Case Law Details
Bharat Bhushan Vs Umesh Kumar (Himachal Pradesh High Court)
Himachal Pradesh High Court held that when the financial capacity of the complainant is not established, the accused is entitled to acquittal. Accordingly, order of Trial Court upheld and appeal of complainant dismissed.
Facts- The complainant filed a complaint against the accused before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act. It was asserted that the accused had issued a cheque dated 20.04.2018 for ₹10,00,000/-, to discharge his legal and enforceable debt in the complainant’s favour. The complainant presented the cheque to the bank; however, it was dishonoured with an endorsement ‘insufficient funds’. The complainant issued a legal notice to the accused asking him to pay the cheque amount. This notice was duly served upon the accused; however, the accused failed to pay the amount despite the receipt of the notice. Hence, the complaint was filed to take action against the accused as per the law.
Trial Court held that the complainant failed to specify the legal liability. He could not mention when the money was advanced and the date of advancing the money in his cross-examination. The complainant failed to specify the reason for advancing the loan. The complainant did not have the financial capacity to pay the amount. His statement of account shows the withdrawal of ₹4,00,000/- and not ₹10,00,000/-. These circumstances made the complainant’s case highly suspect. Hence, the accused was acquitted. Being aggrieved, the complainant has filed the present appeal.
Conclusion- Hon’ble Supreme Court in Dattatraya v. Sharanappa, (2024) 8 SCC 573: (2024) 3 SCC (Cri) 776: 2024 SCC OnLine SC 1899 that when the financial capacity of the complainant is not established, the accused is entitled to acquittal.
Held that the complainant’s version that he had advanced a loan of ₹10,00,000/- to the accused, which was returned by him by issuing a cheque, was highly doubtful. Trial Court had rightly pointed out that the complainant never gave details of the amount of ₹10,00,00/-advanced by him to the accused in his complaint and the preliminary affidavit, and he gave details for the first time in his proof affidavit. This detail does not show advancement of ₹10,00,000/-, and there is a huge gap of ₹6,00,000/- between the withdrawal and the advancement of the loan. This gap has not been explained, which was necessary in view of the cross-examination of the complainant and the Trial Court was justified in doubting the financial capacity of the complainant. Therefore, the Trial Court had taken a reasonable view while acquitting the accused, and this Court will not interfere with the reasonable view of the learned Trial Court, even if another view is possible or this Court would have taken a different view while deciding the matter on the original side. Therefore, no interference is required with the judgment passed by the Trial Court.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
The present appeal is directed against the judgment 14.08.2024, passed by the learned Chief Judicial Magistrate, Mandi, H.P. (learned Trial Court), vide which the complaint filed by the petitioner (complainant before the learned Trial Court) was dismissed. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint against the accused before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short, ‘NI Act’). It was asserted that the accused had issued a cheque dated 20.04.2018 for ₹10,00,000/-, to discharge his legal and enforceable debt in the complainant’s favour. The complainant presented the cheque to the bank; however, it was dishonoured with an endorsement ‘insufficient funds’. The complainant issued a legal notice to the accused asking him to pay the cheque amount. This notice was duly served upon the accused; however, the accused failed to pay the amount despite the receipt of the notice. Hence, the complaint was filed to take action against the accused as per the law.
3. The Learned Trial Court found sufficient reason to summon the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW-1) and Pardeep Kumar (CW-2) to prove his case.
5. The accused in his statement recorded under Section 313 of Cr.P.C. stated that he had kept the cheque in his office at Bhagwahan Mohalla. The complainant used to visit his office frequently. He might have taken the cheque from the office. The accused did not receive any notice. He was at Kullu on 26.04.2018. He received a message that an amount of ₹600/-was deducted from his account. He was busy with his nephew’s marriage at Kullu. He contacted his bank, but the bank was unable to inform him why the said amount was deducted from this account. No defence was sought to be adduced by the accused.
6. Learned Trial Court held that the complainant failed to specify the legal liability. He could not mention when the money was advanced and the date of advancing the money in his cross-examination. The complainant failed to specify the reason for advancing the loan. The complainant did not have the financial capacity to pay the amount. His statement of account (Ext.PW-1/H) shows the withdrawal of ₹4,00,000/- and not ₹10,00,000/-. These circumstances made the complainant’s case highly suspect. Hence, the accused was acquitted.
7. Being aggrieved from the judgment passed by the learned Trial Court, the complainant has filed the present appeal, asserting that the learned Trial Court erred in acquitting the accused. The accused had not disputed the issuance of the cheque. There is a presumption that the cheque was issued for valid consideration, and the burden is upon the accused to rebut this presumption. The accused did not step into the witness box, and the presumption could not be said to have been rebutted. The statement of account shows that various amounts were withdrawn on different dates, and the complainant had sufficient funds in his bank account. Therefore, it was prayed that the present petition be allowed and the judgment passed by the learned Trial Court be set aside.
8. I have heard Mr. G.R. Palsra, learned counsel for the appellant and Mr. Varun Chauhan, learned counsel for the respondent.
9. Mr. G.R. Palsra, learned counsel for the appellant, submitted that the learned Trial Court erred in acquitting the accused. It was duly proved by the statement of account that the complainant had sufficient amount with him. He had withdrawn different amounts on different dates and handed them over to the accused. The accused admitted his signature on the cheque, and a presumption under Sections 118 (a) and 139 of the NI Act arose in the present case. The accused did not lead any evidence to rebut the presumption, and the learned Trial Court erred in dismissing the complaint. Therefore, he prayed that the present appeal be allowed and the judgment passed by learned Trial Court be set aside.
10. Mr. Varun Chauhan, learned counsel for the accused/respondent, submitted that the learned Trial Court had taken a reasonable view in the present case and this Court should not interfere with the reasonable view of the learned Trial Court while deciding an appeal against the acquittal. The evidence led by the complainant made his financial capacity doubtful, and it was not necessary for the accused to step into the witness box in such circumstances. The accused has to prove his defence on the balance of probability, and this can be done by cross-examination of the complainant. Therefore, he prayed that the present appeal be dismissed.
11. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
12. The present appeal has been filed against a judgment of acquittal. It was laid down by the Hon’ble Supreme Court in Surendra Singh v. State of Uttarakhand, 2025 SCC OnLine SC 176: (2025) 5 SCC 433 that the Court can interfere with a judgment of acquittal if it is patently perverse, is based on misreading/omission to consider the material evidence and reached at a conclusion which no reasonable person could have reached. It was observed:
“11. Recently, in the case of Babu Sahebagouda Rudragoudar v. State of Karnataka 2024 SCC OnLine SC 4035, a Bench of this Court to which one of us was a Member (B.R. Gavai, J.) had an occasion to consider the legal position with regard to the scope of interference in an appeal against acquittal. It was observed thus:
“38. First of all, we would like to reiterate the principles laid down by this Court governing the scope of interference by the High Court in an appeal filed by the State for challenging the acquittal of the accused recorded by the trial court.
39. This Court in Rajesh Prasad v. State of Bihar [Rajesh Prasad v. State of Bihar, (2022) 3 SCC 471: (2022) 2 SCC (Cri) 31] encapsulated the legal position covering the field after considering various earlier judgments and held as below : (SCC pp. 482-83, para 29)
“29. After referring to a catena of judgments, this Court culled out the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal in thefollowingwords: (Chandrappa case [Chandrappa v. State of Karnataka, (2007) 4 SCC 415: (2007) 2 SCC (Cri) 325], SCC p. 432, para 42)
‘42. From the above decisions, in our considered view, the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal emerge:
(1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded.
(2) The Criminal Procedure Code, 1973 puts no limitation, restriction or condition on the exercise of such power and an appellate court, on the evidence before it, may reach its own conclusion, both on questions of fact and law.
(3) Various expressions, such as “substantial and compelling reasons”, “good and sufficient grounds”, “very strong circumstances”, “distorted conclusions”, “glaring mistakes”, etc., are not intended to curtail the extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of “flourishes of language” to emphasise the reluctance of an appellate court to interfere with an acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion.
(4) An appellate court, however, must bear in mind that in case of acquittal, there is a double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused, having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court.
(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.”
40. Further, in D. Sundara v. State of Karnataka [H.D. Sundara v. State of Karnataka, (2023) 9 SCC 581: (2023) 3 SCC (Cri) 748] this Court summarised the principles governing the exercise of appellate jurisdiction while dealing with an appeal against acquittal under Section 378CrPC as follows: (SCC p. 584, para 8)
“8. … 8.1. The acquittal of the accused further strengthens the presumption of innocence.
8.2. The appellate court, while hearing an appeal against acquittal, is entitled to reappreciate the oral and documentary evidence;
8.3. The appellate court, while deciding an appeal against acquittal, after reappreciating the evidence, is required to consider whether the view taken by the trial court is a possible view which could have been taken on the basis of the evidence on record;
8.4. If the view taken is a possible view, the appellate court cannot overturn the order of acquittal on the ground that another view was also possible; and
8.5. The appellate court can interfere with the order of acquittal only if it comes to a finding that the only conclusion which can be recorded on the basis of the evidence on record was that the guilt of the accused was proved beyond a reasonable doubt and no other conclusion was possible.”
41. Thus, it is beyond the pale of doubt that the scope of interference by an appellate court for reversing the judgment of acquittal recorded by the trial court in favour of the accused has to be exercised within the four corners of the following principles:
41.1. That the judgment of acquittal suffers from patent perversity;
41.2. That the same is based on a misreading/omission to consider material evidence on record; and
41.3. That no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record.”
12. It could thus be seen that it is a settled legal position that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record.”
13. The present appeal is required to be decided as per the parameters laid down by the Hon’ble Supreme Court.
14. The complainant stated in his proof affidavit (Ext.CW-1/A) that the the accused borrowed money of ₹50,000/- on 06.06.2013, ₹3,00,000/- on 06.09.2013, ₹80,000/- on 02.06.2016, ₹50,000/- on 23.02.2017, ₹2,00,000/- on 14.07.2017 and ₹70,000/- on 19.04.2018. The complainant said that he would require money on the completion of his daughter’s secondary education, and the accused assured him to return the money on demand. The complainant demanded the money in February 2018, but the money was not paid. Thereafter accused issued a cheque in favour of the complainant.
15. The complainant filed a photocopy of his statement of account (Ext.CW-1/H), which shows the cash withdrawal of ₹96,000/- on 04.11.2013, ₹80,000/- on 02.06.2016, ₹50,000/- on 23.02.2017, ₹1,95,600/- on 11.07.2017 (not clearly legible) and ₹1,25,000/- on 19.04.2015. The column of balance shows that the complainant never had ₹ 10,00,000/- in his account.
16. The complainant stated in his cross-examination that he was working as a Pandit. He used to send ₹6,000/- per month to his daughter, who was doing M.A. Sociology. His monthly expenses were ₹5000-₹7000/- and his income was ₹30,000-₹35,000/-per month. He did not file an Income Tax Return. He never earned ₹10,00,000/- at any time. His income in the year 2013 was ₹2,50,000/-.
17. As per his statement he earned ₹30,000-₹ 35,000/-per month and used to spend ₹5,000-₹7000/- per month on his household expenses. He also used to send ₹6000/- to his daughter, which means that his monthly savings, as per his statement, were around 22,000/- per month. Thus, an amount of ₹10,00,000/- would be equivalent to his five years’ savings. As already stated, this saving is not reflected in the statement of account.
18. It was laid down by the Hon’ble Supreme Court in Basalingappa Versus Mudibasappa (2019) 5 SCC 418 that where the financial capacity to pay ₹ 6,00,000/- was questioned and there was no satisfactory reply, the accused had raised a probable defence. It was observed: –
“26. Applying the preposition of law as noted above, in the facts of the present case, it is clear that the signature on the cheque, having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In cross-examination of the PW1, when the specific question was put that a cheque was issued in relation to a loan of Rs. 25,000/-taken by the accused, the PW1 said that he does not remember. PW1 in his evidence admitted that he retired in 1997, on which date he received a monetary benefit of Rs. 8 lakhs, which was encashed by the complainant. It was also brought in the evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs. 4,50,000/-to Balana Gouda towards sale consideration. Payment of Rs. 4,50,000/-being admitted in the year 2010 and further payment of loan of Rs. 50,000/-with regard to which complaint No.119 of 2012 was filed by the complainant, a copy of which complaint was also filed as Ex.D2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per the own case of the complainant, he made a payment of Rs. 18 lakhs. During his cross-examination, when the financial capacity to pay Rs. 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts.
27. There was another evidence on the record, i.e., a copy of the plaint in O.S. No. 148 of 2011 filed by the complainant for recovery of a loan of Rs. 7 lakhs given to one Balana Gouda in December 2009. Thus, there was evidence on record to indicate that in December 2009, he gave ₹ 7 lakhs in a sale agreement, in 2010, he made a payment of ₹ 4,50,000/-towards sale consideration and further, he gave a loan of ₹ 50,000/-for which complaint was filed in 2012 and further loan of ₹ 6 lakhs in November 2011. Thus, during the period from 2009 to November 2011, an amount of ₹ 18 lakhs was given by the complainant to different persons including the accused, which put a heavy burden to prove the financial capacity when it was questioned on behalf of the accused, the accused being a retired employee of State Transport Corporation, who retired in 1997 and total retirement benefits, which were encashed were ₹ 8 lakhs only. The High Court observed that though the complainant is a retired employee, the accused did not even suggest that pension is the only means for the survival of the complainant. The following observations were made in Paragraph 16 of the judgment of the High Court:
“17. Though the complainant is a retired employee, the accused did not even suggest that a pension is the only means for the survival of the complainant. Under these circumstances, the Trial Court’s finding that the complainant failed to discharge his initial burden of proof of lending capacity is perverse.”
28. There is one more aspect of the matter which also needs to be noticed. In the complaint filed by the complainant as well as in the examination-in-chief, the complainant has not mentioned on which date the loan of Rs. 6 lakhs was given to the accused. It was during cross-examination, he gave the date as November 2011. Under Section 118 (b), a presumption shall be made as to the date that every negotiable instrument was made or drawn on such date. Admittedly, the cheque is dated 27.02.2012, there is not even a suggestion by the complainant that a post-dated cheque was given to him in November 2011 bearing a dated 27.02.2012. Giving of a cheque on 27.02.2012, which was deposited on 01.03.2012, is not compatible with the case of the complainant when we read the complaint submitted by the complainant, especially Para 1 of the complaint, which is extracted as below:
“1. The accused is a very good friend of the complainant. The accused requested the Complainant a hand loan to meet out the urgent and family necessary sum of 6,00,000/-(Rupees Six Lakh) and on account of long-standing friendship and knowing the difficulties, which is being faced by the accused the complainant agreed to lend hand loan to meet out the financial difficulties of the accused and accordingly the Complainant lends hand loan Rs. 6,00,000/-(Rupees Six Lakh) dated 27.02.2012 in favour of the Complainant stating that on its presentation it will be honoured. But to the surprise of the Complainant on presentation of the same for collection through his Bank, the Cheque was returned by the Bank with an endorsement “Funds Insufficient” on 01-03-2012.”
29. Thus, there is a contradiction in what was initially stated by the complainant in the complaint and his examination-in-chief regarding the date on which the loan was given on one side and what was said in cross-examination on the other side, which has not been satisfactorily explained. The High Court was unduly influenced by the fact that the accused did not reply to the notice denying the execution of the cheque or legal liability. Even before the trial court, the appellant-accused had not denied his signature on the cheque.
30. We are of the view that when evidence was led before the Court to indicate that apart from a loan of Rs. 6 lakhs given to the accused, within 02 years, an amount of Rs. 18 lakhs have been given out by the complainant and his financial capacity being questioned, it was incumbent on the complainant to have explained his financial capacity. The court cannot insist on a person to lead negative evidence. The observation of the High Court that the trial court’s finding that the complainant failed to prove his financial capacity for lending money is perverse cannot be supported. We fail to see how the trial court’s findings can be termed as perverse by the High Court when it was based on consideration of the evidence, which was led on behalf of the defence.”
19. It was laid down by the Hon’ble Supreme Court in Dattatraya v. Sharanappa, (2024) 8 SCC 573: (2024) 3 SCC (Cri) 776: 2024 SCC OnLine SC 1899 that when the financial capacity of the complainant is not established, the accused is entitled to acquittal. It was observed:
“29. Applying the aforementioned legal position to the present factual matrix, it is apparent that there existed a contradiction in the complaint made by the appellant as against his cross-examination relatable to the time of presentation of the cheque by the respondent, as per the statements of the appellant. This is to the effect that while the appellant claimed the cheque to have been issued at the time of advancing of the loan as a security, however, as per his statement during the cross-examination it was revealed that the same was presented when an alleged demand for repayment of alleged loan amount was raised before the respondent, after a period of six months of advancement. Furthermore, there was no financial capacity or acknowledgement in his income tax returns by the appellant to the effect of having advanced a loan to the respondent. Even further, the appellant has not been able to showcase as to when the said loan was advanced in favour of the respondent nor has he been able to explain as to how a cheque issued by the respondent allegedly in favour of Mr Mallikarjun landed in the hands of instant holder, that is, the appellant.
20. A similar view was taken in John K. Abraham Versus Simon C. Abraham & Another (2014) 2 SCC 236 wherein it was held:-
“9. It has to be stated that in order to draw the presumption under Section 118 read along with 139 of the Negotiable Instruments Act, the burden was heavy upon the complainant to have shown that he had required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant.
10. Keeping the said statutory requirements in mind, when we examine the facts as admitted by the respondent-complainant, as rightly concluded by the learned trial Judge, the respondent was not even aware of the date when the substantial amount of Rs.1,50,000/- was advanced by him to the appellant, that he was not sure as to who wrote the cheque, that he was not even aware when exactly and where exactly the transaction took place for which the cheque came to be issued by the appellant. Apart from the said serious lacuna in the evidence of the complainant, he further admitted as PW.1 by stating once in the course of the cross-examination that the cheque was in the handwriting of the accused and the very next moment taking a diametrically opposite stand that it is not in the handwriting of the accused and that it was written by the complainant himself, by further reiterating that the amount in words was written by him.
21. Therefore, in these circumstances, the complainant’s version that he had advanced a loan of ₹10,00,000/- to the accused, which was returned by him by issuing a cheque, was highly doubtful.
22. Learned Trial Court had rightly pointed out that the complainant never gave details of the amount of ₹10,00,00/-advanced by him to the accused in his complaint and the preliminary affidavit, and he gave details for the first time in his proof affidavit (Ext.CW-1/A). This detail does not show advancement of ₹10,00,000/-, and there is a huge gap of ₹6,00,000/- between the withdrawal and the advancement of the loan. This gap has not been explained, which was necessary in view of the cross-examination of the complainant and the learned Trial Court was justified in doubting the financial capacity of the complainant.
23. It was submitted that issuance of the cheque was not disputed and the learned Trial Court was bound to draw a presumption under Sections 118 (a) and 139 of the NI Act. Learned Trial Court had erred in discarding the complainant’s case without drawing the presumption. This submission cannot be accepted. The presumption under Sections 139 and 118 (a) of the N I Act is a rebuttable presumption which can be rebutted by the cross-examination of the complainant and his witnesses. Once the cross- examination of the complainant made his financial capacity doubtful, the presumption stood rebutted, and the learned Trial Court was justified in doubting the complainant’s case.
24. Therefore, the learned Trial Court had taken a reasonable view while acquitting the accused, and this Court will not interfere with the reasonable view of the learned Trial Court, even if another view is possible or this Court would have taken a different view while deciding the matter on the original side. Therefore, no interference is required with the judgment passed by the learned Trial Court.
25. Consequently, the present appeal fails, and the same is dismissed.
26. The record of the learned Trial Court be sent back with a copy of this judgment for the information of the learned Trial Court.
27. Appeal stands disposed of along with pending miscellaneous application(s), if any.
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