D. Chandran vs S. Anilkumar - 2026 Supreme(Ker) 1235

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2026 Supreme(Ker) 1235

IN THE HIGH COURT OF KERALA AT ERNAKULAM
A. BADHARUDEEN, J.
D. Chandran – Appellant
Versus
S. Anilkumar – Respondent
Crl. A. No. 932 of 2021
Decided On : 07-08-2026

Important Points

Once the signature on a cheque is admitted, the statutory presumption of a legally enforceable debt arises. The burden shifts to the accused to rebut this by a preponderance of probabilities, which requires more than a bare denial or assertions unsupported by coherent evidence.

Subject

Criminal Law - Negotiable Instruments

Act Referred

NEGOTIABLE INSTRUMENTS ACT : S.118, S.138, S.139
CRIMINAL PROCEDURE CODE : S.313(1)(b), S.378(4)

Headnote

(A) Negotiable Instruments Act, 1881 - Sections 118, 138, and 139 - Dishonour of cheque - Presumption of legally enforceable debt - Once the execution of the instrument and the signature are admitted, the court must draw the presumption that it was issued for a legally enforceable debt - To rebut this presumption, the accused must establish a probable defence by a preponderance of probabilities - Mere denial or lack of evidence regarding financial capacity, absent specific pleadings or credible contra-material, is insufficient to overcome the statutory presumption. (Paras 11, 18, 19)

(B) Appeal - Scope - Interference with order of acquittal - Appellate court is entitled to intervene when the trial court's assessment of evidence is based on erroneous legal principles, particularly regarding the misapplication of the burden of proof and the evidentiary weight accorded to statutory presumptions in cheque bounce cases. (Paras 19, 20)

Facts of the case:
The appellant initiated criminal proceedings against the respondent alleging the commission of an offence under the law governing negotiable instruments following the dishonour of a cheque issued for 7,00,000. The trial court acquitted the respondent, primarily on the ground that the complainant allegedly failed to prove his financial capacity to advance the amount and that the execution of the cheque was doubtful. The complainant challenged this acquittal before the appellate court.

Findings of Court:
The court observed that once the signature on the cheque is admitted, the burden rests heavily on the accused to rebut the statutory presumptions. The defence failed to provide substantive evidence or cross-examination to disprove the financial transaction, rendering the initial presumption in favor of the complainant absolute in the absence of a probable defence established by a preponderance of probabilities.

Issues: Whether the respondent successfully rebutted the statutory presumption of a legally enforceable debt and whether the trial court erred in failing to apply the relevant legal presumptions regarding the execution of the disputed cheque.

Ratio Decidendi: The court held that strict adherence to statutory presumptions is mandatory in cases involving the dishonour of cheques. The accused cannot succeed by mere assertions of improbability; instead, they must mount a defence based on the standard of preponderance of probabilities. The failure to do so validates the prosecution's case and necessitates conviction upon a finding of dishonour.

Result: Appeal allowed; the judgment of acquittal is set aside and the accused is convicted and sentenced to imprisonment till rising of the court with a fine.

Advocates Appeared:
For the Apepllant : Shri. M.R.Hariraj (Sr.), Smt. Alina Anna Kose, Smt. Vidya A.K, Shri. Viswajith C.K, Smt. Gisha G. Raj, Shri. Rejivue K.C.
For the Respondent: Shri. K.P. Madhu.

JUDGMENT :

A. BADHARUDEEN, J.

Complainant in C.C.No.2079/2015 on the files of the Temporary Special Court (the Judicial Magistrate of First Class) for the trial of cases under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘NI Act’ for short), Thiruvananthapuram, has filed this criminal appeal under Section 378(4) of the Code of Criminal Procedure (hereinafter referred to as ‘Cr.P.C.’), after getting the leave of this Court. The 1^st respondent herein is the accused before the trial court and the 2^nd respondent is the State of Kerala, represented by the Public Prosecutor.

2. Heard the learned counsel for the complainant/appellant and the learned counsel for the 1^st respondent/accused. Perused the trial court records.

3. I shall refer the parties in this appeal as 'complainant' and 'accused' for easy reference.

4. Consequent to dishonour of cheque, (when the cheque presented for collection the same returned with endorsement, “payment stopped by drawer”) bearing No.140482, dated 28.01.2013, for Rs.7,00,000/- (Rupees seven lakh only), alleged to be issued by the accused to the complainant, the complainant launched prosecution, alleging commission of offence punishable under Section 138 of the NI Act by the accused, when the accused failed to repay the same on demand.

5. The learned Magistrate took cognizance of the offence punishable under Section 138 of the NI Act. During trial, PW1 was examined and Exts.P1 to P5 were marked on the side of the complainant. After questioning the accused under Section 313(1)(b) of Cr.P.C., when opportunity was provided to the accused to adduce defence evidence, the accused himself got examined as DW1, and Exts.D1 to D7(a) were tendered in evidence through him.

6. On appreciation of evidence, the learned Magistrate found that the complainant failed to prove beyond doubt that he was the holder of the cheque entitled to its possession in his own name and receive the money thereunder. Accordingly, relying on doubtful circumstances, the learned Magistrate found that the complainant failed to prove his case beyond doubt to get the benefit of presumptions under Sections 118 and 139 of the NI Act. Consequently, the accused was acquitted.

7. The learned Magistrate relied on the decision of this Court in Basalingappa Vs. Mudi Basappa , reported in 2019(2) KHC 451, to hold that when financial capacity of the complainant would be questioned, it was incumbent upon the complainant to explain his financial capacity.

8. Similarly, another decision of the Apex Court in M.S.Narayana Menon Vs. State of Kerala and Another reported in 2006 SC 336 was also relied on by the learned Magistrate to hold that “for rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. The standard of proof evidently is pre-ponderance of probabilities Inference of pre-ponderance of probabilities can be drawn not only from the materials on records, but also by reference to the circumstances upon which he relies”.

9. Apart from the same, the learned Magistrate held in paragraph No.9 as under:

“9. According to accused he borrowed Rs.2,35,000/- from the complainant in 2011. And he issued two blank signed cheque in that transaction as security. Definite case of the accused was that on the cheque date 28.1.2013 he had no transaction with the complainant. In the decision in G. Gopan V. Tonny Varghese and another 2008(1) KLT 257 Hon'ble High Court held that merely because the cheque contained the signature of the accused, it cannot be said that the cheque was drawn by accused as contemplated under section 138 of Negotiable Instruments Act. It was further held that when execution itself is not proved by the complainant, the presumption under section 139 is not available to him. In Jose Vs P.C. Joy 2008(3) KLT 512 Hon'ble High Court held that the probability of the prosecution case does not depend on the improba