Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(HP) 142

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
RAKESH KAINTHLA, J.
Yog Raj - Appellant
Versus
Bodh Raj @ Bitu - Respondent
Cr. Appeal No. 488 of 2015
Decided on : 01-05-2025

Advocates:
Advocate Appeared:
For the Appellant :Mr. Debender Ghosh, Advocate.
For the Respondent:Mr. K.D. Sood, Senior Advocate, with Mr. Vivek Sharma, Advocate.

The cheque must represent a legally enforceable debt at the time of encashment; the burden to rebut the presumption of liability lies with the accused.

Headnote:
(A) Negotiable Instruments Act, 1881 - Section 138 - Appeal against acquittal - The respondent was acquitted of the offence under Section 138 for dishonour of cheque issued for repayment of loan - The Trial Court found the complainant's case doubtful due to contradictions and lack of evidence regarding financial capacity - The cheque was issued as security and not for discharging a legal liability. (Paras 5, 19, 20)

(B) Presumption under Sections 118 and 139 - The court emphasized that the burden of proof lies on the accused to rebut the presumption that the cheque was issued in discharge of a legal liability, which the accused failed to do. (Paras 8, 11)

Facts of the case:
The complainant lent Rs.10.00 lacs to the accused, who issued a cheque for the same amount. The cheque was dishonoured, leading to the complaint under Section 138. The Trial Court acquitted the accused, citing doubts about the complainant's financial capacity and contradictions in his statements.

Findings of Court:
The Trial Court's acquittal was based on the lack of evidence from the complainant and the reasonable view taken regarding the accused's defence.

Issues: The main issues were whether the cheque represented a legally enforceable debt and the credibility of the complainant's claims.

Ratio Decidendi: The court reiterated that for an offence under Section 138, the cheque must represent a legally enforceable debt at the time of encashment, and the presumption of liability must be rebutted by the accused.

Result: Appeal dismissed.

JUDGMENT :

Rakesh Kainthla, J.

The present appeal is directed against the judgment dated 13.7.2015, passed by learned Judicial Magistrate First Class, Manali, District Kullu, H.P. (learned Trial Court), vide which the respondent (accused before learned Trial Court) was acquitted of the commission of an offence punishable under Section 138 of Negotiable Instruments Act, 1881 (NI Act). (Partiesshall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)

2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant and the accused were known to each other. The accused required money in August 2010. He approached the complainant for the financial assistance of Rs.10.00 lacs. The complainant advanced Rs.10.00 lacs, and the accused promised to repay the amount within three months. The complainant demanded the money, and the accused issued a cheque of Rs.10.00 lacs for discharging his legal liability. The complainant presented the cheque before Punjab National Bank, Mandi, which forwarded it to the bank of the accused, however, the bank of the accused returned the cheque with the endorsement ‘Payment Stopped by the Drawer’. Memo (Ex.CW1/D) was issued. The cheque and the memo were returned by Punjab National Bank to the complainant vide memo (Ex.CW1/C). The complainant issued notice (Ex.CW1/E) asking the accused to pay the amount of Rs.10.00 lacs within 15 days from the date of receipt of the notice. This notice was sent by registered post, and the receipt (Ex.CW1/F) was obtained from the Postal Department. Notice was delivered to the accused, and an acknowledgement (Ex.CW1/G) was signed by the accused. The accused failed to pay the amount within the stipulated period. Hence, the complainant filed a complaint before the Court to take action against the accused as per the law.

3. The learned Trial Court found sufficient reasons to summon the accused for the commission of an offence punishable under Section 138 of the NI Act. When the accused appeared, notice of accusation was put to him, to which he pleaded not guilty and claimed to be tried.

4. The complainant examined himself (CW1) in support of his complaint. The accused, in his statement recorded under Section 313 of Cr.P.C., stated that he had borrowed a sum of Rs.1,50,000/-, which was returned by him. He admitted that the cheque was signed by him. He stated that he was innocent and that nothing was payable to the complainant. He examined Nand Lal (DW1) in defence.

5. Learned Trial Court held that the complainant mentioned different dates in his statement on oath, which was omitted by him from his complaint. The complainant failed to show that he had the financial capacity to lend Rs.10.00 lacs to the accused. No document was produced in support of the transaction. The amount of Rs.10.00 lacs advanced by the complainant was more than the limit of Rs.20,000/- prescribed in Section 269(b) of the Income Tax Act. All these aspects made the complainant’s case doubtful. Hence, the accused was acquitted of the commission of an offence punishable under Section 138 of the NI Act.

6. Being aggrieved from the judgment passed by the learned Trial Court, the complainant filed the present appeal, asserting that the learned Trial Court erred in acquitting the accused. It was wrongly held that the cheque was issued as security. The cheque was issued by the accused to discharge legal liability to repay the money taken by him from the complainant. The accused admitted the signatures on the cheque, and presumptions under Sections 118 and 139 of the NI Act would apply to the present case. The amount stated to have been paid in the statement of account (Ex.DW1/A) was never paid to the complainant. The accused had initially issued the instructi