Dismissed¶112

Shyam Lal v. Gagan Vasudeva

Himachal Pradesh HC13 Nov 2025CR.A/389/2024

Case brief

AI extract

What is this about?

Shyam Lal v. Gagan Vasudeva, Cr. Appeal No. 389 of 2024, High Court of Himachal Pradesh, Shimla (Rakesh Kainthla, Judge), decided 13.11.2025: appeal against acquittal in a Section 138 NI Act complaint dismissed. Grounds: cheque issued towards time-barred debt (loan of July 2012, cheque of August 2019); complainant's financial capacity doubtful (Rs. 25,000/- monthly income; Rs. 5,00,000/- = twenty months' salary); presumption under Sections 118(a)/139 rebutted; stop-payment instruction of 23.05.2018 due to lost cheque preceded issuance/presentation. Trial Court's acquittal upheld as a reasonable view; no interference.

What did the court decide?

None; the appeal failed and was dismissed, leaving the learned Trial Court's acquittal undisturbed. ¶112

Shyam Lal Vs Gagan Vasudeva — Cheque Dishonour | Himachal Pradesh HC (2025)

What the court decided

AI extract

Outcome

None; the appeal failed and was dismissed, leaving the learned Trial Court's acquittal undisturbed.

¶112

Issue for consideration

Whether the judgment of acquittal passed by the learned Trial Court suffered from patent perversity, misreading or omission of material evidence such as to warrant interference in this appeal against acquittal. +3 more

¶30

Court's answer

Interference with a judgment of acquittal is warranted only where it suffers from patent perversity, is based on misreading or omission of material evidence, and no two reasonable views are possible; the learned Trial Court having taken a reasonable view while acquitting the accused, this Court will not interfere with the acquittal in the appeal.

¶111

Ratio / Principle

Under Article 21 of the Limitation Act, 1963, a suit for recovery of Rs. 5,00,000/- advanced in July 2012 could have been filed on or before July 2015 and would have been barred by August 2019; the cheque issued in August 2019 was therefore issued towards the repayment of a time-barred debt.

¶61

Key takeaways

A cheque issued towards a time-barred debt is not towards a legally enforceable debt and does not give rise to liability under Section 138 of the NI Act; consequently, no action could have been taken on the complaint filed before the learned Trial Court.ratio¶67
With a monthly income of Rs. 25,000/- in 2012, an amount of Rs. 5,00,000/- equalled twenty months' salary, and it was difficult to believe the complainant kept that sum at home and handed it over to the accused without security or documentation; the learned Trial Court was justified in insisting upon proof of advancing the loan and in doubting the complainant's case for lack of financial capacity.ratio¶69

Detailed headnote1 paragraphs

Criminal appeal against acquittal under Section 138 NI Act — dismissed; acquittal upheld. (i) Time-barred debt: loan of Rs. 5,00,000/- taken in July 2012, cheque issued August 2019; a suit for recovery under Article 21, Limitation Act 1963 would have been barred by August 2019; a cheque issued towards a time-barred debt is not towards a legally enforceable debt and creates no Section 138 liability (following Social Leasing (India) Ltd. v. Rajan Kumar Kanthwal). (ii) Financial capacity: complainant earned Rs. 25,000/- per month in 2012; Rs. 5,00,000/- equalled twenty months' salary allegedly kept at home and handed over without security or documentation — capacity doubtful; presumption under Sections 118(a)/139 NI Act is rebuttable, disappears once evidence is led, and stood displaced by cross-examination (Rajaram; Tedhi Singh; Basalingappa; Dattatraya; John K. Abraham; Rajesh Jain). (iii) Lost cheque: accused intimated loss and issued stop-payment instruction on 23.05.2018 (Ex. DW1/A) before issuance/presentation of the cheque (dated 22.01.2020; dishonoured 24.01.2020 'payment stopped by the drawer') — no offence under Section 138 NI Act (Gaurav Agarwal; Bobby Anand; K. Sadanandan). Acquittal was a reasonable/possible view; no interference per the Supreme Court parameters in Surendra Singh v. State of Uttarakhand.

¶1

2025:HHC:38099

¶2

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

¶3

Cr. Appeal No. 389 of 2024 Reserved on: 24.09.2025 Date of Decision: 13.11.2025

¶4

Shyam Lal ... Appellant

¶5

Versus Gagan Vasudeva ...Respondent

¶6

Coram Hon’ble Mr Justice Rakesh Kainthla , Judge. Whether approved for reporting?¹ Yes For the Appellant : Mr Rajiv Rai, Advocate. For the Respondent : Mr Manohar Lal Sharma, Advocate.

¶7

Rakesh Kainthla, Judge

¶8

The appellant has filed the present appeal against the judgment dated 04.12.2023 passed by learned Judicial Magistrate First Class, Court no. 3, Mandi, District Mandi, H.P. (learned Trial Court) vide which the complaint filed by the appellant (complainant before the learned Trial Court) was dismissed. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)

¶9

1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

¶10

P a g e | 2 2025:HHC:38099

¶11

2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court alleging the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short ‘NI Act’). It was asserted that the accused had taken ₹ 5,00,000/- from the complainant in July 2012 to meet his domestic needs. The complainant demanded the money from the accused, who issued a post-dated cheque of ₹ 5,00,000/- drawn on Syndicate Bank, Palampur, District Kangra, H.P., in August 2019 to discharge his liability. The complainant presented the cheque to the bank, but it was dishonoured on 24.01.2020 with the endorsement ‘payment stopped by the drawer’. The complainant then issued a legal notice demanding repayment within 15 days of receipt. The notice was returned with the report ‘refused’ and is deemed to be served. The accused failed to repay the amount. Consequently, the complaint was filed before the learned Trial Court to take appropriate legal action.

¶12

Learned Trial Court found sufficient reasons to summon

¶13

the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under

¶14

P a g e | 3 2025:HHC:38099

¶15

Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.

¶16

4. The complainant examined himself (CW1) to prove his case.

¶17

5. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had friendly relations with the complainant. He stated that his chequebook was lost. He discovered this fact in 2018, and he filed a complaint with the bank. He admitted that the cheque bears his signatures. He stated that the cheque was filled in by the complainant. He was only a distributor and had stopped working with the complainant due to some misunderstanding. He denied that any notice was sent to him. He examined Naresh Kumar (DW1), Joginder Singh (DW 2) and himself (DW3).

¶18

Learned Trial Court held that the complainant had asserted that the cheque was issued to him in August 2019, but the accused had stopped the payment of the cheque in 2018, much before the issuance of the cheque. This corroborated the version of the accused that he had lost the cheque. Statement of Joginder Singh (DW2) proved that the complainant had submitted an

¶19

P a g e | 4 2025:HHC:38099

¶20

income tax return of ₹4,75,685/- in the year 2018- 2019. The complainant admitted that he was getting a salary of ₹25,000/per month in the year 2012. Therefore, the complainant’s capacity to advance ₹5 lakhs in the year 2012 was highly doubtful. Therefore, the complaint was dismissed.

¶21

Being aggrieved by the judgment passed by the learned Trial Court, the complainant has filed the present appeal asserting that the learned Trial Court erred in acquitting the accused. Learned Trial Court erred in holding that the accused had rebutted the presumption contained in Section 118 (a) and 139 of the N.I. Act. The accused had never reported the matter to the police, which made his version regarding the loss of the cheque doubtful. The accused first wrote an application to the bank regarding the loss of the cheque and thereafter issued a cheque to the complainant, which amounted to cheating. It was wrongly held that the complainant’s financial capacity was doubtful. The complainant was earning ₹ 25,000/- per month, and he had the financial capacity to advance the money. Minor contradiction regarding the purpose of the loan could not have been used to discard the complainant’s case. Therefore, it was prayed that the

¶22

P a g e | 5 2025:HHC:38099

¶23

present appeal be allowed and the judgment passed by the learned Trial Court be set aside.

¶24

I have heard Mr Rajiv Rai, learned counsel for the appellant and Mr Manohar Lal Sharma, learned counsel for the respondent.

¶25

Mr Rajiv Rai, learned counsel for the appellant, submitted that the learned Trial Court erred in holding that the accused had proved his defence regarding the loss of the cheque. The accused had cheated the complainant by issuing a cheque, which was reported as lost. The accused had not made any complaint to the police, which made his version suspect. Learned Trial Court erred in doubting the financial capacity of the complainant. Therefore, he prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside.

¶26

Mr Manohar Lal Sharma, learned counsel for the respondent, submitted that the accused had lost the chequebook in the year 2018 and reported this fact to the bank. The crossexamination of the complainant made his financial capacity doubtful, and the learned Trial Court was justified in insisting

¶27

P a g e | 6 2025:HHC:38099

¶28

upon the production of satisfactory evidence to advance the loan. No such evidence was produced and the learned Trial Court was justified in acquitting the accused. This was a reasonable view, and no interference is required with it. He relied upon the judgment of this Court in Virender Sharma vs Neeraj Kumar 2024:HHC:6379 in support of his submission.

¶29

I have given considerable thought to the submissions made at the bar and have gone through the records carefully.

¶30

The present appeal has been filed against a judgment of acquittal. It was laid down by the Hon’ble Supreme Court in Surendra Singh v. State of Uttarakhand, 2025 SCC OnLine SC 176: (2025) 5 SCC 433 that the Court can interfere with a judgment of acquittal if it is patently perverse, is based on misreading/omission to consider the material evidence and reached at a conclusion which no reasonable person could have reached. It was observed:

¶31

“11. Recently, in the case of Babu Sahebagouda Rudragoudar v. State of Karnataka 2024 SCC OnLine SC 4035 , a Bench of this Court to which one of us was a Member (B.R. Gavai, J.) had an occasion to consider the legal position with regard to the scope of interference in an appeal against acquittal. It was observed thus:

¶32

“ 38. First of all, we would like to reiterate the principles laid down by this Court governing the scope of interference by the High Court in an appeal filed by the

¶33

P a g e | 7 2025:HHC:38099

¶34

State for challenging the acquittal of the accused recorded by the trial court.

¶35

39. This Court in Rajesh Prasad v. State of Bihar [Rajesh Prasad v. State of Bihar, (2022) 3 SCC 471: (2022) 2 SCC (Cri) 31] encapsulated the legal position covering the field after considering various earlier judgments and held as below: (SCC pp. 482-83, para 29)

¶36

“ 29. After referring to a catena of judgments, this Court culled out the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal in the following words: ( Chandrappa case [Chandrappa v. State of Karnataka, (2007) 4 SCC 415: (2007) 2 SCC (Cri) 325 ], SCC p. 432, para 42)

¶37

‘ 42. From the above decisions, in our considered view, the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal emerge:

¶38

(1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded.

¶39

(2) The Criminal Procedure Code, 1973, puts no limitation, restriction or condition on the exercise of such power and an appellate court, on the evidence before it, may reach its own conclusion, both on questions of fact and law.

¶40

(3) Various expressions, such as “substantial and compelling reasons”, “good and sufficient grounds”, “very strong circumstances”, “distorted conclusions”, “glaring mistakes”, etc., are not intended to curtail the extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of “flourishes of language” to emphasise the reluctance of an appellate court to interfere with an acquittal than to curtail the

¶41

P a g e | 8 2025:HHC:38099

¶42

power of the court to review the evidence and to come to its own conclusion.

¶43

(4) An appellate court, however, must bear in mind that in the case of acquittal, there is a double presumption in favour of the accused. Firstly , the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly , the accused, having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court.

¶44

(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.”

¶45

40. Further, in H.D. Sundara v. State of Karnataka [H.D. Sundara v. State of Karnataka, (2023) 9 SCC 581: (2023) 3 SCC (Cri) 748], this Court summarised the principles governing the exercise of appellate jurisdiction while dealing with an appeal against acquittal under Section 378CrPC as follows: (SCC p. 584, para 8)

¶46

8. … 8.1. The acquittal of the accused further strengthens the presumption of innocence.

¶47

8.2. The appellate court, while hearing an appeal against acquittal, is entitled to reappreciate the oral and documentary evidence;

¶48

8.3. The appellate court, while deciding an appeal against acquittal, after reappreciating the evidence, is required to consider whether the view taken by the trial court is a possible view which could have been taken on the basis of the evidence on record;

¶49

P a g e | 9 2025:HHC:38099

¶50

8.4. If the view taken is a possible view, the appellate court cannot overturn the order of acquittal on the ground that another view was also possible; and

¶51

8.5. The appellate court can interfere with the order of acquittal only if it comes to a finding that the only conclusion which can be recorded on the basis of the evidence on record was that the guilt of the accused was proved beyond a reasonable doubt and no other conclusion was possible.”

¶52

41. Thus, it is beyond the pale of doubt that the scope of interference by an appellate court for reversing the judgment of acquittal recorded by the trial court in favour of the accused has to be exercised within the four corners of the following principles:

¶53

41.1. That the judgment of acquittal suffers from patent perversity.

¶54

41.2. That the same is based on a misreading/omission to consider material evidence on record; and

¶55

41.3. That no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record.”

¶56

12. It could thus be seen that it is a settled legal position that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record.”

¶57

The present appeal is required to be decided as per the

¶58

parameters laid down by the Hon’ble Supreme Court.

¶59

P a g e | 10 2025:HHC:38099

¶60

The complainant stated in the complaint and the proof affidavit (Ex. CW1/A) that the accused had taken ₹ 5 lakhs in cash in July 2012, and he issued the cheque in August 2019. Thus, the cheque was issued after more than seven years of taking the money.

¶61

Article 21 of the Limitation Act, 1963 provides a limitation period of three years for filing a suit for recovery of money payable on demand, and the starting period of the limitation period is the date of advancing the loan. Thus, the suit for recovery of ₹5,00,000/- could have been filed on or before July 2015, and a suit for recovery of ₹ 5,00,000/- would have been barred in August 2019. Therefore, the cheque was issued towards the repayment of the time-barred debt as per the complainant.

¶62

It was laid down by this Court in Social Leasing (India) Ltd. v. Rajan Kumar Kanthwal, 2025 SCC OnLine HP 3131, that a cheque issued towards time-barred debt is not towards the legally enforceable debt and such a cheque will not give rise to a liability under Section 138 of the NI Act. It was observed:

¶63

“25. A bare perusal of the aforesaid provision clearly goes on to show that for analysing the limitation of a liability beyond a period of three years, the acknowledgement, if any, must

¶64

P a g e | 11 2025:HHC:38099

¶65

be there before the period of limitation is over, which is not the case in hand.

¶66

Further, it has been held time and again by the Apex Court as well as by the various High Courts that mere giving of a cheque, without anything more, will not revive a timebarred debt, because a cheque has to be given, as contemplated by the explanation, in discharge of a legally enforceable debt.”

¶67

Therefore, no action could have been taken based on the complaint filed before the learned Trial Court.

¶68

The complainant stated in his cross-examination that his monthly income was ₹25,000/- in the year 2012-2013. He had saved ₹ 5,00,000/- which he had kept at home. Joginder Singh (DW2) stated that the accused had filed an income tax return of ₹ 4,75,685/- in the year 2018-2019. He had not filed any income tax return before that day.

¶69

Statement of the complainant shows that his monthly income was ₹25,000/-, which means that he earned ₹3,00,000/in the year 2012. He would have spent money on himself and his family members. An amount of ₹ 5,00,000/- was equal to his twenty months’ salary, and it is difficult to believe that he would have kept ₹ 5,00,000/- at home and would have handed over this amount to the accused on his asking without any security or documentation. Hence, the learned Trial Court was justified in

¶70

P a g e | 12 2025:HHC:38099

¶71

insisting upon the proof of advancing the loan. It was held in Rajaram v. Maruthachalam, 2023 SCC OnLine SC 48, that where the complainant’s income tax return showed that he had no capacity to lend the money, the presumption stood rebutted on the preponderance of probability. It was observed:

¶72

“34. After analysing all these pieces of evidence, the learned Trial Court found that the Income Tax Returns of the complainant did not disclose that he lent an amount to the accused and that the declared income was not sufficient to give a loan of Rs. 3 lakhs. Therefore, the case of the complainant that he had given a loan to the accused from his agricultural income was found to be unbelievable by the learned Trial Court. The learned Trial Court found that it was highly doubtful as to whether the complainant had lent an amount of Rs. 3 lakh to the accused. The learned Trial Court also found that the complaint had failed to produce the promissory note alleged to have been executed by the accused on 25^th October 1998. After taking into consideration the defence witnesses and the attending circumstances, the learned Trial Court found that the defence was a possible defence and as such, the accused was entitled to the benefit of the doubt. The standard of proof for rebutting the presumption is that of preponderance of probabilities. Applying this principle, the learned Trial Court found that the accused had rebutted the presumption on the basis of the evidence of the defence witnesses and attending circumstances.

¶73

35. The scope of interference in an appeal against acquittal is limited. Unless the High Court found that the appreciation of the evidence is perverse, it could not have interfered with the finding of acquittal recorded by the learned Trial Court.

¶74

P a g e | 13 2025:HHC:38099

¶75

It was laid down by the Hon’ble Supreme Court in Tedhi Singh Versus Narayan Dass Mahant (2022) 6 SCC 735 that the accused has a right to demonstrate that the complainant did not have the financial capacity to advance the loan stated to have been advanced by him. It was observed: -

¶76

“9….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, further 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.”

¶77

It was held by the Hon’ble Supreme Court in Basalingappa Versus Mudibasappa (2019) 5 SCC 418, that where the financial capacity to pay ₹6,00,000/- was questioned and there was no satisfactory reply, the accused had raised a probable defence. It was observed: -

¶78

“ 30. We are of the view that when evidence was led before the Court to indicate that apart from a loan of Rs. 6 lakhs given to the accused, within 02 years, an amount of Rs. 18 lakhs has been given out by the complainant and his

¶79

P a g e | 14 2025:HHC:38099

¶80

financial capacity being questioned, it was incumbent on the complainant to have explained his financial capacity. The court cannot insist on a person to lead negative evidence. The observation of the High Court that the trial court's finding that the complainant failed to prove his financial capacity for lending money is perverse cannot be supported. We fail to see how the trial court's findings can be termed as perverse by the High Court when it was based on consideration of the evidence, which was led on behalf of the defence.”

¶81

It was laid down by the Hon’ble Supreme Court in

¶82

Dattatraya v. Sharanappa, (2024) 8 SCC 573: (2024) 3 SCC (Cri) 776:

¶83

2024 SCC OnLine SC 1899 that when the financial capacity of the accused is not established, the accused is entitled to acquittal. It was observed:

¶84

“29… .Furthermore, there was no financial capacity or acknowledgement in his income tax returns by the appellant to the effect of having advanced a loan to the respondent. Even further, the appellant has not been able to showcase as to when the said loan was advanced in favour of the respondent, nor has he been able to explain as to how a cheque issued by the respondent, allegedly in favour of Mr Mallikarjun, landed in the hands of the instant holder, that is, the appellant.”

¶85

A similar view was taken in John K. Abraham Versus

¶86

Simon C. Abraham & Another (2014) 2 SCC 236, wherein it was

¶87

held:-

¶88

“9. It has to be stated that in order to draw the presumption under Section 118 read along with 139 of the Negotiable Instruments Act, the burden was heavy upon the

¶89

P a g e | 15 2025:HHC:38099

¶90

complainant to have shown that he had required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant.”

¶91

Therefore, the learned Trial Court was justified in

¶92

doubting the complainant’s case due to the lack of financial capacity.

¶93

It was submitted that the evidence of the financial capacity was not required to be given because of the presumption contained in Sections 118(a) and 139 of the NI Act. There is no dispute with the proposition of law that a presumption arises by the admission of the signature on the cheque under the NI Act that it was issued for consideration in the discharge of the legal liability. However, the presumption is rebuttable, and the moment evidence is led, the presumption would stand rebutted. It was laid down by the Hon’ble Supreme Court in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275 that the presumption applies in the absence of evidence and disappears after the evidence is produced. It was observed:

¶94

“38. John Henry Wigmore [John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law] on Evidence states as follows:

¶95

P a g e | 16 2025:HHC:38099

¶96

“The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption ‘disappears as a rule of law and the case is in the Jury's hands free from any rule’.”

¶97

In the present case, the cross-examination of the complainant made his financial capacity doubtful, and the presumption would be displaced.

¶98

Naresh Kumar (DW1) stated that the accused had intimated the loss of the cheque and issued a stop payment instruction regarding the cheque on 23.05.2018 vide letter (Ex. DW1/A). The cheque was issued in August 2019 and bears the date 22.01.2020. It was laid down by the Uttarakhand High Court in Gaurav Agarwal vs. State of Uttarakhand and Ors. (26.09.2025 - UCHC): MANU/UC/0407/2025, that when the accused had issued a stop payment instruction because of the loss of the cheque, much before its presentation, no case for the commission of an offence punishable under Section 138 of the NI Act is made out. It was observed:

¶99

P a g e | 17 2025:HHC:38099

¶100

“16. Having heard learned counsel for the parties and upon perusal of the material on record, this Court finds that the continuation of proceedings against the applicant would be wholly unwarranted in law. It stands admitted on record that the applicant had lodged a stop-payment request with his banker on 12.07.2016 in respect of the cheques in question, much prior to the alleged date of issuance, i.e. 05.12.2016. The bank's contemporaneous report dated 15.07.2016 confirms that the stop-payment instructions had been acted upon and charges debited. In such circumstances, the subsequent presentation of the cheque in December 2016, resulting in dishonour on the ground of "insufficient funds," cannot be treated as valid dishonour attracting the penal consequences of Section 138 NI Act. The ratio of Raj Kumar Khurana v. State (NCT of Delhi), MANU/SC/0727/2009: 2009:INSC:677 : (2009) 6 SCC 72 , squarely applies. Once the cheque had been rendered incapable of encashment before the alleged date of issue, there is, in the eye of the law, no "issuance," and therefore no offence under Section 138 can be said to be made out.

¶101

Allahabad High Court also took a similar view in Bobby

¶102

Anand v. State of U.P., 2023 SCC OnLine All 4645 , wherein it was

¶103

observed:

¶104

“46. In view of the legal proposition as discussed above, this Court is of the view that the essential ingredients of Section 138 of the Act are lacking in the facts of the present case, as the case of a stolen/lost/theft cheque does not fall under the ambit of Section 138 of N.I. Act, thus Section 138 N.I. Act will not be applicable in such cases.”

¶105

Kerala High Court also held similarly in K. Sadanandan

¶106

v. V.S. Satheesh Kumar, 2015 SCC OnLine Ker 16879, as under:

¶107

“10. Considering the above limitation, the question here is whether a cheque returned by the bank on the ground

¶108

P a g e | 18 2025:HHC:38099

¶109

“cheque reported lost” will come within the purview of Section 138 of the N.I. Act. The limitations are provided in the above dictum. Therefore, the refusal on the part of the bank to honour the cheque would not bring the matter within the penal provisions of Section 138 of the N.I. Act.”

¶110

Therefore, the learned Trial Court had taken a

¶111

reasonable view while acquitting the accused and this Court will not interfere with it while deciding the appeal against the acquittal.

¶112

In view of the above, the present appeal fails, and the same is dismissed.

¶113

Record of the learned Trial Court be sent back forthwith, along with copy of this judgment.

¶114

(Rakesh Kainthla) Judge

¶115

13^th November 2025 (ravinder)

Issues for consideration

4 issues framed by the court

AI extract

1.
Whether the judgment of acquittal passed by the learned Trial Court suffered from patent perversity, misreading or omission of material evidence such as to warrant interference in this appeal against acquittal.¶30
The court held
Interference with a judgment of acquittal is warranted only where it suffers from patent perversity, is based on misreading or omission of material evidence, and no two reasonable views are possible; the learned Trial Court having taken a reasonable view while acquitting the accused, this Court will not interfere with the acquittal in the appeal.ratio¶111
2.
Whether the cheque issued in August 2019 towards repayment of money taken in July 2012 was towards a time-barred debt and therefore not towards a legally enforceable debt attracting Section 138 of the NI Act.¶61
The court held
Under Article 21 of the Limitation Act, 1963, a suit for recovery of Rs. 5,00,000/- advanced in July 2012 could have been filed on or before July 2015 and would have been barred by August 2019; the cheque issued in August 2019 was therefore issued towards the repayment of a time-barred debt.ratio¶61
3.
Whether the complainant had the financial capacity to advance Rs. 5,00,000/- and whether the presumptions under Sections 118(a) and 139 of the NI Act stood rebutted.¶97
The court held
With a monthly income of Rs. 25,000/- in 2012, an amount of Rs. 5,00,000/- equalled twenty months' salary, and it was difficult to believe the complainant kept that sum at home and handed it over to the accused without security or documentation; the learned Trial Court was justified in insisting upon proof of advancing the loan and in doubting the complainant's case for lack of financial capacity.ratio¶69
4.
Whether dishonour of a cheque pursuant to a stop-payment instruction issued before its issuance/presentation (cheque reported lost) attracts Section 138 of the NI Act.¶98
The court held
The accused had intimated the loss of the cheque and issued a stop-payment instruction on 23.05.2018 vide letter Ex. DW1/A, whereas the cheque was issued in August 2019 bearing date 22.01.2020; a stop-payment instruction issued because of loss of the cheque much before its presentation means no offence under Section 138 of the NI Act is made out.ratio¶27

Procedural history

How this case reached the court

AI extract

Order under challenge
Judgment dated 04.12.2023 of the learned Judicial Magistrate First Class, Court no. 3, Mandi, District Mandi, H.P. dismissing the complaint filed by the appellant (complainant before the learned Trial Court), thereby acquitting the accused.¶8
Judicial Magistrate First Class, Court no. 3, Mandi, District Mandi, H.P. · 04.12.2023
Prior proceeding
Complaint filed before the learned Trial Court alleging offence punishable under Section 138 NI Act: accused allegedly took Rs. 5,00,000/- in cash in July 2012; post-dated cheque of Rs. 5,00,000/- drawn on Syndicate Bank, Palampur issued in August 2019; cheque dishonoured on 24.01.2020 with endorsement 'payment stopped by the drawer'; legal notice returned with report 'refused' and deemed served; accused failed to repay.¶11
Prior proceeding
Accused summoned; notice of accusation under Section 138 of the NI Act put to him; he pleaded not guilty and claimed to be tried.¶15
Prior proceeding
Complainant examined himself as CW1 to prove his case.¶16
Prior proceeding
Accused's statement under Section 313 Cr.P.C.: admitted friendly relations with complainant, chequebook lost (discovered 2018, complaint filed with bank), cheque bears his signatures but was filled in by complainant; denied receipt of notice; examined Naresh Kumar (DW1), Joginder Singh (DW2) and himself (DW3).¶17
Prior proceeding
Defence evidence: Naresh Kumar (DW1) proved that the accused had intimated loss of the cheque and issued a stop-payment instruction on 23.05.2018 vide letter Ex. DW1/A; Joginder Singh (DW2) proved the complainant's income tax return of Rs. 4,75,685/- for 2018-2019.¶27
Prior proceeding
Learned Trial Court held the complainant's financial capacity to advance Rs. 5 lakhs in 2012 highly doubtful (salary Rs. 25,000/- per month; income tax return of Rs. 4,75,685/- in 2018-2019) and found the payment-stop in 2018 corroborated the accused's version of loss of the cheque; complaint dismissed and accused acquitted.¶20

Shyam Lal v. Gagan Vasudeva

Case brief

What is this about?

What did the court decide?

Shyam Lal v. Gagan Vasudeva

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Shyam Lal Vs State of Hp

Shyam Lal Vs State of Hp

Jagtar Singh Alias Pappu Vs State of Hp

Satya Devi Vs Jarman Singh

Arvind Kumar Alias Chahna Vs State of Hp

State of Hp Vs Charan Dass Verma