Supreme Court: Onus Not On Complainant At Threshold To Prove His Financial Wherewithal To Make Payment In Discharge Of Which Cheque Is Issued In His Favour

The Supreme Court held that 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.

The Court held thus in a Criminal Appeal filed against the Judgment of the Allahabad High Court, Lucknow Bench which set aside the concurrent findings of guilt and conviction recorded against the accused.

The two-Judge Bench of Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah observed, “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.”

Advocate Pinaki Addy appeared on behalf of the Appellant while Senior Advocate Shadan Farasat appeared on behalf of the Respondents.

Brief Facts

The Appellant was the Complainant who alleged that he had advanced a loan of Rs. 22 lakhs to the Respondent-accused on the assurance that the entire amount will be returned. When he demanded return of the money, the accused issued a cheque for an amount of Rs. 22 lakhs drawn on the Bank of Baroda. The Appellant presented the said cheque for encashment at IDBI Bank and the same 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 his money but he neither met him nor returned the money.

Resultantly, he sent a legal notice but the accused did not reply to the same. Hence, a Complaint Case was registered by the Appellant. The Trial Court found the accused guilty of having committed an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) and sentenced him to one year of simple imprisonment along with fine of Rs. 35 lakhs. The Appeal preferred by the accused was dismissed by the Appellate Court and therefore, he filed a Criminal Revision Petition before the High Court. The same was allowed and the conviction was set aside. Being aggrieved, the Appellant approached the Apex Court.

Reasoning

The Supreme Court in view of the above facts, noted, “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 Court said that in this case, 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”, it added.

The Court further remarked that 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 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”, it concluded.

Accordingly, the Apex Court allowed the Appeal, set aside the impugned Order, and modified the sentence to only payment of Rs. 32 lakhs

Cause Title- Ashok Singh v. State of Uttar Pradesh & Anr. (Neutral Citation: 2025 INSC 427)

Appearance:

Appellant: Advocates Pinaki Addy and Sarika Verma.

Respondents: Senior Advocate Shadan Farasat, AOR Mayank Pandey, Advocates Ashish Kumar Pandey, Harshit Anand, Vedant Sharma, Shadab Azhar, and Arun.

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