Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(HP) 1470

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J.
Shyam Lal - Appellant
Versus
Gagan Vasudeva - Respondent
Cr. Appeal No. 389 of 2024
Decided On : 13-11-2025

Advocates Appeared:
For the Appellant :Mr Rajiv Rai, Advocate.
For the Respondent:Mr Manohar Lal Sharma, Advocate.

Cheque for time-barred debt not liable under Section 138 NI Act; Sections 118/139 presumption rebutted by prior stop payment on lost cheque and lack of financial capacity proof; acquittal interference only if perverse.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138, 118(a) and 139 - Limitation Act, 1963 - Article 21 - Cheque issued after seven years of alleged cash loan, post-dated, dishonoured for 'payment stopped by drawer' - Accused claimed chequebook lost in 2018 with stop payment instruction issued then, before alleged issuance - Trial Court acquitted holding presumption rebutted as debt time-barred (three-year limitation for recovery suit), complainant’s financial capacity doubtful (monthly salary equalled loan amount over 20 months, no proof of savings), prior stop payment corroborated loss - High Court dismissed appeal, no interference warranted. Cheque towards time-barred debt not for legally enforceable liability. (Paras 6, 14-17, 18-24, 27-30)

(B) Criminal Procedure Code, 1973 - Section 378 - Appeal against acquittal - Interference only if judgment patently perverse, based on misreading/omission of material evidence, no reasonable view possible - Double presumption of innocence; appellate court reappreciates evidence but upholds possible view of trial court. (Paras 12-13)

(C) Presumption under Sections 118(a) and 139 - Rebuttable on preponderance of probabilities; displaced by evidence like cross-examination revealing doubtful financial capacity, no explanation for advancing large loan without security/documentation. (Paras 19-26)

Facts of the case:
Complainant alleged advancing Rs.5,00,000/- cash loan in July 2012 for domestic needs; post-dated cheque issued August 2019 drawn on bank, presented and dishonoured January 2020 for 'payment stopped'; legal notice refused, no repayment. Accused admitted signatures but claimed lost chequebook reported 2018, relation as distributor ended due to misunderstanding. Trial Court dismissed complaint; appeal filed.

Findings of Court:
Learned Trial Court took reasonable view; no perversity or omission warranting interference; presumption rebutted; appeal dismissed, trial court record returned.

Issues: Whether trial court erred in rebutting presumption due to time-barred debt, lack of financial capacity proof, and prior stop payment on lost cheque; scope of appellate interference in acquittal.

Ratio Decidendi: Cheque for time-barred debt (beyond three years from loan) not enforceable under Section 138; accused entitled to show complainant lacked capacity via cross-examination, defence evidence; prior stop payment before issuance negates offence; acquittal upheld unless only guilt view possible. Result : Appeal dismissed.

Table of Content
1. trial court acquitted on cheque loss and capacity doubts. (Para 1 , 2 , 3 , 4 , 5 , 6)
2. trial erred in rebutting presumption and doubting capacity. (Para 7 , 9)
3. chequebook lost; no loan proof produced. (Para 10)
4. interfere with acquittal only if patently perverse. (Para 11 , 12 , 13)
5. time-barred debt cheque not attracts section 138. (Para 14 , 15 , 16 , 17)
6. lack of capacity rebuts ni act presumption. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24)
7. sections 118(a), 139 presumption is rebuttable. (Para 25 , 26)
8. prior loss report bars section 138 offence. (Para 27 , 28 , 29 , 30)
9. appeal dismissed; no interference warranted. (Para 31 , 32)

JUDGMENT :
Rakesh Kainthla, J.

The appellant has filed the present appeal against the judgment dated 04.12.2023 passed by learned Judicial Magistrate First Class, Court no. 3, Mandi, District Mandi, H.P. (learned Trial Court) vide which the complaint filed by the appellant (complainant before the learned Trial Court) was dismissed. (Parties shall 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 alleging the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short ‘NI Act’). It was asserted that the accused had taken Rs.5,00,000/- from the complainant in July 2012 to meet his domestic needs. The complainant demanded the money from the accused, who issued a post-dated cheque of Rs.5,00,000/- drawn on Syndicate Bank, Palampur, District Kangra, H.P., in August 2019 to discharge his liability. The complainant presented the cheque to the bank, but it was dishonoured on 24.01.2020 with the endorsement ‘payment stopped by the drawer’. The complainant then issued a legal notice demanding repayment within 15 days of receipt. The notice was returned with the report ‘refused’ and is deemed to be served. The accused failed to repay the amount. Consequently, the complaint was filed before the learned Trial Court to take appropriate legal action.

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

4. The complainant examined himself (CW1) to prove his case.

5. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had friendly relations with the complainant. He stated that his chequebook was lost. He discovered this fact in 2018, and he filed a complaint with the bank. He admitted that the cheque bears his signatures. He stated that the cheque was filled in by the complainant. He was only a distributor and had stopped working with the complainant due to some misunderstanding. He denied that any notice was sent to him. He examined Naresh Kumar (DW1), Joginder Singh (DW 2) and himself (DW3).

6. Learned Trial Court held that the complainant had asserted that the cheque was issued to him in August 2019, but the accused had stopped the payment of the cheque in 2018, much before the issuance of the cheque. This corroborated the version of the accused that he had lost the cheque. Statement of Joginder Singh (DW2) proved that the complainant had submitted an income tax return of Rs.4,75,685/- in the year 2018- 2019. The complainant admitted that he was getting a salary of Rs.25,000/- per month in the year 2012. Therefore, the complainant’s capacity to advance Rs.5 lakhs in the year 2012 was highly doubtful. Therefore, the complaint was dismissed.

7. Being aggrieved by the judgment passed by the learned Trial Court, the complainant has filed the present appeal asserting that the learned Trial Court erred in acquitting the accused. Learned Trial Court erred in holding that the accused had rebutted the presumption contain