ASHOK KUMAR SHARMA vs UTTAM KUMAR DESHMUKH

VED
PRAKASH
DEWANGAN
1
Digitally signed
by VED
PRAKASH
DEWANGAN
Date:
2026.10.28
18:30:31 +0530

CGHC010171192019 2026:CGHC:45669
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
ACQA No. 392 of 2019
Reserved for Judgment on 15/10/2026
Judgment delivered on 28/10/2026
Ashok Kumar Sharma S/o Manohar Lal Sharma Aged About 55 Years R/o
Shanichari Bazar, Durg, Tahsil And District- Durg, Chhattisgarh.
... Appellant
versus
Uttam Kumar Deshmukh S/o Babulal Deshmukh Aged About 48 Years R/o
Bichpara, House No. 264, Nearly Bus Statnd, Village And Post- Nimum,
Police Station- Anda, District- Durg, Chhattisgarh.
... Respondent
(Cause title taken from Case Information System)
For Appellant : Mr. Jitendra Gupta and Ms. Upasana
Yadav, Advocates
For Respondent : Mr. Uttam Chand, Advocate on behalf
of Mr. R.K. Gomasta, Advocate
Hon'ble Shri Justice Ravindra Kumar Agrawal
C.A.V. Judgment
The present acquittal appeal under Section 378(4) of the Code of
1.
Criminal Procedure, 1973 has been filed by the appellant against the
impugned judgment dated 06.03.2019, passed by learned Judicial
Magistrate First Class, Durg, in Criminal Case (NI) No. 243 of 2011,

2
whereby the respondent/accused has been acquitted from the offence
of Section 138 of the Negotiable Instruments Act, 1881 (in short “NI
Act”).
The brief facts of the case are that the appellant was the complainant
2.
before the learned trial Court and the respondent was the accused.
The complainant prosecuted a complaint case under Section 138 of
the NI Act against the accused before the learned trial Court with the
allegation that both parties were well acquainted with each other for a
long time and they were having frequent money transaction between
them. For discharge of his liability of borrowed amount, the accused
had given a cheque of UCO bank, Civic Centre, Bhilai branch bearing
No. 935121, dated 30.11.2009 amounting to Rs. 2 lakhs. When the
complainant deposited the said cheque in his bank account at bank of
Maharashtra, Durg branch, the said cheque was dishonored by the
payee bank on the ground of insufficient balance in the bank account
of the accused. Initially, the complainant orally informed the accused
about dishonor of cheque and when he has not paid the amount, the
complainant served a legal demand notice to his counsel on
08.03.2010, which was delivered to the accused on 09.03.2010 and
when the amount of cheque was not paid to the complainant, he filed a
complaint case under Section 138 of NI Act on 01.04.2010. The
complaint case was registered on the same day and process was
issued to the accused. After his appearance, the details of offence
were explained on 23.02.2011 and after recording evidence of the
complainant, statement of the accused under Section 313 of CrPC has
been recorded. He denied the circumstances that appears against him,

3
pleaded innocence and has submitted that he borrowed Rs. 40,000/-
from the complainant only once and he has repaid the entire amount.
At the time of said transaction, he handed over the documents to the
complainant as a security, which has been misused by the
complainant. He too has examined himself and another defence
witness in his defence and relied upon certain documents. The learned
trial Court after hearing the parties and conclusion of the trial acquitted
the accused from the alleged offence holding that the complainant has
failed to prove the legally recoverable debt exists against the accused
and in discharge of the said liability he issued the cheque and there is
no sufficient ground to draw presumption in his favour. The said
judgment of acquittal is under challenge in the present appeal.
Learned counsel appearing for the appellant would submit that, the
3.
learned trial court has erred in fact and law while acquitting the
respondent/accused from the alleged offence. He would further submit
that the statutory presumption in favour of the complainant has been
ignored by the learned trial court. He would further submit that the
learned trial court has erroneously held that cheque in question (exhibit
P-2) was issued for discharge of the liability of borrowed amount of Rs.
40,000/- and with respect to the claimed amount by the complainant,
the complainant has not filed any documentary evidence except the
agreement (exhibit P-1) nor he examined any witness of the alleged
transaction. He would also submit that the accused has not denied that
he has not issued the cheque in favour of the complainant and once he
admitted his signature over the cheque, the burden shifts upon the
accused to show that there was no legally recoverable debt against

4
him. He would also submit that the learned trial Court has failed to
consider that against the dismissal of the civil suit filed by the
complainant, the first appeal is pending before this Court. All the
statutory presumptions are in favour of the complainant, yet the
complaint case has been dismissed by shifting burden upon the
complainant and holding that he has failed to prove his case. He would
further submit that the learned trial Court has also erroneously
considered that the complainant being the money lender has not
proved the transaction by producing the relevant documents and that
the transaction for more than Rs. 20,000/- in cash is prohibited under
the Income Tax Act. The complainant has produced the agreement
executed between the parties, which is sufficient to prima facie
establish the subject transaction between the parties, therefore, the
consideration of the learned trial Court is erroneous and the impugned
judgment of acquittal is liable to be set aside and the respondent/
accused may be convicted and sentenced for the alleged offence.
On the other hand, learned counsel for the respondent/accused
4.
opposes the submissions made by learned counsel for the appellant
and submitted that the learned trial court has considered every aspect
of the case and has acquitted the respondent/accused, which is strictly
in accordance with law. He would also submit that the learned trial
Court has rightly re-appreciated the entire evidence on record and
found that the complainant failed to establish the foundational facts
necessary for drawing the statutory presumption under Sections 118
and 139 of the Negotiable Instruments Act. It is submitted that the
accused was a money lender and he borrowed an amount of Rs.

5
40,000/- from the complainant and a promissory note (exhibit P-9) was
executed on 04.08.2007 and the said amount was repaid. The
documents given to him as a security of borrowed amount was
misused by the complainant. In the legal demand notice and the
complaint itself, the complainant has not disclosed nature of
transaction between them and when the amount of Rs. 2 lakhs was
borrowed by the accused. The source of the fund allegedly advanced
to the accused has also not been proved. None of the witnesses to the
transaction have been examined. The civil suit filed by the complainant
with respect to recovery of amount of Rs. 2 lakhs towards the same
cheque has been dismissed by the learned trial Court vide judgment
and decree dated 05.04.2013 and the complainant could not prove the
transaction between the parties with respect to loan of Rs. 2 lakhs. The
learned trial Court after appreciating the entire evidence available on
record and judgment passed by the Hon'ble Supreme Court holding
the field, acquitted the respondent/accused, which does not suffer from
any illegality or perversity and therefore, the acquittal appeal is liable to
be dismissed.
I have heard learned counsel for the parties and perused the record of
5.
the trial court and considered their rival submissions.
The case of the complainant was that, he was well acquainted with the
6.
accused and they had frequent money transactions between them and
in lieu of repayment of borrowed amount the accused issued the
subject cheque of Rs. 2 lakhs dated 30.11.2009 (exhibit P-2). The
complainant has not disclosed as to when the amount of Rs. 2 lakhs
was borrowed by the accused, but he averred in the complaint memo

6
that the accused had borrowed the amount on different occasions. The
said cheque was dishonored by the payee bank on 17.02.2010 and
thereafter, after service of legal demand notice, the complaint case
was filed. The accused denied his liability with the defence that he
borrowed an amount of Rs. 40,000/- from the complainant and as a
security thereof, the complainant got executed a promissory note and
also obtained a passport size photo, blank signed stamp paper, blank
signed cheque with the assurance that after repayment of Rs. 40,000/-
along with interest, he would return the documents. He repaid the
amount of Rs. 40,000/- along with interest in various installments and
completed it on 06.03.2010, but he has not returned his documents
and misused the same. He never borrowed the amount of Rs. 2 lakhs
from the complainant.
The respondent/accused though has not denied his signature over the
7.
subject cheque, but he specifically denied the existing liability of Rs. 2
lakhs with the defence that the subject cheque was misused by the
complainant. It is true that once the execution of the cheque is
admitted, the statutory presumptions under Sections 118(a) and 139 of
the Negotiable Instruments Act, 1881 operate in favour of the holder of
the cheque. The law is settled in  Rangappa v. Sri Mohan , (2010) 11
SCC 441 and  Bir Singh v. Mukesh Kumar , (2019) 4 SCC 197, that
the presumption includes the existence of a legally enforceable debt or
liability. However, the presumption is rebuttable, and the accused is not
required to discharge the burden beyond reasonable doubt. The
accused can rebut the presumption on the preponderance of
probabilities either by leading defence evidence or by relying upon the

7
material elicited from the complainant during cross-examination.
Therefore, the question is whether the accused succeeded in creating
a probable defence sufficient to rebut the statutory presumption or not.
In the case of Rangappa (supra), the Hon’ble Supreme Court has held
8.
that:-
“26. In light of these extracts, we are in
agreement with the respondent claimant that the
presumption mandated by Section 139 of the Act
does indeed include the existence of a legally
enforceable debt or liability. To that extent, the
impugned observations in Krishna Janardhan
Bhat may not be correct. However, this does not
in any way cast doubt on the correctness of the
decision in that case since it was based on the
specific facts and circumstances therein. As noted
in the citations, this is of course in the nature of a
rebuttable presumption and it is open to the
accused to raise a defence wherein the existence
of a legally enforceable debt or liability can be
contested. However, there can be no doubt that
there is an initial presumption which favours the
complainant.
27. Section 139 of the Act is an example of a
reverse onus clause that has been included in
furtherance of the legislative objective of
improving the credibility of negotiable
instruments. While Section 138 of the Act
specifies a strong criminal remedy in relation to
the dishonour of cheques, the rebuttable
presumption under Section 139 is a device to
prevent undue delay in the course of litigation.
However, it must be remembered that the offence
made punishable by Section 138 can be better

8
described as a regulatory offence since the
bouncing of a cheque is largely in the nature of a
civil wrong whose impact is usually confined to
the private parties involved in commercial
transactions. In such a scenario, the test of
proportionality should guide the construction and
interpretation of reverse onus clauses and the
defendant-accused cannot be expected to
discharge an unduly high standard or proof.
28. In the absence of compelling justifications,
reverse onus clauses usually impose an
evidentiary burden and not a persuasive burden.
Keeping this in view, it is a settled position that
when an accused has to rebut the presumption
under Section 139, the standard of proof for doing
so is that of "preponderance of probabilities".
Therefore, if the accused is able to raise a
probable defence which creates doubts about the
existence of a legally enforceable debt or liability,
the prosecution can fail. As clarified in the
citations, the accused can rely on the materials
submitted by the complainant in order to raise
such a defence and it is conceivable that in some
cases the accused may not need to adduce
evidence of his/her own.”
In  Basalingappa v. Mudibasappa , (2019) 5 SCC 418, the Hon’ble
9.
Supreme Court has held that the burden upon the accused is only to
raise a probable defence, and once such defence is established, the
burden shifts back upon the complainant to prove the transaction in
question. The Hon’ble Supreme Court has held that:-
“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.

9
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 in 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
in the witness box to support his defence.
26. Applying the preposition of law as noted
above, in facts of the present case, it is clear that
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 PW 1, when the
specific question was put that cheque was issued
in relation to loan of Rs 25,000 taken by the
accused, PW 1 said that he does not remember.
PW 1 in his evidence admitted that he retired in
1997 on which date he received 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

10
loan of Rs 50,000 with regard to which Complaint
No. 119 of 2012 was filed by the complainant,
copy of which complaint was also filed as Ext. D-
2, there was burden on the complainant to prove
his financial capacity. In the year 2010-2011, as
per own case of the complainant, he made
payment of Rs 18 lakhs. During his cross-
examination, when 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.”
10. From perusal of the complaint memo, it transpires that the complainant
has not disclosed any date on which the amount was borrowed by the
accused. It is only mention that the accused borrowed the amount on
different dates and to repayment of it, he issued the subject cheque of
Rs. 2 lakhs. Even in the legal demand notice (exhibit P-6C) the
complainant has not disclosed any date of loan transaction.
11. In the evidence, the complainant Ashok Kumar Sharma (PW-1) stated
that in the year 2007, he started money lending business, but he could
not succeeded in the said business. He applied for money lending
license in the year 2007, which could be granted in his favour in the
year 2008. He forgotten the name of person with whom the accused
came to him to borrow the amount. Subsequently, he admitted that
Devdhar Sahu was the person, who took him to his shop. He further
admitted that Devdhar Sahu brought various persons to him who were
in need of money and on his instance, he advanced loan to them and
he was also engaged in recovery of the loan amount. He further stated

11
that in the month of February 2007, the accused borrowed an amount
of Rs. 40,000/- for which he obtained a promissory note from him. He
further stated that the transaction has not been reduced in writing in
any register, even its repayment has also not been reduced in writing.
He admitted that the accused had repaid Rs. 40,000/-. He denied the
receipts executed by him or his son Vikas in lieu of repayment of
borrowed amount in installments. He admitted the seal of his shop in
the document (exhibit D-1C). After repayment of Rs. 40,000/- by the
accused, he returned the promissory note to him. He further stated that
he advanced loan of Rs. 2 lakhs to the accused on 15.07.2007, but the
same has not been mentioned in the legal demand notice, even the
execution of the agreement has also not been mentioned in the said
notice (exhibit P-6). He admitted that after service of notice upon the
accused, he made a complaint against him to the Superintendent of
Police, Durg. He further admitted that his suit for recovery of the
amount filed against the accused was dismissed by the learned trial
Court. He admitted that there is overwriting on the date of subject
cheque. He also admitted that in his complaint memo, there is no
averment that the amount of Rs. 2 lakhs was given to the accused on
15.07.2007 and even the execution of agreement has also not been
averred in the complaint memo. Along with the complaint memo, the
copy of agreement has not been annexed. He further stated that the
accused repaid the amount of Rs. 40,000/- in the month of February
which he kept in his shop and the remaining amount of Rs. 1,60,000/-
was also kept by him from his business and then he advanced loan of
Rs. 2 lakhs to the accused. He could not say about the denomination
of the currency note of Rs. 2 lakhs. He admitted that various cheque

12
bounce cases are pending before the court, which are filed by him. He
also admitted that in the income tax return, he has not disclosed the
pending litigation. Except the evidence of the complainant, he has not
examined any other witness.
On the other hand, the defence of the accused is supported by
12.
documentary proof of repayment or of the original loan transaction of
Rs. 40,000/-, complaint made by him with respect to misuse of cheque
and the evidence of the complainant made in the civil suit, which was
filed by the complainant against the defendant and the same has been
undisputedly dismissed by the learned trial Court.
The accused Uttam Kumar Deshmukh has examined himself as DW-1.
13.
He stated in his examination-in-chief about loan transaction of Rs.
40,000/- from the complainant, handing over the signed blank stamp
paper, signed blank cheque and photograph, refund of the borrowed
amount along with the interest and misusing of the cheque and stamp
paper by the complainant. He denied the loan of Rs. 2 lakhs. He
proved in his defence the documents (exhibit D-1C to D-9C) which was
with relates to repayment of the borrowed amount in installments,
exhibit D-10C is the list of cases, which were prosecuted by the
complainant against different persons for dishonor of cheque, exhibit
D-14C, which is the complaint made to the Superintendent of Police,
Durg on 06.08.2010 about the misuse of cheque by the complainant,
exhibit D-17C with respect to the money lending license in favour of
the complainant, exhibit P-18C is the evidence of Devdhar Sahu and
exhibit D-19C is the evidence of the complainant, exhibit D-21C is
evidence of the complainant in the civil suit and exhibit D-22 is the

13
judgment and decree dated 05.04.2013 of the learned trial Court
passed in civil suit No. 30-B/2011. In cross-examination, he reiterated
that he borrowed an amount of Rs. 40,000/- from the complainant only
once, which he repaid. He denied the borrowing of Rs. 2 lakhs and
execution of any agreement. He proved the promissory note (exhibit P-
9), which he executed at the time when he borrowed Rs. 40,000/- from
the complainant. He denied that he borrowed Rs. 40,000/- from the
complainant, twice.
The promissory note (exhibit P-9) is dated 04.08.2007 and the alleged
14.
agreement (exhibit P-1C) is dated 15.07.2007. The complainant
himself has not stated in his evidence that the accused has borrowed
Rs. 40,000/-, twice. When the agreement was executed on 15.07.2007
for the alleged transaction of Rs. 2 lakhs, there was no question to
execute the promissory note on 04.08.2007 for Rs. 40,000/-. In the
cross-examination of the accused, the complainant given a suggestion
that there was two transactions of borrowing loan of Rs. 40,000/-.
DW-2, Devdhar Sahu is the person, who was working for the
15.
complainant and in whose intervention, the loan of Rs. 40,000/- was
advanced to the accused. He stated that at the time of advancing loan
of Rs. 40,000/-, the complainant obtained a blank cheque, a
promissory note, a stamp paper and a photograph from the accused
and obtained his signature over the blank documents and after
completing the formalities, the complainant advanced loan of Rs.
40,000/- on 15.05.2007. The accused left the part payment of the
borrowed amount to him which he handed over to the complainant and
thus the total amount of Rs. 42,000/- was paid by the accused to the

14
complainant through him. When the accused demanded his
documents back, the complainant evaded for the same and thereafter,
produced the cheque for its encashment after filling the amount of Rs.
2 lakhs. He proved the documents (exhibit D-1 to D-9). In cross-
examination, he stated that the complainant advanced loan to 12-13
persons on his instance. He worked for him for recovery of the
borrowed amount for about 1-2 months. He deposited the amount of
the accused to the complainant 2-3 times. It is the accused who
demanded his documents back from the complainant.
From the aforesaid evidence, it is evident that the accused has been
16.
able to establish a probable defence sufficient to rebut the presumption
arising in favour of the complainant. The complainant's testimony
suffers from material inconsistencies and omissions regarding the
alleged loan transaction of Rs. 2 lakhs. The alleged transaction and the
execution of the agreement dated 15.07.2007 were neither mentioned
in the legal demand notice nor in the complaint, and the complainant
admitted that no copy of the agreement was annexed to the complaint.
Further, the complainant admitted the repayment of the earlier loan of
Rs. 40,000/-, the return of the corresponding promissory note, and the
existence of overwriting in the date of the disputed cheque. The
defence version regarding repayment of the loan of Rs. 40,000/- and
subsequent misuse of the signed blank cheque and other documents
is supported by documentary evidence, the testimony of DW-2
Devdhar Sahu, the complaint lodged by the accused before the
Superintendent of Police, Durg, and the complainant's own evidence in
the civil suit, which was dismissed by the trial Court. The discrepancy

15
between the date of the promissory note and that of the alleged
agreement, coupled with the absence of cogent evidence regarding
the advancement of Rs. 2 lakhs, further lends credence to the defence
version. Thus, upon a cumulative assessment of the oral and
documentary evidence on record, the accused has raised a probable
defence that creates reasonable doubt regarding the existence of a
legally enforceable debt or liability corresponding to the amount of the
disputed cheque. Consequently, the statutory presumption stands
rebutted, and the burden shifts back to the complainant to establish the
alleged transaction and the existence of a legally enforceable debt or
liability, which the complainant has failed to discharge.
In the case of  Dattatraya v. Sharanappa , 2024 (8) SCC 573, the
17.
Hon’ble Supreme Court has reiterated that although the statutory
presumption favours the holder of the cheque, the accused can rebut
the same by showing circumstances which render the existence of the
alleged debt doubtful or improbable. Once such probable defence
emerges from the evidence, the complainant must independently
satisfy the Court regarding the transaction.
“ 18. As the presumption contemplated by virtue
of Section 118 of the NI Act, 1881 entails, Section
139 was similarly introduced to provide for a
presumption that the holder of cheque had
received the issued cheque concerned towards
discharging of the liability of the drawer, either in
whole or in part. Therefore, at this juncture, it is
ideal to make a reference to Section 118 of the NI
Act, 1881, which is reproduced as:
"118. Presumptions as to negotiable
instruments.*—Until the contrary is

16
proved, the following presumptions shall be
made—
(a) of consideration: that every negotiable
instrument was made or drawn for
consideration, and that every such
instrument when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or
transferred for consideration;
(b) as to date : that every negotiable
instrument bearing a date was made or
drawn on such date;
(c) as to time of acceptance : that every
accepted bill of exchange was accepted
within a reasonable time after its date and
before its maturity;
(d) as to time of transfer : that every
transfer of a negotiable instrument was
made before its maturity;
(e) as to order of indorsement : that the
indorsements appearing upon a negotiable
instrument were made in the order in which
they appear thereon;
(f) as to stamp : that a lost promissory note,
bill of exchange or cheque was duly
stamped;
(g) that holder is a holder in due course :
that the holder of a negotiable instrument is
a holder in due course:
Provided that, where the instrument has
been obtained from its lawful owner, or
from any person in lawful custody thereof,
by means of an offence or fraud, or has

17
been obtained from the maker or acceptor
thereof by means of an offence or fraud or
for unlawful consideration, the burden of
proving that the holder is a holder in due
course lies upon him.”
19. Chapter XIII of the NI Act, 1881, of which
Section 118 is a part, lays down specific rules for
evidence to be adduced within the scheme of the
Act herein. As the text of the said provision
showcases, it raises a rebuttable presumption as
against the drawer to the extent that the
negotiable instrument concerned was drawn and
subsequently accepted, indorsed, negotiated, or
transferred for an existing consideration, and the
date so designated on such an instrument is the
date when the negotiable instrument concerned
was drawn. It is also further presumed that the
same was transferred before its maturity and that
the order in which multiple indorsements appear
on such an instrument, that is, the deemed order
thereon. Lastly, the holder of a negotiable
instrument is one in its due course, subject to a
situation where the instrument concerned while
being obtained from a lawful owner and from his
or her lawful custody thereof through undertaking
of an offence as contemplated under any statute
or through the means of fraud, the burden to
prove him or her being a holder in due course,
instead, lies upon such a holder.
20. Accordingly, to begin with, the bare provision
of Section 139 of the NI Act, 1881 is reproduced
herein below:
"139. Presumption in favour of holder.—It
shall be presumed, unless the contrary is
proved, that the holder of a cheque received

18
the cheque, of the nature referred to in
Section 138 for the discharge, in whole or in
part, of any debt or other liability.”
The aforesaid presumption entails an
obligation on the court conducting the trial
for an offence under Section 138 of the NI
Act, 1881 to presume that the cheque in
question was issued by the drawer or
accused for the discharge of a particular
liability. The use of expression “shall
presume” ameliorates the conundrum
pertaining to the right of the accused to
present evidence for the purpose of
rebutting the said presumption.
Furthermore, the effect of such presumption
is that, upon filing of the complaint along
with relevant documents, thereby prima
facie establishing the case against the
drawer, the onus of proof shifts on the
drawer or accused to adduce cogent
material and evidence for rebutting the said
presumption, and as established in Laxmi
Dyechem v. State of Gujarat , based on
preponderance of probabilities.
21. While describing the offence envisaged under
Section 138 of the NI Act, 1881 as a regulatory
offence for largely being in the nature of a civil
wrong with its impact confined to private parties
within commercial transactions, the three-Judge
Bench in the decision of Rangappa highlighted
Section 139 of the NI Act, 1881 to be an example
of a reverse onus clause. This is done so, as the
Court expounds, in the light of Parliament’s intent,
which can be culled out from the peculiar placing
of act of dishonour of cheque in a statute having

19
criminal overtones. The underlying object of such
deliberate placement is to inject and enhance
credibility of negotiable instruments. Additionally,
the reverse onus clause serves as an
indispensable “device to prevent undue delay in
the course of litigation”. While acknowledging the
test of proportionality and having laid the
interpretation of Section 139 of the NI Act, 1881
hereof, it was further held that an accused cannot
be obligated to rebut the said presumption
through an unduly high standard of proof. This is
in light of the observations laid down by a
coordinate Bench in Hiten P. Dalal v.
Bratindranath Banerjee, whereby it was clarified
that the rebuttal ought not to be undertaken
conclusively by an accused, which is reiterated as
follows : (SCC p. 25, para 23)
23. In other words, provided the facts
required to form the basis of a presumption
of law exist, no discretion is left with the
court but to draw the statutory conclusion,
but this does not preclude the person
against whom the presumption is drawn
from rebutting it and proving the contrary. A
fact is said to be proved when, after
considering the matters before it, the court
either believes it to exist, or considers its
existence so probable that a prudent man
ought, under the circumstances of the
particular case, to act upon the supposition
that it exists.
Therefore, the rebuttal does not have to be
conclusively established but such evidence
must be adduced before the court in
support of the defence that the court must

20
either believe the defence to exist or
consider its existence to be reasonably
probable, the standard of reasonability
being that of the “prudent man”.
22.Therefore, it may be said that the liability of the
defence in cases under Section 138 of the NI Act,
1881 is not that of proving its case beyond
reasonable doubt.
23. In light of the aforesaid discussion, and as
underscored by this Court recently in the decision
of Rajesh Jain v. Ajay Singh^9, an accused may
establish non-existence of a debt or liability either
through conclusive evidence that the cheque
concerned was not issued towards the presumed
debt or liability, or through adduction of
circumstantial evidence vide standard of
preponderance of probabilities.”
Once the presumption under Sections 118 and 139 of the N.I. Act
18.
stood rebutted by a probable defence, the burden shifted back upon
the complainant to establish the existence of a legally recoverable debt
of Rs.2 lakhs by cogent and reliable evidence. In the present case,
apart from the cheque and the disputed agreement, there is no
independent evidence proving actual advancement of Rs. 2 lakhs to
the accused. The complainant's failure to produce the most natural and
best evidence, namely the money-lending records, account books and
bank statements, assumes considerable importance. The trial court,
after a detailed analysis of the evidence, reached the conclusion that
the complainant had failed to discharge the burden which reverted
upon him after rebuttal of the presumption. Such a conclusion is a
plausible view based on the evidence available on record.

21
In the case of Rajesh Jain v. Ajay Singh , 2023 (10) SCC 148, the
19.
Hon'ble Supreme Court has considered the burden of proof and
presumptions under the NI Act and explained that once the accused
established, on a preponderance of probability that no debt or liability
existed in the manner pleaded, the burden shifts to the complainant to
prove the debt as a manner of fact. If the complainant fails, the
complaint is liable to be dismissed. It has been held that:-
“28. There are two senses in which the phrase
"burden of proof" is used in the Evidence Act,
1872 ("the Evidence Act" hereinafter). One is the
burden of d proof arising as a matter of pleading
and the other is the one which deals with the
question as to who has first to prove a particular
fact. The former is called the "legal burden" and it
never shifts, the latter is called the "evidential
burden" and it shifts from one side to the other.
[See Kundan Lal Rallaram v. Custodian (Evacuee
Property).]
29. The legal burden is the burden of proof which
remains constant throughout a trial. It is the
burden of establishing the facts and contentions
which will support a party's case. If, at the
conclusion of the trial a party has failed to
establish these to the appropriate standards, he
would lose to stand. The incidence of the burden
is usually clear from the pleadings and usually, it
is incumbent on the plaintiff or complainant to
prove what he pleaded or contends. On the other
hand, the evidential burden may shift from one
party to another as the trial progresses according
to the balance of evidence given at any particular
stage; the burden rests upon the party who would

22
fail if no evidence at all, or no further evidence, as
the case may be is adduced by either side (see
Halsbury's Laws of England, 4th Edn. para 13).
While the former, the legal burden arising on the
pleadings is mentioned in Section 101 of the
Evidence Act, the latter, the evidential burden, is
referred to in Section 102 thereof. [G. Vasu v.
Syed Yaseen Sifuddin Quadri affirmed in Bharat
Barrel & Drum Mfg. Co. v. Amin Chand Payrelal .]
30. Presumption, on the other hand, literally
means "taking as true without examination or
proof. In Kumar Exports v. Sharma Carpets, this
Court referred to presumption as "devices by use
of which courts are enabled and entitled to
pronounce on an issue notwithstanding that there
is no evidence or insufficient evidence."
31. Broadly speaking, presumptions are of two
kinds, presumptions of fact and of law.
Presumptions of fact are inferences logically
drawn from one fact as to the existence of other
facts. Presumptions of fact are rebuttable by
evidence to the contrary. Presumptions of law
may be either irrebuttable (conclusive
presumptions), so that no evidence to the
contrary may be given or rebuttable. A rebuttable
presumption of law is a legal rule to be applied by
the Court in the absence of conflicting evidence
(Halsbury, 4th Edn., paras 111, 112]. Among the
class of rebuttable presumptions, a further
distinction can be made between discretionary
presumptions ("may presume") and compulsive or
compulsory presumptions ("shall presume"). [G.
Vasu v. Syed Yaseen Sifuddin Quadri¹2]
32. The Evidence Act provides for presumptions,
which fit within one of three forms: "may presume"

23
(rebuttable presumptions of fact), "shall presume"
(rebuttable presumption of law) and conclusive
presumptions (irrebuttable presumption of law).
The distinction between "may presume" and
"shall presume" clauses is that, as regards the
former, the Court has an option to raise the
presumption or not, but in the latter case, the
Court must necessarily raise the presumption. If
in a case the Court has an option to raise the
presumption and raises the presumption, the
distinction between the two categories of
presumptions ceases and the fact is presumed,
unless and until it is disproved. [G. Vasu v. Syed
Yaseen Sifuddin Quadri]
*
44. Therefore, in fine, it can be said that once the
accused adduces evidence to the satisfaction of
the Court that on a preponderance of probabilities
there exists no debt/liability in the manner
pleaded in the complaint or the demand notice or
the affidavit-evidence, the burden shifts to the
complainant and the presumption "disappears"
and does not haunt the accused any longer. The
onus having now shifted to the complainant, he
will be obliged to prove the existence of a
debt/liability as a matter of fact and his failure to
prove would result in dismissal of his complaint
case. Thereafter, the presumption under Section
139 does not again come to the complainant's
rescue. Once both parties have adduced
evidence, the Court has to consider the same and
the burden of proof loses all its importance.
[Basalingappa v. Mudibasappa; see also,
Rangappa v. Sri Mohan.]”

24
In the present case, the learned trial Court, upon appreciation of the
20.
evidence, has recorded a finding that the respondent/accused
succeeded in raising a probable defence by eliciting material
admissions from the complainant regarding the absence of particulars
as to the mode of advancement of the alleged loan, non-production of
money-lending records, account books and bank statements despite
specific challenge, and inconsistencies relating to the complainant's
lending activities and source of funds. Thus, unlike the facts before the
Hon’ble Supreme Court in the aforesaid decisions, the presumption
available to the complainant stood sufficiently rebutted on the
preponderance of probabilities, thereby shifting the burden back upon
the complainant to independently establish the existence of a legally
enforceable debt, which the learned trial Court has rightly considered.
It is a settled principle that where an order of acquittal has been
21.
recorded, and the view adopted by the trial court is a reasonably
possible view arising from the evidence on record, the appellate court
would be slow to interfere merely because another view may also be
possible. The presumption of innocence stands reinforced by an order
of acquittal.
The Hon’ble Supreme Court, in Tulasareddi @ Mudakappa &
22.
Another v. State of Karnataka , reported in 2026 SCC OnLine SC 89,
held that :
“27. In the case of Babu Sahebagouda
1
Rudragoudar v. State of Karnataka this Court
held in paragraphs 39 to 42 as under:
1 . 2024 (8) SCC 149

25
39. This Court in Rajesh Prasad v. State of
2
Bihar 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 the following
3
words: (Chandrappa v. State of Karnataka ,
para 42)
‘42. From the above decisions, in our
considered view, the following general
principles regarding powers of the appellate
court while dealing with an appeal against
an order of acqu i ttal 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
exercise of such power and an appellate
court on the evidence before it may reach
its own conclusion, both on questions of
fact and of law.
(3) Various expressions, such as,
“substantial and compelling reasons”, “good
and sufficient grounds”, “very strong
circumstances”, “distorted conclusions”,
2 . (2022) 3 SCC 471 : (2022) 2 SCC (Cri) 31
3 . (2007) 4 SCC 415 : (2007) 2 SCC (Cri)325], SCC p. 432

26
“glaring mistakes”, etc. are not intended to
curtail 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 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
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 H.D. Sundara v. State of
4
Karnataka , this Court summarised the
principles governing the exercise of
appellate jurisdiction while dealing with an
appeal against acquittal under Section 378
CrPC as follows : (SCC p. 584, para 8)
4. (2023) 9 SCC 581 : (2023) 3 SCC (Cri) 748]

27
“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:

28
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.
42. The appellate court, in order to interfere
with the judgment of acquittal would have to
record pertinent findings on the above
factors if it is inclined to reverse the
judgment of acquittal rendered by the trial
court.
*
29. From the aforesaid decisions rendered by this
Court, it can be said that if two reasonable
conclusions are possible on the basis of the
evidence on record, the Appellate Court should
not disturb the findings of acquittal recorded by
the Trial Court. Further, 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. The following
principles have to be kept in mind by the
Appellate Court while dealing with the appeals
against an order of acquittal:
(a) whether the judgment of acquittal
suffers from patent perversity;

29
(b) whether the judgment is based on
misreading/omission to consider the
material evidence on record;
(c) an order of acquittal is to be interfered
with only when there are “compelling and
substantial reasons” for doing so. If the
order is “clearly unreasonable”, it is a
compelling reason for interference.’
(d) the appellate court, while deciding an
appeal against acquittal, after re-
appreciating 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;
(e) 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
(f) 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.”
In the present case, the findings recorded by the learned trial Court
23.
are neither illegal nor perverse, nor do they suffer from misreading of
evidence. The accused successfully created a reasonable doubt
regarding the existence of a legally enforceable debt of Rs. 2 lakhs
and the complainant failed to counter such doubt by reliable evidence.

30
Consequently, this Court is of the considered opinion that no ground is
made out for interference with the judgment of acquittal passed by the
learned trial Court.
The acquittal appeal, therefore, deserves to be and is accordingly
24.
dismissed .
Sd/-
(Ravindra Kumar Agrawal)
Judge
ved