Case Law Details
Raghunath Sharma Vs Suraj Kant (Himachal Pradesh High Court)
Himachal Pradesh High Court held that complainant failed to prove his financial capability and hence the accused is entitled to acquittal. Accordingly, order of Trial Court upheld and petition is dismissed.
Facts- The complainant filed a complaint before Trial Court for taking action against the accused for the commission of an offence punishable u/s. 138 of the Negotiable Instruments Act.
The accused borrowed ₹6.00 lacs from the complainant with an assurance that he would return the amount after two months. The accused failed to pay the amount. When the complainant demanded money, the accused issued a cheque of ₹6.00 lacs. The complainant presented the cheque to his bank, but it was dishonoured with an endorsement ‘insufficient funds’. The complainant informed the accused about the dishonour of the cheque. The accused told the complainant to present the cheque again. The complainant presented the cheque on 22.1.2013, but it was again dishonoured with an endorsement ‘insufficient funds’. The complainant served a notice dated 31.1.2013 upon the accused asking him to pay the money within 15 days. A legal notice was duly served upon the accused, and the accused issued a reply to the notice. He failed to pay the amount. Hence, the complaint was filed against the accused for taking action as per the law.
The applicant/appellant has filed the present application seeking leave to appeal against the order of acquittal dated 14.2.2025, passed by learned Additional Chief Judicial Magistrate-II.
Conclusion- Hon’ble Supreme Court in Dattatraya had held that when there is a discrepancy regarding the issuance of the cheque and the financial capacity of the accused is not established, the accused is entitled to acquittal.
Held that the Income Tax Returns could not have been excluded, and it was open to the complainant to demonstrate that these returns were incorrect or were not filed by him. However, no such steps were taken by the complainant, and the learned Trial Court cannot be faulted for relying upon the Income Tax Returns. Therefore, the learned Trial Court was justified in doubting the financial capacity of the complainant, and there is no infirmity in the findings recorded by the learned Trial Court to this effect.
Also held that the cheque was not drawn on the personal account, and the cheque was drawn on an account maintained in the name of A-One College of Education, which was a Society registered under the Act. Learned Trial Court had rightly held that the complaint was not maintainable without impleading the Society.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
The applicant/appellant has filed the present application seeking leave to appeal against the order of acquittal dated 14.2.2025, passed by learned Additional Chief Judicial Magistrate-II, Nurpur, District Kangra, H.P. (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 application are that the complainant filed a complaint before the learned Trial Court for taking action against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (the NI Act). It was asserted that the parties were known to each other. The accused borrowed ₹6.00 lacs from the complainant with an assurance that he would return the amount after two months. The accused failed to pay the amount. When the complainant demanded money, the accused issued a cheque of ₹6.00 lacs, drawn on Punjab National Bank Branch, Jassur, District Kangra, H.P., in discharge of his legal liability. The complainant presented the cheque to his bank, but it was dishonoured with an endorsement ‘insufficient funds’. The complainant informed the accused about the dishonour of the cheque. The accused told the complainant to present the cheque again. The complainant presented the cheque on 22.1.2013, but it was again dishonoured with an endorsement ‘insufficient funds’. The complainant served a notice dated 31.1.2013 upon the accused asking him to pay the money within 15 days. A legal notice was duly served upon the accused, and the accused issued a reply to the notice. He failed to pay the amount. Hence, the complaint was filed against the accused for taking action as per the law.
3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared before the Court, 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 (CW1).
5. The accused, in his statement recorded under Section 313 of Cr.P.C., denied the case of the complainant. He examined Rakesh Kumar (DW1), Ashok Kumar (DW2), himself (DW3), Ramesh Chand (DW4) and Ajay Singh (DW5).
6. Learned Trial Court held that the accused disputed the financial capacity of the complainant. He stated that his mother had purchased land from the complainant. He issued the cheque as security. This shows that the issuance of the cheque was not in dispute. Hence, the presumption under Sections 139 and 118 (a) of the NI Act that the cheque was issued for a consideration in discharge of the legal liability would arise, and the burden would shift upon the accused to rebut this presumption. The accused examined Ashok Kumar (DW2), who proved that a civil suit was filed by the complainant regarding the sale of the land against the mother of the accused. The complainant claimed that the sale was effected by fraud. This makes the plea of the complainant doubtful that the parties had cordial relations with each other. The complainant failed to prove his financial capacity. The Income Tax returns submitted by him showed that he never had the financial capacity to lend ₹6.00 lacs. The cheque was issued in the account of a society, and the society was not made a party. Therefore, the complaint was ordered to be dismissed.
7. Being aggrieved by the judgment passed by the learned Trial Court, the applicant/appellant filed the present appeal, asserting that the learned Trial Court erred in dismissing the complaint. There is a presumption under Sections 118 (a) and 139 of the NI Act that the cheque was issued for a consideration in discharge of legal liability. The evidence led by the accused was not sufficient to rebut the presumption. The income tax returns were not proved as per the law, and the learned Trial Court erred in relying upon them. The account of the accused pertains to A-One College of Education, and he was a Deputy Secretary. The complaint was rightly filed against him. Therefore, it was prayed that the leave to appeal be granted and the judgment passed by the learned Trial Court be set aside.
8. I have heard Mr. Naresh Kaul, learned counsel for the applicant/appellant. He submitted that the learned Trial Court erred in dismissing the complaint. The issuance of the cheque was not disputed, and the learned Trial Court erred in not relying upon the presumption contained in Sections 118(a) and 139 of the NI Act. The income tax returns were not proved as per law, and the complaint was rightly filed against the accused. Therefore, he prayed that the present application be allowed and the leave to appeal be granted.
9. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
10. Learned Trial Court held that the presumption attached to the cheque under Sections 118 (a) and 139 of the NI Act can be rebutted by the accused by leading evidence as well as cross-examination of the complainant and his witnesses. It was laid down by the Hon’ble Supreme Court in Basalingappa v. Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571: 2019 SCC OnLine SC 491 that the admission of signatures raises the presumption under Sections 118 (a) and 139 of the NI Act that the cheque was issued for consideration in the discharge of the legal liability but the accused can rebut the presumption by leading the evidence or cross-examining the complainant and his witnesses to show that his version is not reliable. It was observed at page 432:
“25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of the cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption, and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come into the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come into the witness box to support his defence.
11. This position was reiterated in Rajaram v. Maruthachalam, (2023) 16 SCC 125: 2023 SCC OnLine SC 48, wherein it was observed at page 132:
25. It can thus be seen that this Court has held that once the execution of the cheque is admitted, Section 139 of the NI Act mandates a presumption that the cheque was for the discharge of any debt or other liability. It has, however, been held that the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. It has further been held that to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. It has been held that inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
12. A similar view was taken in Murugan v. M.K. Karunagaran, 2023 SCC OnLine SC 2041, wherein it was observed:
6. It is well settled that to rebut the presumption under Section 139 of the Negotiable Instruments Act, 1881, it is open to the accused not only to rely on the evidence led by him, but he can also rely on the materials submitted by the complainant, in order to raise a probable defence. The respondent’s counsel relied on the ratio in Basalingappa v. Mudibasappa reported in (2019) 5 SCC 418 to say that the complainant here failed to discharge his burden. The relevant paragraph is extracted hereunder:—
“25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him, or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference or preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.”
13. In the present case, the accused relied upon the cross-examination and the statements of witnesses to rebut the presumption.
14. The copy of the plaint (Ex.D1) showed that a civil suit was filed by the complainant Raghu Nath, in which it was stated that the mother of the accused had got the sale deed registered from the complainant by playing fraud and misrepresentation. Payment of ₹6.00 lacs was made on 10.6.2011 through two cheques, which were dishonoured on their presentation. These averments in the plaint show that the mother of the accused was supposed to pay ₹6.00 lacs towards sale consideration, which she had paid through two cheques, and these two cheques were dishonoured. This civil suit was filed in the year 2011 bearing Civil Suit No. 91 of 2011.
15. The complainant asserted that he had cordial relations with the accused. The accused asked him for ₹6.00 lacs on 13.09.2022, which he had paid. Learned Trial Court had rightly held that the filing of the civil suit against the mother of the accused showed that the relationship was far from cordial. The complainant had filed a civil suit in which he had claimed that cheques of ₹6.00 lacs issued by the mother of the accused were dishonoured. He wanted to get the sale deed set aside by pleading fraud. In these circumstances, it is difficult to believe that the accused would have approached the complainant for ₹6.00 lacs and the complainant would have paid ₹6.00 lacs to the accused. This made the whole case of the complainant highly suspicious.
16. The accused proved Income Tax Returns (Ex. DA-1 to Ex. DA-13) by examining Inspector Rakesh Kumar (DW1). These Income Tax Returns show that the complainant never had income to lend an amount of ₹6.00 lacs. The complainant could not provide the source of his income to pay ₹6.00 lacs to the accused. It was laid down by the Hon’ble Supreme Court in Tedhi Singh Versus Narayan Dass Mahant (2022) 6 SCC 735 that the accused has a right to demonstrate that the complainant did not have the financial capacity to advance the loan stated to have been advanced by him. It was observed:-
“9. The Trial Court and the First Appellate Court have noted that in the case under Section 138 of the N. I. Act, the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the N. I. Act is not civil suits. At the time, when the complainant gives his evidence unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the Courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.”
17. This question was also considered by the Hon’ble Supreme Court in BasalingappaVersus Mudibasappa (2019) 5 SCC 418 and it was held that where the financial capacity to pay the amount 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 as to 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 in his examination-in-chief regarding the date on which the loan was given on one side and what was said in cross-examination in 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 has 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 of 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.”
18. It was laid down by the Hon’ble Supreme Court in Dattatraya (supra) that when there is a discrepancy regarding the issuance of the cheque and the financial capacity of the accused 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 moved 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.
19. 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.”
20. It was submitted that the Income Tax Returns (Ex.DA-1 to Ex. DA-13) were computer-generated and they were not proved as per the law. First, there is nothing on record to show that any objection was raised when the documents were being exhibited; an objection regarding the wrong exhibition of the documents cannot be raised during the appeal when such an objection was not raised before the learned Trial Court. It was laid down by the Hon’ble Supreme Court in R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple, (2003) 8 SCC 752 that an objection to the admissibility of the evidence should be taken when it is tendered and not subsequently. When secondary evidence is being led and no objection is raised, the same is deemed to be waived and cannot be taken during the appeal. It was observed:-
20. The learned counsel for the defendant-respondent has relied on Roman Catholic Mission v. State of Madras [AIR 1966 SC 1457] in support of his submission that a document not admissible in evidence, though brought on record, has to be excluded from consideration. We do not have any dispute with the proposition of law so laid down in the above said case. However, the present one is a case which calls for the correct position of law being made precise. Ordinarily, an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to the admissibility of documents in evidence may be classified into two classes: (i) an objection that the document which is sought to be proved is itself inadmissible in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as “an exhibit”, an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The latter proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because, by his failure, the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both parties. Out of the two types of objections referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to a waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in a superior court.
21. The Privy Council in Padman v. Hanwanta [AIR 1915 PC 111: 19 CWN 929] did not permit the appellant to take objection to the admissibility of a registered copy of a Will in appeal for the first time. It was held that this objection should have been taken in the trial court. It was observed: (AIR p. 112)
“The defendants have now appealed to His Majesty-in-Council, and the case has been argued on their behalf in great detail. It was urged in the course of the argument that a registered copy of the Will of 1898 was admitted in evidence without sufficient foundation being laid for its admission. No objection, however, appears to have been taken in the first court against the copy obtained from the Registrar’s office being put in evidence. Had such an objection been made at the time, the District Judge, who tried the case in the first instance, would probably have seen that the deficiency was supplied. Their Lordships think that there is no substance in the present contention.”
22. Similar is the view expressed by this Court in P.C. Purushothama Reddiar v. S. Perumal [(1972) 1 SCC 9 : (1972) 2 SCR 646]. In this case, the police reports were admitted in evidence without any objection and the objection was sought to be taken in appeal regarding the admissibility of the reports. Rejecting the contention, it was observed: (SCC p. 15, para 19)
“19. Before leaving this case, it is necessary to refer to one of the contentions taken by Mr Ramamurthi, learned counsel for the respondent. He contended that the police reports referred to earlier are inadmissible in evidence as the Head Constables who covered those meetings have not been examined in the case. Those reports were marked without any objection. Hence, it is not open to the respondent now to object to their admissibility — see Bhagat Ram v. Khetu Ram [AIR 1929 PC 110] .”
21. This judgment was followed in Dayamathi Bai v. K.M. Shaffi, (2004) 7 SCC 107, wherein it was observed:-
“13. We do not find merit in this civil appeal. In the present case, the objection was not that the certified copy of Ext. P-1 is in itself inadmissible, but the mode of proof was irregular and insufficient. The objection as to the mode of proof falls within procedural law. Therefore, such objections could be waived. They have to be taken before the document is marked as an exhibit and admitted to the record (see Order 13 Rule 3 of the Code of Civil Procedure). This aspect has been brought out succinctly in the judgment of this Court in R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple [(2003) 8 SCC 752] to which one of us, Bhan, J., was a party vide para 20 : (SCC p. 764)
“20. The learned counsel for the defendant-respondent has relied on Roman Catholic Mission v. State of Madras [AIR 1966 SC 1457] in support of his submission that a document not admissible in evidence, though brought on record, has to be excluded from consideration. We do not have any dispute with the proposition of law so laid down in the abovesaid case. However, the present one is a case which calls for the correct position of law being made precise. Ordinarily, an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to the admissibility of documents in evidence may be classified into two classes : (i) an objection that the document which is sought to be proved is itself inadmissible in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as ‘an exhibit’, an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The latter proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because, by his failure, the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure are fair to both parties. Out of the two types of objections referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to a waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in a superior court.”
(emphasis in original)
14. To the same effect is the judgment of the Privy Council in the case of Gopal Das v. Thakurji [AIR 1943 PC 83: 47 CWN 607] in which it has been held that when the objection to the mode of proof is not taken, the party cannot lie by until the case comes before a court of appeal and then complain for the first time of the mode of proof. When the objection to be taken is not that the document is in itself inadmissible but that the mode of proof was irregular, it is essential that the objection should be taken at the trial before the document is marked as an exhibit and admitted to the record. Similarly, in Sarkar on Evidence, 15th Edn., p. 1084, it has been stated that where copies of the documents are admitted without objection in the trial court, no objection to their admissibility can be taken afterwards in the court of appeal. When a party gives in evidence a certified copy, without proving the circumstances entitling him to give secondary evidence, the objection must be taken at the time of admission, and such objection will not be allowed at a later stage.
15. In the present case, when the plaintiff submitted a certified copy of the sale deed (Ext. P-1) in evidence and when the sale deed was taken on record and marked as an exhibit, the appellant did not raise any objection. Even execution of Ext. P-2 was not challenged. In the circumstances, it was not open to the appellant to object to the mode of proof before the lower appellate court. If the objection had been taken at the trial stage, the plaintiff could have met it by calling for the original sale deed, which was on record in collateral proceedings. But as there was no objection from the appellant, the sale deed dated 14-11-1944 was marked as Ext. P-1 and it was admitted to the record without objection.”
22. A similar view was taken in Lachhmi Narain Singh v. Sarjug Singh, (2022) 13 SCC 746, wherein it was observed:-
“21. In such a scenario, where no protest was registered by the probate applicant against the production of a certified copy of the cancellation deed, he cannot later be allowed to take up the plea of non-production of the original cancellation deed in the course of the appellate proceeding. As already noted, the main contention of probate applicants was that the mode of proof of the cancellation deed was inadequate. However, such was not the stand of the probate applicants before the trial court. The objection as to the admissibility of a registered document must be raised at the earliest stage before the trial court, and the objection could not have been taken in appeal, for the first time. On this, we may draw support from observations made by Ameer Ali, J. in Padman v. Hanwanta (Padman v. Hanwanta, 1915 SCC OnLine PC 21] wherein the following was set out by the Privy Council: (SCC OnLine PC)
“The defendants have now appealed to His Majesty-in-Council, and the case has been argued on their behalf in great detail. It was urged in the course of the argument that a registered copy of the will of 1898 was admitted in evidence without sufficient foundation being laid for its admission. No objection, however, appears to have been taken in the first court against the copy obtained from the Registrar’s office being put in evidence. Had such an objection been made at the time, the District Judge, who tried the case in the first instance, would probably have seen that the deficiency was supplied. Their Lordships think that there is no substance in the present contention.”
22. A similar view was taken by George Rankin, J. in the decision of Privy Council in Gopal Das v. Sri Thakurji (Gopal Das v. Sri Thakurji, 1943 SCC OnLine PC 2] where it was held that objection as to the mode of proof must be taken when the document is tendered and before it is marked as an exhibit. It cannot be taken in appeal.
The objection as to the mode of proof should be taken before a document is admitted and marked as an exhibit. In the present case, the probate applicant never raised any objection in regard to the mode of proof of the cancellation deed before the trial court, as is evident from a perusal of the records, and this must be held against him.
23. In support of our above conclusion, we may usefully refer to the ratio in R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple [R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple, (2003) 8 SCC 752] where Ashok Bhan, J. while dealing with the aspect of disallowing objection as to mode of proof at appellate stage as a rule of fair play to avoid prejudice to the other side, said as follows : (SCC p. 764, para 20)
“20. … In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The latter proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because, by his failure, the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both parties. Out of the two types of objections, referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to a waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence.”
24. This Court, in the opinion written by S.H. Kapadia, J. in Dayamathi Bai v. K.M. Shaffi [Dayamathi Bai v. K.M. Shaffi, (2004) 7 SCC 107] has similarly held that the objection as to the mode of proof falls within procedural law. Therefore, such objections could be waived. Moreover, the objection is to be taken before the document is marked as an exhibit and admitted in Court.
25. In view of the foregoing discussion, it is clear that a plea regarding the mode of proof cannot be permitted to be taken at the appellate stage for the first time, if not raised before the trial court at the appropriate stage. This is to avoid prejudice to the party who produced the certified copy of an original document without protest by the other side. If such an objection was raised before the trial court, then the party concerned could have cured the mode of proof by summoning the original copy of the document. But such an opportunity may not be available or possible at a later stage. Therefore, allowing such an objection to be raised during the appellate stage would put the party (who placed a certified copy on record instead of an original copy) in jeopardy and would seriously prejudice the interests of that party. It will also be inconsistent with the rule of fair play as propounded by Ashok Bhan, J. in R.V.E. Venkatachala [R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple, (2003) 8 SCC 752].
23. Therefore, the Income Tax Returns could not have been excluded, and it was open to the complainant to demonstrate that these returns were incorrect or were not filed by him. However, no such steps were taken by the complainant, and the learned Trial Court cannot be faulted for relying upon the Income Tax Returns.
24. Therefore, the learned Trial Court was justified in doubting the financial capacity of the complainant, and there is no infirmity in the findings recorded by the learned Trial Court to this effect.
25. The cheque was not drawn on the personal account, and the cheque was drawn on an account maintained in the name of A-One College of Education, which was a Society registered under the Act. Learned Trial Court had rightly held that the complaint was not maintainable without impleading the Society. Admittedly, the society was not arrayed as a party. The society is a juristic person under the H.P. Co-operative Societies Act. It was laid down by the Hon’ble Supreme Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 that it is not permissible to prosecute the Directors in the absence of the Company. It was observed that:
“58. Applying the doctrine of strict construction, we are of the considered opinion that the commission of the offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the section make it unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence, subject to the averments in the petition and proof thereof. One cannot be oblivious to the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative.”
26. This judgment was followed by the Hon’ble Supreme Court in Charanjit Pal Jindal v. L.N. Metalics, (2015) 15 SCC 768: 2015 SCC OnLine SC 1033, and it was held:
“11. From the aforesaid finding, we find that after analysing all the provisions and having noticed the different decisions rendered by this Court, the three-judge Bench arrived at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning a company as an accused is imperative. Hence, in this case, we find no reason to refer the matter to the larger Bench.
12. In the present case, only the appellant was impleaded as an accused. In that view of the matter, we are of the view that the complaint with respect to the offence under Section 138 read with Section 141 of the Act was not maintainable following the decision in Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661: (2012) 3 SCC (Civ) 350: (2012) 3 SCC (Cri) 241]. We set aside the judgment dated 17-4-2010 passed by the trial court, the order dated 27-5-2011 passed by the appellate court and the impugned judgment dated 9.11.2012 passed by the High Court of Orissa, Cuttack in Charanjit Pal Jindal v. L.N. Metalics [Charanjit Pal Jindal v. L.N. Metalics, Criminal Revision No. 467 of 2011, decided on 9-11-2012 (Ori)]. The appellant stands acquitted.”
27. This position was reiterated in Himanshu v. B. Shivamurthy, (2019) 3 SCC 797: 2019 SCC OnLine SC 83, and it was held:
“13. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused.”
28. This position was reiterated in Pawan Kumar Goel v. State of U.P., 2022 SCC OnLine SC 1598, and it was held:
“31. This Court has been firm with the stand that if the complainant fails to make specific averments against the company in the complaint for the commission of an offence under Section 138 of the NI Act, the same cannot be rectified by taking recourse to general principles of criminal jurisprudence. Needless to say, the provisions of Section 141 impose vicarious liability by deeming a fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub- sections (1) and (2) would not be liable to be convicted based on the principles of vicarious liability.”
29. Therefore, in view of the binding precedents of the Hon’ble Supreme Court, the prosecution of the society is necessary before the accused can be held vicariously liable. Since society has not been arrayed as the accused, therefore, the accused cannot be held vicariously liable.
30. Therefore, the learned Trial Court had taken a reasonable view while dismissing the complaint, and no interference is required with the reasonable view taken by the learned Trial Court. Hence, the leave to appeal cannot be granted.
31. In view of the above, the present application fails, and the same is dismissed.
Cr. Appeal (AST) No. 3086 of 2025
32. Since the leave to appeal has been declined, therefore, the present appeal is disposed of as having become infructuous. The pending miscellaneous application(s), if any, also stands disposed of.
Note:
1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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