2025:HHC:23801 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.Appeal No. 49 of 2025 Reserved on: 28.06.2025 Date of Decision: 23.07.2025 Ram Lal ...Appellant Versus Jagpal ...Respondents Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 Yes For the Appellant : Ms. Anu Tuli Azta, Advocate. For Respondent : Ms. Reeta Goswami, Senior Advocate, with Ms. Rekha Thakur, Advocate. Rakesh Kainthla, Judge The appeallant has filed the present appeal against the judgment dated 30.09.2024 passed by learned Judicial Magistrate First Class, Court No.2, Paonta Sahib, District Sirmour, H.P. (learned Trial Court), vide which the complaint filed by the complainant was dismissed. (Parties shall hereinafter be referred to 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes. P a g e | 2 2025:HHC:23801 in the same manner as they were arrayed before the learned Trial Court for convenience.) 2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short ‘NI Act’). It was asserted that the accused and the complainant had cordial relations with each other. The accused demanded a friendly loan of ₹8,00,000/- from the complainant, which was advanced. The accused promised to repay the amount on or before 01.09.2021. The complainant demanded the money on 01.09.2021, and the accused issued a cheque drawn on H.P. State Co-Op Bank, Salwala Puruwala, Tehsil Paonta Sahib, District Sirmour, H.P., however, to repay the loan. The complainant deposited the cheque for payment at State Bank of India, Kacha Tank, Nahan, District Sirmour, H.P. The cheque was dishonoured with an endorsement ‘insufficient funds’. The complainant issued a legal notice to the accused asking him to repay the amount. The notice was duly served upon the accused. However, he failed to repay the amount; hence, the complainant filed a complaint before the learned Trial Court to take action against the accused. P a g e | 3 2025:HHC:23801 3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of 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 (CW1) to prove his case. 5. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had issued the cheque and had received a notice. He stated that he had sent the reply to the notice. He stated that a false case was filed against him. The statements of Renu Sharma (DW-1) and Sunil Kumar (DW-2) were recorded in defence. 6. Learned Trial Court held that the cheque was presented at Nahan. The complainant was required to file the complaint at Nahan. The Court at Paonta Sahib had no territorial jurisdiction to hear the complaint. The accused succeeded in establishing that the complainant and his father had filed many complaints of dishonour of cheques at Paonta Sahib and Shillai. The complainant asserted that he had advanced a sum of ₹8,00,000/- P a g e | 4 2025:HHC:23801 to the accused for his domestic needs, but stated in his cross- examination that the amount was given for business purposes. The complainant had failed to produce income tax returns to show his capacity to advance the loan and his financial capacity to advance an amount of ₹8,00,000/- to the accused was not proved. Hence, the complaint was dismissed. 7. Feeling aggrieved and dissatisfied with the judgment passed by the learned Trial Court, the complainant has filed the present appeal, asserting that the learned Trial Court erred in appreciating the material placed before it. The accused admitted the issuance of the cheque, and a presumption under Section 118(a) and 139 of the NI Act would arise that the cheque was issued for consideration to discharge the legal liability. Once the Court concluded that it had no jurisdiction to hear and entertain the complaint, the findings on the merits could not have been given. The filing of various complaints by the complainant and his father is not sufficient to dismiss the complaint. Therefore, it was prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. P a g e | 5 2025:HHC:23801 8. I have heard Ms. Anut Tuli Azta, learned Counsel for the appellant/complainant, and Ms. Reeta Goswami, learned Senior Counsel, assisted by Ms. Rekha Thakur, learned counsel for the respondent/accused 9. Ms. Anu Tuli Azta, learned counsel for the appellant/complainant, submitted that the learned Trial Court erred in holding that the accused had rebutted the presumption attached to the cheque. Mere filing of the various complaints by a person and his father cannot result in the dismissal of the complaint. The accused never disputed his signature on the cheque, and the presumption under Section 118(a) and 139 of the NI Act would arise that the cheque was issued for consideration in discharge of legal liability. This presumption can be rebutted by leading satisfactory evidence. The evidence led by the accused was insufficient to rebut the presumption. Once the learned Trial Court held that it had no territorial jurisdiction, it was bound to return the complaint and could not have recorded the findings on merits. Therefore, she prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. She relied on judgments of the Hon’ble Supreme Court in M/S Shri Sendhuragro And Oil Industries vs Kotak Mahindra Bank Ltd 2025 P a g e | 6 2025:HHC:23801 INSC 328 and Yogesh Upadhya vs. Atlanta Ltd. 2023 SCC OnLine SC 170 in support of her submission. 10. Ms. Reeta Goswami, learned Senior Counsel for the respondent/accused, submitted that the learned Trial Court had taken a reasonable view while dismissing the complaint, and this Court should not interfere with the reasonable view taken by the learned Trial Court while deciding the appeal against the acquittal. The learned Trial Court had jurisdiction to hear and entertain the present complaint, and the findings recorded by the learned Trial Court on merits are correct; therefore, she prayed that the present appeal be dismissed. 11. I have given considerable thought to the submissions made at the bar and have gone through the records carefully. 12. The present appeal has been filed against a judgment of acquittal. It was laid down by the Hon’ble Supreme Court in Surendra Singh v. State of Uttarakhand, 2025 SCC OnLine SC 176: (2025) 5 SCC 433 that the Court can interfere with a judgment of acquittal if it is patently perverse, is based on misreading/omission to consider the material evidence and reached at a conclusion which no reasonable person could have reached. It was observed: P a g e | 7 2025:HHC:23801 “11. Recently, in the case of Babu Sahebagouda Rudragoudar v. State of Karnataka 2024 SCC OnLine SC 4035, a Bench of this Court to which one of us was a Member (B.R. Gavai, J.) had an occasion to consider the legal position with regard to the scope of interference in an appeal against acquittal. It was observed thus: “38. First of all, we would like to reiterate the principles laid down by this Court governing the scope of interference by the High Court in an appeal filed by the State for challenging the acquittal of the accused recorded by the trial court. 39. This Court in Rajesh Prasad v. State of Bihar [Rajesh Prasad v. State of Bihar, (2022) 3 SCC 471: (2022) 2 SCC (Cri) 31] 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 case [Chandrappa v. State of Karnataka, (2007) 4 SCC 415: (2007) 2 SCC (Cri) 325], SCC p. 432, para 42) ‘42. From the above decisions, in our considered view, the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded. (2) The Criminal Procedure Code, 1973 puts no limitation, restriction or condition on the exercise of such power and an appellate court, on the evidence before it, may reach its own conclusion, both on questions of fact and law. P a g e | 8 2025:HHC:23801 (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 the 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 an 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 a 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 disturb the finding of acquittal recorded by the trial court.” 40. Further, in H.D. Sundara v. State of Karnataka [H.D. Sundara v. State of Karnataka, (2023) 9 SCC 581: (2023) 3 SCC (Cri) 748] this Court summarised the principles governing the exercise of appellate jurisdiction while dealing with an appeal against acquittal under Section 378CrPC as follows: (SCC p. 584, para 8) “8. … 8.1. The acquittal of the accused further strengthens the presumption of innocence. P a g e | 9 2025:HHC:23801 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.” 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.” 12. It could thus be seen that it is a settled legal position 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; that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible and only the view consistent P a g e | 10 2025:HHC:23801 with the guilt of the accused is possible from the evidence available on record.” 13. The present appeal is required to be decided as per the parameters laid down by the Hon’ble Supreme Court. 14. Section 142 (2) of the NI Act deals with territorial jurisdiction; it reads as under: - The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction— (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or (b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account is situated. Explanation — For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account. 15. It was laid down in Yogesh Upadhya (supra) that the offence punishable under 138 of the NI Act shall be enquired into and tried only by a Court within whose local jurisdiction the cheque is delivered for collection through an account. It was observed: “9. In this regard, it may be noted that Section 142 of the 1881 Act, titled “Cognizance of Offences”, provided that, notwithstanding anything contained in the Criminal P a g e | 11 2025:HHC:23801 Procedure Code, 1973, no court shall take cognizance of an offence punishable under Section 138 except on a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque; such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138; and no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the First Class shall try an offence punishable under Section 138. 10. Significantly, the aforestated original Section 142 of the 1881 Act was renumbered as Section 142(1) when amendments were made in the 1881 Act by the Negotiable Instruments (Amendment) Act, 2015 (Act 26 of 2015). Further, Section 142(2) was inserted in the statute book along with Section 142-A. The newly inserted Section 142(2), to the extent relevant, states that the offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction — (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated. 11. This being the statutory scheme, stress is laid by Mr Chirag M. Shroff, learned counsel, upon the words: “shall be inquired into and tried only by a court within whose local jurisdiction …” in Section 142(2) to contend that the courts at Nagpur would have exclusive jurisdiction in relation to the dishonoured cheques presented by the respondent Company through its bank at Nagpur. 12. Perusal of the Statement of Objects and Reasons in Amendment Act 26 of 2015 makes it amply clear that insertion of Sections 142(2) and 142-A in the 1881 Act was a direct consequence of the judgment of this Court in Dashrath Rupsingh Rathod [Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129: (2014) 4 SCC (Civ) 676: (2014) 3 SCC (Cri) 673]. Therefore, the use of the phrase: “shall be inquired into and tried only by a court within whose local P a g e | 12 2025:HHC:23801 jurisdiction …” in Section 142(2) of the 1881 Act is contextual to the ratio laid down in Dashrath RupsinghRathod [Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129 : (2014) 4 SCC (Civ) 676 : (2014) 3 SCC (Cri) 673] to the contrary, whereby territorial jurisdiction to try an offence under Section 138 of the 1881 Act vested in the court having jurisdiction over the drawee bank and not the complainant's bank where he had presented the cheque. Section 142(2) now makes it clear that the jurisdiction to try such an offence would vest only in the court within whose jurisdiction the branch of the Bank where the cheque was delivered for collection, through the account of the payee or holder in due course, is situated. The newly inserted Section 142-A further clarifies this position by validating the transfer of pending cases to the courts conferred with such jurisdiction after the amendment. 13. The later decision of this Court in Bridgestone India (P) Ltd. v. Inderpal Singh [Bridgestone India (P) Ltd. v. Inderpal Singh, (2016) 2 SCC 75 : (2016) 1 SCC (Civ) 588 : (2016) 1 SCC (Cri) 472] affirmed the legal position obtaining after the amendment of the 1881 Act and endorsed that Section 142(2)(a) of the 1881 Act vests jurisdiction for initiating proceedings for an offence under Section 138 in the court where the cheque is delivered for collection i.e. through an account in the branch of the bank where the payee or holder in due course maintains an account. This Court also affirmed that Dashrath Rupsingh Rathod [Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129: (2014) 4 SCC (Civ) 676: (2014) 3 SCC (Cri) 673] would not non-suit the company insofar as territorial jurisdiction for initiating proceedings under Section 138 of the 1881 Act was concerned.” (emphasis supplied) 16. A similar view was taken in M/s Shri Sendhuragro & Oil Industries (supra) wherein it was held: “61. It is clear on a reading of Section 142(2)(a) and the Explanation thereto that, for the purposes of clause (a), P a g e | 13 2025:HHC:23801 where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account. 62. 62. A conjoint reading of Section 142(2)(a) along with the explanation thereof, makes the position emphatically clear that, when a cheque is delivered or issued to a person with liberty to present the cheque for collection at any branch of the bank where the payee or holder in due course, as the case may be, maintains the account then, the cheque shall be deemed to have been delivered or issued to the branch of the bank, in which, the payee or holder in due course, as the case may be, maintains the account, and the court of the place where such cheque was presented for collection, will have the jurisdiction to entertain the complaint alleging the commission of offence punishable under Section 138 of the N.I. Act. In that view of the position of law, the word ‘delivered’ used in Section 142(2)(a) of the N.I. Act has no significance. What is of significance is the expression ‘for collection through an account’. That is to say, delivery of the cheque takes place where the cheque was issued, and presentation of the cheque will be through the account of the payee or holder in due course, and the said place is decisive to determine the question of jurisdiction.” (emphasis supplied) 17. It was specifically mentioned in para 4 of the complaint that the complainant deposited the cheque for payment in his bank at State Bank of India Kacha Tank, Nahan, District Sirmour, H.P.; therefore, the Courts at Nahan will have territorial jurisdiction to hear and entertain the present complaint. The complainant asserted in para 7 of the complaint that he was residing within the local jurisdiction of the Court at Paonta Sahib; therefore, the Court P a g e | 14 2025:HHC:23801 had jurisdiction to hear and entertain the complaint. The residence of the complainant is immaterial to determine the jurisdiction because of Section 142 of the NI Act, and the Court at Paonta Sahib would not acquire any jurisdiction by the residence of the complainant. Thus, the complaint was required to be filed at Nahan as per the averments made in the complaint. 18. It is undisputed that both Nahan and Paonta are located within the Sessions Division of Sirmour at Nahan. It was laid down by this Court in Sanjay Kumar another vs. State of H.P Latest HLJ 2007 (2)1270 that the High Court in exercise of its jurisdiction under sub-Section (2) and (3) of Section 14 of Cr.P.C has issued a notification authorizing all the Judicial Magistrates posted within a particular district to exercise the power of inquiry and trial in respect of the cases arising in any part or area of the district, therefore, learned Magistrate has the jurisdiction throughout the area of the district where he is posted. A notification issued by the Chief Judicial Magistrate regarding the distribution of the work will not take away the jurisdiction conferred by the High Court. It was observed: “4. What is required to be seen at this stage is whether the Court at Mandi had the jurisdiction to proceed with the P a g e | 15 2025:HHC:23801 trial, or it was only the court at Sundernagar that had the jurisdiction to try the matter. The High Court, in exercise of its power under sub-sections (2) and (3) of Section 14 of the Code of Criminal Procedure, has issued a Notification authorising all the Judicial Magistrates posted within a particular District to exercise the powers of inquiry and trial in respect of the case pertaining to any part or area of the District. That is to say, the Magistrates have been conferred the powers to be exercised by them throughout the area of the District they are posted. 5. Learned counsel has produced two Notifications issued by the Chief Judicial Magistrate, Mandi, which, according to him, confine the local jurisdiction of the Magistrates and the jurisdiction of the Judicial Magistrate (2) Mandi, has been confined to the area of a particular police station within the Sub Division of District Mandi. 6. The submission made by the learned counsel is not correct. Both the Notifications are under Section 15 of the Code of Criminal Procedure with regard to the distribution of work of the Judicial Magistrates. They are not the Notifications, under Section 14 of the Code, defining the jurisdiction of the Magistrates posted in the district. Therefore, the submission is rejected.” 19. Therefore, the conclusion drawn by the learned Trial Court that only the learned Magistrate at Nahan will have the jurisdiction and the learned Magistrate posted at Paonta cannot exercise the jurisdiction is incorrect. Learned Magistrate had jurisdiction over the whole district of Sirmour, H.P., and the submissions made before this Court, the learned Magistrate was required to return/transfer the complaint cannot be accepted. P a g e | 16 2025:HHC:23801 20. Once it is so held, the other objection that since the learned Magistrate had no jurisdiction, therefore, she was in error in returning the findings on merits is not sustainable. 21. The complainant stated that he handed over ₹8,00,000/- to the accused in July 2021, and the accused assured to return the amount. He stated in his cross-examination that he had brought the money from his house to purchase the land, but he did not purchase the land because he had handed over the money to the accused. The money was in the form of currency notes of ₹500/-each in 16 bundles. He had collected this amount by selling the crop of garlic and tomatoes. He filed the Income Tax Return, but volunteered to say that since the money was taken out of the agricultural income, therefore, it was not necessary to file the Income Tax Return. He had borrowed the money from his family members. Layak Ram Sharma is the head of the family, who keeps the money with him. He had taken the money from Layak Ram Sharma. 22. Renu Sharma (DW-1) brought the record of various complaints. She stated that Mohan Lal (father of the complainant) filed a Case No. 365 of 2021 against the accused Jagpal Singh for the P a g e | 17 2025:HHC:23801 cheque amount of ₹1,20,000/-. Dula Ram (grandfather of the complainant) filed a complaint No. 132 of 2022 against the accused Jagpal for the cheques worth ₹2,00,000/- and ₹3,00,000/-. Mohan Lal (father of the complainant) filed a Case No. 121 of 2022, but it was decided on 22.02.2024. 23. Sunil Kumar (DW-2) stated that Dula Ram had filed a complaint No. 87 of 2021 against the accused Jagpal for a cheque of ₹2,00,000/-. Similarly, Dula Ram had filed a complaint No. 88 of 2021 against the accused Jagpal for ₹1,00,000/-. Dula Ram filed another complaint No. 98 of 2021 against the accused Jagpal for a cheque of ₹2,00,000/-. All these cases were pending in the Court at Shilai, District Simrour, H.P. 24. Statements of these witnesses show that the complainant and his family members have filed multiple complaints against the accused for different amounts. Cross- examination of Sunil Kumar (DW-2) also shows that a notice was issued by Dula Ram to the accused on 11.07.2021. A cheque of ₹1,00,000/- was issued on 20.05.2021. 25. In the present case, the date of advancing the loan has not been given, but the date of issuing the cheque is 01.09.2021. It P a g e | 18 2025:HHC:23801 is highly unlikely that the complainant would have advanced the money to the accused when he and his family members had filed multiple cases against the accused for the dishonour of the cheques. It was laid down by the Hon’ble Supreme Court in John K. John v. Tom Varghese, (2007) 12 SCC 714: (2008) 3 SCC (Cri) 374: 2007 SCC OnLine SC 1293 that where three civil suits were instituted against the accused, it is highly unlikely that the loan would be advanced to him. It was observed at page 716: “11. The relationship between the parties is not in dispute. The complainant is a partner of a firm which is in the business of running a chitty fund. The fact that the respondent subscribed three chitties and that he could not pay the instalments of the prized amount is not in dispute. The pendency of three civil suits filed by the firm through the appellant against the respondent is also not in dispute. The High Court, upon analysing the materials brought on record by the parties, had arrived at a finding of fact that, in view of the conduct of the parties, it would not be prudent to hold that the respondent borrowed a huge sum despite the fact that the suits had already been filed against him by the appellant. Presumption raised in terms of Section 139 of the Act is rebuttable. If, upon analysis of the evidence brought on record by the parties, in a fact situation obtaining in the instant case, a finding of fact has been arrived at by the High Court that the cheques had not been issued by the respondent in discharge of any debt, in our opinion, the view of the High Court cannot be said to be perverse warranting interference by us in exercise of our discretionary jurisdiction under Article 136 of the Constitution. The High Court was entitled to take notice of the conduct of the parties. It has been found by the High Court, as of fact, that P a g e | 19 2025:HHC:23801 the complainant did not approach the Court with clean hands. His conduct was not that of a prudent man. Why no instrument was executed although a huge sum of money was allegedly paid to the respondent was a relevant question which could be posed in the matter. It was open to the High Court to draw its own conclusion therein. Not only had no document been executed, even no interest had been charged. It would be absurd to form an opinion that, despite knowing that the respondent was not even in a position to discharge his burden to pay instalments in respect of the prized amount, an advance would be made to him and that too even after the institution of three civil suits. The amount advanced even did not carry any interest. If in a situation of this nature, the High Court has arrived at a finding that the respondent has discharged his burden of proof cast on him under Section 139 of the Act, no exception thereto can be taken.” (emphasis supplied) 26. A similar view was taken in A.M. Perumal v. Star Tours and Travels (India) Ltd., 2010 SCC OnLine Ker 4874: 2010 Cri LJ 3732, wherein it was observed at page 3735: “8. The evidence of PW 1 and Dwl would show that there were various transactions between the revision petitioner and the first respondent, and there are various payments also. Ext. D12 would show that the revision petitioner had been facing another prosecution for dishonour of three other cheques, all issued in discharge of liability, that arose out of a business transaction. This circumstance persuades me to doubt the genuineness of the plea that the cheque was issued in discharge of the liability. In the normal course, if an earlier cheque is dishonoured, the first attempt would be to clear that liability. No debtor would deliver another cheque to make room for another prosecution. The possibility of demanding and delivering blank cheques as security cannot be ruled out. No creditor would be content with another cheque for a subsequently P a g e | 20 2025:HHC:23801 arisen liability when the earlier cheque issued in discharge of another liability returned dishonoured and the liability remains not discharged. Acceptance of another cheque in that circumstance would be either with the intent to go for prosecution or to get proof…” (emphasis supplied) 27. The total amount of the cheques mentioned by the defence witnesses is ₹12,00,000/-, which means that the complainant and his family members had advanced a total amount of ₹20,00,000/- (including the present cheque) to the accused. This is a huge amount. The complainant has not given the details of the property owned by him and the income generated from the property to establish his financial capacity. Therefore, in these circumstances, the learned Trial Court was justified in doubting the financial capacity of the complainant. 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, and where the complainant’s financial capacity is doubtful the burden to rebut the presumption is discharged. 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 P a g e | 21 2025:HHC:23801 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-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.” 28. 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 P a g e | 22 2025:HHC:23801 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 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 a 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 P a g e | 23 2025:HHC:23801 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 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 P a g e | 24 2025:HHC:23801 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-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.” 29. 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 P a g e | 25 2025:HHC:23801 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 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 the instant holder, that is, the appellant. 30. 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 P a g e | 26 2025:HHC:23801 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 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.” 31. Therefore, the learned Trial Court had taken a reasonable view while dismissing the complaint; hence, no interference is required with the judgment passed by the learned Trial Court. 32. Consequently, the present appeal fails, and the same is dismissed. 33. Record of the learned Trial Court be sent back forthwith, along with a copy of this judgment. (Rakesh Kainthla) Judge 23rd July, 2025 (ravinder)