[Cites 17, Cited by 0]
Madhya Pradesh High Court
Ismail Beg vs Vishal Jain on 5 December, 2025
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE RAJENDRA KUMAR VANI
ON THE 5th OF DECEMBER, 2025
CRIMINAL APPEAL No. 11571 of 2022
ISMAIL BEG
Versus
VISHAL JAIN
Appearance:
Shri Shafiquallah - Advocate for the appellant.
Shri J.L. Soni - Advocate for the respondent.
ORDER
I.A. No.23461/2022, an application under Section 378(4) of
Cr.P.C. has been filed seeking leave to appeal against the judgment of
acquittal dated 17.10.2022 passed in Criminal Appeal No.82/2021
(Vishal Jain Vs. Ismail Beg) by 14th Additional Sessions Judge, Bhopal
(M.P.) arising out of judgment dated 11.02.2020 passed in Criminal
Case No.13398/2016 by JMFC, Bhopal, whereby the appellate court
allowing the appeal has set aside the judgment of the Trial Court and
has acquitted the respondent/accused (for short "accused") from the
charge of offence punishable under Section 138 of the Negotiable
Instruments Act.
2 . I have gone through the impugned judgments of the Courts
below. On due consideration leave is granted to appellant. I.A.
No.23461/2022 is disposed of accordingly.
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3. With the consent of learned counsel for the parties, the matter
is heard finally.
4 . The brief facts of the case, as alleged by the
appellant/complainant (in short "complainant") in the complaint filed
under Section 138 of the Negotiable Instruments Act, 1881 (for short 'the
NI Act ") are that both the parties are known to each other. The
complainant had given Rs.4,00,000/- for a month to accused to fulfill
his personal needs. The accused did not return the aforesaid amount after
a month and on being made demand of the aforesaid amount by the
complainant, he handed over a cheque bearing No.042514 dated
05.03.2015 of Rs.4,00,000/- to complainant. On being presented the said
cheque in the bank, the same got dishonoured due to the reason
"Payment stopped by Drawer". Again on presenting the cheque in the
bank, the same got dishonoured on the same ground. The
accused/respondent did not return the amount even after receipt of
demand notice dated 10.06.2015 on behalf of complainant.
5. The accused denied the allegations made in the complaint and
stated that he has been falsely implicated in the case. His defence is that
he had borrowed Rs.1,50,000/- in lieu of cheque and gold given to one
Tabrez Khan. The aforesaid amount has been repaid by him but the
cheque has not been returned by Tabrez Khan rather he while misusing
the cheque gave it to the complainant.
6 . The learned Trial Court, after hearing the parties and
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considering the material on record, vide judgment dated 11.02.2020
convicted the accused for the offence punishable under Section 138 of
the N.I. Act and sentenced to undergo R.I. for six months and directed
to pay compensation of Rs.5,77,592/- to the complainant under Section
357 (3) of Cr.P.C. with default stipulations. In addition, the accused was
further directed to pay Rs.20,000/- for expenses to complainant under
the provisions of Section 359 of Cr.P.C.
7 . Being aggrieved by the judgment passed by the learned Trial
Court, the accused preferred an appeal. The learned appellate Court
setting aside the judgment passed by the learned Trial Court allowed the
appeal and eventually acquitted the accused of the offence under Section
138 of NI Act. Hence, the present appeal.
8. It is submitted by the learned counsel for the
appellant/complainant that the learned Trial Court has convicted the
respondent/accused, however the learned appellate court has acquitted
the accused on the grounds that the present appellant/complainant could
not prove his financial capacity to advance Rs.4,00,000/- and only on
this ground the order of acquittal has been passed, which is erroneous.
He has a good case on merits. He prays to set aside the order of acquittal
of learned appellate court and to restore the judgment of conviction and
sentence of learned trial court.
9. Per contra, learned counsel for the respondent/accused has
submitted that the learned appellate court has considered various factual
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aspects and rightly came to the conclusion that the present
appellant/complainant has no financial capacity to lend Rs.4,00,000/- to
the respondent/accused, therefore, the order of acquittal has rightly been
passed by the learned appellate court.
1 0 . Heard learned counsel for the parties and perused the
record.
1 1 . The appellant herein is the complainant, who filed a
complaint under Section 138 of the Negotiable Instruments Act against
respondent/accused-Vishal Jain. The learned Trial Court has convicted
the respondent/accused for the offence and sentenced as mentioned in
para 4 herein above, while in appeal the learned appellate court acquitted
the respondent of the charges levelled against him under Section 138 of
the NI Act on the ground that it could not be proved by the complainant
that the cheque in question (Ex.P/1) was given by the respondent-
accused for discharging in whole or in part of any debt or other liability.
It is found proved by the appellate court that the notice (Ex.P/4) has been
received by the accused which was served at the address given by the
accused as per para 17 of the impugned judgment.
12. As regards, the essential ingredients required to establish the
commission of an offence under Section 138 of the NI Act, the Hon‟ble
Supreme Court, in the case of Gimpex (P) Ltd. v. Manoj Goel: (2022)
11 SCC 705, has lucidly enumerated the same in the following terms:
"26. The ingredients of the offence under Section 138 are:
26.1. The drawing of a cheque by person on an account
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maintained by him with the banker for the payment of any
amount of money to another from that account;
26.2. The cheque being drawn for the discharge in whole or
in part of any debt or other liability;
26.3. Presentation of the cheque to the bank;
26.4. The return of the cheque by the drawee bank as
unpaid either because 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;
26.5. A notice by the payee or the holder in due course
making a demand for the payment of the amount to the
drawer of the cheque within 30 days of the receipt of
information from the bank in regard to the return of the
cheque; and
26.6. The drawer of the cheque failing to make payment of
the amount of money to the payee or the holder in due course
within 15 days of the receipt of the notice."
13. It is not in dispute that to constitute an offence under Section
138 of the NI Act, the cheque in question must have been issued in
discharge of a legally enforceable debt or liability. However, Section
139 of the NI Act provides that once the drawer admits his signature on
the cheque, a statutory presumption arises that the cheque was issued for
the discharge, in whole or in part, of a debt or other liability. Section
118 of the NI Act further lays down a presumption that every negotiable
instrument, when held by a holder in due course, has been made or
drawn for consideration. In addition, Section 20 of the NI Act stipulates
that when a person signs and delivers a stamped but otherwise
incomplete negotiable instrument, he thereby authorizes the holder to
complete it for any amount not exceeding the value covered by the
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stamp. The scope and effect of these presumptions have been
comprehensively explained by the Hon‟ble Supreme Court in Bir Singh
v. Mukesh Kumar: (2019) 4 SCC 197, wherein it was observed:
"33. A meaningful reading of the provisions of
the Negotiable Instruments Act including, in
particular, Sections 20, 87 and 139, makes it amply clear that
a person who signs a cheque and makes it over to the payee
remains liable unless he adduces evidence to rebut the
presumption that the cheque had been issued for payment of
a debt or in discharge of a liability. It is immaterial that the
cheque may have been filled in by any person other than the
drawer, if the cheque is duly signed by the drawer. If the
cheque is otherwise valid, the penal provisions of Section
138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a
payee, towards some payment, the payee may fill up the
amount and other particulars. This in itself would not
invalidate the cheque. The onus would still be on the accused
to prove that the cheque was not in discharge of a debt or
liability by adducing evidence."
14. Here in this case, when we travel through the evidence on
record, it is found that complainant Ismail Beg (PW-1) has categorically
stated in his statement that he had friendly terms with the accused; and
for his personal need the accused borrowed an amount of Rs.4.00 lakhs
from him for a period of one month, but when he did not return the
amount; on demand being by him, accused gave him a cheque bearing
No.042514 dated 05.03.2015 of Rs.4.00 lakhs of the State Bank of India,
Branch Mukherjee Chowk, Mandsaur. He presented the cheque for
payment in his bank on 05/03/2015 and on the request of accused on
09.04.2015 and 09.05.2015 but it has been returned with an
endorsement "Payment Stopped by Drawer". When the complainant
received information dated 12.05.2015 of the Bank on 14.05.2015, he
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issued a notice (Ex.P/4) dated 10.06.2015 to the accused and demanded
the cheque amount. This notice has been served upon the accused at his
address on 26.06.2015 and at his official address on 18.06.2015, in
respect of which the postal receipts have been filed. The cheque is
Ex.P/1, bank return memos are Ex.P/2 & Ex.P/3, notice is Ex.P/4 and
postal receipts are Ex.P/5, P/6 & P/7, and acknowledgement receipts
are Ex.P/8 & P/9.
15. Though the complainant Ismail Beg (PW-1) has been
cross-examined by accused in respect of his financial capacity to
advance the amount to accused, in response to that, he categorically
stated that he is a teacher and his initial income was Rs.6000/-, which is
now Rs.10,000/- per month. In para 32 he has stated that his earning is
Rs.25000-30000/- per month. He has further stated that the amount paid
to the accused originated from the sale proceeds of his wife's ancestral
property (land). The aforesaid ancestral property was sold for the
consideration of Rs.21-22 lakhs. Though he stated that at the time of
advancing the amount to the accused, it has been reduced into writing
but that document has lost. In respect of these statements, he remained
intact in cross-examination.
16. The defence of the respondent-accused from inception is that
of his non-acquaintance with the complainant. He stated during his
examination under Section 313 of Cr.P.C. especially in reply to
question 5 and 25 that the cheque in question along with gold was given
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to Tabrez Khan by him and he borrowed Rs.1,50,000/- from Tabrez
Khan. Thereafter, he paid Rs.1,80,000/- to Tabrez Khan but Tabrez Khan
did not return the cheque in question along with gold. He does not know
the present appellant/complainant The aforesaid cheque has been
misused by the complainant. He also admits this fact that he had stopped
the payment of the aforesaid cheque when it was produced in the bank
by the complainant for its encashment. The same defence has also been
taken by accused in his statement as DW-1 and he stated that the cheque
Ex.P/1 was given to Tabrez Khan as security and he has deposited 140
gms gold with Tabrez Khan but Tabrez Khan despite payment of
Rs.1,80,000/- has not returned the aforesaid gold and cheque. However
the accused admitted in his cross-examination that he has not filed any
complaint or FIR in Police Station or elsewhere against Tabrez Khan to
the effect that he has not returned his gold and cheque in question which
was given as security to Tabrez Khan, but why such complaint or FIR
has not been lodged by the accused, has not been clarified.
17. From the defence taken by the accused and keeping in view
his statement as well as the facts stated in his examination under Section
313 of Cr.P.C., it is categorically established that the execution of
cheque (Ex.P/1) has been admitted by the accused which in turn
establishes that the cheque (Ex.P/1) bears the signature of
respondent/accused. A bare comparison with naked eyes also makes it
evident that the remaining writing on the cheque also made by same
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person who has signed it. It was not a defence of the respondent/accused
in his statement under Section 313 of Cr.P.C. and in his statement as
DW-1 that the cheque Ex.P/1 does not bear his signature and that the
complainant has no financial means to advance him Rs.4.00 lakhs rather
his defence is of non-acquaintance with the complainant.
18. Recently in the case of Sanjabij Tari Vs. Kishore S. Borcar &
another, in Criminal Appeal No.1755 of 2010 , the Hon'ble Apex Court
in para 15 to 18 has held as under :
"15. In the present case, the cheque in question has
admittedly been signed by the Respondent No.1-Accused .
This Court is of the view that once the execution of the
cheque is admitted, the presumption under Section 118 of the
NI Act that the cheque in question was drawn for
consideration and the presumption under Section 139 of the
NI Act that the holder of the cheque received the said cheque
in discharge of a legally enforceable debt or liability arises
against the accused. It is pertinent to mention that
observations to the contrary by a two Judges Bench
in Krishna Janardhan Bhat vs. Dattatraya G. Hegde, (2008) 4
SCC 54 have been set aside by a three Judges Bench
in Rangappa (supra).
16. This Court is further of the view that by creating this
presumption, the law reinforces the reliability of cheques as a
mode of payment in commercial transactions.
17. Needless to mention that the presumption contemplated
under Section 139 of the NI Act, is a rebuttable presumption.
However, the initial onus of proving that the cheque is not in
discharge of any debt or other liability is on the
accused/drawer of the cheque [See: Bir Singh vs. Mukesh
Kumar, (2019) 4 SCC 197].
18. The judgment of this Court in APS Forex Services
Private Limited (supra) relied upon by learned counsel for
the Respondent No.1-Accused only says that presumption
under Section 139 of the NI Act is rebuttable and when the
same is rebutted, the onus would shift back to the
complainant to prove his financial capacity, more
particularly, when it is a case of giving loan by cash. This
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judgment nowhere states, as was sought to be contended by
learned counsel for the Respondent No.1-Accused, that in
cases of dishonour of cheques, in lieu of cash loans, the
presumption under Section 139 of the NI Act does not arise"
19. Here in this case, as discussed earlier that the financial
capacity of complainant to advance Rs.4.00 lakhs has not been
questioned by the respondent/accused from inception though he has
cross-examined on this point to the complainant during which the
complainant reveals the sources satisfactorily and which remains
unrebutted. While examination under Section 313 of Cr.P.C. and
deposing as a witness DW-1 present respondent/accused has not
uttered anything in this regard rather he took a defence that he did not
know the complainant. Thus, the initial burden in respect of financial
capacity to advance the aforesaid amount of Rs.4.00 lakhs to the accused
has been well established by the complainant in this case. In this view
of the matter, the presumption under Section 118 and 139 of the NI Act
coupled with the provisions of Section 20 of the NI Act applies in this
case and accused had utterly failed to rebut it.
20. In the case of Satish Kumar Vs. State (Govt. NCT Delhi)
and another, 2025 SCC OnLine Del 8429 , in para 15 the Delhi High
Court has observed that once the petitioner admitted his signatures on
the cheques in question, the statutory presumptions under Sections
118 and 139 of the NI Act stood attracted against him. It was, therefore,
incumbent upon the petitioner to rebut these presumptions by leading
cogent and credible evidence to show that the cheques were not issued in
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discharge of any legally enforceable debt or liability.
21. The Hon'ble Apex Court in Sanjabij Tari (supra) in para 22
and 23 has held as infra :
"22. It is pertinent to mention that in the present case, the
Respondent No.1- Accused has filed no documents and/or
examined any independent witness or led any evidence with
regard to the financial incapacity of the Appellant-
Complainant to advance the loans in question. For instance,
this Court in Rajaram S/o Sriramulu Naidu (Since Deceased)
Through LRs. vs. Maruthachalam (Since Deceased) Through
LRs., (2023) 16 SCC 125 has held that presumptions
under Sections 118 and 139 of the NI Act can be rebutted by
the accused examining the Income Tax Officer and bank
officials of the complainant/drawee.
WHEN THE EVIDENCE OF PW-1 IS READ IN ITS
ENTIRETY, IT CANNOT BE SAID THAT THE
APPELLANT-COMPLAINANT HAD NO
WHEREWITHAL TO ADVANCE LOAN
23. Most certainly, the accused can rely upon the evidence
adduced by the complainant to rebut the presumption with
regard to the existence of a legally enforceable debt or
liability, yet in the present case, when the evidence of
Appellant-Complainant (PW-1) is read in its entirety, like it
should be, it cannot be said that the Appellant-Complainant
had no wherewithal to advance any loan to the Respondent
No.1-Accused."
22. Keeping in view the law laid down in the aforesaid cases, the
complainant has established the fact that the cheque in question
(Ex.P/1) was given by the accused for the discharge of legally
enforceable debt or liability and in this respect the presumption arises
under Section 118 and 139 of NI Act which could not be rebutted by the
accused.
23. One more important fact is also referable in this regard that
though the accused has denied to receive the notice (Ex.P/4) but it has
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not been challenged by the accused that the address on Ex.P/4 is not his
address. The service of Ex.P/4 on the accused has been well established
in the light of postal receipts Ex.P/5 P/6 & P/7 and the track record of
the post as Ex.P/8 and Ex.P/9, which shows that the notice has been
delivered at the home and official address of respondent/accused.
24. In the case of Sanjabij Tari (supra), the Hon'ble Apex Court
in para 29, 30 & 31 has held that when the accused has failed to reply to
the statutory notice under Section 138 of the NI Act that leads to an
inference that there is merit in the complainant's version, the accused has
the initial burden to set up the defence in his reply to the demand notice
that the complainant did not have the financial capacity to advance the
loan. When a statutory notice is not replied, it has to be presumed that
the cheque was issued towards the discharge of liability. Paragraphs 29,
30 & 31 of the said decision read as under :-
"29. Furthermore, the fact that the accused has failed to reply
to the statutory notice under Section 138 of the NI Act leads
to an inference that there is merit in the Appellant-
Complainant's version. This Court in Tedhi Singh vs.
Narayan Dass Mahant, (2022) 6 SCC 735 has held that the
accused has the initial burden to set up the defence in his
reply to the demand notice that the complainant did not have
the financial capacity to advance the loan. The relevant
portion of the said judgment is reproduced hereinbelow:-
"10. ... 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
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initially lead evidence to show that
he had the financial capacity. To
that extent, the courts in our view
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 cross-examination 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)
30. This Court in MMTC Ltd. and Another vs. Medchl
Chemicals & Pharma (P) Ltd. and Another, (2002) 1 SCC
234 has specifically held that when a statutory notice is not
replied, it has to be presumed that the cheque was issued
towards the discharge of liability.
31. Also, after receipt of the legal notice, wherein the
Appellant-Complainant alleged that the Respondent No.1-
Accused's cheque had bounced, no complaint or legal
proceeding was initiated by the Respondent No.1-Accused
alleging that the cheque was not to be encashed.
Consequently, the defence of financial incapacity of
Appellant-Complainant advanced by the Respondent No.1-
Accused is an afterthought."
25. As far as the defence of the respondent/accused is concerned,
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Tabrez Khan was the important witness in this respect but Tabrez Khan
has not been examined on behalf of the accused for the reasons best
known to him. If Tabrez Khan had received the cheque in question and
140 gms gold as security from the accused/respondent and even after
returning the amount of Rs.1,80,000/- by the accused, he has not
returned the said cheque and gold, as a natural corollary the accused
must have lodged an FIR or complaint against said Tabrez Khan or must
have been produced in evidence on behalf of the accused/respondent as a
witness before the Trial Court to establish his defence but non-
examination of Tabrez Khan and non-filing of any FIR or complaint
against Tabrez Khan draws an adverse inference against the accused.
26. As a result, as per the statutory requirement, the complainant
has succeeded in proving its case against respondent/accused. The
learned appellate court erroneously acquitted the accused/respondent,
despite there being evidence available on record that the cheque (Ex.P/1)
was issued for the discharge of a legally enforceable debt. The impugned
judgment and order of acquittal passed by the learned appellate court is
liable to be set aside. As far as the conclusion of learned Trial Court in
respect of conviction of respondent/accused under Section 138 of N.I.
Act is concerned, the same is founded on the cogent basis. Moreover,
the punishment under aforesaid section, which is six months RI with
compensation of Rs.5,77,592/- under Section 357(3) of Cr.P.C. and
Rs.20,000/- for expenses and sentence in default is concerned, the same
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is not found to be unreasonable or inappropriate rather it is found to be
lawful and appropriate.
27. Resultantly, this appeal is allowed. The impugned judgment
of acquittal passed by the lower appellate court is hereby set aside and
the impugned judgment of conviction and order of sentence passed by
the Trial Court is hereby restored and upheld . The learned Trial Court is
directed to take the accused/respondent in custody and send him to jail
as per the order of sentence passed by it.
28. Let a copy of this order along with the record be sent to the
trial Court for necessary compliance.
(RAJENDRA KUMAR VANI)
JUDGE
DV
