Accused Convicted for Dishonoured Cheque Issued to Repay Debt | HC

Case Details: Nand Lal Thakur vs. Mukhtyar Singh - [2025] 180 taxmann.com 128 (HC-Himachal Pradesh)

Judiciary and Counsel Details

• Rakesh Kainthla, J.
• P.K. Verma, Adv. for the Appellant.
• Skandh Sharma, Adv. for the Respondent.

Facts of the Case

In the instant case, the accused was taking feed on a credit basis from the firm ‘Thakur Cattle’. There was a dispute between the accused and the supplier; thus, the accused requested the complainant to intervene. The Complainant paid Rs. 1.5 lakh on behalf of the accused to the supplier.

The accused issued a cheque in favour of the complainant to return the amount paid by the complainant. The complainant presented a cheque for its collection, but it was dishonoured with an endorsement ‘insufficient funds’.

Thereafter, the complainant issued a notice to the accused asking him to repay the money. The notice was sent to the correct address and was deemed to be served. However, the accused failed to do so, and thus, a complaint was filed before the Trial Court for taking action as per law. The Trial Court vide the impugned order acquitted the accused.

It was noted that the Court has to raise a presumption that the cheque was issued in discharge of liability for consideration, and the burden would shift upon the accused to rebut the presumption under section 139 of the Negotiable Instruments Act, 1881.

In the instant case, evidence of the accused did not rebut the presumption; rather, the statement of the proprietor of the firm proved that the complainant had paid Rs. 1.50 lakh on behalf of the accused. Further, the witness produced by the complainant also stated that the cheque was dishonoured as the holder of the account had no money.

Further, the said witness was not cross-examined at all, which means that his testimony was not disputed by the accused. Hence, in these circumstances, the complainant’s version that the cheque was dishonoured due to insufficient funds had to be accepted as correct.

High Court Held

The High Court held that it was duly proved on record that the accused had issued a cheque to discharge his legal liability, which was dishonoured with an endorsement ‘funds insufficient’, and the accused failed to pay the money despite having received a deemed receipt of the notice.

Thus, the accused was to be convicted for the commission of an offence punishable under Section 138 of the Act, and accordingly, the impugned order of the Trial Court, acquitting the accused, was to be set aside.

List of Cases Reviewed

• APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers [2020] 114 taxmann.com 367/159 SCL 1 (SC)/(2020) 12 SCC 724 (Para 19)
• N. Vijay Kumar v. Vishwanath Rao N. [2025] 173 taxmann.com 781/188 SCL 675 (SC)/2025 SCC OnLine SC 873 (Para 20)
• C.C. Alavi Haji v. Palapetty Muhammed [2007] 77 SCL 117 (SC)/2007(6) SCC 555 (Para 25) followed

List of Cases Referred to

• Surendra Singh v. State of Uttarakhand 2025 SCC OnLine SC 176 (para 12)
• APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers [2020] 114 taxmann.com 367/159 SCL 1 (SC) (para 19)
• N. Vijay Kumar v. Vishwanath Rao N. [2025] 173 taxmann.com 781/188 SCL 675 (SC) (para 20)
• C.C. Alavi Haji v. Palapetty Muhammed [2007] 77 SCL 117 (SC) (para 25).