₹10-Lakh Cheque Acquittal Set Aside: Madras HC Sends Case Back, Says Missing Loan Papers Alone Didn’t Justify Dismissal

The complainant alleged that he advanced the respondent ₹10,00,000 in cash on 27 August 2018 and received a post-dated cheque for repayment. The cheque was returned unpaid with the endorsement “Other Reasons”; the respondent received a statutory demand notice but denied the debt.

He admitted the cheque and signature, but claimed that blank signed cheques had been given to the complainant in 2011 in connection with property dealings.

The Trial Court acquitted him, finding that the presumption had been rebutted in light of inconsistencies in the complainant’s evidence and the absence of adequate supporting material. The complainant appealed under Section 378 CrPC.

Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 require the court, once execution of a cheque is admitted or established, to presume consideration and that the holder received it towards discharge of a debt or liability; the presumption under Section 139 includes a legally enforceable debt.

The accused may rebut the presumption on a preponderance of probabilities and need not disprove the complainant’s case beyond reasonable doubt. The Court applied Rangappa v. Sri Mohan, (2010) 11 SCC 441, and Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283, on these principles.

The appeal was brought under Section 378 CrPC.

The High Court held that the admitted cheque and signature triggered the statutory presumptions, which had to be weighed against the respondent’s explanation that the cheque arose from earlier property dealings.

It considered the complainant’s bank statement, including a cash withdrawal of ₹9,70,000 shortly before the alleged loan, and his income-tax return as relevant support for his financial capacity, while recognising that financial capacity alone did not prove payment.

The Court considered the absence of a written loan agreement, receipt, independent witnesses, and the original settlement deed, as well as the inconsistency about interest, but concluded that these matters could not, on their own, discredit the complainant’s case.

It found that the Trial Court had dismissed the complaint principally for lack of additional documentary proof and interest-payment records, without adequately accounting for the statutory presumptions and the other evidence.

It set aside the acquittal and remitted the matter to the Trial Court for fresh consideration after hearing both parties; it did not itself convict the respondent.

The Trial Court was directed to complete the proceedings within two months, and the parties were directed to appear without awaiting further notice and avoid unnecessary adjournments.