1 2025:CGHC:45239 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ACQA No. 465 of 2019 Arvind Singh Khandelwal S/o Balkishan Khandelwal, Aged About 38 Years, R/o Surana Building, Ganjpara, Durg, Police Station- City Kotwali, District- Durg, Chhattisgarh ... Appellant(s) versus Sunil Kumar Jain (Baradia) S/o B.M. Baradia, Aged About 44 Years, R/o Near Khandelwal Colony, Vardhman Nagar, Durg, Through Padma Baradia, “Chartered Accountant”, Jawahar Chowk, Durg, Police Station- City Kotwali, Durg, Tahsil And District- Durg, Chhattisgarh ... Respondent(s) For Appellant : Mr. Ali Afzaal Mirza, Advocate For Respondent(s) : Mr. Rohan Kumbhare, Advocate on behalf of Mr. TK Jha, Advocate SB : Hon'ble Shri Justice Deepak Kumar Tiwari Judgment on Board 04/09/2025 1. This Acquittal Appeal has been preferred against the judgment dated 23.2.2016 passed in Criminal Appeal No.144/2015 by the Additional SHYNA AJAY Digitally signed by SHYNA AJAY DN: cn=SHYNA AJAY, o=PERSONAL, st=Chhattisgarh, c=IN 2 Sessions Judge, Durg (CG), whereby, while allowing the appeal preferred by the respondent/accused, the judgment dated 9.10.2015 passed by the Judicial Magistrate First Class, Durg, in Criminal Complaint Case No.277/13, was set-aside. By the said judgment dated 9.10.2015, the respondent/accused had been convicted under Section 138 of the Negotiable Instruments Act, 1881 (in short “the Act, 1881”) and was sentenced to undergo SI for 3 months and to pay compensation of Rs.2,20,000/-, in default of payment of compensation to undergo additional SI for 1 month. Furthermore, against the aforesaid judgment dated 9.10.2015, Criminal Appeal No.37/2016 preferred by the complainant seeking enhancement of sentence and compensation, was dismissed by the Appellate Court. By the impugned judgment, the respondent/accused has been acquitted of the said charge. 2. Necessary facts of the case, as per the averments in the complaint, are that the complainant had been acquainted with the respondent/accused for a long time. The respondent/accused for his business needs made a demand for cash loan and on different dates, the complainant advanced loan to him, aggregating to a sum of Rs.2,00,000/-. For repayment of the said loan, the respondent issued two cheques dated 28.1.2013 and 24.1.2013 for Rs.1,00,000/- each respectively (Ex.C/1 & Ex.-C2 respectively). When both the cheques were presented for encashment, they were dishonoured due to insufficiency of funds as per the Bank Memos - Ex.C/3 & C/4 respectively. Thereafter, a legal notice (Ex.C/6) was 3 served upon the respondent. Despite service of the said notice, when the payment was not made, the complaint case has been filed. 3. During trial, the respondent/accused abjured his guilt and claimed to be tried. In order to prove his case, the complainant has examined himself and exhibited 10 documents vide Ex.C/1 to C/10. 4. In the statement recorded under Section 313 of the Cr.P.C., the respondent/accused stated that he has been falsely implicated and he had given the said cheques as security for the business transaction. The respondent/accused examined himself and father of the complainant namely Balkrishna Khandelwal (DW-2) and Prakash Uikey (DW-3), the then employee of KJ Enterprises, to demonstrate the fact that he had business relations with the said concern, whose proprietor was complainant -Arvind Singh Khandelwal. Further, certain amounts in cash were deposited with the employee of the said concern vide Ex.D/3 and with the complainant’s father vide Ex.- D/2. However, the Ledger Account-Ex.D/1 did not reflect the aforesaid deposits and there was a mismatch in the entries. The said ledger account (Ex.D/1) has been supplied to the respondent/accused by the complainant. In this regard, Ku. Sugandha Dhenge, Handwriting Expert, was also examined. 5. The trial Court, after evaluation of the evidence, convicted the respondent/accused, against which, he preferred an appeal (Criminal Appeal No.144/2015), which was allowed. However, the other appeal (Criminal Appeal No.37/2016) filed by the appellant/complainant for enhancement of sentence and compensation was dismissed. 4 6. Learned counsel for the appellant/complainant would submit that the respondent/accused has not denied his signature on the disputed cheques (Ex.C/1 & C/2). Therefore, legal presumptions under Sections 118 and 139 of the Act, 1881, would arise and he has not discharge the burden of rebutting the same. In support of the above contention, learned counsel for the appellant would place reliance on judgments rendered in the matters of Bir Singh Vs. Mukesh Kumar, reported in (2019) 4 SCC 197 and P. Rasiya Vs. Abdul Nazer and another, reported in 2022 SCC OnLine SC 1131. He would lastly submit that the appeal may be allowed and conviction of the respondent/accused be restored. 7. On the other hand, learned counsel for the respondent/accused would support the impugned judgment and submits that the same is well merited and does not call for any interference. 8. Heard learned counsel for the parties and also perused the record with utmost circumspection. 9. In the matter of Rajesh Jain Vs. Ajay Singh, reported in (2023) 10 SCC 148, the law relating to the effect of legal presumption as per Section 118 and Section 139 of the NI Act has been clarified. As per Section 118 of the NI Act it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration and as per Section 139 of the Act “unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability. Both the presumptions are rebuttable in nature. The 5 relevant paras of the aforesaid judgment i.e. 33 to 44 is reproduced hereunder:- “33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that “unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability”. It will be seen that the “presumed fact” directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are hence, not repeated- reference to one can be taken as reference to another” “34. Section 139 of the NI Act, which takes the form of a “shall presume” clause is illustrative of a presumption of law. Because Section 139 requires that the Court “shall presume” the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase “unless the contrary is proved”.” “35.The Court will necessarily presume that the cheque had been issued towards discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel & Drum Mfg. v. Amin Chand Payrelal] [(1999) 3 SCC 35]” “36.Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. 6 Mukesh Kumar (2019) 4 SCC 197]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.” “37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.” “38.John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law on Evidence states as follows: “The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption ‘disappears as a rule of law and the case is in the Jury's hands free from any rule.” “39.The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of “preponderance of probabilities”, similar to a defendant in a civil proceeding. [Rangappa vs. Sri Mohan (AIR 2010 SC 1898)]” “40.In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words “until the contrary is proved” occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask 7 the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa v. Mudibasappa (AIR 2019 SC 1983); see also Kumar Exports v. Sharma Carpets (2009) 2 SCC 513]” “41.In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused’s case may be even fifty-one to forty-nine and arising out of the entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 CrPC statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was “no debt/liability”. [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513]” “42.The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.” “43.The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundan Lal case v. Custodian (Evacuee Property), AIR 1961 SC 1316 when the creditor 8 had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non-existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Sections 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well.” “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, AIR 2019 SC 1983; see also, Rangappa v. Sri Mohan (2010) 11 SCC 441]” 10. Reverting to the facts of the present case, a perusal of the complaint would show that the dates on which the cash loan was advanced to the respondent/accused have not been mentioned. It is stated that the complainant and his father Balkrishna Khandelwal (DW-2) are running a business in the name and style of ‘KJ Enterprises’, which is engaged in coal business. The respondent/accused has taken a specific defence that in connection with his coal business, he had given two cheques as security. By examining himself, the respondent/accused deposed that since he is engaged in brick kiln business, which requires coal and from time to time, he had given 9 cash to the employee of the said concern. In his defence, the respondent/accused examined the then employee of KJ Enterprises namely Prakash Uikey (DW-3), who categorically deposed that the said concern belongs to complainant Arvind Khandelwal and he had served there for about 1 ½ -2 years. On 13.12.2012, the respondent/accused has deposited cash with him to make a payment to the complainant to the tune of Rs.50,000/-, for which, he has issued the receipt-Ex.D/3. The said witness was not cross examined by the complainant. The complainant categorically denied having any relation with KJ Enterprises and stated that the said concern belongs to his elder brother namely Rohit Khandelwal, however, the said fact was not suggested to Prakash Uikey (DW-3) during his cross-examination. The father of the complainant Balkrishna Khandelwal (DW-2) also admitted that the respondent/accused deposited Rs.25,000/- on 17.10.2012 in respect of KJ Enterprises, for which, he issued a receipt -Ex.D/2. The respondent/accused further deposed that in the month of December 2012, the ledger account provided to him by the complainant (Ex.D/1), did not reflect the deposits made by him and hence, the cheques deposited as security were misused. 11. The Appellate Court taking into consideration the aforesaid infirmities in the complainant’s case and also the fact that no receipt or document has been executed or obtained from the respondent/accused at the time the loan was financed, in light of the judgment rendered in the matter of Rangappa Vs. Shri Mohan, 10 reported in (2010) 11 SCC 441, drew a conclusion that the respondent/accused successfully rebutted the presumption. 12. For the foregoing, this Court is also of the view that the complainant has failed to prove the bonafide nature of the transaction by producing any relevant documents, particularly any receipt, to show that any loan has been advanced. Therefore, the existence of a legally enforceable debt or liability remains under cloud. 13.In the matter of Constable 907 Surendra Singh & another vs. State of Uttrakhand, 2025 INSC 114, the law has been reiterated that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; and that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible. 14.For the foregoing, this Court does not find any illegality or infirmity in the impugned judgment passed by the Appellate Court and the view taken by it is a possible one. 15.Resultantly, the Appeal fails and is hereby dismissed. Sd/- (Deepak Kumar Tiwari) Judge Shyna