1. Complainant claimed cheque dishonour under Section 138, NI Act for a loan of Rs. 17 lakhs. (Para 3 , 7 )
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2026 Supreme(Telangana) 262
HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Tirumala Devi Eada, J.
Shail Dada Kalandar Vali S/o. Shaik Mahabub Saheb - Petitioner
Versus
Kondur Alivelamma W/o. Madhusudhan Shetty and another - Respondents
Criminal Revision Case No.3176 of 2018
Decided On : 23-01-2026
Important Points
When an accused admits the issuance of a cheque and an agreement detailing the loan, the presumption under Section 139 of the NI Act stands. This cannot be rebutted by challenging the complainant's financial capacity or claiming a blank cheque if the agreement specifically identifies the cheques.
Subject
Criminal Law - Negotiable Instruments Act
Act Referred
Headnote
(A) Negotiable Instruments Act, 1881 - Sections 138 and 139 - Dishonour of cheque for insufficiency of funds - Presumption in favour of holder - Where the accused admits the issuance of a cheque and the execution of an agreement disclosing the loan amount and details of cheques issued for the discharge of a legally enforceable debt, the presumption under Section 139 is triggered and remains unrebutted unless a probable defence is raised. (Paras 11, 12)
(B) Rebuttal of Presumption - To rebut the presumption under Section 139 read with Section 118 of the NI Act, the accused must raise a probable defence based on a preponderance of probabilities. Mere denial of the complainant's capacity to lend or claims regarding the filling of a blank cheque are insufficient when they are contradicted by the accused's own admissions of the loan and the agreement. (Paras 14, 16)
(C) Blank Cheques and Material Alteration - If an accused admits the issuance of a cheque and the execution of an agreement detailing the specific loan amount and identifying the cheque numbers, the contention that the cheque was blank or that the contents were filled subsequently by the complainant does not invalidate the liability under the Act. (Para 14)
Facts of the case:
The complainant alleged that a loan of Rs. 17.00 lakhs was advanced to the accused. To avoid stamp duty on the mortgage deed, the property was registered for Rs. 4,76,000/-, and four cheques were issued for the remaining balance of Rs. 12,24,000/-, as detailed in a written agreement. One cheque for Rs. 3.00 lakhs was dishonoured due to insufficient funds. Despite the issuance of a statutory legal notice, the accused failed to make the payment. The trial court convicted the accused, and the appellate court subsequently confirmed the conviction.
Findings of Court:
The court found that the accused, through his own evidence and during cross-examination, admitted to the issuance of the cheque and the execution of the agreement. This agreement specifically mentioned the total loan amount and the specific cheque numbers used for repayment. Consequently, the ingredients of Section 138 were satisfied, and the presumption under Section 139 stood unrebutted as the accused failed to provide a probable defence.
Issues: Whether the accused successfully rebutted the statutory presumption under Section 139 of the NI Act and whether discrepancies in the language of the cheque's contents rendered the instrument invalid.
Ratio Decidendi: When an accused admits the execution of an agreement that corroborates the loan and the identity of the cheques issued, the burden of proof shifts heavily. Such admissions preclude the accused from challenging the complainant's financial capacity or claiming that the cheque was materially altered. In the presence of a corroborative agreement, the presumption under Section 139 remains intact unless a probable defence is established on a preponderance of probabilities.
Result: Criminal Revision Case is dismissed confirming the judgment of conviction.
(B) Rebuttal of Presumption - To rebut the presumption under Section 139 read with Section 118 of the NI Act, the accused must raise a probable defence based on a preponderance of probabilities. Mere denial of the complainant's capacity to lend or claims regarding the filling of a blank cheque are insufficient when they are contradicted by the accused's own admissions of the loan and the agreement. (Paras 14, 16)
(C) Blank Cheques and Material Alteration - If an accused admits the issuance of a cheque and the execution of an agreement detailing the specific loan amount and identifying the cheque numbers, the contention that the cheque was blank or that the contents were filled subsequently by the complainant does not invalidate the liability under the Act. (Para 14)
Facts of the case:
The complainant alleged that a loan of Rs. 17.00 lakhs was advanced to the accused. To avoid stamp duty on the mortgage deed, the property was registered for Rs. 4,76,000/-, and four cheques were issued for the remaining balance of Rs. 12,24,000/-, as detailed in a written agreement. One cheque for Rs. 3.00 lakhs was dishonoured due to insufficient funds. Despite the issuance of a statutory legal notice, the accused failed to make the payment. The trial court convicted the accused, and the appellate court subsequently confirmed the conviction.
Findings of Court:
The court found that the accused, through his own evidence and during cross-examination, admitted to the issuance of the cheque and the execution of the agreement. This agreement specifically mentioned the total loan amount and the specific cheque numbers used for repayment. Consequently, the ingredients of Section 138 were satisfied, and the presumption under Section 139 stood unrebutted as the accused failed to provide a probable defence.
Issues: Whether the accused successfully rebutted the statutory presumption under Section 139 of the NI Act and whether discrepancies in the language of the cheque's contents rendered the instrument invalid.
Ratio Decidendi: When an accused admits the execution of an agreement that corroborates the loan and the identity of the cheques issued, the burden of proof shifts heavily. Such admissions preclude the accused from challenging the complainant's financial capacity or claiming that the cheque was materially altered. In the presence of a corroborative agreement, the presumption under Section 139 remains intact unless a probable defence is established on a preponderance of probabilities.
Result: Criminal Revision Case is dismissed confirming the judgment of conviction.
Legal Category Hierarchy
- crime and sentencing
- practice and procedure
Advocates Appeared:
For the Petitioner: Sri S.M. Rafee
For the Respondent: Sri Venkatesh Ediga, Sri Jithender Rao Veeramalla, Additional Public Prosecutor
For the Petitioner: Sri S.M. Rafee
For the Respondent: Sri Venkatesh Ediga, Sri Jithender Rao Veeramalla, Additional Public Prosecutor
Table of Contents
2. Accused denied legally enforceable debt, alleging blank cheque misuse and disputing complainant's capacity to lend. (Para 4 , 5 )
3. Accused admitted issuing cheque and executing agreement detailing loan, thus failing to rebut presumption under Section 139, NI Act. (Para 9 , 11 , 12 , 16 )
4. Once issuance of cheque and receipt of loan are admitted, presumption of legally enforceable debt arises and stands unrebutted. (Para 12 , 16 )
5. Criminal Revision Case dismissed, confirming conviction and sentence under Section 138, NI Act. (Para 17 )
6. What is the effect of the accused admitting the issuance of the cheque and the loan agreement?
By admitting issuance of cheque and execution of agreement detailing the loan, the accused strengthens the complainant's case and fails to rebut the presumption under Section 139 of the NI Act. (Para 11 , 12 , 16 )
7. What is the standard of proof for rebutting the presumption under Section 139 of the NI Act?
The accused needs to raise a probable defence based on preponderance of probabilities, but mere denial is insufficient when admissions exist. (Para 16 )
8. Does the complainant's capacity to lend funds need to be proven after the accused admits the loan?
When the accused admits taking the loan and issuing the cheque, he cannot challenge the complainant's capacity to extend the hand loan. (Para 11 )
ORDER :
Tirumala Devi Eada, J.
This Criminal Revision Case is filed by the petitioner aggrieved by the judgment dated 15.10.2018 passed in Crl.A. No.77 of 2018 by the IV Additional District & Sessions Judge at Nagar Kurnool, whereby the appeal is dismissed.
2. Heard Sri S.M. Rafee, learned counsel for the petitioner, Sri Venkataiah Ediga, learned counsel for the respondent No.1 and Sri Jithender Rao Veeramalla, learned Additional Public Prosecutor appearing for respondent No.2-State.
3. The case of the complainant before the trial court is that the complainant and the petitioner-accused are acquainted with each other and that the accused has approached the complainant and borrowed an amount of Rs.17.00 lakhs for his business purpose by mortgaging his immovable property and that, to avoid the stamp duty on the mortgage deed, it was registered for Rs.4,76,000/- and for the remaining amount of Rs.12,24,000/- , the accused has issued four cheques bearing Nos.650414, dated 18.09.2009, 650415, dated 31.05.2010, 650416, dated 18.06.2010 for Rs.3.00 lakhs each and cheque No.650417 dated 18.12.2010 for Rs.3,24,000/-. The said details are narrated in an agreement dated 17.06.2009 executed by the accused. It is the case of the complainant that the first cheque bearing No.650414 for an amount of Rs.3.00 lakhs and the interest over the total principle amount up to August, 2009 was realized and thereafter the accused did not pay the amount. The cheque bearing No.650416, dated 18.06.2010 was deposited by the complainant and the same was returned by the bank for the reason ‘funds insufficient’. The cheque return memo was issued on 20.07.2010. Thus, the complainant has issued legal notice dated 17.08.2010, which was received by the accused and the accused has issued a reply notice and denied the transaction with dishonest intention. Therefore, the complaint under Section 138 of NI Act has been filed by the complainant. The trial court, after a full-fledged trial, has convicted the accused sentencing him to undergo simple imprisonment for six months and to pay Rs.3.00 lakhs i.e. the cheque amount as compensation and on payment of Rs.3.00 lakhs by the accused, the same shall be paid to the complainant under Section 357 Cr.P.C. Aggrieved by the said judgment of conviction, the accused has preferred an appeal vide Crl.A. No.77 of 2018 and the appellate court dismissed the appeal, confirming the judgment of conviction delivered by the trial court. Aggrieved by the said judgment of the appellate court, the present revision case is filed.
4. Learned counsel for the petitioner has submitted that there are many discrepancies in the cheque put forth by the complainant and that Ex.P1 is signed in Telugu, but all the contents are filled in English, which means to say that the contents are filled subsequently by the complainant. He further submitted that the accused has taken loan of Rs.4.00 lakhs from the husband of the complainant and has repaid the same. But, misusing the cheque given by him, the present case has been filed by the complainant. He further submitted that the complainant is a housewife and a housewife lending an amount of Rs.17.00 lakhs is highly improbable. He further submitted that he issued a cheque only for Rs.3.00 lakhs but not for Rs.17.00 lakhs. The registered mortgage deed under Ex.D1 also does not mention the amount of Rs.17.00 lakhs, and therefore issuance of cheques for Rs.17.00 lakhs would not arise. If Ex.P5 i.e. agreement executed by the accused is considered, it would be proved that there is no legally enforceable debt to be paid by the revision petitioner. If the executant of the agreement under Ex.P5 has denied its very execution, then it was the duty of the complainant to examine the witnesses, but the here the complainant failed to get them examined. Therefore, an adverse inference must have been drawn by the trial court holding that Ex.P5 is not proved. Though the accused has admitted the signature on the cheque, it is his c
