MP High Court Overturns Acquittal in Rs 21.5 Lakh Cheque Dishonour Case, Cites Failure to Rebut Statutory Presumption

Jabalpur: The High Court of Madhya Pradesh has overturned a trial court's acquittal in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881, holding that the accused failed to effectively rebut the statutory presumption of a legally enforceable debt. Justice Achal KumarPaliwal , presiding over Criminal Appeal No. 2423/2015, found that the trial court erred in primarily focusing on the complainant's inability to prove the source of funds, rather than assessing whether the accused had raised a probable defence.

The case involved a cheque of Rs. 21,50,000 issued by the respondent-accused, Mahendra Singh , to the appellant-complainant, Dheerendra Singh . According to the complainant, the amount was advanced as a loan related to a road construction project. The cheque was dishonoured due to insufficient funds.

The Judicial Magistrate First Class, Beohaari had acquitted the accused, accepting his defence that the signed blank cheque was lost and questioning the complainant's ability to provide such a large cash loan.

Appealing the acquittal, counsel for the complainant argued that the accused admitted his signature on the cheque, triggering the mandatory presumption under Sections 118 and 139 of the NI Act that the cheque was issued for a legally enforceable debt. They contended that the accused's defence of a lost cheque was not substantiated by any credible evidence, such as an FIR or immediate intimation to the bank for stop payment. They further argued that the source of funds was adequately explained in the complainant's evidence, citing arrangements through loans and encashment of an FD.

Conversely, the respondent's counsel maintained that the cheque was lost and a police report (Ex.D/1) was filed. They reiterated the complainant's failure to prove the source of the substantial amount, highlighting the lack of detailed evidence regarding the loan and FD.

Justice Paliwal , after reviewing the record and relevant Supreme Court judgments on Section 139 of the NI Act, noted that the basic ingredients for drawing the statutory presumption were present: the accused's signature on the cheque was admitted, it was drawn on his account, presented within validity, and dishonoured for insufficient funds. The onus, therefore, shifted to the accused to establish a probable defence.

Analyzing the accused's defence of a lost cheque, the Court found it unconvincing. Key observations included: * No specific suggestion of the cheque being lost was put to the complainant or his witness during cross-examination. * The police witness examined by the defence stated that the alleged police report (Ex.D/1) had no entry in the station's daily diary. * Crucially, the accused failed to inform the concerned bank or request stop payment for the specific cheque number, which the Court found highly improbable if the cheque was genuinely lost. Citing Rangappa v. Sri Mohan and Ashok Singh v. State of UP , the Court emphasized that such omissions weaken the defence. * The accused also did not seek expert examination to prove that only his signature was on the cheque and other details were filled by someone else. * No reply was sent by the accused to the statutory legal notice (Ex.P/4), further undermining the defence.

Regarding the complainant's source of funds, the Court referred to recent Supreme Court pronouncements, including Rohitbhai Jivanlal Patel v. State of Gujarat , Ashok Singh v. State of UP , and P. Rasiya v. Abdul Nazer . These judgments establish that once the presumption under Section 139 is drawn, the focus shifts to whether the accused has rebutted the presumption. Questioning the complainant's source of funds becomes relevant only if the accused raises a probable defence challenging the financial capacity or the existence of debt on a balance of probabilities. The Court held that the trial court's approach was fundamentally flawed in demanding proof of source beyond reasonable doubt from the complainant at the outset.

Considering the complainant's and his witness's testimony, which indicated a business relationship and financing through loans and FD, the Court found that it could not be said that the complainant lacked the financial capacity, especially since the accused's own deposition was silent on this aspect. The absence of source details in the complaint or notice was deemed not fatal, particularly given the accused's failure to reply to the notice.

The High Court concluded that the accused failed to rebut the presumption drawn under Sections 118 and 139 of the NI Act. Consequently, the ingredients of Section 138 of the NI Act were established.

Setting aside the trial court's acquittal, the High Court convicted the respondent-accused, Mahendra Singh , under Section 138 of the NI Act. He was sentenced to pay a fine of double the cheque amount, totaling Rs. 43,00,000/-. Out of this amount, Rs. 40,00,000/- is to be paid to the appellant-complainant as compensation. A default in paying the fine will result in simple imprisonment for six months.

The Court directed that a copy of the judgment and the case record be sent to the trial court for necessary compliance. The appeal was accordingly allowed.