IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. MP(M) No. 1409 of 2025 in Criminal Appeal____ of 2025 (Cr.AST No. 5043 of 2025 Reserved on: 23.06.2025 Date of Decision: 04.07.2025 Sharif Mohamad ...Applicant/appellant Versus Bhagat Ram & another ...Respondents Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 No. For the Applicant/Appellant : Mr. Loveneesh Singh Thakur, Advocate. For the Non-applicant/ Respondent : Nemo. Rakesh Kainthla, Judge The applicant/appellant has filed the present application seeking grant of leave to file an appeal against the judgment dated 08.05.2025, passed by the learned Judicial Magistrate, First Class, Sundernagar, District Mandi, H.P. (learned Trial Court). (Parties shall hereinafter be referred to in the same 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes. P a g e | 2 manner as they were arrayed before the learned Trial Court for convenience.) 2. Briefly stated, the facts giving rise to the present application are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short, NI Act). It was asserted that the complainant is a businessman and transporter engaged in the business of General Karyana Store at Dugrain, Sundernagar, District Mandi, H.P. The accused developed friendly relations with the complainant. The accused needed money to purchase the land. The complainant advanced ₹8,00,000/- to the accused in two instalments. The accused issued a cheque of ₹8,00,000/- drawn at Punjab National Bank, Bhangrotu, District Mandi. The cheque was dishonoured with an endorsement ‘insufficient funds’. The accused failed to pay the amount despite the receipt of a valid notice of demand. Hence, the complaint was filed before the learned Trial Court to take action as per the law. 3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, notice of P a g e | 3 accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried. 4. The complainant examined himself as CW1 to prove his case. 5. The accused, in his statement recorded under Section 313 of Cr.P.C., denied the complainant’s allegations. 6. The learned Trial Court held that the accused had challenged the complainant’s financial capacity. The complainant admitted that he had no source of income. He and his wife were in debt of ₹15,00,000/-. This admission made the financial capacity of the complainant doubtful. Hence, the accused was acquitted. 7. Being aggrieved by the judgment passed by the learned Trial Court, the complainant has filed the present appeal, asserting that the learned Trial Court failed to appreciate the evidence properly. The accused admitted the issuance of the cheque, and the presumptions under Sections 118(a) and 139 of the NI Act would arise that the cheque was issued in discharge of the legal liability for consideration. The burden would shift upon the accused to rebut this presumption. The defence taken by the P a g e | 4 accused that he had issued the cheque towards the investment in the cryptocurrency is highly improbable because the accused would not have issued the cheque without sufficient money in his account. The failure to show the money in the income tax return is not sufficient to doubt the case of the complainant. Therefore, it was prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. 8. An application for leave to appeal is also preferred along with the appeal. 9. I have heard Mr. Loveneesh Singh Thakur, learned counsel for the applicant/appellant/complainant. He submitted that the accused had admitted the issuance of the cheque. The plea taken by him that the cheque was issued towards the investment in the cryptocurrency is improbable because no one would issue a blank cheque towards the investment without having sufficient money in the account. The statement of the accused was not sufficient to rebut the presumption attached to the cheque; therefore, he prayed that the present application be allowed and the leave to appeal be granted in favour of the applicant/appellant/complainant. P a g e | 5 10. I have given considerable thought to his submissions made at the bar and have gone through the records carefully. 11. The complainant admitted during his cross- examination that he and his wife were in debt of ₹15,00,000/- and he had no source of income. This admission is sufficient to raise doubt regarding the financial capacity of the complainant, and the learned Trial Court was justified in doubting the testimony of the complainant. It is not explained as to how the complainant could have advanced a huge sum of ₹8,00,000/- to the accused when he was in debt of ₹15,00,000/-. It was laid down by the Hon’ble Supreme Court in Tedhi Singh Versus Narayan Dass Mahant (2022) 6 SCC 735 that the accused has a right to demonstrate that the complainant did not have the financial capacity to advance the loan stated to have been advanced by him. It was observed: - “9. The Trial Court and the First Appellate Court have noted that in the case under Section 138 of the N.I. Act, the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the N.I. 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 P a g e | 6 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-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.” 12. This question was also considered by the Hon’ble Supreme Court in Basalingappa Versus Mudibasappa (2019) 5 SCC 418, and it was held that where the financial capacity to pay ₹6,00,000/- was questioned and there was no satisfactory reply, the accused had raised a probable defence. It was observed: - “26. Applying the preposition of law as noted above, in the facts of the present case, it is clear that the 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 the PW1, when the specific question was put that a cheque was issued in relation to a loan of Rs. 25,000/-taken by the accused, the PW1 said that he does not remember. PW1 in his evidence admitted that he retired in 1997, on which date he received a 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 P a g e | 7 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, a copy of which complaint was also filed as Ex.D2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per the own case of the complainant, he made a payment of Rs. 18 lakhs. During his cross-examination, when the 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. 27. There was another evidence on the record, i.e., a copy of the plaint in O.S. No. 148 of 2011 filed by the complainant for recovery of a loan of Rs. 7 lakhs given to one Balana Gouda in December 2009. Thus, there was evidence on record to indicate that in December 2009, he gave ₹ 7 lakhs in a sale agreement, in 2010, he made a payment of ₹ 4,50,000/- towards sale consideration and further, he gave a loan of ₹ 50,000/-for which complaint was filed in 2012 and further loan of ₹ 6 lakhs in November 2011. Thus, during the period from 2009 to November 2011, an amount of ₹ 18 lakhs was given by the complainant to different persons including the accused, which put a heavy burden to prove the financial capacity when it was questioned on behalf of the accused, the accused being a retired employee of State Transport Corporation, who retired in 1997 and total retirement benefits, which were encashed were ₹ 8 lakhs only. The High Court observed that though the complainant is a retired employee, the accused did not even suggest that pension is the only means for the survival of the complainant. The following observations were made in Paragraph 16 of the judgment of the High Court: "17. Though the complainant is a retired employee, the accused did not even suggest that a pension is the only means for the survival of the complainant. Under P a g e | 8 these circumstances, the Trial Court's finding that the complainant failed to discharge his initial burden of proof of lending capacity is perverse." 28. There is one more aspect of the matter which also needs to be noticed. In the complaint filed by the complainant as well as in the examination-in-chief, the complainant has not mentioned as to on which date the loan of Rs. 6 lakhs was given to the accused. It was during cross-examination, he gave the date as November 2011. Under Section 118 (b), a presumption shall be made as to the date that every negotiable instrument was made or drawn on such date. Admittedly, the cheque is dated 27.02.2012, there is not even a suggestion by the complainant that a post-dated cheque was given to him in November 2011 bearing a dated 27.02.2012. Giving of a cheque on 27.02.2012, which was deposited on 01.03.2012, is not compatible with the case of the complainant when we read the complaint submitted by the complainant, especially Para 1 of the complaint, which is extracted as below: "1. The accused is a very good friend of the complainant. The accused requested the Complainant a hand loan to meet out the urgent and family necessary sum of 6,00,000/-(Rupees Six Lakh) and on account of long-standing friendship and knowing the difficulties, which is being faced by the accused the complainant agreed to lend hand loan to meet out the financial difficulties of the accused and accordingly the Complainant lends hand loan Rs. 6,00,000/- (Rupees Six Lakh) dated 27.02.2012 in favour of the Complainant stating that on its presentation it will be honoured. But to the surprise of the Complainant on presentation of the same for collection through his Bank, the Cheque was returned by the Bank with an endorsement "Funds Insufficient" on 01-03-2012." 29. Thus, there is a contradiction in what was initially stated by the complainant in the complaint and his examination-in-chief regarding the date on which the loan was given on one side and what was said in cross- P a g e | 9 examination on the other side, which has not been satisfactorily explained. The High Court was unduly influenced by the fact that the accused did not reply to the notice denying the execution of the cheque or legal liability. Even before the trial court, the appellant-accused had not denied his signature on the cheque. 30. We are of the view that when evidence was led before the Court to indicate that apart from a loan of Rs. 6 lakhs given to the accused, within 02 years, an 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. The court cannot insist on a person to lead negative evidence. The observation of the High Court that the trial court's finding that the complainant failed to prove his financial capacity for lending money is perverse cannot be supported. We fail to see how the trial court's findings can be termed as perverse by the High Court when it was based on consideration of the evidence, which was led on behalf of the defence.” 13. It was laid down by the Hon’ble Supreme Court in Dattatraya v. Sharanappa, (2024) 8 SCC 573: (2024) 3 SCC (Cri) 776: 2024 SCC OnLine SC 1899 that when the financial capacity of the accused is not established, the accused is entitled to acquittal. It was observed: “29. Applying the aforementioned legal position to the present factual matrix, it is apparent that there existed a contradiction in the complaint made by the appellant as against his cross-examination relatable to the time of presentation of the cheque by the respondent, as per the statements of the appellant. This is to the effect that while the appellant claimed the cheque to have been issued at the time of advancing of the loan as a security, however, as per P a g e | 10 his statement during the cross-examination it was revealed that the same was presented when an alleged demand for repayment of alleged loan amount was raised before the respondent, after a period of six months of advancement. Furthermore, there was no financial capacity or acknowledgement in his income tax returns by the appellant to the effect of having advanced a loan to the respondent. Even further, the appellant has not been able to showcase as to when the said loan was advanced in favour of the respondent nor has he been able to explain as to how a cheque issued by the respondent allegedly in favour of Mr Mallikarjun landed in the hands of instant holder, that is, the appellant. 14. A similar view was taken in John K. Abraham Versus Simon C. Abraham & Another (2014) 2 SCC 236 wherein it was held:- “9. It has to be stated that in order to draw the presumption under Section 118 read along with 139 of the Negotiable Instruments Act, the burden was heavy upon the complainant to have shown that he had required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant. 10. 10. Keeping the said statutory requirements in mind, when we examine the facts as admitted by the respondent- complainant, as rightly concluded by the learned trial Judge, the respondent was not even aware of the date when the substantial amount of Rs.1,50,000/- was advanced by him to the appellant, that he was not sure as to who wrote the cheque, that he was not even aware when exactly and where exactly the transaction took place for which the cheque came to be issued by the appellant. Apart from the said serious lacuna in the evidence of the complainant, he P a g e | 11 further admitted as PW.1 by stating once in the course of the cross-examination that the cheque was in the handwriting of the accused and the very next moment taking a diametrically opposite stand that it is not in the handwriting of the accused and that it was written by the complainant himself, by further reiterating that the amount in words was written by him.” 15. Therefore, the learned Trial Court had taken a reasonable view while acquitting the accused; hence, leave to appeal cannot be granted 16. Consequently, the present application fails, and the same is dismissed. Criminal Appeal of___ 2025 (Cr.AST No. 5043 of 2025) 17. Since the leave to appeal has been declined, therefore, the proposed appeal is disposed of as having become infructuous. The pending miscellaneous application(s), if any, also stand disposed of. (Rakesh Kainthla) Judge 04th July, 2025 (ravinder)