Sections 139–142 — Presumptions, Cognizance, Jurisdiction

Sections 139 to 142 of the Negotiable Instruments Act, 1881 hold three of the most heavily examined doctrines in the Section 138 cluster: the statutory presumptions in favour of the holder under Sections 118 and 139; the limited cognizance regime under Section 142(a) and (b); and the jurisdictional rule under Section 142(2) as inserted by the 2015 amendment, which legislatively overruled the Five-Judge Bench in Dashrath Rupsingh Rathod. Together these four sections fix who can prosecute, where they may prosecute, when they may prosecute, and what the accused must prove to escape conviction. The doctrines are unforgiving: every Section 138 fact-pattern in a state judiciary or CLAT-PG paper turns on at least one of them.

The procedural choreography of how a complaint moves from filing to trial is treated separately in Section 138 — Procedure on Complaint; the calendar discipline governing the thirty-day notice and the one-month complaint clock is in Section 138 — Statutory Notice and Limitation. This chapter assumes those layers and concentrates on the substantive presumption framework, the cognizance regime, and the jurisdictional architecture. The register, like the rest of the cluster of Negotiable Instruments Act notes dealing with Sections 138 to 147, is criminal-procedural — quasi-criminal, summary, with its own evidentiary rules that depart from the ordinary criminal trial.

The presumption framework — Sections 118 and 139

Section 118 of the Negotiable Instruments Act, 1881 raises a battery of presumptions in favour of every negotiable instrument: presumption of consideration, of date, of time of acceptance, of time of transfer, of order of indorsements, of stamp, and of the holder being a holder in due course. The presumption of consideration in Section 118(a) is the workhorse of cheque-bounce litigation: until the contrary is proved, every negotiable instrument is presumed to have been made or drawn for consideration.

Section 139 adds the offence-specific presumption: it shall be presumed, unless the contrary is proved, that the holder of a cheque received it for the discharge, in whole or in part, of any debt or other liability. Read with Section 118, the combined effect is that once the issuance of the cheque is admitted or proved, the magistrate must presume that the cheque was issued for consideration and in discharge of a legally enforceable debt or liability. The accused does not begin the trial as a presumed innocent in the ordinary criminal sense; he begins as a presumed defaulter who must dislodge the presumption.

The standard of rebuttal — preponderance of probabilities

The leading authority on the rebuttal standard is the three-judge bench decision in Rangappa v. Sri Mohan (2010) 11 SCC 441. The Supreme Court held that the presumption under Section 139 is a presumption of law, not merely of fact; that the burden of rebutting the presumption is on the accused; and crucially, that the standard of rebuttal is the civil standard of preponderance of probabilities, not the criminal standard of proof beyond reasonable doubt. The accused need not lead direct evidence to disprove the debt; he may rebut the presumption by reference to the materials placed by the complainant himself, or by leading defence evidence, or by demonstrating from circumstances that the existence of the debt is more improbable than probable.

The doctrinal subtlety in Rangappa is that the presumption extends to the existence of a "legally enforceable debt or liability" — not merely to the issuance of the cheque. Earlier authorities had occasionally drawn a line between the two; Rangappa read Sections 118 and 139 together to fold the two into a single composite presumption. Once the complainant proves issuance and dishonour, the magistrate must presume that the cheque was issued for the discharge of a legally enforceable debt. The accused must then rebut on a preponderance of probabilities.

Bharat Barrel and the distinction from civil pleading

The earlier Supreme Court ruling in Bharat Barrel and Drum Manufacturing Co. v. Amin Chand Pyarelal (1999) 3 SCC 35 had laid down the foundational rule that the presumption of consideration under Section 118(a) is a rebuttable presumption, and that the accused who pleads absence of consideration must adduce evidence sufficient to dislodge it. The court held that mere denial in the written statement (in a civil suit on a negotiable instrument) is insufficient; the defendant must lead positive evidence to rebut. Rangappa applied the same logic to criminal proceedings under Section 138, fixing the rebuttal standard at preponderance.

The aspirant must distinguish three propositions. First, the burden of proving the issuance and dishonour of the cheque, and of giving the statutory notice and waiting out the fifteen-day failure-to-pay window, is on the complainant — the foundational ground discussed in bouncing of cheques essentials — and is discharged on a criminal standard. Second, once that ground is laid, the presumption under Sections 118 and 139 operates, and the burden shifts to the accused. Third, the accused's burden is the civil standard — preponderance — not the criminal standard. Confusing those three layers is the most common mistake in answering Section 138 questions.

Section 146 — the dishonour memo presumption

A fourth presumption, often overlooked, sits alongside Sections 118 and 139. Section 146 NI Act provides that the court shall, on production of bank's slip or memo bearing thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour, unless and until that fact is disproved. The bank witness need not be examined to prove dishonour as a matter of strict proof; the memo carries the presumption. The complainant's task in proving the offence is consequently lighter than in an ordinary criminal trial.

Cognizance under Section 142

Section 142 governs cognizance and is structured in two operative limbs. Sub-section (1) deals with eligibility, mode, and limitation; sub-section (2) deals with territorial jurisdiction.

Section 142(a) — only on written complaint

Section 142(a) bars cognizance of an offence under Section 138 except upon a written complaint by the payee or, as the case may be, the holder in due course of the cheque. Three operational rules follow.

The complaint must be in writing. An oral complaint, or one ratified later in writing after the magistrate has acted, is jurisdictionally void. The complaint is the foundational document; the entire proceeding rests on it.

The complainant must be the payee or holder in due course. A stranger to the cheque cannot prosecute. The threshold concepts of holder and holder in due course under Sections 8 and 9 govern the locus inquiry. The Supreme Court in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. AIR 2002 SC 182 held that where the payee is a corporate body, a duly authorised officer may file the complaint on behalf of the company; the company is the de jure complainant. The earlier worry in Associated Cement Co. Ltd. v. Keshvanand (1998) 1 SCC 687 that the complainant must be a corporeal person was harmonised in M.M.T.C. with corporate practice.

A police report is not a substitute. Section 138 is non-cognizable; no FIR, no investigation under Sections 154 to 173 CrPC (now Sections 173 to 193 BNSS), no charge-sheet. The exclusion of the police-report route is structural: the offence is a private wrong with quasi-criminal consequences, and the complainant alone may set the law in motion.

Section 142(b) — the one-month complaint clock

Section 142(b) imposes the limitation: the complaint must be filed within one month of the date on which the cause of action arises under proviso (c) to Section 138 — that is, the day after the fifteen-day failure-to-pay window has expired. The Supreme Court in N. Harihara Krishnan v. J. Thomas (2018) 13 SCC 663 reaffirmed the composite character of the cause of action: it accrues on the day after the fifteen-day window, not earlier and not later, and the one-month clock starts from that day.

The proviso to Section 142(b), inserted by the 2002 amendment, permits condonation of delay if the complainant satisfies the court that he had sufficient cause for not filing within the one-month period — the calendar discipline is treated end-to-end in the notice and limitation chapter. The discretion is judicial, modelled on Section 5 of the Limitation Act, 1963; the magistrate may not condone routinely. Subodh S. Salaskar v. Jayprakash M. Shah (2008) 13 SCC 689 confirmed that the proviso confers a real but disciplined discretion.

Section 142(c) — magistrate competence

Section 142(c) requires that no court inferior to a Metropolitan Magistrate or a Judicial Magistrate of the First Class shall try any offence under Section 138. Read with Section 143(1), the rule is that Section 138 cases are tried by JMFC/MM only — a deliberate concentration of competence at the front of the magisterial hierarchy.

Jurisdiction — the 2015 amendment and the Dashrath Rupsingh arc

The story of Section 138 jurisdiction is the story of three rulings, an Ordinance, and an amending Act.

K. Bhaskaran — the wide rule

The Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 first laid out the five constituent acts that make up a Section 138 offence: drawing the cheque, presenting it to the bank, the bank's return of the cheque unpaid, the giving of the statutory notice, and the failure of the drawer to pay within fifteen days. Reading Section 178(d) CrPC — which permits jurisdiction wherever any of several constituent acts has occurred — the court held that the complainant could file the complaint at any of the five places. The rule was complainant-friendly and produced a wide jurisdictional menu.

Dashrath Rupsingh — the narrow rule

Fifteen years later, a Five-Judge Bench in Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129 overruled the wide rule. The Bench held that the only court competent to try an offence under Section 138 was the court within whose territorial jurisdiction the drawee bank — that is, the bank on which the cheque was drawn — was situated. The reasoning was that the offence is committed where the cheque is dishonoured; the other four acts (drawing, presentation, notice, failure to pay) are not the offence-creating events but merely components of the cause of action. The complainant's choice was abruptly narrowed from five possible forums to one.

Dashrath Rupsingh caused immediate practical chaos. Thousands of pending cases stood transferred to the drawee-bank court; corporate payees who had filed at their place of business found their complaints dismissed for want of jurisdiction; the small payee who had drawn comfort from the wide forum-selection rule was effectively pushed into the drawer's home court. The decision was widely criticised as commercially unworkable.

The 2015 Ordinance and Amendment Act

Parliament responded swiftly. The Negotiable Instruments (Amendment) Ordinance, 2015 was promulgated on 15 June 2015, replaced by the Negotiable Instruments (Amendment) Act, 2015 (No. 26 of 2015), which inserted a new Section 142(2) into the Act. The amended provision reads, in substance, that the offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course maintains the account is situated; or (b) if the cheque is presented for payment by the payee or holder in due course otherwise than through an account, the branch of the drawee bank where the drawer maintains the account is situated.

The legislative move was a clean override. Jurisdiction now follows the payee's banker, not the drawer's banker, in the routine collection-through-account case. Section 142A was simultaneously inserted to validate transfers and pending proceedings consequent on the change of jurisdictional regime, ensuring that cases pending at the time of the amendment were dealt with on the new footing.

Bridgestone and the post-2015 settlement

The Supreme Court in Bridgestone India (P) Ltd. v. Inderpal Singh (2016) 2 SCC 75 confirmed that the 2015 amendment had retrospectively settled the jurisdictional question and that the new Section 142(2) regime applied to all complaints, including those filed before the amendment date. The legislative override of Dashrath Rupsingh was not merely prospective; it cleared the entire backlog of jurisdictional confusion. The post-2015 settlement is therefore: payee's banker's branch, full stop.

What jurisdiction looks like in practice

A simple worked example fixes the rule. Drawer's bank account is in Chennai. Payee deposits the cheque for collection through his own account in Mumbai. The cheque is dishonoured and the dishonour memo is issued by the drawee bank in Chennai but received by the payee through his Mumbai bank. Under K. Bhaskaran the payee could have filed at five places. Under Dashrath Rupsingh only Chennai. Under Section 142(2) post-2015, only Mumbai — the branch where the payee maintains the account through which the cheque was presented for collection. The payee's banker's branch is the single forum, and jurisdiction follows the cheque's collection path.

Section 141 — vicarious liability of companies and directors

Section 141 NI Act lifts the corporate veil for cheque-bounce purposes. Where the offence under Section 138 is committed by a company, every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of its business, as well as the company itself, shall be deemed to be guilty. The leading authority is S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89, where a three-judge bench held that the complaint must contain specific averments that the accused director was in charge of and responsible for the conduct of the business; a generic averment that he was simply "a director" is insufficient. Subsequent rulings in K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48 and Pooja Ravinder Devidasani v. State of Maharashtra (2014) 16 SCC 1 refined the rule: a non-executive director, an additional director, or a director who has resigned before the cheque was issued cannot be roped in without specific allegations linking him to the conduct of the business at the relevant time.

The proviso to Section 141(1) carves out the bona fide defence: a person liable under the section may escape if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of the offence. Section 141(2) extends liability to any director, manager, secretary, or other officer of the company with whose consent or connivance, or owing to whose neglect, the offence was committed. The provisions track the broader vicarious-liability architecture of capacity and liability of parties under Sections 26 to 32 NI Act, but with a stricter pleading discipline appropriate to the criminal-procedural register.

Operating the four sections together

The four sections — 139, 140, 141, 142 — operate in sequence in any Section 138 prosecution.

Section 139 raises the presumption that the cheque was received for the discharge of debt or liability; the accused must rebut on preponderance of probabilities. Section 140 bars the defence that the drawer believed there was no reason to expect the cheque would be dishonoured — that is, lack of mens rea is not a defence; Section 138 is, in this sense, a strict-liability offence subject only to the rebuttal mechanism of Section 139. Section 141 extends liability to companies and to every person who, at the time of the offence, was in charge of and was responsible to the company for the conduct of its business; the role-pleading averments under Section 141 must appear in the complaint, as held in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89. Section 142 then closes the loop with the cognizance and jurisdiction rules already discussed.

Section 140 deserves a separate note. The provision states that it shall not be a defence in a prosecution under Section 138 that the drawer had no reason to believe when he issued the cheque that the cheque might be dishonoured on presentation for the reasons stated in that section. The provision pre-empts the defence of bona fide mistake — a drawer who claims he honestly believed funds would be available cannot escape liability. The presumption under Section 139, read with Section 140, fixes a tight liability regime on the drawer.

Stop-payment as ground — the parallel SC authority

An important slice of the presumption framework is how it handles cheques returned not for insufficient funds but on stop-payment instructions. The Supreme Court in Electronics Trade & Technology Development Corp. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. (1996) 2 SCC 739 held that a cheque returned with the endorsement "instructions for stoppage of payment" amounts to dishonour within the meaning of Section 138; once issued, the presumption under Section 139 takes over, and a notice issued by the drawer to the bank for stoppage does not preclude an action under Section 138. The same principle was reiterated and given a more expansive scope in subsequent authorities, including Goaplast (P) Ltd. v. Chico Ursula D'Souza AIR 2003 SC 2035, holding that a post-dated cheque countermanded before the date of presentation is still amenable to prosecution under Section 138.

The combined effect is that the entire menu of dishonour reasons — insufficiency of funds, account closed (NEPC Micon Ltd. v. Magma Leasing Ltd. (1999) 4 SCC 253), stop-payment, signature mismatch (Laxmi Dyechem v. State of Gujarat (2013) 1 SCC 375) — falls within Section 138, subject only to the rebuttal of the Section 139 presumption on a preponderance standard. The conceptual relation to the wider law of dishonour by non-acceptance and non-payment under Sections 91 to 93 is doctrinally close: dishonour for the purposes of Section 138 includes every refusal to honour the cheque, however the bank may have phrased the return memo.

The bank-witness presumption and Section 145 affidavit evidence

The Section 146 dishonour-memo presumption operates alongside Section 145, which permits the complainant's evidence to be given on affidavit. The Supreme Court in Indian Bank Association v. Union of India (2014) 5 SCC 590 directed wide use of Section 145 affidavits to give effect to the six-month disposal target in Section 143(3). The mechanics of affidavit evidence are drilled in Section 144 — Service of Summons; Section 145 — Affidavit Evidence; for present purposes it is enough to note that the presumption framework lightens the complainant's evidentiary load at every stage.

Multiple presentations and successive notices

The presumption regime applies independently on each presentation. The three-judge Bench in MSR Leathers v. S. Palaniappan (2013) 1 SCC 177 overruled the earlier Sadanandan Bhadran (1998) line and held that the payee may present the cheque any number of times within its validity, with a fresh cause of action accruing on each dishonour followed by a fresh notice and a fresh failure to pay. The presumption under Section 139 attaches to each cause of action; the magistrate's election as to which cause of action to prosecute on does not weaken the presumption that operates on the elected cycle.

Where the presumption framework slots into the trial

Once the complainant has proved issuance, presentation within validity, dishonour (typically by producing the bank memo with the Section 146 presumption), service of the statutory notice (with the Section 27 General Clauses Act presumption supporting receipt), and the failure of the drawer to pay within fifteen days, the foundational ground is laid. The Sections 118 and 139 presumptions then operate. The accused may rebut by leading defence evidence, by exploiting cracks in the complainant's evidence, or by demonstrating that the cheque was issued only as security or for a non-existent debt. Each rebuttal must clear the preponderance bar.

The aspirant who has internalised the presumption-cognizance-jurisdiction framework — the Sections 118 and 139 presumptions, the Rangappa rebuttal standard, the Section 142(a) cognizance gate, the Section 142(b) one-month clock, and the Section 142(2) post-2015 jurisdictional rule — has the doctrinal scaffolding to answer any Section 138 fact-pattern with confidence. The procedural choreography that wraps around this framework, including the magistrate's election between summary and summons trial, is treated in the dedicated summary trial chapter; the appellate-stage compensation overlay is treated in the Section 143A interim compensation chapter. The doctrines are dense, but they are also tightly interlocked; once the architecture is clear, the answers fall into place.

Frequently asked questions

What is the standard of rebuttal under Section 139 NI Act after Rangappa?

The Supreme Court in Rangappa v. Sri Mohan (2010) 11 SCC 441 held that the presumption under Section 139 is a presumption of law, that the burden of rebuttal is on the accused, and that the rebuttal standard is the civil standard of preponderance of probabilities, not the criminal standard of proof beyond reasonable doubt. The accused may rebut by leading defence evidence or by reference to cracks in the complainant's evidence. The shift in standard is the single most important doctrinal feature distinguishing a Section 138 trial from an ordinary criminal trial.

Can a person other than the payee or holder in due course file a Section 138 complaint?

No. Section 142(a) is exclusive: only the payee or, where the cheque has been negotiated, the holder in due course may complain. A stranger to the cheque, an assignee outside the scheme of negotiation, or a third-party recipient of the dishonour memo has no locus. Where the payee is a corporate body, Section 142(a) is satisfied by a complaint signed by a duly authorised officer on behalf of the company, as held in M.M.T.C. Ltd. v. Medchl Chemicals (2002) AIR SC 182.

Where must a Section 138 complaint be filed after the 2015 amendment?

Section 142(2), inserted by the 2015 Amendment Act, requires the complaint to be filed at the court within whose local jurisdiction the branch of the bank where the payee or holder in due course maintains the account through which the cheque was presented for collection is situated. If presentation is otherwise than through an account, the relevant forum is the branch of the drawee bank where the drawer maintains the account. The amendment overrode Dashrath Rupsingh Rathod (2014) 9 SCC 129 and was applied retrospectively in Bridgestone India v. Inderpal Singh (2016) 2 SCC 75.

Is bad faith or knowledge a required ingredient under Section 138?

No. Section 140 bars the defence that the drawer had no reason to believe the cheque would be dishonoured. Section 138 is a strict-liability offence subject only to the rebuttal mechanism of Section 139 — the accused cannot escape by pleading bona fide mistake or honest belief that funds would be available. The presumption under Section 139, read with Section 140, fixes a tight liability regime on the drawer that the rebuttal must dislodge on a preponderance standard.

Does the presumption under Section 139 cover the existence of a legally enforceable debt?

Yes. The Supreme Court in Rangappa v. Sri Mohan (2010) 11 SCC 441 read Sections 118 and 139 together to fold the presumption of consideration and the presumption of debt into a single composite presumption. Once the complainant proves issuance and dishonour, the magistrate must presume that the cheque was issued for the discharge of a legally enforceable debt or liability. The accused must then rebut both the existence of consideration and the existence of the debt on a preponderance of probabilities.

What does Section 146 add to the presumption framework?

Section 146 NI Act provides that the court shall presume the fact of dishonour on production of the bank's slip or memo bearing the official mark denoting that the cheque has been dishonoured, unless and until that fact is disproved. The complainant need not strictly examine the bank witness to prove dishonour as a matter of formal proof; the memo carries the presumption. The provision lightens the complainant's evidentiary burden and accelerates trial — it sits naturally alongside the affidavit-evidence regime under Section 145.