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2026 Supreme(Online)(Ker) 61956
IN THE HIGH COURT OF KERALA AT ERNAKULAM
C.S. Dias, J
R. Vipinachandran – Appellant
Versus
Girisan – Respondent
CRIMINAL MISC. CASE
For the Appellants/Petitioners: K. N. Chandrababu, C. Y. Vinod Kumar, Satheesh V. T.
For the Respondents: Dalbi Emmanuel P
The complainant in a Section 138 NI Act case does not need to prove financial capacity at the threshold; the burden lies with the accused to substantiate financial incapacity, especially if no reply to the statutory demand notice was sent.
Headnote:(A) Negotiable Instruments Act - Section 138 - Financial Capacity of Complainant - Onus of proof - The complainant is not required to prove financial capacity to lend at the threshold when the accused has issued a cheque towards a legally enforceable debt. (Para 4)
(B) Statutory Demand Notice - Failure to reply - Defence of financial incapacity - Where the accused fails to send a reply notice alleging financial incapacity of the complainant, such a defence cannot be permitted later. (Para 4)
Issues: Whether the complainant is required to produce additional evidence to prove financial capacity to lend when the accused did not raise such a plea in the statutory reply notice.
ORDER
The petitioner is the complainant in S.T. No.124/2023 on the file of the Court of the Judicial First Class Magistrate-II, Aluva, which has been filed against the first respondent, alleging the commission of the offence punishable under Section 138 of the Negotiable Instruments Act ('Act', for brevity).
2. I have heard the learned counsel appearing for the petitioner and the learned counsel appearing for the first respondent.
3. Undisputedly, the first respondent does not deny the execution of the cheque. He also has not sent any reply to the statutory demand notice sent by the petitioner. It was during the cross-examination of the petitioner that the learned counsel for the first respondent put a suggestion to the petitioner that he did not have the financial capacity to pay Rs. 13,75,000/-, the amount covered by the cheque. It is in order to discredit the said defence that the petitioner filed applications to re-examine and also to produce additional material.
4. In Ashok Singh v. State of U.P. and Another (2025 INSC 427) and Kuntegowda v. Thurubaiah (2026 KHC 6582), the Hon'ble Supreme Court has categorically held that the onus is not on the complainant at the threshold to prove his financial capacity to lend the money to the accused, who in turn had issued the cheque towards a legally enforceable debt. Furthermore, in Kuntegowda's case (supra), the Hon'ble Supreme Court has also held that if the accused failed to send the reply notice regarding the financial incapacities of the complainant, the said defence cannot be permitted.
Taking into consideration the above categoric declaration of law, I am of the view that it is for the accused to substantiate that the complainant does not have the financial capacity to pay the amount towards a legally enforceable debt. Therefore, I am of the view that the present applications are irrelevant and immaterial. It would be up to the Trial Court to consider and dispose of the complainant as per the principles laid down in the afore- cited decisions.
In the afore-said circumstances, I dispose of the petition, by directing the Trial Court to consider and dispose of the complaint, in accordance with the law and as expeditiously as possible at any rate within out of time limit three months from the date of a production of a copy of this order, untrammelled by any observations made in Annexures A14 and A15 orders.
