The Himachal Pradesh High Court, Shimla, has set aside the acquittal of an accused in a cheque dishonour case and convicted him under Section 138 of the Negotiable Instruments Act, 1881, holding that the Trial Court had erroneously ignored the statutory presumptions attached to a cheque.
Justice Rakesh Kainthla, allowing the appeal filed by M/s Sagar Katha Factory, held that once the issuance of the cheque and the signature thereon are admitted, a statutory presumption arises under Sections 118 and 139 of the NI Act that the cheque was issued towards the discharge of a legally enforceable debt or liability.
The case arose from a commercial transaction relating to the supply of Khair wood, wherein the complainant alleged that an amount of ₹5.50 lakh remained unpaid by the accused. The accused issued a cheque towards the said liability, which was dishonoured for “insufficient funds”. Although the Trial Court acquitted the accused on the ground that the complainant failed to produce account statements and failed to prove the underlying agreement, the High Court found this approach to be legally flawed.
The Court held that the Trial Court wrongly shifted the burden of proof onto the complainant, despite the existence of statutory presumptions in favour of the cheque holder. Referring to the recent Supreme Court precedents, including Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069 and APS Forex Services v. Shakti International Fashion Linkers, (2020) 12 SCC 724, the Court reiterated that the complainant is not required to independently prove the debt at the threshold once execution of the cheque is admitted.
Rejecting the Trial Court’s view that the complainant ought to have produced documentary material to independently establish that the cheque was issued in discharge of liability, the High Court held that“no adverse inference could have been drawn against the complainant for withholding the statement of account.”
On the accused’s claim that no amount was due because goods had already been supplied, the High Court held that the statutory presumption remained unrebutted, as the accused led no defence evidence and a mere denial during the Section 313 CrPC examination could not establish the absence of liability. The Court also held that an adverse inference could not be drawn against the complainant for not producing account statements, as the presumption under Section 139 obviates such a requirement unless rebutted.
The Court further held that refusal to accept the statutory demand notice amounts to deemed service, and that all ingredients of Section 138 NI Act stood duly satisfied.
Accordingly, the High Court set aside the judgment of acquittal dated March 8, 2013 and convicted the accused under Section 138 NI Act, directing that he be produced for hearing on the quantum of sentence on February 27, 2026.
Appearances
Appellant- Mr Karan Singh Kanwar, Advocate.
Respondent- Ms Shalini Thakur, Advocate.
