Dishonour of Cheque - Financial capacity of complainant to advance loan must be established.

Himachal Pradesh High Court Upholds Acquittal in Cheque Bounce Case, Citing Doubtful Financial Capacity of Complainant The Court reaffirms that presumption under Negotiable Instruments Act can be rebutted through evidence showing complainant's inability to lend.

In a significant ruling, the Himachal Pradesh High Court has upheld the acquittal of Jarman Singh in a cheque bounce case, emphasizing the importance of financial capacity in such matters. The judgment, delivered by Justice Rakesh Kainthla, reaffirmed that the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881, can be rebutted if the accused can produce evidence that casts doubt on the complainant's financial capacity to lend the alleged amount.

The case revolved around a complaint filed by Satya Devi, who accused Jarman Singh of issuing a cheque for Rs. 4,42,000 which was dishonored due to insufficient funds. Satya Devi claimed that the amount was lent as a personal loan to Singh, who was a friend in financial distress. The trial court initially found Singh guilty and sentenced him to six months of simple imprisonment, along with a compensation payment of Rs. 5,50,000.

However, upon appeal, the Additional Sessions Judge of Nalagarh overturned this decision. The appellate court found that the complainant, Satya Devi, lacked the financial capacity to lend such a substantial amount, thereby rebutting the presumption of consideration that arose from the cheque's issuance. The appellate court highlighted that Devi, being a housewife without an independent income, could not have advanced the loan. Moreover, her husband had a separate pending complaint against Singh under the same act, which further complicated the credibility of the loan claim.

In response to the acquittal, Satya Devi sought leave to appeal, arguing that the appellate court ignored the statutory presumptions under the Negotiable Instruments Act. However, the High Court dismissed the application, agreeing with the appellate court's assessment. Justice Kainthla noted that while the presumption under Sections 118(a) and 139 is indeed a part of the Act, it is rebuttable. The accused, Jarman Singh, successfully demonstrated through cross-examination and evidence that Satya Devi's financial capacity was questionable.

The judgment referenced several Supreme Court cases, including "Basalingappa v. Mudibasappa" and "Tedhi Singh v. Narayan Dass Mahant," which have established that the financial capacity of the complainant is a relevant factor in cheque bounce cases. The High Court emphasized that the burden of proof can shift back to the complainant if the accused raises a probable defence through credible evidence.

This ruling underscores the judiciary's stance on requiring concrete evidence of financial transactions in cheque bounce cases, ensuring that presumptions do not override factual realities. It also highlights the importance of establishing financial capacity in such disputes, potentially influencing future cases under the Negotiable Instruments Act.

Bottom Line:

Presumption under Sections 118(a) and 139 regarding consideration is rebuttable - Financial capacity of complainant to advance loan must be established.

Statutory provision(s): Negotiable Instruments Act, 1881 Sections 138, 118(a), 139

Satya Devi v. Jarman Singh, (Himachal Pradesh) : Law Finder Doc Id # 2807530