Holding

The Supreme Court held that the High Court erred; the statutory presumption under Sections 118 and 139 shifted the burden to the accused, who failed to rebut it, so the conviction under Section 138 stands, with the sentence modified to a fine only.

Summary

The appellant, Ashok Singh, claimed he had advanced a loan of Rs.22,00,000 to the accused, who issued a cheque that was later dishonoured with a ‘payment stopped by drawer’ endorsement. The appellant presented the cheque, sent a statutory notice within the prescribed period, and filed a complaint under Section 138 of the Negotiable Instruments Act, 1881. The trial court and appellate court convicted the accused, but the Allahabad High Court set aside the conviction, holding that the appellant failed to prove the source of the loan funds. The Supreme Court held that the burden of proving a legally enforceable debt rests on the accused once the statutory presumption under Sections 118 and 139 arises, and the appellant was not required to initially prove his financial capacity. It also ruled that the complaint was maintainable despite the drawer being a partnership firm because the signatory, a partner, was the person in charge. Consequently, the Court allowed the appeal, reinstated the conviction, but modified the sentence to a fine of Rs.32,00,000 due to the accused’s age.

Issues considered

Whether the High Court erred in setting aside the conviction under Section 138 of the Negotiable Instruments Act, 1881.
Whether the complainant must prove the source of funds or his financial capacity to advance the loan at the threshold of a Section 138 proceeding.
Whether a complaint is maintainable when the drawer of the cheque is a partnership firm but the signatory partner is arrayed as the accused.
Extent of the onus of proof on the complainant versus the accused under Sections 118, 138, 139 and 141 of the Negotiable Instruments Act.
Whether the sentence imposed on the accused should be modified in view of his age and personal circumstances.

Legislation cited

Negotiable Instruments Act, 1881s. 118, s. 138, s. 139, s. 141, s. 142

Subjects

Cheque dishonouredSource of fundsFinancial capacity of the complainantOnus not on complainantLegally enforceable debtStop paymentDrawer of the chequeNot arrayed as a partySignatory of the chequePerson in charge of the Partnership FirmArrayed as accusedReturned un-encashedCheque lostReturn of moneyRe-paymentStatutory noticeStatutory presumption

Judgment

[2025] 4 S.C.R. 504 : 2025 INSC 427

Ashok Singh
v.
State of Uttar Pradesh & Anr.
R1: State of Uttar Pradesh
R2: Ravindra Pratap Singh
(Criminal Appeal No. 4171 of 2024)
02 April 2025
[Sudhanshu Dhulia and Ahsanuddin Amanullah,* JJ.]

Issue for Consideration
Whether the High Court erred in setting aside the concurrent
findings of guilt and the consequent conviction of the respondent
no.2-accused under Section 138, Negotiable Instruments Act, 1881.

Headnotes†
Negotiable Instruments Act, 1881 – ss.138, 139 – Onus u/s.138
not on the complainant to initially lead evidence to show
that he had the financial capacity for advancing loan to the
accused, unless a case is set up in the reply to the statutory
notice sent – On facts, the appellant advanced loan to the
respondent no.2-accused – Cheque issued by the respondent
to return the money was dishonoured with the endorsement
‘payment stopped by drawer’ – Respondent no.2 did not reply
to the legal notice sent by the appellant – Complaint filed –
Respondent no.2 convicted by Trial Court – Order confirmed
by the Appellate Court – High Court set aside the conviction –
Interference with:
Held: There are serious doubts with regard to the veracity of the
defences raised by the respondent no.2 – Admittedly, the signature
on the cheque is of the respondent no.2 himself – One of the ground
on which the High Court acquitted the respondent no.2 was that the
appellant was unable to prove the source of the amount given to
him as loan – The onus is not on the complainant at the threshold
to prove his capacity/financial wherewithal to make the payment in
discharge of which the cheque is alleged to have been issued in his
favour – Only if an objection is raised that the complainant was not

* Author
[2025] 4 S.C.R. 505

Ashok Singh v. State of Uttar Pradesh & Anr.

in a financial position to pay the amount so claimed by him to have
been given as a loan to the accused, only then the complainant
would have to bring before the Court cogent material to indicate
that he had the financial capacity and had actually advanced the
amount in question by way of loan – Appellant had categorically
stated in his deposition and reiterated in the cross-examination
that he had withdrawn the amount from the bank – Respondent
no.2 did not make any serious attempt to dispel such statement
of the appellant – Appellant succeeded in establishing his case –
Impugned order set aside – However, considering the age of the
respondent no.2, conviction and sentence imposed upon him not
revived – Sentence modified to only payment of fine, as directed.
[Paras 18, 21-23]
Negotiable Instruments Act, 1881 – s.138 – Extent of burden
of proof on the complainant – Discussed – Foremost defence
available to the accused, stated. [Paras 15, 16]

Negotiable Instruments Act, 1881 – s.138 – Maintainability of
complaint – Cheque issued by the respondent no.2-accused,
a Partner in the Partnership Firm M/s Sun Enterprises was
dishonoured – Complaint u/s.138 filed by the appellant against
the respondent no.2 – Respondent no.2 contended that the
complaint was not maintainable since the drawer of the cheque
i.e., the Partnership Firm-M/s Sun Enterprises was not arrayed
as a party – Sustainability:
Held: Complaint is maintainable as the signatory of the cheque
is arrayed as accused and is also the person in charge – It was
never urged that the respondent no.2-accused, a Partner in
M/s Sun Enterprises is not the person in charge thereof. [Para 20]

Case Law Cited
Sunita Palita v. Panchami Stone Quarry [2022] 14 SCR 458 :
(2022) 10 SCC 152 – held applicable.
Aneeta Hada v. Godfather Travels and Tours Private Limited
[2012] 5 SCR 503 : (2012) 5 SCC 661; Aparna A Shah v. Sheth
Developers Private Limited [2013] 7 SCR 69 : (2013) 8 SCC 71;
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] Supp. 3 SCR
371 : (2005) 8 SCC 89; Bir Singh v. Mukesh Kumar [2019] 2 SCR
506 [2025] 4 S.C.R.

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24 : (2019) 4 SCC 197; Rajesh Jain v. Ajay Singh [2023] 13 SCR
788 : (2023) 10 SCC 148; Kishan Rao v. Shankargouda [2018] 5
SCR 69 : (2018) 8 SCC 165; Uttam Ram v. Devinder Singh Hudan
[2019] 13 SCR 425 : (2019) 10 SCC 287; Dattatraya v. Sharanappa
[2024] 8 SCR 121 : 2024 SCC OnLine SC 1899; John K John v.
Tom Varghese [2007] 11 SCR 287 : (2007) 12 SCC 714; Krishna
Janardhan Bhat v. Dattatraya G Hegde [2008] 1 SCR 605 : (2008)
4 SCC 54; G Pankajakshi Amma v. Mathai Mathew (Dead) through
LRs. (2004) 12 SCC 83; Rohitbhai Jivanlal Patel v. State of Gujarat
[2019] 5 SCR 417 : (2019) 18 SCC 106; M/s S. S. Production v.
Tr. Pavithran Prasanth, 2024 INSC 1059 – referred to.

List of Acts
Negotiable Instruments Act, 1881.

List of Keywords
Cheque dishonoured; Source of funds; Financial capacity of the
complainant; Onus not on the complainant; Legally enforceable
debt; Stop payment; Payment stopped by drawer; Drawer of
the cheque; Not arrayed as a party; Signatory of the cheque;
Person in charge of the Partnership Firm; Arrayed as accused;
Returned un-encashed; Cheque lost; Return of money; Re-
payment; Signatory of the cheque; Statutory notice; Statutory
presumption.

Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
4171 of 2024
From the Judgment and Order dated 21.02.2024 of the High Court
of Judicature at Allahabad, Lucknow Bench in CRR No. 619 of 2020

Appearances for Parties
Advs. for the Appellant:
Pinaki Addy, Ms. Arpita Singh, Chandrakant Sukumar Sarkar,
C M Dwivedi, M/S. Mukesh Kumar Singh And Co.
Advs. for the Respondents:
Shadan Farasat, Sr. Adv., Ashish Kumar Pandey, Harshit Anand,
Vedant Sharma, Shadab Azhar, Mayank Pandey.
[2025] 4 S.C.R. 507

Ashok Singh v. State of Uttar Pradesh & Anr.

Judgment / Order of the Supreme Court

Judgment

Ahsanuddin Amanullah, J.

The present appeal impugns the Final Judgment and Order dated
21.02.2024 in Criminal Revision Petition No.619 of 2020 (hereinafter
referred to as the ‘Impugned Order’)1 passed by the High Court
of Judicature at Allahabad, Lucknow Bench (hereinafter referred
to as the ‘High Court’), allowing the petition and setting aside
the concurrent findings of guilt and conviction recorded against
respondent no.2 (hereinafter also referred to as the ‘accused’) in the
Order dated 12.04.2019 in Complaint Case No.6650/2012 passed
by the Presiding Officer/Additional Court, Room No.5, Lucknow
(hereinafter referred to as the ‘Trial Court’) as later upheld by
the Additional Sessions Judge, Court No.1, Lucknow (hereinafter
referred to as the ‘Appellate Court’) vide Order dated 23.10.2020
in Criminal Appeal No.148/2019.

FACTS:
2. The appellant is the complainant in Complaint Case No.6650/2012.
He alleged that he had advanced a loan of Rs.22,00,000/- (Twenty-
Two lakhs) to the respondent no.2 on the assurance that the
entire amount will be returned. When the appellant demanded
return of the money, the accused issued Cheque No.726716 dated
17.03.2010 for an amount of Rs.22,00,000/- (Twenty-Two lakhs)
drawn on the Bank of Baroda. The appellant presented the said
cheque for encashment at IDBI Bank, Main Branch, Lucknow. On
07.05.2010, the cheque was dishonoured with the endorsement
‘payment stopped by drawer’ and the cheque along with receipt
was returned. Subsequently, the appellant attempted to contact
the accused seeking return of the money but the accused neither
met him nor returned the money. The appellant sent a Legal Notice
dated 18.05.2010 through Registered Post. However, the accused
did not reply to the Notice. Hence, a complaint case was registered
by the appellant.

1 2024:AHC-LKO:15310
508 [2025] 4 S.C.R.

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3. On an appreciation of facts and the evidence presented before it,
the Trial Court vide Order dated 12.04.2019 found the accused
guilty of having committed an offence under Section 1382 of the
Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘Act’)
and sentenced him to one year of simple imprisonment along with
fine of Rs.35,00,000/- (Rupees Thirty-Five Lakhs). In case of default
in making the payment of fine, a further sentence of three months’
simple imprisonment was directed to be served. It was ordered
that a sum of Rs.30,00,000/- (Rupees Thirty Lakhs) be given to the
complainant as compensation. The appeal preferred by the accused
was dismissed by the Appellate Court vide Order dated 23.10.2020
and the Order of the Trial Court was confirmed.
4. The accused filed a criminal revision petition before the High Court
which came to be allowed vide the Impugned Order and the conviction
and sentence imposed on the accused/respondent no.2 was set
aside. While doing so, the High Court noted as under, inter alia:
‘The complainant has failed to prove his case that the cheque
was issued towards discharge of a lawful debt specially when the
complainant has failed to disclose details of his Bank Account
and date when he withdrew the amount in question and paid to
the revisionist as well as the date when he obtained the cheque.
Therefore, there are glaring inconsistencies indicating doubt in the
complainant’s version, hence, the conviction and sentence cannot
be sustained.’

2 ‘138. Dishonour of cheque for insufficiency, etc., of funds in the account.—Where any cheque drawn
by a person on an account maintained by him with a banker for payment of any amount of money to
another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is
returned by the bank unpaid, either because of the amount of money standing to the credit of that account
is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by
an agreement made with that bank, such person shall be deemed to have committed an offence and shall,
without prejudice to any other provision of this Act, be punished with imprisonment for a term which may
extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless—
(a) the cheque has been presented to the bank within a period of six months from the date on which it is
drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within
thirty days of the receipt of information by him from the bank regarding the return of the cheque as
unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or
as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the
said notice.
Explanation.—For the purposes of this section, “debt or other liability” means a legally enforceable debt
or other liability.’
[2025] 4 S.C.R. 509

Ashok Singh v. State of Uttar Pradesh & Anr.

APPELLANT’S SUBMISSIONS:
5. Mr. Pinaki Addy, learned counsel for the appellant, submitted that the
High Court fell in error in upsetting the concurrent findings of facts
recorded by the Courts below by re-appreciating and re-analyzing
the evidence. It was argued that during the cross-examination of the
accused, it was admitted that the intimation regarding loss of the
cheque was sent to the police in 2011 i.e., much after the cheque
was presented by the appellant on 17.03.2010. The said intimation is
dated 12.03.2010 which proves that the document was manufactured
in 2011 and back-dated. The intimation also was never converted into
a First Information Report (hereinafter referred to as ‘FIR’), hence it
carries no evidentiary value.
6. It was submitted that the cheque was issued in discharge of loan
availed by the accused and hence presumption under Section 118
read with Section 139 of the Act would operate in the appellant’s
favour. The burden of proof lies on the accused and he has to raise
a probable defence. In the absence of any evidence, a mere oral
statement that there did not exist any debt would not be sufficient to
rebut the presumption, especially when the signature on the cheque
has been admitted by the accused in his evidence.
7. It was further submitted that the Trial Court and the Appellate Court
have duly considered the evidence on record and have rightly
disbelieved the story put forth by the accused and held the prosecution
case to have been proved beyond reasonable doubt. The counsel
placed reliance on the following decisions: Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197; Rajesh Jain v. Ajay Singh, (2023) 10
SCC 148; Kishan Rao v. Shankargouda, (2018) 8 SCC 165, and;
Uttam Ram v. Devinder Singh Hudan, (2019) 10 SCC 287. It was
prayed that the appeal be allowed.

RESPONDENT NO.2-ACCUSED’S SUBMISSIONS:
8. Per contra, Mr Shadan Farasat, learned senior counsel for the
respondent no.2-accused submitted, at the outset, that the Impugned
Order is good in law and does not require any interference by this
Court. It was submitted that no proof of withdrawal of Rs.22,00,000/-
(Rupees Twenty-Two Lakhs) was placed on record by the complainant.
The entire story put forth by the complainant is fictitious and he has
failed to prove the circumstances in which the cheque was handed
over and the existence of any business relations between the parties.
510 [2025] 4 S.C.R.

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9. It was submitted that the complainant had also failed to prove his
capacity to advance such huge amount of loan in the absence of
adducing any evidence viz. ledger, Income-Tax Returns, money-
lending license, etc. In such circumstances, the complainant also
failed to prove that the cheque was issued for a legally enforceable
debt and such debt existed on the date of presentation of the
cheque.
10. It was his contention that the Trial Court as well as the Appellate Court
were misled by the appellant about the existence of two complaints
by the respondent no.2 and findings of both the Courts on this issue
are erroneous. Further, it was argued that the accused never handed
over the signed cheque to the appellant and the same was lost while
he was travelling from Sultanpur to Raebareli at Atheha Market and
Missing Report, in this connection, was also filed on 12.03.2010 at
Police Station Udaipur, District Pratapgarh, Uttar Pradesh.
11. Reliance was placed on the decisions in Bir Singh (supra), Rajesh
Jain (supra) and Dattatraya v. Sharanappa, 2024 SCC OnLine SC
1899, to highlight that the appellant did not discharge his burden
of establishing the factual basis to activate the presumptive clause.
It was further submitted, that in any case, the complaint is not
maintainable since the drawer of the cheque i.e., the Partnership
Firm viz. M/s Sun Enterprises, has not been arrayed as a party.
Additionally, learned senior counsel also placed reliance on the
decisions in John K John v. Tom Varghese, (2007) 12 SCC 714;
Krishna Janardhan Bhat v. Dattatraya G Hegde, (2008) 4 SCC
54, and; G Pankajakshi Amma v. Mathai Mathew (Dead) through
LRs., (2004) 12 SCC 83.
12. While it was urged that the appeal be dismissed, without prejudice
to the foregoing submissions, learned senior counsel canvassed that
the offence under the Act is compoundable and the accused being
58 years of age with no criminal antecedents and the sole bread-
earner of his family comprising 8 members, if found and held guilty
by this Court, may only be saddled with monetary penalty, and a
reasonable time-frame be granted to make such payment.

ANALYSIS, REASONING & CONCLUSION:
13. We have heard learned counsel and learned senior counsel for the
respective parties at length.
[2025] 4 S.C.R. 511

Ashok Singh v. State of Uttar Pradesh & Anr.

14. The present case has travelled to this Court from three Courts
and this is the fourth Court. At the very first stage, the Trial Court
on appreciation of evidence had found that a legally enforceable
debt existed in favour of the complainant-appellant payable by the
respondent no.2-accused; returned a finding of guilt/conviction, and;
sentenced the respondent no.2 to one year simple imprisonment and
fine of Rs.35,00,000/- (Rupees Thirty-Five Lakhs). The Appellate
Court upheld the findings, whereas the High Court, by the Impugned
Order, acquitted the respondent no.2.
15. There can be no dispute that in matters relating to alleged offences
under Section 138 of the Act, the complainant has only to establish
that the cheque was genuine, presented within time and upon it being
dishonoured, due notice was sent within 30 days of such dishonour,
to which re-payment must be received within 15 days, failing which
a complaint can be preferred by the complainant within one month
as contemplated under Section 142 (1)(b) of the Act.
16. On the other hand, the foremost defence available to the accused
is to deny the very liability to pay the amount for which the cheque
was issued on the ground that it was not a ‘legally enforceable debt’
under the Act.
17. In the present case, there is no denial apropos the signature on
the cheque by the respondent no.2 and, as noted hereinbefore,
the stand taken is that the said cheque was lost. This is the reason
given by the respondent no.2 to have advised the bank to stop
payment due to which the cheque in question was not honoured/
encashed. However, the relevant dates beg to tell a different tale. The
cheque in question dated 17.03.2010 was presented within time but
returned un-encashed on 07.05.2010 with the endorsement ‘payment
stopped by drawer’. A Legal Notice was also sent by the appellant
on 18.05.2010 through Registered Post, i.e., within the stipulated
thirty days period, intimating about the dishonour of the cheque. As
no reply was proffered by respondent no.2, thus, an inference, albeit
rebuttable, could arise that he had no sustainable/valid defence to
justify why the cheque in question was dishonoured. Be that as it
may, the respondent no.2 avers that no reply was sent as he had
not received any Legal Notice.
18. Further, a defence raised by the respondent no.2 was that he
had intimated the police of the factum of the cheque being lost.
512 [2025] 4 S.C.R.

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However, upon verification of the said claim, it emerges that such
intimation/information reached the police only in the year 2011,
though the intimation itself was dated 12.03.2010. Notably, the
cheque was presented on 17.03.2010. This sequence strengthens
the statutory presumption in favour of the appellant, as it cannot be
believed that a cheque having been lost on/about 12.03.2010, the
respondent no.2 would intimate the police thereof only in the year
2011, moreso, when the amount involved was a princely sum of
Rs.22,00,000/- (Rupees Twenty-Two Lakhs). It is noted that during
cross-examination, respondent no.2 admitted that such intimation
was sent to the police only in 2011 but never converted into a formal
FIR. This further raises serious doubts with regard to the veracity of
the accused’s claims/defences insofar as the story projected of the
cheque having been lost is concerned.
19. The accused asseverates that the cheque was drawn by M/s Sun
Enterprises. Respondent no.2-accused was a Partner in the said
Partnership Firm. Learned senior counsel drew attention to Aneeta
Hada v. Godfather Travels and Tours Private Limited, (2012) 5
SCC 661, where, looking to Section 141 of the Act, the Court held
that if the person committing an offence is a ‘company’, a complaint
against its ‘director’, without arraigning the ‘company’ as an accused
would not be maintainable. By way of Aparna A Shah v. Sheth
Developers Private Limited, (2013) 8 SCC 71, it was held that ‘…
under Section 138 of the Act, it is only the drawer of the cheque who
can be prosecuted.’ We are of the view, in the prevalent facts and
circumstances, that the dicta in Sunita Palita v. Panchami Stone
Quarry, (2022) 10 SCC 152 would apply:
‘36. The High Court also rightly held that the Managing
Director or Joint Managing Director would admittedly be
in charge of the company and responsible to the company
for the conduct of its business by virtue of the office they
hold as Managing Director or Joint Manging Director. These
persons are in charge of and responsible for the conduct
of the business of the company and they get covered
under Section 141 of the NI Act. A signatory of a cheque
is clearly liable under Sections 138/141 of the NI Act.
37. The High Court, however, failed to appreciate that
none of these appellants were Managing Director or Joint
[2025] 4 S.C.R. 513

Ashok Singh v. State of Uttar Pradesh & Anr.

Managing Director of the accused Company. Nor were
they signatories of the cheque which was dishonoured.
xxx
40. There can be no doubt that in deciding a criminal
revision application under Section 482CrPC for quashing
a proceeding under Sections 138/141 of the NI Act, the
laudable object of preventing bouncing of cheques and
sustaining the credibility of commercial transactions
resulting in enactment of the said sections has to be
borne in mind. The provisions of Sections 138/141 of
the NI Act create a statutory presumption of dishonesty
on the part of the signatory of the cheque, and when
the cheque is issued on behalf of a company, also
those persons in charge of or responsible for the
company or the business of the company. Every person
connected with the company does not fall within the ambit
of Section 141 of the NI Act.
xxx
42. Liability depends on the role one plays in the
affairs of a company and not on designation or status
alone as held by this Court in S.M.S. Pharmaceuticals
[S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8
SCC 89: 2005 SCC (Cri) 1975]. The materials on record
clearly show that these appellants were independent, non-
executive Directors of the company. As held by this Court in
Pooja Ravinder Devidasani v. State of Maharashtra [Pooja
Ravinder Devidasani v. State of Maharashtra, (2014) 16
SCC 1: (2015) 3 SCC (Civ) 384: (2015) 3 SCC (Cri) 378]
a non-executive Director is not involved in the day-to-day
affairs of the company or in the running of its business.
Such Director is in no way responsible for the day-to-day
running of the accused Company. Moreover, when a
complaint is filed against a Director of the company,
who is not the signatory of the dishonoured cheque,
specific averments have to be made in the pleadings
to substantiate the contention in the complaint, that
such Director was in charge of and responsible
for conduct of the business of the Company or the
514 [2025] 4 S.C.R.

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Company, unless such Director is the designated
Managing Director or Joint Managing Director who
would obviously be responsible for the company and/
or its business and affairs.
xxx
48. For the reasons discussed above, the appeal is
allowed. The judgment and order [Ashwini Kumar Singh v.
Panchami Stone Quarry, 2019 SCC OnLine Cal 4491] of
the High Court is set aside. Criminal Case No. AC/121/2017
pending under Sections 138/141 of the NI Act in the
Court of Judicial Magistrate, 2nd Court, Suri, Birbhum is
quashed insofar as these appellants are concerned. It is
made clear that the proceedings may continue against
the other accused in the criminal case, including in
particular the accused Company, its Managing Director/
Additional Managing Director and/or the signatory of
the cheque in question.’
(emphasis supplied)

20. No doubt the judgment by 2 learned Judges in Sunita Palita
(supra) is innocent of the pronouncement by the 3-Judge Bench in
Aneeta Hada (supra). However, Sunita Palita (supra) has taken
note of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8
SCC 89, rendered also by a 3-Judge Bench, which was reiterated
in Aneeta Hada (supra). As such, our harmonised reading of
these judgments would lead us to the conclusion, on facts herein,
that as the signatory of the cheque is arrayed as accused and
is also the person in charge, the underlying complaint would be
maintainable. Even before us, it has never been urged that the
accused, a Partner in M/s Sun Enterprises is not the person in
charge thereof.
21. One of the grounds, which weighed heavily with the High Court to
acquit the respondent no.2 was that the appellant was unable to
prove the source of Rs.22,00,000/- (Rupees Twenty-Two Lakhs)
given to the respondent no.2 as loan. Admittedly, the signature
on the cheque is of the respondent no.2 himself. The decision in
Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106
can be profitably referred to:
[2025] 4 S.C.R. 515

Ashok Singh v. State of Uttar Pradesh & Anr.

‘18. In the case at hand, even after purportedly
drawing the presumption under Section 139 of the
NI Act, the trial court proceeded to question the
want of evidence on the part of the complainant as
regards the source of funds for advancing loan to
the accused and want of examination of relevant
witnesses who allegedly extended him money for
advancing it to the accused. This approach of the
trial court had been at variance with the principles of
presumption in law. After such presumption, the onus
shifted to the accused and unless the accused had
discharged the onus by bringing on record such facts
and circumstances as to show the preponderance of
probabilities tilting in his favour, any doubt on the
complainant’s case could not have been raised for
want of evidence regarding the source of funds for
advancing loan to the appellant-accused. The aspect
relevant for consideration had been as to whether
the appellant-accused has brought on record such
facts/material/circumstances which could be of a
reasonably probable defence.
19. In order to discharge his burden, the accused put
forward the defence that in fact, he had had the monetary
transaction with the said Shri Jagdishbhai and not with
the complainant. In view of such a plea of the appellant-
accused, the question for consideration is as to whether
the appellant-accused has shown a reasonable probability
of existence of any transaction with Shri Jagdishbhai?
In this regard, significant it is to notice that apart
from making certain suggestions in the cross-
examination, the appellant-accused has not adduced
any documentary evidence to satisfy even primarily that
there had been some monetary transaction of himself with
Shri Jagdishbhai. Of course, one of the allegations of the
appellant is that the said stamp paper was given to Shri
Jagdishbhai and another factor relied upon is that Shri
Jagdishbhai had signed on the stamp paper in question
and not the complainant.
xxx
516 [2025] 4 S.C.R.

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20. Hereinabove, we have examined in detail the findings
of the trial court and those of the High Court and have no
hesitation in concluding that the present one was clearly
a case where the decision of the trial court suffered from
perversity and fundamental error of approach; and the
High Court was justified in reversing the judgment of the
trial court. The observations of the trial court that there
was no documentary evidence to show the source
of funds with the respondent to advance the loan, or
that the respondent did not record the transaction
in the form of receipt of even kachcha notes, or that
there were inconsistencies in the statement of the
complainant and his witness, or that the witness of
the complaint was more in the know of facts, etc.
would have been relevant if the matter was to be
examined with reference to the onus on the complaint
to prove his case beyond reasonable doubt. These
considerations and observations do not stand in
conformity with the presumption existing in favour of
the complainant by virtue of Sections 118 and 139 of
the NI Act. Needless to reiterate that the result of such
presumption is that existence of a legally enforceable
debt is to be presumed in favour of the complainant.
When such a presumption is drawn, the factors relating
to the want of documentary evidence in the form of
receipts or accounts or want of evidence as regards
source of funds were not of relevant consideration
while examining if the accused has been able to
rebut the presumption or not. The other observations
as regards any variance in the statement of complainant
and witness; or want of knowledge about dates and other
particulars of the cheques; or washing away of the earlier
cheques in the rains though the office of the complainant
being on the 8th floor had also been irrelevant factors
for consideration of a probable defence of the appellant.
Similarly, the factor that the complainant alleged the loan
amount to be Rs 22,50,000 and seven cheques being
of Rs 3,00,000 each leading to a deficit of Rs 1,50,000,
is not even worth consideration for the purpose of the
determination of real questions involved in the matter. May
[2025] 4 S.C.R. 517

Ashok Singh v. State of Uttar Pradesh & Anr.

be, if the total amount of cheques exceeded the alleged
amount of loan, a slender doubt might have arisen, but, in
the present matter, the total amount of 7 cheques is lesser
than the amount of loan. Significantly, the specific amount
of loan (to the tune of Rs 22,50,000) was distinctly stated
by the appellant-accused in the aforesaid acknowledgment
dated 21-3-2017.’
(emphasis supplied)

22. The High Court while allowing the criminal revision has primarily
proceeded on the presumption that it was obligatory on the part of
the complainant to establish his case on the basis of evidence by
giving the details of the bank account as well as the date and time
of the withdrawal of the said amount which was given to the accused
and also the date and time of the payment made to the accused,
including the date and time of receiving of the cheque, which has
not been done in the present case. Pausing here, such presumption
on the complainant, by the High Court, appears to be erroneous.
The onus is not on the complainant at the threshold to prove his
capacity/financial wherewithal to make the payment in discharge of
which the cheque is alleged to have been issued in his favour. Only
if an objection is raised that the complainant was not in a financial
position to pay the amount so claimed by him to have been given
as a loan to the accused, only then the complainant would have to
bring before the Court cogent material to indicate that he had the
financial capacity and had actually advanced the amount in question
by way of loan. In the case at hand, the appellant had categorically
stated in his deposition and reiterated in the cross-examination that
he had withdrawn the amount from the bank in Faizabad (Typed
Copy of his deposition in the paperbook wrongly mentions this as
‘Firozabad’). The Court ought not to have summarily rejected such
stand, more so when respondent no.2 did not make any serious
attempt to dispel/negate such stand/statement of the appellant.
Thus, on the one hand, the statement made before the Court, both
in examination-in-chief and cross-examination, by the appellant with
regard to withdrawing the money from the bank for giving it to the
accused has been disbelieved whereas the argument on behalf of the
accused that he had not received any payment of any loan amount
has been accepted. In our decision in M/s S. S. Production v. Tr.
Pavithran Prasanth, 2024 INSC 1059, we opined:
518 [2025] 4 S.C.R.

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‘8. From the order impugned, it is clear that though the
contention of the petitioners was that the said amounts
were given for producing a film and were not by way of
return of any loan taken, which may have been a probable
defence for the petitioners in the case, but rightly, the
High Court has taken the view that evidence had to be
adduced on this point which has not been done by the
petitioners. Pausing here, the Court would only comment
that the reasoning of the High Court as well as the First
Appellate Court and Trial Court on this issue is sound. Just
by taking a counter-stand to raise a probable defence
would not shift the onus on the complainant in such
a case for the plea of defence has to be buttressed
by evidence, either oral or documentary, which in the
present cases, has not been done. Moreover, even if
it is presumed that the complainant had not proved
the source of the money given to the petitioners by
way of loan by producing statement of accounts and/
or Income Tax Returns, the same ipso facto, would not
negate such claim for the reason that the cheques
having being issued and signed by the petitioners
has not been denied, and no evidence has been led to
show that the respondent lacked capacity to provide
the amount(s) in question. In this regard, we may make
profitable reference to the decision in Tedhi Singh v
Narayan Dass Mahant, (2022) 6 SCC 735:
‘10. The trial court and the first appellate court
have noted that in the case under Section 138
of the NI Act the complainant need not show
in the first instance that he had the capacity.
The proceedings under Section 138 of the
NI Act is not a civil suit. At the time, when
the complainant 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
[2025] 4 S.C.R. 519

Ashok Singh v. State of Uttar Pradesh & Anr.

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 crossexamination 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.’
(emphasis supplied)’
(underlining in original; emphasis supplied by
us in bold)

23. In the present case, on an overall circumspection of the entire facts
and circumstances of the case, we find that the appellant succeeded
in establishing his case and the Orders passed by the Trial Court and
the Appellate Court did not warrant any interference. The High Court
erred in overturning the concurrent findings of guilt and consequential
conviction by the Trial Court and the Appellate Court.
24. Accordingly, for reasons aforesaid, the appeal is allowed. The
Impugned Order is set aside. Though the natural consequence
would entail revival of the conviction and sentence imposed upon
the respondent no.2 i.e., one year simple imprisonment and fine of
Rs.35,00,000/- (Rupees Thirty-Five Lakhs), but having regard to
the parting submissions of learned senior counsel for the accused/
respondent no.2, to the effect that considering his age, he may be
520 [2025] 4 S.C.R.

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only subjected to fine and not imprisonment, we are inclined to modify
the sentence to only payment of a fine restricted to Rs.32,00,000/-
(Rupees Thirty-Two Lakhs). Acceding to the request by the learned
senior counsel, such fine be paid within four months from today to
the appellant, failing which the sentence in entirety, as awarded by
the Trial Court and upheld by the Appellate Court, will stand restored,
with the added modification that the entire fine of Rs.35,00,000/-
(Rupees Thirty-Five Lakhs) will be payable to the appellant.
25. Parties are left to bear their own costs. I.A. No.99358/2024 (exemption
from filing Official Translation) is allowed. I.A. No.234705/2024 (to
file additional documents) is allowed; Annexure A-1 (Application/
Tehrir) is taken on record.

Result of the case: Appeal allowed.

†
Headnotes prepared by: Divya Pandey