A finance company manager said the money had already reached the complainant. Nobody cross-examined him, and two courts convicted anyway
The Himachal Pradesh High Court sets aside a cheque-bounce conviction affirmed on appeal, holding that the trial and appellate courts simply never engaged with the one witness who rebutted the presumption.
The presumption under Section 139 of the Negotiable Instruments Act does most of the work in a cheque-dishonour prosecution. Once the signature is admitted, the law assumes the cheque was issued to discharge a debt, and the accused has to displace that assumption on a balance of probabilities. He rarely can. Most defences amount to an assertion with nothing behind it.
Occasionally one of them has evidence behind it — and the question then is whether the court noticed. On 24 September 2026 Justice Rakesh Kainthla allowed a criminal revision in a case where, on his reading, neither of the two courts below had.
A car, a cheque, and a refinance
The complainant, Ramesh Kumar, said the accused Kishori Lal had bought a Tata Zest from him for ₹4,00,000, of which ₹1,92,000 had been paid and ₹2,08,000 remained. For that balance the accused issued a cheque of ₹2,08,000, which came back marked “insufficient funds”. A demand notice followed, then a complaint under Section 138, then conviction by the Additional Chief Judicial Magistrate, Court No. 1, Mandi in Complaint No. 906 of 2019, then affirmance by the Sessions Judge, Mandi in Criminal Appeal No. 105 of 2024.
The sentence was not nominal. By judgment and order of 10 July 2024 the Magistrate awarded simple imprisonment for five months and compensation of ₹4,16,000 for the loss sustained — twice the cheque amount — with a default sentence of three months’ simple imprisonment. So a man convicted on a ₹2,08,000 cheque stood liable to pay more than four lakh rupees and to go to prison, on a conviction twice affirmed.
The accused’s case at trial was that he had never issued a cheque to the complainant at all. He had issued a cheque to Tata Finance, and it was that cheque, he said, which had been misused.
The High Court did not accept that framing, and said so at the outset of its reasoning. By claiming he had issued a cheque in the name of Tata Finance, the accused had not disputed issuance. The courts below were right that admission of issuance triggers the presumption under Sections 118(a) and 139 that the cheque was for consideration in discharge of a debt or liability. The Court cited Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148, for the proposition that where an accused says a blank cheque leaf was voluntarily signed and handed over, that is itself enough to bring the presumption into play.
So the accused started from where every such accused starts — with the presumption against him. What made his case different was his defence witness.
Before turning to the evidence the Court restated the seven ingredients of the offence, which are worth keeping in one place: the drawing of a cheque on an account maintained by the drawer for payment to another from that account; the cheque being drawn for the discharge, in whole or in part, of a debt or other liability; presentation to the bank within six months or within the period of the cheque’s validity; return of the cheque by the drawee bank unpaid, either because the credit in the account is insufficient or because it exceeds the amount arranged to be paid; a notice by the payee or holder in due course demanding payment within thirty days of receiving the bank’s information about the return; failure by the drawer to pay within fifteen days of receipt of the notice; and filing of the complaint within a month of the expiry of that fifteen-day grace period, before a Metropolitan Magistrate or a Judicial Magistrate not below the first class. The phrase “debt or other liability”, the Court noted, means a legally enforceable debt or other liability.
The witness nobody challenged
Navneet Sharma (DW-1), a Branch Manager at Shriram Finance, deposed to a fact rather than a theory. The vehicle bearing registration No. HP-34-B-8385 — the same car — had been refinanced for ₹3,00,000 at the accused’s instance, and an amount of ₹2,91,988 had been transferred to the account of Ramesh Kumar, the complainant.
If that was true, the ₹2,08,000 for which the cheque was issued had already been paid, by a route the complainant himself would have seen in his bank statement.
The complainant’s answer was evidentiary. In cross-examination DW-1 had admitted that the data sheet he produced was a computer-generated copy and that he had issued no certificate under Section 65B of the Indian Evidence Act. Without that certificate, it was argued, the statement of the witness was inadmissible.
Justice Kainthla drew the line the argument had blurred. Section 65B governs the admissibility of the electronic record. It does not silence the person in the witness box. DW-1 had stated as a fact that he was a Branch Manager, that the vehicle was refinanced, and that ₹2,91,988 was transferred to the complainant’s account. Even if the document he brought were taken out of consideration entirely, that testimony survived — and it was that testimony, not the data sheet, which established the payment.
The second objection was that DW-1 had said in cross-examination that it was a case of buying and selling and the money went to the account of the registered owner, which, the complainant argued, contradicted the claim that it went to him. The Court rejected this too, and for a reason that turned the point round. No document had been produced showing that ownership was ever transferred to the accused. The complainant was admittedly the registered owner of the vehicle. On that record, “the registered owner” meant the complainant, so the answer confirmed rather than contradicted the defence.
The conclusion followed: the statement of DW-1 made it probable that the accused had discharged the ₹2,08,000 debt for which the cheque was issued, the accused had no other liability towards the complainant, and the evidence was sufficient to rebut the presumption.
What the courts below did wrong
The High Court was specific about the error in each court, and the two errors are different.
The trial court, it held, had been swayed by the presumption. It had relied on the absence of a reply to the demand notice — which the High Court said was not a material consideration — and had never asked the question that mattered, which was whether the statement of DW-1 was sufficient to discharge the burden. That aspect was missed.
The appellate court had engaged with the evidence but recorded a finding it could not sustain: that it was not proved that the account mentioned by DW-1 belonged to the complainant. The difficulty, as the High Court put it, is that DW-1’s testimony that the amount was transferred to the complainant’s account was never challenged in cross-examination. It is hard to see how a court could record a contrary finding about an assertion the other side chose not to test.
The Court had set out the limits of its own jurisdiction before reaching the evidence, relying on Kuntegowda v. Thurubaiah, 2026 SCC OnLine SC 1485. Section 397 of the Code of Criminal Procedure — now Section 438 of the Bharatiya Nagarik Suraksha Sanhita, 2023 — lets a High Court or Sessions Judge call for the record of an inferior criminal court to satisfy itself as to the correctness, legality or propriety of any finding, sentence or order, and as to the regularity of the proceedings. That discretion is to be exercised where there has been a miscarriage of justice; but the revisional court does not sit as an appellate court, should not dwell on the facts and evidence as one would, should refrain from substituting its own conclusion after an elaborate consideration of the evidence, and must not reverse findings merely because an alternative view is possible. The Supreme Court’s decision in State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand, (2004) 7 SCC 659, to the same effect, was also noted.
That left the objection that a revisional court should not re-appreciate evidence. Justice Kainthla accepted the principle and held it inapplicable. The Court was not re-appreciating the evidence, he said, but pointing out the effect of the non-consideration of vital evidence. Where a court fails to consider material evidence having an important bearing on the outcome, that judgment can be interfered with in revision.
The distinction matters well beyond this case. A revision is not a second appeal on facts, and a litigant who simply invites the High Court to read the evidence again will be turned away. But a judgment that never engaged with evidence capable of deciding the case is not a finding of fact at all, and the revisional court is not re-weighing anything when it says so.
The order
The revision was allowed. The judgment and order of the Additional Chief Judicial Magistrate, Mandi, as affirmed by the appellate court, were set aside, and the accused was acquitted of the offence under Section 138 of the NI Act. Any compensation paid or deposited is to be refunded to him after the limitation for an appeal expires, and if an appeal is filed, to be dealt with as the Supreme Court has directed in such cases.
As required by Section 437-A of the Code of Criminal Procedure — Section 481 of the Bharatiya Nagarik Suraksha Sanhita, 2023 — the accused was directed to furnish bail bonds of ₹25,000 with one surety in the like amount before the trial court within four weeks, effective for six months, with the stipulation that if a Special Leave Petition is filed against the judgment, or leave is granted, he will appear before the Supreme Court on receipt of notice. That direction is the ordinary consequence of an acquittal: it keeps the acquitted person answerable to the appellate process without keeping him in custody.
Mr. Rohit, Advocate, appeared for the petitioner in place of Mr. G.R. Palsra; Mr. Vijay Chaudhary for respondent No. 1; and Mr. Tarun Pathak, Deputy Advocate General, for the State.
The case is a useful corrective to a familiar pattern. A Section 138 defence that consists only of denial will fail, and should. But the presumption is rebuttable, and when an accused produces a witness who speaks to a payment and the complainant declines to cross-examine him on it, the court has to say what it makes of that evidence. Here, two courts convicted without doing so.