Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Mad) 2240

IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. Nirmal Kumar, J.
C. Somasundaram - Appellant
Versus
Saradha - Respondent
Crl.A.No.196 of 2014
Decided On : 24-03-2026

Advocates Appeared:
For the Appellant : Ms.Jaysree Dharbar, Legal Aid Counsel
For the Respondent: Ms.Harshana.T Legal Aid Counsel

In a prosecution for dishonour of a cheque, while the burden of rebuttal lies on the accused, if the complainant fails to demonstrate financial capacity to advance the alleged loan, the court may conclude that the presumption of a legally enforceable debt has been effectively rebutted through a preponderance of probabilities.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 118, 138 and 139 - Dishonour of cheque - Financial capacity - Presumption - The burden of proof to rebut the presumption under Section 139 lies on the accused, and the standard of proof is that of preponderance of probability - The accused can rely on the evidence led by him or on the materials submitted by the complainant to raise a probable defence - When the complainant fails to prove having the financial wherewithal to advance a substantial loan, the court is justified in doubting the legitimacy of the transaction. (Paras 10, 11, 14)

(B) Appeal - Scope and ambit - Interference with acquittal - An appellate court should not reverse an order of acquittal merely because an alternate view is possible - Interference is only warranted if the trial court's decision is afflicted by perversity, illegality, or gross misappreciation of facts. (Paras 15, 16)

Facts of the case:
The appellant filed a complaint alleging that the respondent borrowed a substantial sum of money and issued a cheque for repayment, which was subsequently dishonoured due to insufficient funds. The respondent contended that the cheque was a blank instrument previously provided as security for another transaction and misused by the appellant. The trial court acquitted the respondent, noting the appellant's failure to demonstrate the necessary financial capability to lend the claimed amount.

Findings of Court:
The trial court's finding that the complainant lacked the financial wherewithal to advance the loan was well-reasoned. The complainant failed to produce credible documentation regarding the source of funds, and the evidence regarding the loan transaction was inconsistent. The respondent successfully raised a probable defence, thereby rebutting the statutory presumption of a legally enforceable debt.

Issues: The primary issues were whether the appellant possessed the financial capacity to advance the alleged loan and whether the respondent successfully rebutted the presumption of liability under the relevant law.

Ratio Decidendi: Once the respondent raised a probable defence through cross-examination and by pointing out the lack of financial capacity of the complainant, the initial presumption under the law is rebutted. Appellate courts must not interfere with an acquittal unless the findings below are perverse or based on a wrong appreciation of evidence.

Result: Appeal dismissed; judgment of acquittal affirmed.

Table of Content
1. overview of parties, procedural history, and core factual background of the loan and cheque dishonor. (Para 1 , 2 , 3 , 4)
2. parties' contentions regarding financial capacity, witness credibility, and burden of proof in section 138 n.i. act cases. (Para 5 , 6 , 7 , 8 , 9 , 10)
3. court’s evaluation of evidence, questioning the complainant's financial means, and rejection of documentary support. (Para 11 , 12 , 13 , 14)
4. scope of appellate jurisdiction in reversing an order of acquittal. (Para 15)
5. dismissal of the criminal appeal and order for payment of legal aid counsel fees. (Para 16 , 17)

JUDGMENT :

M. Nirmal Kumar, J.

The appellant as complainant filed a private complaint for offence under Section 138 of Negotiable Instruments Act, 1881 in C.C.No.485 of 2011 against the respondent before the learned Judicial Magistrate, Fast Track Court at Magisterial Level-II, Coimbatore (Trial Court). The trial Court by judgment dated 28.06.2013 dismissed the complaint and acquitted the respondent.

2.Despite service of notice and the respondent's name printed in the cause list, there was no representation for the respondent either in person or by any counsel. Hence, this Court by order dated 22.10.2025 appointed Ms.Harshana.T as Legal Aid Counsel for the respondent. Similarly there was no representation for the appellant, this Court by order dated 04.11.2025 appointed Ms.Jaysree Dharbar as Legal Aid Counsel for the appellant.

3.Gist of the case is that on 07.01.2008 the respondent borrowed a sum of Rs.5,00,000/- (Rupees five lakh only) by cash and executed a promissory note (Ex.P1) in favour of the appellant agreeing to repay the said amount with the interest of 1.5% per month. Despite appellant made repeated demand for repayment, the respondent failed to do so. On 19.05.2008 the respondent issued a cheque No.377631 (Ex.P2) in favour of the appellant for a sum of Rs.5,35,000/- drawn at Bank of Baroda, Kinathukadavu Branch. On 25.08.2008 when the appellant presented the cheque (Ex.P2) for encashment through his bank viz., South Indian Bank, Ganapathy Branch, Coimbatore, the cheque returned for the reason “Insufficient Funds” vide cheque return memo (Ex.P3). Thereafter, the appellant issued a statutory notice (Ex.P4) dated 22.09.2008 to the respondent to repay the cheque amount. Despite receipt of statutory notice (Ex.P4), the respondent neither returned the cheque amount nor sent any reply. Thereafter, following the procedures, the complaint in C.C.No.485 of 2011 filed before the trial Court.

4.During trial, the appellant examined himself as PW1 and marked Exs.P1 to P7. Ex.P1 is the promissory note, Ex.P2 is the cheque, Ex.P3 is the cheque return memo, Ex.P4 is the statutory notice, Ex.P5 is the proof of certificate of posting, Ex.P6 is the Acknowledgment and Ex.P7 is the Debit Advice. On the side of the defence, the respondent examined one Velusamy as DW1, his brother-in-law as DW2 and Dr.Ravikumar examined as DW3 and marked Exs.D1 & D2.

5.Learned counsel for the appellant submitted that the appellant to prove his case examined himself as PW1 and marked seven documents as Exs.P1 to P7. The defence taken by the respondent is that the statutory notice dated 22.09.2008 (Ex.P4) is time barred since it was issued beyond the prescribed period of 30 days from the date of return memo (Ex.P3) dated 20.03.2008, which the trial Court rejected. The respondent examined attesting witness to the promissory note (Ex.P1) as DW1 who confirmed that he saw the appellant executing the promissory note (Ex.P1). DW2, appellant's brother-in-law confirmed the respondent obtaining loan from the appellant. DW3, Dr.Ravikumar confirmed that the respondent was working in his clinic and he was not aware about the transaction between the appellant and the respondent. In this case, the defence taken by the respondent is that a signed blank cheque (Ex.P2) was issued to DW3, Dr.Ravikumar in connection with chit transaction with Renuka Devi. DW3 in turn handed