Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Mad) 72134

IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. Murali Shankar, J
Puviyarasi – Appellant
Versus
A. Vinothkumar – Respondent
CRL.A(MD).No. 203 of 2023

Advocates:
For the Appellants/Petitioners: S. Muniyandi, A. Saravanan
For the Respondents: N. Marimuthu

Once the execution of a cheque is admitted, the presumption under Sections 118 and 139 of the Negotiable Instruments Act mandates that the court presume the existence of a legally enforceable debt. The burden then shifts to the accused to rebut this through a preponderance of probabilities.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 118, 138, 139, 142 - Code of Criminal Procedure, 1973 - Section 200, 207, 255(1), 357 - Dishonor of cheque - Presumption of legally enforceable debt - Rebuttal of presumption - Standard of proof - Where signature on cheque is admitted, presumption under S.118 and S.139 arises in favor of holder - Accused failed to rebut presumption - Failure to reply to statutory notice leads to adverse inference - Financial capacity of complainant not to be questioned at threshold unless accused raises probable defence - Acquittal by trial court set aside.

(B) Appeals - Scope - Appellate court empowered to reverse acquittal if trial court's finding is perverse or suffers from fundamental error of approach - Error in shifting burden of proof back to complainant without valid rebuttal by accused.

Facts of the case:
The appellant (complainant) filed a complaint under Section 138 of the NI Act against the respondent (accused) for the dishonor of a cheque for Rs.5 lakhs issued for repayment of a loan. The trial court acquitted the accused, citing lack of financial capacity and inconsistencies in the complainant's evidence. The appellant filed the instant appeal challenging the order of acquittal.

Findings of Court:
The court held that once the signature on the cheque is admitted, the statutory presumption under Sections 118 and 139 of the NI Act operates in favour of the complainant. The respondent failed to provide a probable defence, and his failure to reply to the statutory notice strengthened the complainant's case. The court ruled that the trial court's approach in questioning the complainant's financial capacity was legally erroneous.

Issues: Whether the respondent/accused successfully rebutted the presumption under Section 139 of the NI Act, and whether the trial court’s acquittal was perverse.

Ratio Decidendi: Where the drawer admits to signing the cheque, the presumption under Section 139 of the NI Act cannot be rebutted merely by questioning the complainant's financial capacity, especially when no reply was sent to the demand notice. The burden lies on the accused to prove his defence by a preponderance of probabilities.

Result: Appeal allowed; accused convicted and sentenced to pay a fine of Rs.10,00,000.

Table of Content
1. overview of the trial court proceedings and the nature of the appeal. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. application of statutory presumptions under sections 118 and 139 of the ni act. (Para 8 , 9 , 10 , 11 , 12 , 13)
3. assessment of evidence and the threshold for rebutting statutory presumptions. (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22)
4. impact of failing to provide a rebuttal or respond to statutory demand notices. (Para 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33)
5. conclusion on the offence, sentencing, and compensation for the aggrieved party. (Para 34 , 35 , 36 , 37)

JUDGMENT

This Criminal Appeal is directed against the judgment made in S.T.C.No.66 of 2022, dated 02.11.2022 on the file of the learned Judicial Magistrate, (FTC) Uthamapalayam, Theni District, in acquitting the respondent/accused for the offence under Section 138 of Negotiable Instruments Act.

2.The appellant, who is the complainant, filed a complaint under Section 200 Cr.P.C., against the respondent for the offence under Section 138 r/w 142 of Negotiable Instruments Act.

3. For the sake of convenience and brevity, the parties hereinafter will be referred as per their ranking/status before the trial Court.

4.The case of the complainant is that the accused, who had acquaintance with the complainant through the complainant's father, obtained a loan of Rs.5 lakhs from the complainant on 02.01.2022 for his urgent family expenses and to clear the sundry debts, agreeing to repay the said amount within one month and issued a cheque bearing No.024302, dated 02.02.2022 for Rs.5 lakhs drawn on Axis Bank, Cumbum Branch and requested the complainant to present the cheque on that date and get the amount. The complainant, believing the words of the accused, presented the cheque for collection on 08.03.2022 through her bank Tamil Nadu Grama bank, Pudupatti Branch, but the cheque was returned as account closed vide bankers memo, dated 09.03.2022. Hence, the complainant sent a legal notice, dated 11.03.2022 demanding the accused to pay the amount covered by the cheque, but the legal notice was returned as unclaimed. The accused having knowledge about the issuance of the legal notice, neither sent any reply nor complied with the notice demand. Hence, the complainant was constrained to file the above complaint for the alleged offence under Section 138 and 142 of Negotiable Instruments Act.

5. The learned Judicial Magistrate, upon receiving the complaint, recorded the sworn statement of the complainant and on perusing the records, upon satisfied that there existed a prima facie case took the case on file in S.T.C.No.66 of 2022 for the offence under Section 138 of Negotiable Instruments Act and ordered for issuance of summons to the accused. After appearance of the accused, copies of the records were furnished to him under Section 207 of Cr.P.C., on free of cost. When the accused was questioned about the offence alleged against him, he denied the commission of offence and pleaded not guilty.

6. During trial, the complainant examined herself as P.W.1 and exhibited 4 documents as Ex.P.1 to Ex.P.4. The accused adduced neither oral nor documentary evidence.

7. The learned Judicial Magistrate, upon considering the evidence both oral and documentary and on hearing the arguments of both the sides, passed the impugned judgment, dated 02.11.2022 holding that the complainant has not proved the offence under Section 138 of Negotiable Instruments Act as against the accused beyond reasonable doubt, acquitted him under Section 255(1) of Cr.P.C. Aggrieved by the impugned judgment of acquittal, the complainant has preferred the present appeal.

8. Whether the impugned judgment of acquittal passed in S.T.C.No.66 of 2022, dated 02.11.2022 on the file of the learned Judicial Magistrate, (FTC), Uthamapalayam, is liable to be set aside? is the point for consideration.

9. Before proceeding further, it is necessary to refer Section 118 (a) and 139 of the Negoti

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2025 Supreme(Online)(Mad) 72134

IN THE HIGH COURT OF JUDICATURE AT MADRASK. Murali Shankar, JPuviyarasi – AppellantVersusA. Vinothkumar – RespondentCRL.A(MD).No. 203 of 2023

Once the execution of a cheque is admitted, the presumption under Sections 118 and 139 of the Negotiable Instruments Act mandates that the court presume the existence of a legally enforceable debt. The burden then shifts to the accused to rebut this through a preponderance of probabilities.

Cases Referred (4)

IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. Murali Shankar, J
Puviyarasi – Appellant
Versus
A. Vinothkumar – Respondent
CRL.A(MD).No. 203 of 2023