2026 Supreme(Mad) 1089

IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.K.ILANTHIRAIYAN, J.
Venkatachalapathy S/o.Palanisamy, - Appellant 
Versus
M/s. Classic Apparels Ltd. – Respondent 
Crl.A.No.825 of 2004 & A.S.No.477 of 2011 and C.M.P.Nos.7263 of 2004, 23 of 2011 & M.P.No.1 of 2011 & C.M.P.No.20860 of 2017
Decided on : 13-05-2026

Partial evidence of a witness cannot be discarded without evaluating its probative value. Furthermore, documents like contracts are invalid if they antedate the purchase of the stamp paper, and liability under a cheque cannot be rebutted based on unsubstantiated, fabricated commercial claims.

Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Dishonour of cheque - Liability - Evidence - Presumption - Procedural law - Evidence of witness partially cross-examined cannot be discarded or eschewed in its entirety without evaluating its probative value - Court must examine surrounding circumstances leading to non-completion of cross-examination - Evidence is admissible unless there is a deliberate attempt to avoid questioning - Burden of proof under Section 138 is initially on complainant and shifts to accused upon proof of issuance of cheque. (Paras 35, 36, 37)

(B) Civil Procedure Code, 1908 - Section 96 - Contract - Fabrication of documents - Agreement validity - An agreement on stamp paper purchased after the date of execution is inherently void and indicates fabrication - Parties asserting existence of joint business association must provide substantive evidence; mere allegations in pleadings are insufficient to establish inter-party liability. (Paras 21, 27)

Facts of the case:
The litigation originated from a dispute involving multiple business entities over alleged non-performance of supply orders, non-delivery of finished textiles, and unpaid liabilities. A suit for recovery of money was filed, alleging joint liability among defendants. Concurrently, a criminal complaint was initiated under Section 138 for dishonour of a cheque issued in discharge of alleged legal debt. The civil court decreed the suit, while the criminal appellate court acquitted the accused, citing the civil court's findings as the basis for the acquittal.

Findings of Court:
The court found the plaintiff failed to establish the existence of any joint business association or the delivery of raw materials. The evidence indicated that key documents, including the primary agreement, were fabricated as their execution dates preceded the purchase of the stamp papers. Furthermore, the court held that the trial judge acted incorrectly by eschewing the evidence of a defense witness simply because they were not available for further cross-examination, ignoring the probative value of already recorded statements.

Issues: Whether the alleged joint business relationship existed, the validity of the underlying contract, the appropriateness of eschewing incomplete witness testimony, and whether the dishonour of the cheque constituted an offense under Section 138.

Ratio Decidendi: A court cannot summarily eschew evidence of a witness who has been partially cross-examined without considering the reasons for non-completion or the probative value of existing testimony. Allegations of joint liability require independent proof; failure to provide evidence of business relations, combined with proof that vital documentation was fabricated (antedated stamp paper), necessitates the dismissal of the claim and the restoration of a criminal conviction for cheque dishonour where liability is admitted.

Result: Appeal Suit allowed; Criminal Appeal allowed; Judgment and decree of lower civil court set aside; Conviction restored.

Table of Content
1. plaintiff's claim regarding joint business and breach of contract for supply of garments. (Para 1 , 2 , 3)
2. defendants' denial of joint business, allegations of forged documents, and counter-claims of breach. (Para 4 , 5)
3. arguments regarding maintainability, lack of evidence for joint liability, and procedural errors. (Para 8 , 9)
4. criminal appeal background: cheque dishonour and forgery allegations under negotiable instruments act. (Para 11 , 12 , 13 , 14)
5. court’s assessment of failure to prove joint business relationship and validity of contract documents. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25)
6. treatment of incomplete evidence and the legal requirements for proving business debt. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37)
7. court holds debt is legally enforceable; sets aside acquittal; dismisses frivolous civil suit. (Para 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45)

JUDGMENT :

G.K.ILANTHIRAIYAN, J.

A.S.No.477 of 2011:-

1.This appeal suit is directed as against the judgment and decree passed in O.S.No.481 of 2004 dated 29.11.2008 on the file of the learned Additional District and Sessions Judge, Fast Track Court-III, Coimbatore, thereby allowing the suit and directed the defendants to pay a sum of Rs.7,25,468/- with interest at the rate of 12% per annum from the filing of the suit till the date of judgment and thereafter at the rate of 9% till realisation in favour of the plaintiff.

2. The respondent is the plaintiff and the appellants are the defendants 5 & 1 to 4 respectively in the suit. For the sake of convenience, the parties are referred to as per their ranking in the trial Court.

3. The case of the plaintiff is that it is a company that is involved in manufacturing knitted garments, dyeing, compacting and exporting the same to abroad. The foreign buyers had been entrusting their requirements of knitted garments with the plaintiff and they are having continuous export orders. Therefore, the plaintiff was looking for a suitable company having required infrastructure facilities for manufacturing knitted fabrics into garments as per the specification and requirement of the plaintiff for carrying out the orders placed by the buyers. The first defendant is a partnership firm and the defendants 2 to 4 are its partners. The fifth defendant is the sole proprietary concern but they are joint business associates and are doing business jointly.

3.1. While being so, the defendants approached the plaintiff and stated about their infrastructure facility for manufacturing knitted garments along with bank facility. Therefore, the plaintiff placed orders with them vide orders by order Nos.9102 & 9103 dated 12.11.1999 in order to export the same to abroad within a stipulated time and the defendants agreed to do the same. In the previous business transaction, the plaintiff owed a sum of Rs.17,25,293/- to the fifth defendant. Therefore, the plaintiff issued cheque for the said sum towards full discharge of its liability. In the mean time, the plaintiff entrusted orders to the defendants jointly and the fifth defendant also agreed to carry out the order as placed by the plaintiff.

3.2. Thereafter, the plaintiff had purchased yarn from M/s.Chamber Cotton Fabrics, Tirupur, for a sum of Rs.9,69,450/- and delivered the same to the fifth defendant. The plaintiff had also purchased Melange yarn from Tiruppur Cotton Spinning and Weaving Mills for Rs.4,44,015/- and delivered the same to the first defendant, as per the instruction given by the fifth defendant. The plaintiff had also purchased Melange yarn from Sulochana Cotton and Spinning Mills, Tiruppur to the tune of Rs.1,72,470/- and directly delivered the same to the first defendant. The fifth defendant agreed that the cost of the yarn to the tune of Rs.15,85,935/- shall be adjusted out of the cheque which was issued in favour of the fifth defendant to the tune of Rs. 17,25,293/-. After adjusting the said amount by supplying of yarn by the plaintif

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