VISHAL KUMAR THARWANI vs ASHOK SINGH

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VED
PRAKASH
DEWANGAN
Digitally signed
by VED
PRAKASH
DEWANGAN
Date: 2026.10.28
18:33:18 +0530

CGHC010185932021 2026:CGHC:45650
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
ACQA No. 159 of 2021
Reserved for Judgment on 14/10/2026
Judgment delivered on 28/10/2026
Vishal Kumar Tharwani S/o Shri Vijay Kumar Tharwani Aged About 26 Years
R/o Behind Shri Ram Care Hospital, Geetanjali Nagar, Phase - 1, Nehru
Nagar, Bilaspur Police Station Civil Line, Tahsil And District Bilaspur
Chhattisgarh., District : Bilaspur, Chhattisgarh
... Appellant
versus
Ashok Singh S/o Jagdish Singh Aged About 43 Years R/o Near Old
Employment Office, Chandani Chowk, Kududand, Bilaspur Police Station
Civil Line, Tahsil And District Bilaspur Chhattisgarh., District : Bilaspur,
Chhattisgarh
... Respondent
(Cause title taken from Case Information System)
For Appellant : Mr. Vaibhav A. Goverdhan, Advocate
For Respondent : Mr. Vikrant Pillai, 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
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impugned judgment dated 02.04.2018, passed by learned 9
Additional Sessions Judge, Bilaspur in Criminal Appeal No. 229 of
2017, whereby the respondent/accused has been acquitted from the

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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, the complainant is running a grocery shop in the name
and style of Ganesh Provision Stores and the accused was engaged
in property dealing business. They were well acquainted with each
other and having good relation. For his business purposes, the
accused borrowed an amount of Rs. 17,15,000/- from the complainant,
which he given after collecting the cash amount from the amount of
death claim of his father under the Life Insurance Policy, which was
allowed on 08.12.2012 in the name of his mother Smt. Manju
Tharwani and taking loan from one Rahaslal and thereafter extended
loan to the accused in installments between December 2012 and
January 2013. The accused assured him that he will return the amount
within two months. In lieu of the borrowed amount and its repayment,
the accused gave a cheque of Chhattisgarh Rajya Sahakari Bank
Maryadit, Nehru Chowk, Bilaspur bearing No. 131141, dated
25.03.2013 amounting to Rs. 17,15,000/-. When the complainant
deposited the said cheque in his bank account running at State Bank
of India, Tifra, Bilaspur, the said cheque was dishonored by the payee
bank on 28.03.2013. The complainant informed the accused about
dishonor of the cheque and then the accused requested him to
present the cheque again for its clearance. On 08.05.2013, when the

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complainant again presented the said cheque for its clearance through
his bank account, the same was again dishonored by the payee bank
on 10.05.2013 on the ground of insufficient fund in the bank account of
the accused. The intimation of dishonor of cheque was received by the
complainant on 14.05.2013. The complainant served a legal demand
notice to the accused through his counsel on 07.06.2013, but the
same was returned unserved on 15.06.2013 with the endorsement of
not claimed. Since the accused has not paid the amount of cheque, he
filed the complaint case under Section 138 of NI Act on 17.07.2013
before the learned Judicial Magistrate First Class, Bilaspur. The
complaint case was registered on 21.08.2013 and process was issued
to the accused. When after service of summons and bailable warrant
upon the accused, he had not appeared the warrant of arrest was
issued against him on 05.01.2015 and then on 16.03.2015 the
accused appeared in the proceeding and was released on bail. The
details of offence were explained on 18.05.2015 and thereafter the
evidence of the complainant witnesses were recorded. The statement
of the accused under Section 313 of CrPC has also been recorded in
which he denied the circumstances that appears against him, pleaded
innocence and has submitted that, he has been falsely implicated in
the offence. He also stated that his cheque was stolen for which he
already made a complaint to Civil Lines police station and by misusing
his cheque, the complainant has falsely prosecuted him. The accused
examined himself as DW-1.
After appreciation of oral and documentary evidence led by the parties,
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the learned trial Court vide its judgment dated 27.11.2017 convicted

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the respondent for the offence under Section 138 of NI Act and
sentenced him for simple imprisonment for 6 months and
compensation of Rs. 17,15,000/- with default stipulations. The
judgment of conviction and sentence was challenged by the accused
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before the learned 9 Additional Sessions Judge, Bilaspur in Criminal
Appeal No. 229 of 2017, which was allowed by the learned appellate
court vide its judgment dated 02.04.2018 and acquitted the accused
from the offence of Section 138 of NI Act. Hence this appeal against
acquittal.
Learned counsel appearing for the appellant/complainant would submit
4.
that the learned appellate court has erred in facts and law while
acquitting the respondent/accused from the alleged offence. The well-
reasoned judgment of conviction and sentence has been set aside by
the learned appellate court by holding that the complainant has failed
to prove his financial capacity to advance loan of Rs. 17,15,000/- to
the accused. The complainant has duly proved his financial capacity
by making averment that he managed the fund from the amount
received by his mother Smt. Manju Tharwani towards death claim of
his father and borrowed some of the amount from Rahaslal. The
learned appellate court has erroneously considered that the burden to
prove the financial capacity was upon the complainant in which no
sufficient evidence has been produced and therefore there exists no
legally recoverable debt against the accused ignoring the statutory
presumption available in favour of the complainant. He would also
submit that the accused had not denied his signature over the subject
cheque and therefore, the presumption under Sections 118 and 139 of

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NI Act are in favour of the complainant and he is not required to prove
his financial capacity beyond reasonable doubt in the complaint case.
By relying upon the judgment of Ashok Singh v. State of Uttar
Pradesh , 2025 Live Law SC 383, he would submit that even if the
complainant could not examine the relevant witnesses with respect to
source of funds that itself would not discharge the accused to prove
his defence. The complainant is required only to prove the source of
fund by preponderance of probabilities that he had sufficient source of
fund to advance loan to the accused, which he did in the present case.
The learned appellate court has considered only the aspect of source
of fund of the complainant and other evidence and statutory
presumption have not been considered while passing the judgment of
acquittal of the accused. It is further submitted by him that the learned
trial Court has rightly considered the document (exhibit P-10), which
was the agreement executed between the complainant and Rahaslal
on 04.01.2013 borrowing Rs. 7 lakhs. He would also submit that the
accused could not prove the theft of his cheque and misusing the
cheque by the complainant as there is sufficient manipulations in the
acknowledgment of the complaint allegedly made by him to the police
station. The accused had not made effort to get an offence registered
for misusing of his cheque and only making a complaint is not
sufficient to establish his defence. Further, the legal demand notice
has not been accepted by the accused and has not replied the same,
which also gives presumption against him, yet the learned appellate
court acquitted the respondent/accused which suffers from perversity
and illegality and the impugned judgment of acquittal is liable to be set
aside. In support of his submission, he would also rely upon the case

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of “ Sanjabij Tari v. Kishore S. Borcar and Another ” 2025 LiveLaw
SC 952.
Per contra, learned counsel appearing for the respondent/accused
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opposes the submissions made by learned counsel for the appellant
and submitted that the learned appellate court has rightly considered
the financial capacity of the complainant to advance loan to the
accused as he claimed huge cash amount was given to the accused.
The agreement (exhibit P-10) clearly demonstrates that the accused
was incapacitated to advance loan to the accused as he himself
borrowed an amount of Rs. 7 lakhs from Rahaslal on 04.01.2013 for
his own personal requirement. He would also submit that from the
account statement of Smt. Manju Tharwani (exhibit P-9), it transpires
that an amount of Rs. 2 lakhs was withdrawn by herself on 04.01.2013
and Rs. 2 lakhs on 05.01.2013 by herself and there is no evidence that
the same amount was given to the accused. The complainant has not
disclosed anywhere as to what amount was given to the accused on
which date. He would further submit that the cheque of the accused
was stolen for which he made a police complaint on 08.01.2013
(exhibit D-2) and also made an application on 08.01.2013 to the bank
for stop payment (exhibit D-1). Initially, the cheque was dishonored on
the ground of stop payment on 28.03.2013 (exhibit P-3).
Subsequently, the complainant again deposited the said cheque on
08.05.2013 and this time the cheque was dishonored on the ground of
funds insufficient. The accused has bonafidely stopped the payment of
cheque as the same was stolen and subsequent dishonor on the
ground of funds insufficient itself is doubtful. No demand notice was

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received by the accused and therefore, he could not replied the same.
Relying upon the judgment of Dattatraya v. Sharanappa , 2024 (8)
SCC 573, he would submit that the presumptions are rebuttable
presumptions and the accused has duly rebutted the presumptions
and the burden again shifts upon the complainant to prove his case in
accordance with law, in which he failed to prove the financial capacity
to advance loan of such a huge money that too without any
documentary proof. The complainant has not produced any
documentary evidence with respect to his financial capacity and his
inability to put forth the relevant evidence of the loan advanced, no
presumption could be drawn against the accused under Section 139 of
NI Act. The accused is sufficiently discharged his burden and rebut the
presumption. The evidence of the complainant is also full of
contradictions and material inconsistencies and therefore, the learned
appellate court has rightly considered the financial capacity of the
complainant and held that the complainant has failed to prove that he
was capable to advance loan of Rs. 17,15,000/- to the accused and
also failed to prove that there exists a legally recoverable debt against
the accused, which does not suffer from any illegality or perversity. He
would also submit that where two views are possible and the learned
appellate court after the appreciation of evidence accepted the view in
favour of the accused, the same cannot be reverted in an appeal
against acquittal without there being any consideration of grave
miscarriage of justice. Therefore, the appeal against acquittal have no
merit and liable to be dismissed.

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I have heard learned counsel for the parties and perused the record of
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the trial court as well as the appellate court and considered their rival
submissions.
The case of the complainant is that in between December 2012 and
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January 2013, he advanced loan a sum of Rs. 17,15,000/- to the
respondent/accused on account of his business need and towards
discharge of the said liability, the accused issued cheque No. 131141
dated 25.03.2013 for Rs. 17,15,000/-, which was dishonored for
insufficiency of funds and despite notice, the accused had not repaid
the same. The accused denied from borrowing money from the
complainant with the defence that the subject cheque was stolen from
his office, which was misused by the complainant. He made a police
complaint and stop payment of the cheque from the bank. Initially, the
cheque was dishonored on the ground of stop payment and
subsequently it was dishonored for insufficient fund. The accused also
raised defence that the complainant himself had borrowed Rs. 7 lakhs
from Rahaslal on 04.01.2013 and he himself was incapacitated to
advance loan to the accused. The learned appellate court has
considered the financial capacity of the complainant to advance loan
to the accused of such a huge amount of Rs. 17,15,000/- in cash
without any documentary proof and has acquitted the accused from
the alleged offence.
It is true that once the execution of the cheque is admitted, the
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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 well settled in  Rangappa v. Sri Mohan , (2010) 11

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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
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.
In the case of Rangappa (supra), the Hon’ble Supreme Court has held
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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

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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
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.”

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In  Basalingappa v. Mudibasappa , (2019) 5 SCC 418, the Hon’ble
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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.
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

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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 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.”
11. From the evidence of the complainant, it emerges that although he
claimed to have advanced Rs. 17,15,000/- between December 2012
and January 2013, neither the complaint, nor the statutory notice, nor
the affidavit under Section 145 of the NI Act disclosed the date on
which the amount was given to the accused. Though he averred that
he arranged the amount from the death claim amount received by his

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mother on 08.12.2012 under the Life Insurance claim and borrowed
some amount from one Rahaslal and in support thereof, he filed the
bank statement of the bank account of his mother Smt. Manju
Tharwani (exhibit P-9) and agreement with Rahaslal dated 04.01.2013
(exhibit P-10). The bank account statement of Smt. Manju Tharwani
(exhibit P-9) discloses that an amount of Rs. 8,81,328/- was credited
on 08.12.2012, however certain withdrawals of cash amount from
ATM, an amount of Rs. 2 lakhs was withdrawn in cash on 04.01.2013
and Rs. 2 lakhs in cash on 05.01.2013 in self withdrawal. The
agreement (exhibit P-10) discloses that on 04.01.2013, the
complainant borrowed an amount of Rs. 7 lakhs from Rahaslal for his
personal need. The said person Rahaslal has not been examined by
the complainant to prove that he actually advanced an amount of Rs. 7
lakhs to the complainant. The omission assumes significance because
the alleged transaction was not a casual advance of a nominal amount
but a substantial sum of Rs. 17,15,000/-, and according to the
complainant, the amount was advanced in cash.
The learned appellate court has noticed material inconsistencies
12.
regarding the complainant's financial capacity. The appellate court has
considered that the complainant has not produced his income tax
return, any ledger or balance sheet of his business to prove the
transaction. The learned trial Court has also observed that no one can
advance loan of such a huge amount without there being any security
or any document in writing. The complainant has not examined Smt.
Manju Tharwani and Rahaslal in support of his claim and thus the
subject transaction is suspicious and the complainant failed to prove

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his financial capacity by leading evidence to that effect. Such findings
are borne out by the record and cannot be said to be perverse.
On the other hand, the defence of the accused is supported by
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document (exhibit D-2), which is a complaint made to the police, with
respect to theft of his cheque, exhibit D-1, which is an application to
the bank for stop payment of the subject cheque and the document
(exhibit P-3), which is the cheque return memo dated 28.03.2013,
whereby the subject cheque was dishonored on the ground of
payment stopped by drawer and also the examination of the accused
as DW-1.
The complainant Vishal Kumar Tharwani in his evidence deposed that
14.
he advanced loan of Rs. 17,15,000/- to the accused between
December 2012 and January 2013 and for its repayment the accused
issued a cheque No. 131141, dated 25.03.2013, which was
dishonored by the payee bank and when he informed such dishonor of
the cheque to the accused, he asked him to redeposit it in the bank
and then he again deposited the cheque on 08.05.2013, which was
again dishonored on 10.05.2013 and thereafter he issued legal
demand notice on 07.06.2013, but it was returned unserved, then he
filed the complaint case. In cross-examination, he stated that the
contents of the cheque is not in his handwriting. He voluntarily stated
that the accused handed over the cheque to him in presence of
Mukesh Mathani. He admitted the first dishonor of cheque on
25.03.2013. Thereafter, he again presented the cheque to the bank.
He further admitted in the notice (exhibit P-6), he has not mentioned
the date on which the amount were given to the accused. Even in his

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complaint memo, it has not been mentioned. He also could not state
as to on which date the amount was given to the accused. He
voluntarily stated that he withdrawn the amount of Rs. 40-40
thousands from ATM and gave an amount of Rs. 2 lakhs to the
accused in December 2012, thereafter he withdrawn further amount of
Rs. 2 lakhs on 04.01.2013 from State Bank and on the same day, he
borrowed Rs. 7 lakhs from Rahaslal and gave it to the accused. On
05.01.2013, he gave Rs. 4,15,000/- to the accused and on that very
day the accused gave the subject cheque to him. At the time when he
gave Rs. 6,15,000/- to the accused, Mukesh Matlani was present there
and when he gave Rs. 9 lakhs to the accused, Rahaslal was present
there. He further stated that, though he is a businessman, but he is not
the income tax payee, but his brother is submitting his income tax
return. He admitted that there is no mention of Rs. 17,15,000/- given to
the accused in the income tax return. He also shown his ignorance
about the signature on the postal envelope (exhibit P-8). An amount of
Rs. 8,81,328/- was deposited in the bank account of his mother Manju
Tharwani and he withdrew Rs. 40,000/- on 5 times through ATM of his
mother and Rs. 2-2 lakhs on 04.01.2013 and 05.01.2013. He further
admitted that in the agreement (exhibit P-10), there is no mention that
he borrowed the amount from Rahaslal for advancing loan to the
accused, but his own personal need is mentioned.
In defence the accused examined himself as DW-1, who proved the
15.
document (exhibit D-1), which is an application to the bank for stop
payment of the subject cheque, exhibit D-2 is the complaint made to
the police, exhibit D-3 is the notice sent by Mahila Police Station, Durg

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and has stated that the subject cheque was stolen from his office and
it was misused by the complainant and filed the present complaint
case. In his cross-examination, he denied that before missing of his
cheque, he made a complaint to the police only to come out his
liability. He admitted that he made a complaint to the police about theft
of his cheque, but has not lodged any complaint case in the court
when the police has not taken any action on his complaint.
Upon consideration of the evidence available on record, it appears that
16.
the complainant has failed to disclose the specific dates on which the
alleged loan amount of Rs. 17,15,000/- was advanced to the accused.
Although he claimed to have arranged the amount from the insurance
claim received by his mother, Smt. Manju Tharwani, and by borrowing
Rs. 7,00,000/- from Rahaslal, the bank statement (Exhibit P-9)
establishes only the credit of Rs. 8,81,328/- and subsequent cash
withdrawals, whereas Rahaslal has not been examined to substantiate
the alleged borrowing. Moreover, the agreement (Exhibit P-10) records
that the amount of Rs. 7 lakhs was borrowed for the complainant's
personal needs and does not indicate that it was intended to be
advanced to the accused. The complainant has further admitted that
the alleged transaction was not reflected in his income tax records and
that no specific date of advancement of the loan was mentioned in the
complaint or statutory notice. He has also failed to examine Smt.
Manju Tharwani or Rahaslal to corroborate his version. On the other
hand, the accused has produced the application for stopping payment
of the cheque (Exhibit D-1), the police complaint regarding the alleged
theft of the cheque (Exhibit D-2), and the cheque return memo (Exhibit

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P-3), which records the initial dishonor on the ground of payment
stopped by the drawer. The aforesaid documentary evidence, read
with the testimony of the accused as DW-1, lends support to his
defence that the cheque was stolen and subsequently misused. The
complainant's failure to establish the source of funds and substantiate
the alleged advancement of such a substantial amount, coupled with
the documentary evidence produced by the accused, creates a
reasonable doubt regarding the alleged transaction. Thus, the
evidence brought on record supports the finding of the learned
appellate court that the accused has raised a probable defence
against the alleged legally enforceable debt and financial capacity of
the complainant.
In the case of  Basalingappa  (supra), the Hon’ble Supreme Court
17.
recognized that the question of financial capacity becomes relevant
once a specific challenge is raised by the accused. In paragraph 30, it
has been held that:-
“30. We are of the view that when evidence was
led before the court to indicate that apart from
loan of Rs 6 lakhs given to the accused, within 2
years, 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. Court cannot insist on a person to lead
negative evidence. The observation of the High
Court that 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 that how the trial court's findings can be

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termed as perverse by the High Court when it was
based on consideration of the evidence, which
was led on behalf of the defence.”
In the case of “ Ashok Singh ” (supra), the Hon’ble Supreme Court has
18.
also considered the judgment of M/s S. S. Production v. Tr.
Pavithran Prasanth , 2024 INSC 1059, in which the judgment of
Tedhi Singh v. Narayan Dass Mahant , 2022 (6) SCC 735 was relied
upon and has held that:-
“22. The High Court while allowing the criminal
revision has primarily proceeded on the
presumption that it was obligatory on the part of
the complainant to establish his case on the basis
of evidence by giving the details of the bank
account as well as the date and time of the
withdrawal of the said amount which was given to
the accused and also the date and time of the
payment made to the accused, including the date
and time of receiving of the cheque, which has
not been done in the present case. Pausing here,
such presumption on the complainant, by the
High Court, appears to be erroneous. The onus is
not on the complainant at the threshold to prove
his capacity/financial wherewithal to make the
payment in discharge of which the cheque is
alleged to have been issued in his favour. Only if
an objection is raised that the complainant was
not in a financial position to pay the amount so
claimed by him to have been given as a loan to
the accused, only then the complainant would
have to bring before the Court cogent material to
indicate that he had the financial capacity and
had actually advanced the amount in question by
way of loan. In the case at hand, the appellant

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had categorically stated in his deposition and
reiterated in the cross-examination that he had
withdrawn the amount from the bank in Faizabad
(Typed Copy of his deposition in the paperbook
wrongly mentions this as ‘Firozabad’). The Court
ought not to have summarily rejected such stand,
more so when respondent no.2 did not make any
serious attempt to dispel/negate such
stand/statement of the appellant. Thus, on the
one hand, the statement made before the Court,
both in examination-in-chief and cross
examination, by the appellant with regard to
withdrawing the money from the bank for giving it
to the accused has been disbelieved whereas the
argument on behalf of the accused that he had
not received any payment of any loan amount
has been accepted. In our decision in M/s S. S.
Production v. Tr. Pavithran Prasanth, 2024 INSC
1059, we opined:
‘8. From the order impugned, it is clear that
though the contention of the petitioners was that
the said amounts were given for producing a film
and were not by way of return of any loan taken,
which may have been a probable defence for the
petitioners in the case, but rightly, the High Court
has taken the view that evidence had to be
adduced on this point which has not been done
by the petitioners. Pausing here, the Court would
only comment that the reasoning of the High
Court as well as the First Appellate Court and
Trial Court on this issue is sound. Just by taking a
counter-stand to raise a probable defence would
not shift the onus on the complainant in such a
case for the plea of defence has to be buttressed
by evidence, either oral or documentary, which in

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the present cases, has not been done. Moreover,
even if it is presumed that the complainant had
not proved the source of the money given to the
petitioners by way of loan by producing statement
of accounts and/or Income Tax Returns, the
same ipso facto, would not negate such claim for
the reason that the cheques having being issued
and signed by the petitioners has not been
denied, and no evidence has been led to show
that the respondent lacked capacity to provide
the amount(s) in question. In this regard, we may
make profitable reference to the decision in Tedhi
Singh v Narayan Dass Mahant, (2022) 6 SCC
735: ‘10. The trial court and the first appellate
court have noted that in the case under Section
138 of the NI Act the complainant need not show
in the first instance that he had the capacity. The
proceedings under Section 138 of the NI Act is
not a civil suit. 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

21
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.”
In the case of  Dattatraya (supra), the Hon’ble Supreme Court has
19.
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 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,

22
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
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.”

23
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
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

24
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 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

25
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
either believe the defence to exist or
consider its existence to be reasonably
probable, the standard of reasonability
being that of the “prudent man”.

26
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.”
20. In the present case, the accused has specifically pleaded that the
subject cheque was stolen from his office and was subsequently
misused by the complainant. In support of his defence, the accused
has produced the police complaint dated 08.01.2013 (Exhibit D-2) and
the application submitted to the bank on the same date for stopping
payment of the cheque (Exhibit D-1), which is further corroborated by
the cheque return memo dated 28.03.2013 (Exhibit P-3), recording
dishonour on the ground of payment stopped by the drawer. These
circumstances lend support to the defence of the accused that the
cheque had not been voluntarily delivered to the complainant towards
discharge of any legally enforceable debt or liability. Although Sections
118 and 139 of the Negotiable Instruments Act, 1881 raise statutory
presumptions in favour of the holder of the cheque, such presumptions
are rebuttable and cannot be applied mechanically where the very
circumstances in which the complainant obtained possession of the
instrument are placed in doubt. In view of the proviso to Section 118 of
the Act, where the instrument is shown to have been obtained from its

27
lawful owner or a person in lawful custody by means of an offence or
fraud, the burden of proving that the holder is a holder in due course
lies upon him. In the present case, once the accused has raised a
probable defence supported by contemporaneous documentary
evidence, the complainant was required to establish, by cogent and
reliable evidence, the circumstances in which the cheque came into
his possession and the alleged advancement of the loan. However,
the complainant has failed to satisfactorily establish the alleged
transaction or his financial capacity to advance the substantial amount
of Rs.17,15,000/-. Consequently, the statutory presumption cannot, by
itself, sustain the complainant's case, and the defence raised by the
accused deserves consideration in the light of the evidence available
on record.
21 . Once the presumption under Sections 118 and 139 of the N.I. Act
stood rebutted by a probable defence, the burden shifted back upon
the complainant to establish the existence of a legally recoverable
debt of Rs. 17,15,000/- by cogent and reliable evidence. In the present
case, apart from the cheque and the disputed bank account statement
of Smt. Manju Tharwani and the agreement (exhibit P-10), there is no
independent evidence proving actual advancement of Rs. 17,15,000/-
to the accused. The complainant's failure to produce the most natural
and best evidence, namely the persons on whose presence the
amount was allegedly advanced to the accused, account books and
bank statements, assumes considerable importance. Further, the
withdrawal of the amount of Rs. 40,000/- on different occasions from
ATM of Smt. Manju Tharwani has also not been corroborated from her
bank account statement (exhibit P-9). The appellate court, after a

28
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.
22. It is significant to note that the subject cheque was initially dishonoured
on 28.03.2013 on the ground of “payment stopped by drawer”,
whereas upon its subsequent presentation, the same was dishonoured
on 10.05.2013 on the ground of “insufficient funds”. However, the
complainant has not disclosed in the complaint the material fact that
the cheque had earlier been dishonoured on the ground of stop
payment, nor has he explained the circumstances in which the cheque
was presented again despite the earlier dishonour. The initial
dishonour memo (Exhibit P-3), read with the application for stop
payment (Exhibit D-1) and the police complaint (Exhibit D-2), lends
corroboration to the defence of the accused. Though the subsequent
dishonour on the ground of insufficiency of funds may independently
attract consideration under Section 138 of the Negotiable Instruments
Act, 1881, the complainant’s failure to disclose the earlier dishonour
and explain the surrounding circumstances is a relevant circumstance
to be considered while appreciating the credibility of his version and
determining whether the accused has successfully raised a probable
defence regarding the alleged misuse of the cheque.
23. It is a settled principle that where an order of acquittal has been
recorded, and the view adopted by the court below 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

29
possible. The presumption of innocence stands reinforced by an order
of acquittal.
24. The Hon’ble Supreme Court, in Tulasareddi @ Mudakappa &
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:
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 words: (Chandrappa v. State of
3
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.
1
. 2024 (8) SCC 149
2
. (2022) 3 SCC 471 : (2022) 2 SCC (Cri) 31
3
. (2007) 4 SCC 415 : (2007) 2 SCC (Cri)325], SCC p. 432

30
(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”,
“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

31
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)
“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.”
4
. (2023) 9 SCC 581 : (2023) 3 SCC (Cri) 748]

32
41. Thus, it is beyond the pale of doubt that
the scope of interference by an appellate
court for reversing the judgment of acquittal
recorded by the trial court in favour of the
accused has to be exercised within the four
corners of the following principles:
41.1. That the judgment of acquittal suffers
from patent perversity;
41.2. That the same is based on a
misreading/omission to consider material
evidence on record; and
41.3. That no two reasonable views are
possible and only the view consistent with
the guilt of the accused is possible from the
evidence available on record.
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:

33
(a) whether the judgment of acquittal
suffers from patent perversity;
(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.”
25. The judgments relied upon by learned counsel for the appellant
in  Ashok Singh (supra) do not advance the case of the appellant in
the facts of the present matter. There is no dispute with the proposition
laid down therein that once the execution and signature on the cheque
are admitted, the statutory presumptions under Sections 118 and 139

34
of the Negotiable Instruments Act operate in favour of the complainant,
and the accused is required to rebut the same by raising a probable
defence. However, in the aforesaid case, the Court found that the
accused had failed to rebut the statutory presumption by bringing on
record any material creating a reasonable doubt regarding the
existence of the debt or liability. In the present case, the learned
appellate court, upon appreciation of the 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 relevant documents, account
books despite specific challenge, and inconsistencies relating to the
complainant's source of funds. Thus, unlike the facts before the
Hon’ble Supreme Court in the aforesaid decision, 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 appellate court has rightly
considered. Therefore, the ratio of the aforesaid decision is
distinguishable on facts and does not render the impugned judgment
of acquittal unsustainable.
26. In the case of “ Sanjabij Tari (supra), the Hon’ble Supreme Court has
considered the judgment of Tedhi Singh (supra), which has been
considered in the present case earlier, and therefore, it does not
support the complainant in the case.

35
27. In the present case, from the aforesaid consideration, this Court is of
the view that the findings recorded by the appellate court 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. 17,15,000/-, and the
complainant failed to counter such doubt by reliable evidence.
Consequently, this Court is of the considered opinion that no ground is
made out for interference with the judgment of acquittal.
28. The acquittal appeal, therefore, deserves to be and is accordingly
dismissed .
Sd/-
(Ravindra Kumar Agrawal)
Judge
ved