Accused Can Challenge Complainant’s Financial Capacity In Sec.138 NI Act Case During Trial: Kerala High Court

The High Court was considering an appeal filed at the instance of the complainant in a cheque bounce case.

The Single Bench of Justice A. Badharudeen held, “Regarding the finding of the learned Magistrate that no evidence was tendered to show that the original complainant was financially sound enough to lend Rs.2,50,000/- to the accused on the material day, is also of least significance in the instant case. That is to say, in a prosecution alleging commission of offence under Section 138 of the N.I Act, the accused can challenge the financial capacity of the complainant to advance the money so as to make the prosecution allegation dis-believable. But for which, there must be a challenge by the accused during the trial stage and failure to challenge the same would stand to hold that the accused was convinced of the financial capacity of the complainant to advance the cheque amount involved in the case.”

Advocate Brijesh Mohan represented the Appellant, while Senior Public Prosecutor Sri Vipin Narayan represented the Respondent.

Factual Background

On dishonour of a cheque for Rs 2.5 lakh, alleged to be issued by the accused to the complainant, the complainant launched prosecution alleging commission of an offence punishable under Section 138 of the NI Act, by the accused. The trial court proceeded with the trial and recorded the evidence. The Magistrate acquitted the accused.

Arguments

One of the arguments raised by the petitioner was that the financial capacity of the complainant or the source of the money was not at all disputed by the accused.

Reasoning

On a perusal of the facts of the case, the Bench noted that as per the evidence of the first witness, who was the Power of Attorney Holder, he had witnessed the transaction which led to the execution of the cheque, and he deposed that the accused borrowed Rs 2,50,000 from the complainant at the residence of the complainant. He had answered all queries put to him during cross-examination, and his evidence regarding the transaction and execution of the cheque was not at all shaken.

The Bench held, “However, the learned Magistrate took a hyper technical view in this case to hold that since the name of PW1 was not cited in the preliminary witness schedule, his evidence could not be believed. In this connection, it is pertinent to note that the legal position is well settled on the point that a Power of Attorney Holder is competent to file a complaint and he is equally competent to give evidence on behalf of the complainant. But it is essential that when the Power of Attorney Holder of the complainant gives evidence, he should be aware of the transaction which led to execution of Ext.P1 cheque, otherwise his evidence being hearsay has no probative value.”

The Bench was of the view that in a prosecution generated on a private complaint, if there is an omission in giving the name of one among the witnesses in the initial witness schedule, the same would not a reason to disbelieve the evidence of such a witness for the said reason alone, who got examined and his evidence was not shaken even during cross examination. Thus, the Bench held that the Magistrate went wrong in discarding the evidence of the witness.

“In fact, by the evidence of PW1 the complainant successfully proved the transaction that led to the execution of Ext.P1 cheque so as to canvass the benefit of the presumptions under Sections 118 and 139 of the N.I Act in favour of the complainant. In the instant case, there is nothing available to hold that these presumptions are in any way rebutted by the accused”, it added.

Considering the fact that no challenge was raised by the accused, stating that the complainant was incapable of giving Rs 2,50,000, the Bench noted that the accused did not dispute the financial capacity of the complainant in any manner and thus,no burden was cast upon the complainant to prove his financial capacity to advance the said amount. As per the Bench, the same could not be a reason to disbelieve or non-suit the complainant.

Thus, allowing the appeal and setting aside the verdict of acquittal, the Bench held the accused guilty for the offence punishable under Section 138 and sentenced her to undergo imprisonment till rising of court and pay fine of Rs 4 lakh.

Cause Title: Rajesh v. Ambili (Neutral Citation: 2026:KER:22222)

Appearance

Appellant: Advocates Brijesh Mohan, Resmi G. Nair

Respondent: Senior Public Prosecutor Sri Vipin Narayan, Advocates M.R.Sasith

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