances which may lead this court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that the consideration did not exist. It is settled position of law that though there may not be sufficient negative evidence which could be brought on record by the defendant to discharge his burden, yet mere denial would not fulfill the requirements of the rebuttal as envisaged under Sections 118 and 139 of the N.I. Act. Reference can also be made to the judgment of the Hon'ble Supreme Court in Rangappa vs. Sri Mohan (2010) 11 SCC 441, wherein it has been observed that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities. The relevant paras of the aforesaid judgment are reproduced as under:- ''26. In light of these extracts, we are in agreement with the respondent-claimant that the presumption 22 Neutral Citation No. (2026:HHC:21056) mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. 27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the 14 of 36 dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.' In the present case on hand, the accused merely denied the case of complainant and he has not placed sufficient materials before the court to believe his defence. Mere denial of the case of complainant is not sufficient ground to believe the defence of accused that the complainant has not lent an amount of Rs.30 lakhs to the accused.” 23 Neutral Citation No. (2026:HHC:21056) 22. In Rohitbhai Jivanial Patel’s case, (2019) 18 SCC 106, it has been held by the Hon'ble Supreme Court that once the accused could not deny his signatures on the cheque in question that had been drawn in favour of the complainant, therefore, it is required to be presumed that the cheque in question was drawn for consideration and the holder of the cheque i.e. the complainant received the same in discharge of an existing debt. The relevant portion of the aforesaid judgment reads as under:- "15. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 of the NI Act is concerned, apparent it is that the appellant-accused could not deny his signatures on the cheques in question that had been drawn in favour of the complainant on a bank account maintained by the accused for a sum of Rs.3 lakhs each. The said cheques were presented to the bank concerned within the period of their validity and were returned unpaid for the reason of either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of Sections 118 and 139 are apparent on the fact of the record. The trial court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e. the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the appellant- accused to establish a probable defence so as to rebut such a presumption." 23. The Honorable Supreme Court of India in "Triyambak S Hegde vs. Sripad" (2022) 1 SCC 742 while relying upon the constitution bench judgment of 24 Neutral Citation No. (2026:HHC:21056) Basalingappa vs. Mudibasappa (2019) 5 SCC 418, under para 14 of its judgment reiterated that once the cheque was issued and that the signatures are upon the cheque are accepted by the accused, the presumptions under section 118(a) and section 139 of the NI Act arise against the accused. That is, unless the contrary is proved, it shall be presumed that the cheques in question were drawn by the accused for a consideration and that the complainant had received the cheque in question in discharge of debt/liability from the accused.: "25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.” 24. In the case on hand, the defendants took contradictory pleas at the same time, as on the one hand 25 Neutral Citation No. (2026:HHC:21056) it has been submitted that the defendants were called by the plaintiff no.2 in his house and their signatures were obtained forcibly on blank papers, but on the other hand it is submitted that the defendants had misplaced and lost the cheques, which were being misused by the plaintiffs. As per the defendants, the plaintiff got the documents fabricated and forged by obtaining the signatures of the defendants on blank papers under threat, coercion etc. The case of the defendants is that defendant No. 2 had lodged a complaint with Superintendent of Police, Shimla, on 02.08.2006, as plaintiff No. 2 was avoiding the delivery of the goods, despite having received the payment, then he called defendant No. 2 to his house at Kasumpati and thereafter when defendants No. 2 and 3 went to his house, plaintiff No. 2 had obtained their signatures on number of blank papers under threat and he had also fabricated the documents and forged their signatures. The further case of the defendants is that thereafter on the intervention of the police, plaintiff No. 2 had delivered the goods to the defendants. In cross-examination DW-1 admitted that the complaint lodged before the police was 26 Neutral Citation No. (2026:HHC:21056) not pursued further because the plaintiff had given him the gold. DW-2 also admitted in cross-examination that the complaint was withdrawn on 6th/7th August, 2007. It is not understandable that when on the intervention of the police, the defendants have received the gold and they have decided not to pursue the complaint, then why they did not demand the blank papers from the plaintiffs on which their signatures were allegedly obtained by them. In fact, no explanation has been given by the defendants in this regard. Therefore, the story of the defendants regarding obtaining their signatures on blank papers appears to be an afterthought and concocted one and the same cannot be believed. The contradictory stand which has been taken by the defendants is not sufficient to rebut the presumption, which arises in favour of the plaintiffs. In view of the acknowledgment letter, Ex. P2, cheques, Ex. P3 and Ex. P9, it stands duly established on record that a sum of Rs. 21,91,224/- is due and payable to the plaintiffs by the defendants. 25. Therefore, in view of what has been discussed hereinabove, the learned Trial Court had not committed any error in decreeing the suit of the plaintiffs 27 Neutral Citation No. (2026:HHC:21056) and the instant appeal, which sans merits, deserves dismissal and is accordingly dismissed. Pending application(s), if any, shall also stand(s) disposed of. ( Sushil Kukreja ) Judge 2nd June, 2026 (virender)