Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(HP) 1478

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J.
Satya Devi - Appellant
Versus
Jarman Singh - Respondent
Cr. MP(M) No. 2038 of 2025
Decided On : 13-11-2025

Advocates Appeared:
For the Appellant :Mr. Kuldeep Singh Chandel, Advocate.
For the Respondent:Mr. N.K. Thakur, Senior Advocate with Mr Karanveer Singh, Advocate.

Presumption under Sections 118(a) and 139 of NI Act rebutted on preponderance of probabilities where cross-examination shows complainant's lack of financial capacity as housewife with unproven remittances and improbability of loan after accused's prior default to her husband.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138, 118(a) and 139 - Dishonour of cheque - Presumption that cheque issued for discharge of debt or liability - Rebuttable on preponderance of probabilities - Accused rebuts presumption through cross-examination revealing complainant as housewife with no independent income, unexplained cash remittances from son abroad, and improbability of advancing loan after accused’s prior default to complainant’s husband - Trial Court convicted accused sentencing to imprisonment and compensation; Appellate Court acquitted finding complainant’s version not proved beyond reasonable doubt - High Court holds Appellate Court took reasonable view, presumption displaced by evidence, declines leave to appeal. (Paras 7, 10-17, 21-23)

(B) Evidence Act and CrPC - Cross-examination and probable defence - Accused entitled to demonstrate complainant’s lack of financial capacity via cross-examination without needing to enter witness box - Prior related complaint and unexplained transaction history cast doubt on loan transaction - Presumption under Sections 118(a) and 139 applies only in absence of contrary evidence and disappears upon production thereof. (Paras 8, 13-18, 22)

Facts of the case:
Complainant alleged advancing loan to accused in financial distress; accused issued cheque dishonoured for insufficient funds; statutory notice served but no repayment. Trial Court summoned accused, convicted post trial holding presumption not rebutted. Accused appealed successfully; Appellate Court doubted complainant’s capacity and loan probability given prior default to husband and her status. Application filed seeking leave to appeal acquittal.

Findings of Court:
Appellate Court rightly re-appreciated evidence finding glaring discrepancies; accused raised probable defence; no grave illegality in acquittal; application dismissed, records remitted.

Issues: Whether Appellate Court erred in reversing conviction by holding presumption rebutted; whether complainant proved financial capacity and transaction beyond doubt despite cross-examination revelations.

Ratio Decidendi: Presumption under Sections 118(a) and 139 rebutted where cross-examination establishes complainant’s doubtful financial capacity as housewife sans income proof, improbable loan post prior family default, shifting onus back; appellate acquittal not perverse warranting interference.

Result: Application for leave to appeal dismissed.

Table of Content
1. cheque dishonour triggers section 138 ni act proceedings and presumption. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. parties dispute appellate court's rebuttal of ni act presumption. (Para 8 , 9 , 10 , 11)
3. prior default renders subsequent loan improbable, rebutting presumption. (Para 12 , 13 , 14 , 15)
4. unproven complainant financial capacity rebuts consideration presumption. (Para 16 , 17 , 18 , 19 , 20)
5. cross-examination evidence displaces rebuttable sections 118/139 presumption. (Para 21 , 22)
6. acquittal upheld; no leave to appeal granted. (Para 23 , 24 , 25)

JUDGMENT :
Rakesh Kainthla, J.

The present application has been filed for seeking leave to appeal against the judgment dated 17.12.2022 passed by learned Additional Sessions Judge, Nalagarh, District Solan, H.P. (learned Appellate Court), vide which the respondent (accused before the learned Trial Court) was acquitted of the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). (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 application are that the complainant presented a complaint against the accused before the learned Trial Court for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant and the accused were friends. The accused was facing financial difficulties, and he demanded Rs. 4,42,000/- from the complainant. The complainant advanced the amount as a loan. The accused issued a cheque for Rs.4,42,000/- drawn on Punjab National Bank to repay the amount taken by him. The complainant presented the cheque to the bank, but it was dishonoured with the remarks “funds insufficient”. The complainant served a notice upon the accused asking him to repay the money within fifteen days of the receipt of the notice. The notice was duly served upon the accused, but he failed to repay the amount; hence, a complaint was filed before the learned Trial Court for taking action as per the law.

3. The 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 herself (CW1) to prove her case.

5. The accused, in his statement recorded under Section 313 of CrPC, denied the complainant’s case in its entirety. He examined Ramesh Kumar (DW-1) and Nitin Thakur (DW-2) to prove his defence.

6. The learned Trial Court held that the statement of the complainant proved that the accused had borrowed Rs. 4,42,000/- and issued a cheque to discharge his liability. The accused did not dispute his signature on the cheque and stated that the cheque was handed over to the complainant’s husband as security. The admission of the signatures on the cheque would trigger a presumption under Section 118(a) and 139 of the NI Act, and the burden would shift upon the accused. The evidence led by the accused was not sufficient to rebut the presumption. The cheque was dishonoured with an endorsement “funds insufficient”. The notice was duly served upon the accused, and he failed to repay the amount, despite the receipt of a valid notice of demand. Hence, the accused was convicted of the commission of an offence punishable under Section 138 of the NI Act and sentenced to undergo simple imprisonment of six months, pay a compensation of Rs.5,50,000/- and in default of payment of compensation, to undergo further simple imprisonment for one month.

7. Being aggrieved by the judgment and order passed by the learned Trial Court, the accused filed an appeal, which was decided by the learned Additional Session Judge, Nalagarh (learned Appellate Court). Learned Appellate Court held that the accused did not dispute the execution of the cheque in the cross-