Complainant Must Prove Cheque Execution Through Person Having Direct Knowledge Of Transaction Before Availing NI Act Presumptions: Kerala High Court

The Court observed that where the complainant himself is unaware of the transaction, passing of consideration and execution of the cheque, the evidence of such a witness would be insufficient to establish the foundational facts necessary to invoke the presumptions.

The Court was hearing an appeal filed by a complainant challenging the acquittal of an accused in a cheque dishonour case. The complainant alleged that the accused had borrowed ₹4.5 lakh and issued a cheque towards repayment of the amount. Upon dishonour of the cheque, prosecution was initiated under Section 138 of the Negotiable Instruments Act.

A Bench Justice A. Badharudeen observed: “It is the well settled law that in a prosecution alleging commission of offence punishable under Section 138 of the NI Act, the complainant would get the benefit of twin presumptions under Sections 118 and 139 of the NI Act and the pre condition for the same is proof of the transaction and execution of the cheque in a convincing manner. The same would definitely include passing of consideration covered by the cheque.”

The Court further observed: “Indubitably such evidence shall be given by the person, who had direct knowledge regarding the transaction and execution of the cheque and the evidence of a person, who does not know the same is insufficient to prove the transaction and the execution of the cheque.”

Advocate Rajeev V. Kurup appeared for the appellant, while Advocate S. Nidheesh appeared for the accused. Senior Public Prosecutor Vipin Narayan A. appeared for the State.

Background

According to the complainant, the accused had borrowed ₹4,50,000 and subsequently issued a cheque towards the discharge of the liability. The cheque was dishonoured upon presentation, following which the complainant issued the statutory notice and instituted prosecution under Section 138 of the Negotiable Instruments Act.

The trial court, after evaluating the evidence, acquitted the accused. Challenging the acquittal, the complainant approached the High Court contending that he had proved the transaction and execution of the cheque and was therefore entitled to the benefit of the presumptions under Sections 118 and 139 of the Act.

Court's Observations

The High Court examined the evidence of PW1, the complainant, and found that during cross-examination, he admitted that the money had been advanced to the accused by his father in five instalments.

The complainant further admitted that the details of those instalments had been recorded by his father in a notebook and that he was unaware whether any specific period had been fixed for repayment. He also stated that he did not know when the first instalment was advanced and was unaware of the contents of the agreement allegedly executed between his father and the accused.

The Court noted that although PW1 referred to a notebook maintained by his father recording the details of the advances, the notebook was never produced before the court.

The Court found that the evidence on record clearly indicated that the transaction and passing of consideration were between the complainant's father and the accused.

The Bench observed: “This evidence would show that, in fact, the transaction and passing of consideration are in between the father and the accused, and the complainant did not know the transaction or execution of the cheque, including passing of consideration.”

The Court further held: “Thus in the instant case the competent person to depose about the transaction and execution of Ext.P1 cheque is none other than the father of PW1.”

The Court found it significant that, despite being the person who allegedly advanced the money and maintained records of the transaction, the complainant's father was not examined.

Referring to the explanation offered by the complainant, the Court noted that the father had been engaged in money lending despite being a police officer and therefore did not wish to enter the witness box because of the prohibition contained in the Conduct Rules applicable to government servants.

However, the Court held that the absence of the most material witness left the foundational facts of the prosecution unproven.

The Bench, accordingly, held: “On scrutiny of the evidence of PW1 and the discussion as aforesaid, it is emphatically clear that the transaction which led to execution of Ext.P1 cheque failed to be proved by the evidence of PW1 and the complainant had miserably failed to discharge the initial burden cast upon him, to prove the transaction which led to the execution of the cheque, which would disentitle him the benefit of presumptions under Sections 118 and 139 of the NI Act in favour of him.”

The Court held that since the complainant failed to establish the foundational facts necessary to invoke the statutory presumptions, the trial court was justified in acquitting the accused.

Conclusion

Finding no infirmity in the trial court's conclusion that the prosecution had failed to prove the case beyond a reasonable doubt, the Court dismissed the appeal and affirmed the acquittal of the accused.

Cause Title: Shijosh K. v. State of Kerala & Anr. (Neutral Citation: 2026:KER:40471)

Appearances

Appellant: Rajeev V. Kurup and Ajith Kathiranthara, Advocates.

Respondents: S. Nidheesh and Sabu S. Kallaramoola, Advocates; Vipin Narayan A., Senior Public Prosecutor.

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