Negotiable Instruments Act: Complainant Must Prove Financial Capacity
- ByAdmin --
- 09 Apr 2025 --
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In a major ruling under the Negotiable Instruments Act, 1881, the Supreme Court held that the complainant must prove financial capacity to lend the money if they want to prosecute someone for cheque bounce.
The verdict turns the spotlight on accountability—not just for the accused, but also the accuser.
The Case
A businessman issued a cheque worth ₹10 lakhs which bounced. The complainant, who filed a case under Section 138, was asked to show how he had that much money to lend.
He failed. And the case collapsed.
What the Court Said
• Burden of proof starts with the complainant
• Courts must ensure that the transaction was legitimate and not fabricated
• Section 139’s presumption (that cheque was issued for a debt) is rebuttable
Legal Impact
This judgment:
• Prevents misuse of NI Act to harass debtors
• Encourages documented transactions
• Makes cheque bounce cases evidence-driven, not assumption-based
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