RENUKA v. THE STATE OF MAHARASHTRA
Statutory Presumption under Section 139 of the N.I. Act Cannot Be Rebutted at the Pre-Trial Stage of Issuance of Process.
Court: Supreme Court of India
Citation: 2026 INSC 327
Decision Date: 07-04-2026
List of Laws
Negotiable Instruments Act, 1881; Section 138 of the Negotiable Instruments Act, 1881; Section 139 of the Negotiable Instruments Act, 1881; Article 227 of the Constitution of India; Criminal Procedure Code (Revisional Jurisdiction)
- Facts: The appellant, Renuka, was involved in a matrimonial and share-transfer dispute with her husband. A settlement was drafted wherein the husband agreed to pay ₹50 crores and transfer properties in exchange for Renuka withdrawing her complaints. To secure this payment, the second respondent (a mediator and friend of the husband) issued a cheque for ₹50 crores as a guarantor. Renuka subsequently signed a "Declaration-cum-Indemnity" document and presented the cheque, which was returned with the remark "payment stopped by drawer". Following a statutory notice that went unheeded, she filed a complaint under Section 138 of the Negotiable Instruments Act, 1881.
- Procedural Posture: The Metropolitan Magistrate issued process against the second respondent. However, the Sessions Court, in its revisional jurisdiction, set aside this order on the grounds that there was no legally enforceable debt since the settlement agreement was not signed by the second respondent. The High Court of Bombay dismissed the appellant's writ petition under Article 227, upholding the Sessions Court's view. The appellant then approached the Supreme Court.
- Issue: Can a complaint under Section 138 of the Negotiable Instruments Act be dismissed at the pre-trial stage of issuance of process on the ground that the debt is not legally enforceable, despite the statutory presumption under Section 139?
- Holding: No. The Supreme Court held that once the basic ingredients of Section 138 are satisfied and the signature on the cheque is undisputed, the statutory presumption under Section 139 must be triggered, and rebuttal can only occur during the trial.
- Reasoning: The Court reasoned that at the stage of issuing process, the Magistrate only needs to see if a prima facie case exists based on the issuance of the cheque, its dishonour, the statutory notice, and the timely filing of the complaint. Under Section 139 of the N.I. Act, there is a "reverse onus" clause which mandates the Court to presume that the cheque was issued for a legally enforceable debt. This presumption cannot be dislodged in a summary manner at the pre-trial stage merely by the drawer's contention. Whether a debt was legally enforceable is a question of fact to be determined through evidence during the trial. By scuttling the proceedings early, the lower courts ignored the legislative intent of improving the credibility of negotiable instruments.
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