The High Court at Calcutta has affirmed the conviction of Tuhin Gangopadhyay for an offence under Section 138 of the Negotiable Instruments Act, 1881, while simultaneously granting him relief from a seven-day prison sentence. Justice Uday Kumar, presiding over the criminal revisional application, upheld the compensatory fine of ₹35,000 imposed by the Sessions Court, emphasizing that the petitioner failed to successfully rebut the mandatory statutory presumptions regarding the validity of the cheque. While the court maintained the finding of guilt, it modified the judgment of the First Appellate Court to exempt the petitioner from undergoing the substantive imprisonment term, balancing the punitive aspect of the law with the compensatory objective of the legislation.

The legal battle originated from a complaint filed by Benukar Sikdar in 2016 , alleging that the petitioner had failed to repay a loan of ₹30,000 borrowed for his textile business, Madhukari Textile. The cheque issued for the alleged repayment was dishonoured by the bank with the notation "payment stop by attachment order/court order." Following the dishonour and the subsequent failure of the petitioner to satisfy the statutory demand notice , the complainant initiated criminal proceedings. After a conviction by the trial court in 2021 , which included a three-month prison sentence, the matter reached the appellate court, which later reduced the imprisonment to seven days and adjusted the fine.

Evidence Assessment and The ‘Lost Cheque’ Defence

The petitioner’s central argument before the High Court was that the cheque had been stolen along with his money bag in November 2015, a claim he supported with a contemporaneous General Diary (G.D.) entry lodged at the Suri Police Station. The petitioner argued that this record, coupled with his bank stop-payment instructions, provided a clear, documented rebuttal to the claims of the complainant. He contended that the lower courts erred by dismissing these documents as "self-serving" and failing to recognize that his actions shifted the burden of proof back onto the complainant to establish the validity of the debt.

However, Justice Uday Kumar rejected this interpretation, noting that while lodging a prompt police diary signifies alertness, it does not, in isolation, shatter the robustness of the statutory presumptions enshrined in Sections 118 and 139 of the Negotiable Instruments Act . The court observed that the petitioner failed to provide any corroborating evidence—such as testimony from investigating officers or proof of active misuse—to establish that the cheque was stolen or obtained through illicit means prior to its presentation. As the court noted, "As soon as the complainant discharges the burden to prove that the instrument was executed by the drawer, the rules of presumption under Sections 118 and 139 of the NI Act help him and shift the burden of rebutting the said presumptions upon the said drawer."

Proprietorship Liability Under Negotiable Instruments Law

Beyond the factual dispute, the petitioner attempted to raise a technical legal challenge, arguing that the complaint was fundamentally flawed because the business concern, "Madhukari Textile," was not arraigned as a separate accused entity. This argument sought to exploit a distinction between the individual and the business. The High Court, however, dismissed this claim as legally misconceived. Justice Uday Kumar clarified that a proprietary concern is not a distinct legal entity separate from its individual proprietor. Consequently, any debt incurred by such a business constitutes the personal and unlimited liability of the proprietor. The failure to include the business name as a party-accused was determined to be immaterial to the maintainability of the criminal prosecution under the Act.

Revisiting Financial Capacity and Loan Enforceability

The Court also addressed the significant contention regarding the complainant's financial capacity and the lack of a written loan agreement. The petitioner argued that the absence of the loan in the complainant’s Income Tax Returns (ITR) cast doubt on the existence of a legally enforceable debt. In responding to this, the court provided a nuanced interpretation of judicial precedents, acknowledging that while the lack of ITR disclosures can weaken a lender's case in massive, unexplained commercial transactions, it does not serve as an absolute, inflexible rule of law for every modest hand loan.

"Minor accounting omissions or tax-related irregularities by a lender does not automatically destroy the legal enforceability of a debt unless the accused discharges the primary burden of demonstrating that the complainant was utterly and financially incapable of sparing the specific modest sum," the court observed. Finding no patent perversity in the lower courts' reliance on evidence, Justice Uday Kumar affirmed that the revisional court could not sit as a second appellate court to re-weigh evidence that had already been concurrently appraised by the magistrate and the sessions judge.

The final order mandates that the petitioner must pay the ₹35,000 compensation to the complainant. The trial court has been directed to ensure that any amounts previously deposited by the petitioner during the pendency of the litigation are fully credited and adjusted against this liability. Failure to comply with these directions will result in the invocation of coercive measures under Section 421 read with Section 431 of the Code of Criminal Procedure, 1973, for the recovery of the compensation as arrears of fine. The petitioner’s application for revision was dismissed on merits, and the trial court records are to be returned immediately for the execution of the payment directives.