In Brief
Kalamani Tex and its managing partner were acquitted by the trial court of dishonoring a cheque issued as consideration for a debt, on the ground that no legally enforceable liability existed. The High Court reversed the acquittal and convicted both appellants under Section 138 of the Negotiable Instruments Act. The Supreme Court upheld the conviction, holding that the trial court committed a patent error of law by overlooking statutory presumptions under Sections 118 and 139 of the NIA. Once signatures on the cheque and deed of undertaking were admitted, the burden shifted to the appellants to rebut the presumption of a legally enforceable debt through credible evidence meeting the 'preponderance of probability' standard. Bare denials without cogent evidence fell short. The appeal was dismissed, though the sentence of imprisonment was waived given the appellants had deposited the cheque amount.
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