Case at a Glance
A grocery-shop owner said he lent a property dealer ₹17,15,000 in 2012–13 and received a cheque for that amount, which was dishonoured first with ‘payment stopped by drawer’ and then for insufficient funds. The trial court convicted the accused, but the Sessions Court acquitted him. Justice Ravindra Kumar Agrawal upheld the acquittal: the accused had applied to stop payment and lodged a police complaint about a stolen cheque before the cheque date, while the complainant gave no dates of the loan, did not examine the person he borrowed from, and his bank statement did not show the payments. The accused had raised a probable defence and the appellate view was a possible one.
The complainant, who runs a grocery shop, alleged that between December 2012 and January 2013 he lent ₹17,15,000 to the accused, partly from his mother’s life insurance death claim of ₹8,81,328 credited on 8 December 2012 and a ₹7 lakh loan from one Rahaslal. The accused issued cheque No. 131141 dated 25 March 2013 for ₹17,15,000 on a co-operative bank. It was returned on 28 March 2013 as ‘payment stopped by drawer’ and again on 10 May 2013 for insufficient funds. The legal notice of 7 June 2013 came back unserved and the complaint was filed on 17 July 2013.
The accused said the cheque had been stolen from his office; he had asked his bank to stop payment and lodged a police complaint on 8 January 2013. On 27 November 2017 the trial court convicted him under Section 138 of the Negotiable Instruments Act, 1881, sentencing him to six months’ simple imprisonment and compensation of ₹17,15,000. On 2 April 2018 the Additional Sessions Judge, Bilaspur allowed his appeal and acquitted him. The complainant appealed against the acquittal under Section 378(4) CrPC.
The Key Question Before the Court
Did the accused rebut the presumption under Sections 118 and 139 of the NI Act by a probable defence, and was the appellate court’s acquittal a possible view that should not be disturbed?
A Probable Defence Shifts the Burden Back to the Complainant
The Court applied Rangappa v. Sri Mohan, (2010) 05 SC CK 0036, under which “the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation”, and Basalingappa v. Mudibasappa, (2019) 04 SC CK 0037, which holds that an accused need only raise a probable defence on a preponderance of probabilities and that a “Court cannot insist on a person to lead negative evidence.” It noted the complainant’s reliance on Ashok Singh v. State of Uttar Pradesh, (2025) 04 SC CK 0316, that “The onus is not on the complainant at the threshold to prove his capacity/financial wherewithal”, and on Sanjabij Tari v. Kishore S. Borcar, (2025) 09 SC CK 0342, but distinguished them because there the accused had not raised a probable defence.
Here, the stop-payment request, the police complaint of 8 January 2013 and the first return memo reading ‘payment stopped by drawer’ supported the theft defence. Once that defence was raised, the complainant had to prove the transaction, and he did not: he gave no dates of advancing money, did not examine Rahaslal or his mother, produced no income-tax or ledger entry, and his bank statement did not show the payments. The Court found that “the complainant has failed to satisfactorily establish the alleged transaction” and that “The accused successfully created a reasonable doubt regarding the existence of a legally enforceable debt”. Applying Tulasareddi @ Mudakappa v. State of Karnataka, (2026) 01 SC CK 1876 and Babu Sahebagouda Rudragoudar v. State of Karnataka, (2024) 04 SC CK 0058, it held the appellate court’s view was a reasonably possible one and not perverse.
What the Court Actually Held
- The presumption under Sections 118 and 139 of the NI Act is rebuttable, and an accused need only raise a probable defence on a preponderance of probabilities.
- A stop-payment request and police complaint about a stolen cheque made before the cheque date, together with a ‘payment stopped by drawer’ return, constituted a probable defence.
- Once the defence was raised, the complainant’s failure to prove when and how the ₹17.15 lakh was advanced was fatal.
- The appeal against acquittal was dismissed, as the appellate court’s view was reasonably possible and not perverse.
Why This Judgment Matters
- It shows that the Section 139 presumption is not unbeatable where the accused acted promptly to report a lost or stolen cheque.
- It reminds complainants that large cash loans must be backed by evidence of source and payment.
- It reaffirms the narrow scope of interference with acquittals in cheque bounce cases.
What Should Advocates Take Away From the Judgment?
For Lenders and Borrowers
- If a cheque book or cheque goes missing, immediately inform your bank and the police in writing.
- If you lend large amounts, keep bank transfers, receipts and dates; cash without records is hard to prove.
- Call persons from whom you sourced the money as witnesses if your capacity is questioned.
For Counsel
- Distinguish Ashok Singh and Sanjabij Tari where the accused has a contemporaneous, documented defence.
- In acquittal appeals, show perversity, not just a better alternative view.
- Use Basalingappa to argue that the accused need not lead negative evidence.
Key Takeaways
- Section 139 presumption can be rebutted by a probable defence.
- Prior stop-payment and police complaint supported the ‘stolen cheque’ plea.
- The complainant failed to prove the loan’s dates and source.
- Acquittal upheld; possible view not disturbed.
Frequently Asked Questions
Can an accused escape a cheque bounce case by saying the cheque was stolen?
Only if the defence is probable. Here, the accused had asked his bank to stop payment and lodged a police complaint before the cheque date, which the Court accepted as a probable defence.
Does the complainant have to prove financial capacity?
Not at the threshold, per Ashok Singh. But once a probable defence is raised, the burden shifts back and the complainant must prove the transaction.
Why did the High Court not restore the conviction?
Because the appellate court’s acquittal was a reasonably possible view and not perverse, applying Tulasareddi and Babu Sahebagouda Rudragoudar.
Conclusion
The Chhattisgarh High Court’s ruling is a reminder that the presumption under the NI Act is a starting point, not the end of the inquiry: documented, timely conduct by the accused can shift the burden, and an undocumented loan will not survive scrutiny.
Practical takeaway: Report lost or stolen cheques to the bank and police immediately; and if you lend, document every rupee — it may decide your Section 138 case.
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