Failure to prove financial capacity and non-compliance with production orders rebuts statutory presumption under Section 139.

The respondent-complainant alleged that he provided a hand loan of ₹2,50,000 to the applicant-accused in October 2013, claiming he paid ₹85,000 in cash and withdrew ₹1,65,000 via ATM/cheque

A cheque for ₹2,50,000 dated 27.03.2014 was issued by the accused, which was returned with the endorsement "Funds Insufficient"

The trial court (Judicial Magistrate First Class, Visnagar) convicted the accused under Section 138 of the N.I. Act, sentencing her to one year of imprisonment and ₹2,50,000 compensation

This conviction was confirmed by the 5th Ad-hoc Sessions Judge, Mehsana

The accused challenged these orders, contending that the cheque was lost/misused and that the complainant failed to prove the withdrawal of the loan amount despite a court order

1. Whether the complainant's failure to produce bank documents proving the withdrawal of funds, despite a court direction under Exhibit 23, shifted the burden of proof back to the complainant to establish the existence of a legally enforceable debt

2. Whether the applicant-accused successfully rebutted the statutory presumption under Sections 118 and 139 of the N.I. Act through the standard of preponderance of probabilities

The court applied Section 138, Section 118, and Section 139 of the Negotiable Instruments Act, 1881, which create a rebuttable presumption that a cheque was issued for a legally enforceable debt

It relied on Rajesh Jain v. Ajay Singh (2023) regarding the "preponderance of probabilities" standard for rebuttal

It distinguished Ashok Singh v. State of U.P. (2025), noting that while a complainant need not initially prove financial capacity, an obligation arises when the accused makes a "sincere attempt" to negate the stand through court-ordered production of documents

The High Court found that the accused raised a "strong probable defence" by demonstrating that stop-payment instructions for a series of lost cheques (including the disputed one) were issued on 21.10.2013, months before the cheque was allegedly issued in 2014

Crucially, the accused had moved an application (Exh. 23) directing the complainant to produce bank statements to prove he actually withdrew ₹1,65,000 to lend the money

Although the trial court granted this application, the complainant admitted in cross-examination that he had no evidence to support the withdrawal

The court reasoned that once the accused successfully created doubt about the transaction via Exh. 23 and the bank letter (Exh. 36), the onus shifted back to the complainant

The complainant’s failure to discharge this shifted burden nullified the statutory presumption

The court allowed the Revision Application, quashed the judgments of both the trial court and the first Appellate Court, and acquitted the applicant of the charges under Section 138 of the N.I. Act

The Record & Proceedings were ordered to be returned to the lower court forthwith