The Supreme Court ruled that when an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act raises the defence that the complainant lacked financial capacity to advance the alleged loan, this defence must be raised in the accused's reply to the statutory notice. Failing to raise it at that stage weakens the defence significantly. The initial burden of proving financial incapacity rests on the accused, not the complainant, aligning with the presumption under Section 139 of the Act.

Section 138 of the Negotiable Instruments Act, 1881 criminalises dishonour of cheques for insufficiency of funds. Crucially, Section 139 creates a statutory presumption in favour of the complainant — once the complainant proves that a cheque was drawn on their account and was dishonoured, the court presumes it was issued for discharge of a legally enforceable debt or liability. This presumption is rebuttable but the burden shifts to the accused to disprove it.

The Supreme Court's ruling addresses a common defence tactic: accused persons argue that the complainant never had the financial means to advance the loan in the first place, implying no actual debt existed. The Court clarified that this defence cannot be introduced for the first time at the trial stage or through cross-examination alone. It must be expressly raised in the reply to the legal notice (mandatory under Section 138 before filing a complaint), so that the complainant has an opportunity to address it.

This decision reinforces the evidentiary framework: the complainant enjoys the Section 139 presumption; the accused bears the initial evidential burden to rebut it. The ruling integrates procedural fairness with substantive presumption law, and tests aspirants on the interplay between Section 138 (dishonour), Section 139 (presumption), and the burden-shifting mechanism — a classic CLAT PG examination angle.