Supreme Court Reinstates Conviction in Cheque Dishonour Case: Key Legal Insights

The Supreme Court of India recently delivered a significant judgment in the case of Ashok Singh vs. State of Uttar Pradesh & Anr., overturning the High Court’s acquittal of the accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881. The case, which has traversed through multiple judicial forums, highlights the complexities surrounding the presumption of guilt in cheque bounce cases and the burden of proof on the accused. Below is a detailed narrative of the case, including key arguments and the Court’s reasoning.

Background of the Case

The appellant, Ashok Singh, had advanced a loan of Rs. 22,00,000/- to the respondent no. 2, Ravindra Pratap Singh, who issued a cheque for the same amount. The cheque was dishonoured with the endorsement ‘payment stopped by drawer’. The appellant followed the legal procedure by sending a notice and subsequently filing a complaint when the accused failed to repay the amount.

Key Arguments

Appellant’s Submissions

Mr. Pinaki Addy, learned counsel for the appellant, argued:

The High Court erred in re-appreciating evidence and overturning concurrent findings of guilt by the Trial and Appellate Courts.
The accused admitted his signature on the cheque, triggering the presumption under Sections 118 and 139 of the Act.
The accused’s claim of the cheque being lost was dubious, as the police intimation was made only in 2011, despite the cheque being presented in 2010.

Key Verbatim Argument:
“The cheque was issued in discharge of loan availed by the accused and hence presumption under Section 118 read with Section 139 of the Act would operate in the appellant’s favour. The burden of proof lies on the accused and he has to raise a probable defence.”

Respondent’s Submissions

Mr. Shadan Farasat, learned senior counsel for the respondent no. 2, contended:

The complainant failed to prove the source of the loan amount or the existence of a legally enforceable debt.
The cheque was drawn by a partnership firm, M/s Sun Enterprises, and the firm was not arraigned as an accused, making the complaint non-maintainable.
The accused had reported the cheque as lost, and the complainant’s story was fictitious.

Key Verbatim Argument:
“No proof of withdrawal of Rs. 22,00,000/- was placed on record by the complainant. The entire story put forth by the complainant is fictitious and he has failed to prove the circumstances in which the cheque was handed over.”

Supreme Court’s Analysis

The Supreme Court critically examined the sequence of events and the evidence on record. Key observations included:

The accused’s claim of the cheque being lost was undermined by the delayed police intimation in 2011, despite the cheque being presented in 2010.
The presumption under Section 139 of the Act operates in favour of the complainant once the cheque’s authenticity is admitted.
The High Court erred in placing the burden on the complainant to prove his financial capacity, which is not required at the threshold.

Key Verbatim Excerpt:
“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.”

Conclusion

The Supreme Court allowed the appeal, reinstating the conviction but modifying the sentence to a fine of Rs. 32,00,000/- payable within four months. The judgment underscores the importance of the statutory presumption in cheque dishonour cases and clarifies the burden of proof.

Petitioner Name: Ashok Singh.
Respondent Name: State of Uttar Pradesh & Anr..
Judgment By: Justice Ahsanuddin Amanullah, Justice Sudhanshu Dhulia.
Place Of Incident: Lucknow, Uttar Pradesh.
Judgment Date: 02-04-2025.

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