CRL.L.P./167/2025 of SUSHMA SRIVASTAVA Vs STATE THROUGH SHO & ANR.

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+CRL.L.P. 167/2025 & CRL.M.A. 7217/2025, CRL.M.A. 7218/2025SUSHMA SRIVASTAVA.....Appellant

Through:Appearance not given.

versus

STATE THROUGH SHO & ANR.

.....Respondents

Through:Mr. Satinder Singh Bawa, APP.SI Suresh Bhatia, PS: Timarpur.

CORAM:

HON'BLE MR. JUSTICE SANJEEV NARULAO R R

06.03.2025

1.The present petition under Section 419(4) of the Bharatiya NagarikSuraksha Sanhita 2023 (formerly Section 378(4) of the Code of CriminalProcedure, 1973) seeks leave to appeal against judgment dated 08[th]July,2024, passed by the Judicial Magistrate First Class: NI Act-03 (Central), TisHazari Courts, Delhi, dismissing the Appellant’s complaint under section138 NI Act bearing CT Case No. 535169/2016 titled “Sushma Srivastava v.”Simran Singh.

Factual Background

2.The relevant facts leading to the present proceedings, as narrated inthe petition, are as follows:

2.1The Appellant filed complaint against Respondent No. 2 underSection 138 of the Negotiable Instruments Act, 1881[1], alleging that

1 “NI Act”

Respondent No. 2, friend of the Appellant, had approached her inSeptember 2014 seeking friendly loan of ₹5.5 lakh, citing urgent financial need and assuring repayment within six months. Relying on this assurance,the Appellant extended loan of ₹4 lakh in cash and an additional ₹1.5 lakh through cheque No. 746491 dated 17[th]September, 2014.

2.2In the first week of April 2015, Respondent No. 2 issued two post-dated cheques in favour of the Appellant towards repayment of the loan–cheque No. 974175 dated 20[th] April, 2015 for ₹2 lakh and cheque No. 974174 dated 21[st] April, 2015 for ₹3.50 lakh, both drawn on HDFC Bank.

2.3At the time of issuing these cheques, Respondent No. 2 had allegedlyassured the Appellant that they would be cleared upon presentation.However, both these cheques were dishonoured with the remarks ‘Alterationrequire drawer authentication’ and ‘Payment stopped by drawer.’

2.4The Appellant immediately informed Respondent No. 2 about thedishonour, but no payment was made. Consequently, the Appellant issued alegal notice dated 5[th]May, 2015, demanding payment of the amountscovered by the dishonoured cheques. Despite receipt of the notice,Respondent No. 2 failed to comply, leading the Appellant to initiateproceedings under Section 138 of the NI Act.

2.5Following the summoning of Respondent No. 2, notice underSection 251 CrPC was served on 25[th]July, 2017, wherein Respondent No. 2presented her defence, which was duly recorded.

2.6In support of her case, the Complainant examined herself as CW-1,and the Deputy Manager of HDFC Bank, Patel Nagar, New Delhi as CW-2.The statement of Respondent No. 2 was also recorded under Section 313CrPC. In her defence, Respondent No. 2 examined herself as DW-1 and one

Mr. Arvind Kumar as DW-2.

2.7Upon consideration of the evidence and arguments advanced, theTrial Court rendered the impugned judgment, dismissing the complaint andacquitting Respondent No. 2.

Appellant’s Case

3.The Appellant assails the impugned judgment on the followinggrounds:

3.1The impugned order is based on conjecture and lacks cogentreasoning. The Trial Court’s findings are speculative, and contrary toestablished legal principles.

3.2The Appellant has duly proved all the essential ingredients required toestablish an offence under Section 138 of the NI Act. The cheques inquestion were drawn from Respondent No. 2’s account and issued indischarge of an admitted debt. Despite receiving legal notice, RespondentNo. 2 failed to make the requisite payment, thereby attracting liability underthe NI Act.

3.3The statutory presumption under Section 139 of the NI Act, whichmandates that cheques are presumed to have been issued in discharge of alegally enforceable debt, was clearly applicable in this case. Respondent No.2 not only failed to rebut this presumption but, in fact, admitted to issuingthe cheques and signing them.

3.4Respondent No. 2 presented inconsistent and contradictory defences.Initially, in her statement under Section 251 CrPC, she outrightly deniedtaking any loan from the Appellant. However, she later conceded to makinga partial repayment of ₹1.50 lakh– claiming to have paid ₹50,000/- to the Appellant’s husband and ₹1 lakh to the Appellant herself.

3.5The Trial Court erred in relying on the bank statement of theAppellant’s husband to support Respondent No. 2’s claim of repayment. Notonly did this document fail to corroborate the alleged repayment of₹50,000/-, but the actual payments made by Respondent No. 2 amounted to only ₹46,000/- and were entirely unrelated to the loan. These payments were made as reimbursement for personal assistance extended to her by theAppellant’s husband, not towards the discharge of the loan.

3.6During cross-examination, Respondent No. 2 contradicted her earlierassertion, admitting that no payment of ₹50,000/- was ever made to the Appellant’s husband.

3.7The Trial Court also failed to appreciate that the defence presented byRespondent No. 2, claiming to have repaid the sum of INR 1 lakh in cash,was not substantiated by the following facts:

(i)In her statement under Section 251 CrPC, her reply to the legal notice,and the complaint that she allegedly lodged against the Appellant,Respondent No. 2 consistently stated that she had personally paid ₹1 lakh in cash to the Appellant. However, she later changed her stance, claiming thatthe amount was paid through one Arvind Kumar, person not mentioned inany of her prior statements.

(ii)Respondent No. 2 failed to provide any documentary proof of thealleged ₹1 lakh payment made on 10[th]April, 2015. Even during cross-examination, when specifically asked to produce statement of accountreflecting loan of ₹1 lakh from her employer (which she claimed was the source of the repayment), she initially asserted that she could provide it, butultimately failed to do so.

(iii)The testimony of DW-2 did not support Respondent No. 2’s defence,

and the defences presented by both DW-1 and DW-2 were entirelyinconsistent and failed to establish any defence.

(iv)DW-2 did not stand by his own statement, and his cross-examinationcontradicted Respondent No. 2’s defence. He failed to recall the exact datewhen the alleged payment was made at the Appellant’s office, and could noteven specify the denominations of the currency notes allegedly handed overto the Appellant.

Analysis

4.The Court has considered the aforenoted contentions and perused theimpugned order. This case arises under Section 138 of the NI Act, wherestatutory presumptions operate in favour of the cheque holder. UnderSection 118(a) of the Act, once the execution of the cheque is admitted, apresumptionarisesthatthechequewasissuedforconsideration.Additionally, Section 139 strengthens this presumption by deeming that thecheque was received in discharge, either wholly or partially, of debt orliability. These provisions collectively shift the burden onto the accused torebut the presumption of legally enforceable liability.

5.However, the Supreme Court has consistently held that the standardfor establishing such probable defence is based on preponderance ofprobabilities.[2]This means that the accused does not need to conclusivelyprove their defence, but must demonstrate that their version is reasonablyprobable, thereby shifting the burden back to the complainant.

6.The standard for rebuttal is not proof beyond reasonable doubt, asrequired in criminal trial, but on the scale of preponderance ofprobabilities.Theaccusedhastwopossibleavenuestorebutthe

presumption––either to prove that no consideration or debt existed, or todemonstrate that, in the specific facts of the case, the non-existence of suchliability is so probable that prudent person would be compelled toconclude that no debt ever arose. The accused may discharge this burdeneither by leading direct evidence or by relying on the material already onrecord.[3]

7.A perusal of the impugned order in light of the aforementioned legalprinciples demonstrates that the Trial Court has thoroughly examined theevidence, and appropriately applied the well-established legal principles setforth by the Supreme Court. In fact, the Trial Court duly acknowledged thatthe presumptions stood attracted in favour of Appellant. Accordingly, uponreaching this conclusion, the Trial Court proceeded to assess whether thepresumption in favour of the Appellant was rebutted by Respondent No. 2,based on the principles of preponderance of probabilities. In this regard, it ispertinent to highlight the following observations made in the impugnedjudgment:

“15.The case of the complainant is that the accused took loan of Rs.5,50,000/- from her and thereafter, issued the cheques in questionto return the loan amount, which subsequently got dishonoredupon presentation. During the course of trial, the accused hasadmitted her signatures over the cheque in question and asdiscussed previously, the legal presumption u/s 118 (a) /139 of theNI Act are attracted to the present case. Once Section 139 of theNegotiable Instruments Act comes into picture, the Court presumesthat the cheque was issued in discharge, in whole or in part, of anydebt or liability. At this stage, with the help of presumption underSection 139 of the Negotiable Instruments Act, the case of thecomplainant stands proved. The Court, at this stage, is completelyin concurrence with the judgments relied upon by Ld. Counselfor complainant on the point of presumption.5,50,000/- from her and thereafter, issued the cheques in questionto return the loan amount, which subsequently got dishonoredupon presentation. During the course of trial, the accused hasadmitted her signatures over the cheque in question and asdiscussed previously, the legal presumption u/s 118 (a) /139 of theNI Act are attracted to the present case. Once Section 139 of theNegotiable Instruments Act comes into picture, the Court presumesthat the cheque was issued in discharge, in whole or in part, of anydebt or liability. At this stage, with the help of presumption underSection 139 of the Negotiable Instruments Act, the case of thecomplainant stands proved. The Court, at this stage, is completelyin concurrence with the judgments relied upon by Ld. Counselfor complainant on the point of presumption.

2 Basalingappa v. Mudibasappa, (2019) 5 SCC 418.

3 Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148.18.To sum up the above mentioned judgment, to disprove thepresumptions, the accused should bring on record such facts andcircumstances, upon consideration of which, the Court may eitherbelieve that the consideration and debt did not exist or their non-existence was so probable that prudent man would under thecircumstances of the case, act upon the plea that they did not exist.However, at the same time, it is also to be remembered that baredenial of the existence of legally enforceable debt or other liabilitycannot be said to be sufficient to rebut the presumption andsomething which is probable has to be brought on record to shiftthe burden back to the complainant. Keeping these basic principlesin mind, this Court shall now proceed to deal with the defencetaken by the accused and examine whether the accused has beenable to rebut the presumption arising in favour of the complainant.presumptions, the accused should bring on record such facts andcircumstances, upon consideration of which, the Court may eitherbelieve that the consideration and debt did not exist or their non-existence was so probable that prudent man would under thecircumstances of the case, act upon the plea that they did not exist.However, at the same time, it is also to be remembered that baredenial of the existence of legally enforceable debt or other liabilitycannot be said to be sufficient to rebut the presumption andsomething which is probable has to be brought on record to shiftthe burden back to the complainant. Keeping these basic principlesin mind, this Court shall now proceed to deal with the defencetaken by the accused and examine whether the accused has beenable to rebut the presumption arising in favour of the complainant.19.In her complaint, the complainant has stated that loan of Rs.5,50,000/- was advanced to the accused wherein Rs. 1,50,000/-was advanced through cheque and Rs. 4,00,000/- was advanced incash. The accused, during trial, admitted taking loan of Rs.1,50,000/- from the accused but stated that the loan amount hasbeen returned to the accused wherein Rs. 50,000/- has beenreturned through account transfer and Rs. 1,00,000/- was returnedin cash by one Mr. Arvind Kumar. Accused categorically deniedadvancement of cash loan of Rs. 4,00,000/-. The accused hasmaintained consistent defence wherein she has stated that thecheques in question including four other blank signed chequeswere given by her to the complainant as the latter had assured herthat she would be able to help her with procurement of loan andwere not issued against any legally enforceable debt or liability.5,50,000/- was advanced to the accused wherein Rs. 1,50,000/-was advanced through cheque and Rs. 4,00,000/- was advanced incash. The accused, during trial, admitted taking loan of Rs.1,50,000/- from the accused but stated that the loan amount hasbeen returned to the accused wherein Rs. 50,000/- has beenreturned through account transfer and Rs. 1,00,000/- was returnedin cash by one Mr. Arvind Kumar. Accused categorically deniedadvancement of cash loan of Rs. 4,00,000/-. The accused hasmaintained consistent defence wherein she has stated that thecheques in question including four other blank signed chequeswere given by her to the complainant as the latter had assured herthat she would be able to help her with procurement of loan andwere not issued against any legally enforceable debt or liability.20.In the opinion of this Court, the accused has been able to raisereasonable doubts on the version of the complainant which thecomplainant has not been able to prove beyond reasonable doubtsfor the following reasons. Firstly, there are inconsistencies in thetestimony of the complainant. The accused has admitted taking ofloan of Rs. 1,50,000/- from the complainant through cheque. Theaccused has stated that at the instance of the complainant, theamount was partially repaid to the bank account of her husbandand partially in cash to her at her office. During her cross-examination on 12.12.2018, the complainant categorically deniedany payment being made by the accused to the bank account of herhusband but on 17.01.2019, bank account statement of herhusband Ex. CW1/D1 was produced by her wherein she wasconfronted with entries as mentioned at point-A, and of thegiven document. Thereafter, the complainant admitted transfer ofreasonable doubts on the version of the complainant which thecomplainant has not been able to prove beyond reasonable doubtsfor the following reasons. Firstly, there are inconsistencies in thetestimony of the complainant. The accused has admitted taking ofloan of Rs. 1,50,000/- from the complainant through cheque. Theaccused has stated that at the instance of the complainant, theamount was partially repaid to the bank account of her husbandand partially in cash to her at her office. During her cross-examination on 12.12.2018, the complainant categorically deniedany payment being made by the accused to the bank account of herhusband but on 17.01.2019, bank account statement of herhusband Ex. CW1/D1 was produced by her wherein she wasconfronted with entries as mentioned at point-A, and of thegiven document. Thereafter, the complainant admitted transfer ofRs. 46,000/- by the accused to the bank account of her husband asindicated at the entries as aforementioned. She, however, statedthat the payments were unrelated to the transaction in question butno evidence to prove this was led by her. In fact, even her husbandwas not examined as witness by the complainant to prove that theadmitted payments in Ex. CW1/D1 were not related to the loanadvanced by the complainant to the accused. Moreover, nothingregarding any separate monetary transaction between the accusedand the husband of the complainant was mentioned by thecomplainant in her complaint or evidence by way of affidavit Ex.CW1/A and there was categorical denial of any payments by theaccused to the bank account of her husband until the bank accountstatement of husband of complainant was brought on record. Itraises reasonable doubt on version of the complainant whereinthere was no whisper of any separate monetary transaction alongwith initial denial of receipt of any amount and gives credibility tothe consistent defence maintained by the accused. The complainantcould have led independent evidence to prove any separatemonetary transaction which was not done. Therefore, any way onelooks at it, it is clear that part loan amount has been paid by theaccusedtothecomplainantwhichhasnotbeenacknowledged/endorsed by the complainant in her complaint oraffidavit of evidence and neither is there any whisper of any suchpayment in the legal demand notice sent to the accused.indicated at the entries as aforementioned. She, however, statedthat the payments were unrelated to the transaction in question butno evidence to prove this was led by her. In fact, even her husbandwas not examined as witness by the complainant to prove that theadmitted payments in Ex. CW1/D1 were not related to the loanadvanced by the complainant to the accused. Moreover, nothingregarding any separate monetary transaction between the accusedand the husband of the complainant was mentioned by thecomplainant in her complaint or evidence by way of affidavit Ex.CW1/A and there was categorical denial of any payments by theaccused to the bank account of her husband until the bank accountstatement of husband of complainant was brought on record. Itraises reasonable doubt on version of the complainant whereinthere was no whisper of any separate monetary transaction alongwith initial denial of receipt of any amount and gives credibility tothe consistent defence maintained by the accused. The complainantcould have led independent evidence to prove any separatemonetary transaction which was not done. Therefore, any way onelooks at it, it is clear that part loan amount has been paid by theaccusedtothecomplainantwhichhasnotbeenacknowledged/endorsed by the complainant in her complaint oraffidavit of evidence and neither is there any whisper of any suchpayment in the legal demand notice sent to the accused.

21.Secondly, the complainant has not been able to give anyindependent evidence regarding availability of funds enabling herto advance Rs. 4,00,000/- to the accused in cash as friendly loan.During her cross-examination, some of the statements/admissionsqua loan in question made by the complainant are as follows:independent evidence regarding availability of funds enabling herto advance Rs. 4,00,000/- to the accused in cash as friendly loan.During her cross-examination, some of the statements/admissionsqua loan in question made by the complainant are as follows:

(i)I have not mentioned anywhere in my legal notice,complaint or my evidence affidavit, the source ofRs. 4,00,000/- cash, which was handed over to theaccused.complaint or my evidence affidavit, the source ofRs. 4,00,000/- cash, which was handed over to theaccused.

(ii)It is correct that no document with respect towithdrawal or otherwise cash of Rs. 4,00,000/- hasbeen placed on record.withdrawal or otherwise cash of Rs. 4,00,000/- hasbeen placed on record.

(iii)I had taken some money in cash from mother-in-law, and some cash was in my hand as I wasworking.law, and some cash was in my hand as I wasworking.

(iv)It is wrong to suggest that I had led only Rs.1,50,000/- to the accused, and that is why I do nothave any document to show from where I hadarranged the amount of Rs. 4,00,000/-.1,50,000/- to the accused, and that is why I do nothave any document to show from where I hadarranged the amount of Rs. 4,00,000/-.

22.Though the complainant during her cross-examination hasstated that part amount was taken by her from her mother-in-stated that part amount was taken by her from her mother-in-

law, nothing has been brought on record to prove the same.She has not even proven the “cash at hand” as alleged byplacing on record relevant income tax returns proving thesame. Once the complainant is confronted with questionsregarding the source of funds qua loan allegedly advanced incash to the accused, it was imperative upon the complainant toadduce evidence to show the availability of funds specificallykeeping in mind the fact that contentious loan amount hasbeen advanced in cash. The Hon’ble Delhi High Court inSheela Sharma v. Mahendra Pal 2016 SCC OnLine Del 4696held that:

“31 .In cases where the Complainant claimsto have advanced friendly loan in cash, andwhere the transaction of loan is not evidencedby any other documentary or other reliableevidence, no doubt, the aspect whether theavailabilityoffundsincashwiththeComplainant/ lender, and its advancement asloan to the Accused have been reflected in theincome tax returns of the Complainant/lender,or not, become relevant. If, the availability offunds, and the loan transaction itself is not soreflected, that factor is taken note of by theCourt as relevant to hold that the presumptionunder Section 118 and 139 of the NI Act standsrebutted. However, these considerations wouldnot be relevant, where loan transaction itself isotherwiseestablished,eitherthroughdocumentary evidence such as, receipt or aloan agreement, or acknowledgement executedby the Accused, or by oral evidence of anindependentwitnesswhoisfoundtobecredible”.

(emphasis supplied)

Hence, the complainant has clearly failed to prove the source offunds used for advancement of alleged loan of Rs. 4,00,000/- tothe accused and the entire transaction comes under cloud ofdoubt due to lack of evidence, as the same has not beenconclusively proven by the complainant.23.Thirdly, the defence of accused that she had returned Rs.1,00,000/- to the complainant is supported by the testimony ofDW-2 Mr. Arvind Kumar. Upon being questioned regarding thedate on which the amount was given to her to be handed over tothe complainant, the witness stated that he did not rememberthe exact date but it was some time in the first week of April,

2015 while as per the version of the accused, this amount washanded over on 10.04.2015. It is reasonable that person whois being examined about an incident that took place 8 years agomay not remember the exact date. Similarly, it has beenadmitted by the complainant in her cross-examination that sheand the accused used to work in the same locality which hasbeen re-iterated by DW-2 who stated in his cross-examinationthat it used to take only 10 to 15 mins to reach the office ofcomplainant from their office. Thus, it is not inconceivable thatan office boy would leave for half an hour for some workassigned by his superior at around 12:00 noon in the afternoonand would come back in time to resume his duties for the day.Mere suggestions would not discredit the testimony of anindependent witness who has otherwise supported the versionof the accused. The testimony of DW-2 cannot be discardedmerely because he was unable to remember the denominationof currency notes especially considering that his testimony wasrecorded almost after 8 years of the incident in question.

24.Fourthly, the accused has taken steps like reasonable personcan be expected to do in circumstances when her cheques havebeen misused by another. Reply Ex. CW1/G to legal demandnotice Ex. CW1/E is already on record wherein the accused hasstated that friendly loan of Rs. 1,50,000/- was given to her bythe complainant and certain documents (as mentioned inparagraph 6 of Ex. CW1/G) i.e. form 16, income slip of 3months, statement of accounts, PAN Card, Voter ID and 6blank signed cheques (cheque no. 974170 to 974175) werehanded over by the accused to the complainant. It was furtherstated that another cheque bearing number 000003 was handedover by the accused at later date upon insistence of thecomplainant. It was stated that later when the accused obtainedloan from nationalised bank, she demanded return of theaforementioneddocuments,whichwasrefusedbythecomplainant who started pressurising the accused to returnloan of Rs. 1,50,000 /- which was partly paid in the bankaccount of complainant’s husband and partly in cash at thecomplainant’s office. However, when the accused was informedby her bank regarding presentation of cheque Ex. CW1/A, sheissued instructions for cancellation of the cheques that hadbeen handed over to the complainant for loan purpose.Therefore, as soon as the accused received informationregarding presentation of the cheques, she issued instructionsfor stopping payment on them and even the legal demand noticeEx. CW1/E was duly replied through Ex. CW1/G by her statingthe same facts. Infact, the accused, thereafter, also instituted

complaintsagainstthecomplainant.Complaintdated21.05.2015 lodged with SHO, Police Station New Ashok Nagar,follow-up letter on it dated 07.09.215 and follow-up letter sentto ACP, East Delhi, Delhi Police dated 05.10.2015 are onrecord as Ex. DW 1/B wherein all facts as aforementioned havebeen mentioned by the accused, in her complaint dated21.05.2015. Thereafter, when no action was taken by the policeupon the complaints of the accused, she filed complaint caseCCNo.52019/2016withLd.ACMM,EastDistrict,Karkardooma Courts, Delhi upon which summoning orderMark-E was issued on 15.10.2020.

The facts as mentioned by accused in her complaints to thepolice and upon which complaint case has also been filedupon her has also been consistently maintained by the accusedduring the entire trial, in the present case. In fact, the samedefence has not only been taken by the accused in the presentcase but also in her leave to defend in CS No. 300/18 institutedby the complainant against the accused. Therefore, not only hasthe accused taken steps like reasonable person would but hasalsoconsistentlymaintainedherstanceregardingthetransaction between her and the complainant.

The inconsistencies in the defence of the accused, as pointedout by Ld. Counsel for complainant during his arguments can,undernocircumstances,beconsideredasmaterialinconsistencies. For instance, even if name of Mr. ArvindKumar had not been mentioned by the accused in her policecomplaints Ex. DWl/B or reply Ex. CWl/G or in her noticeunder section 251 CrPC or in her application under section145(2) NI Act, it is not material considering that she hasspecifically mentioned about taking of hand loan and returningthe amount of Rs. 1,00,000/-. person cannot be expected toremember each and every detail of the circumstances inquestion, at all times. Similarly, the fact that the loan allegedlytaken by the accused from her employer was mentioned as handloan and as medical loan at various stages of trial does notadversely affect the case of the accused as it is only thecategory of loan that has been mentioned differently and not thequantum of loan or loan transaction itself. Likewise, the factthat there was discrepancy in the statements of the accusedregarding the timeline of April, 2015 wherein she stated thatthe amount of Rs. 1,00,000/- was returned on 10.04.2015 whileshe also stated that the harassment by complainant and herhusband started in third week of April, 2015 cannot beconsidered to be material inconsistency as common manmay forget the dates by week or two especially after some

time has passed since the incident occurred.

27.It is settled position of law that the ease of the complainantshould stand its own legs. It cannot take advantage of theweakness of the defence, nor can the court, on its own make outa new case for the prosecution and convict the accused on thatbasis. It has been held by the Hon’ble Supreme Court in RahulBuilders v. Arihant Fertilizers and Chemicals and Another(2008) 2 SCC 321, the NI Act envisages application of thepenalprovisionswhichneedstobeconstruedstrictly.Therefore, even if two views in the matter are possible, theCourt should lean in favour of the view which is beneficial tothe accused. This is more so, when such view will alsoadvance the legislative intent, behind enactment of this criminalliability.should stand its own legs. It cannot take advantage of theweakness of the defence, nor can the court, on its own make outa new case for the prosecution and convict the accused on thatbasis. It has been held by the Hon’ble Supreme Court in RahulBuilders v. Arihant Fertilizers and Chemicals and Another(2008) 2 SCC 321, the NI Act envisages application of thepenalprovisionswhichneedstobeconstruedstrictly.Therefore, even if two views in the matter are possible, theCourt should lean in favour of the view which is beneficial tothe accused. This is more so, when such view will alsoadvance the legislative intent, behind enactment of this criminalliability.28.It is important to underscore the established canon of criminallaw that in order to pass conviction in criminal case, theaccused “must be” guilty and not merely “may be” guilty. Themental distance between “may be” guilty to “must be” guilty isa long one and must be travel not on surmises and conjectures,but by cogent evidence. In this case, after the accusedsuccessfully rebutted the presumption of consideration byraising doubt the very factum of the transaction of loan. Theaccused has clearly presented case which is superior in way.As per the settled law, this is all that what is required, aspreponderance of probabilities is not rigorous standard ofproof, but only so much evidence as makes the court lean infavour of one side and not the other. Consequently, the benefitof doubt must go to the accused. The material on record doesnot suggest that the accused “must be” guilty whichever wayone looks at it.law that in order to pass conviction in criminal case, theaccused “must be” guilty and not merely “may be” guilty. Themental distance between “may be” guilty to “must be” guilty isa long one and must be travel not on surmises and conjectures,but by cogent evidence. In this case, after the accusedsuccessfully rebutted the presumption of consideration byraising doubt the very factum of the transaction of loan. Theaccused has clearly presented case which is superior in way.As per the settled law, this is all that what is required, aspreponderance of probabilities is not rigorous standard ofproof, but only so much evidence as makes the court lean infavour of one side and not the other. Consequently, the benefitof doubt must go to the accused. The material on record doesnot suggest that the accused “must be” guilty whichever wayone looks at it.

29.Accordingly, this Court holds that the complainant has failed toprove his case. The accused has been able to rebut presumptionunder Section 118 and 139 NI Act arising in favour of thecomplainant.”prove his case. The accused has been able to rebut presumptionunder Section 118 and 139 NI Act arising in favour of thecomplainant.”

8.The Appellant’s testimony is marred by material inconsistencies,particularly those that surfaced during cross-examination. At the outset, sheunequivocally denied receiving any payment in her husband’s bank account.However, when confronted with his bank statement, which reflected atransfer of ₹46,000/- from Respondent No. 2, she had no choice but to concede its receipt. In further attempt to discredit this transaction, she

dismissed it as unrelated to the disputed debt, yet she failed to furnish anyplausible explanation or documentary proof to substantiate this claim.Significantly, this payment found no mention in her legal notice, complaint,or affidavit, raising serious questions about the credibility of her version.The absence of any details regarding an alleged ‘separate transaction’between Respondent No. 2 and the Appellant’s husband further weakens herstance. Crucially, despite this transaction forming the crux of her rebuttal,the Appellant’s husband was not examined as witness to affirm that thepayment had no connection with the loan in question. Given thesecontradictions, the Trial Court rightly concluded that Respondent No. 2 hadindeed made partial payment of ₹46,000/- towards discharging the alleged liability.

9. The alleged repayment of ₹1 lakh in cash was duly supported by the testimony of DW-2, Mr. Arvind Kumar, who categorically stated that he haddelivered the amount to the Appellant on behalf of Respondent No. 2. TheAppellant, in an attempt to discredit this testimony, argued that DW-2 wasunable to recall the precise date of the transaction or the denominations ofthe currency notes. However, the Trial Court rightly dismissed thiscontention, holding that such minor lapses in memory were neither unusual,nor sufficient to cast doubt on the overall veracity of his statement,especially considering that the transaction had occurred nearly eight yearsearlier. DW-2 remained steadfast in his assertion that the cash was handedover in the first week of April 2015––a timeline that aligns with RespondentNo. 2’s claim that the payment was made on 10[th]April, 2015. The inabilityto recall trivial details, such as currency denominations, does not negate thecore fact of repayment, particularly when viewed in conjunction with the

other evidence on record. The Trial Court, therefore, found no cogent reasonto disbelieve his testimony.

10.The Appellant also failed to produce any evidence to substantiate herclaim that she had the financial capacity to lend ₹4,00,000/- in cash to Respondent No. 2. While she asserted during cross-examination that aportion of the loan was sourced from her mother-in-law, and the remainderwas her personal “cash in hand,” she did not examine her mother-in-law as awitness or provide any supporting documents or independent evidence toverify this claim. In this regard, the Trial Court, relying on judgement ofthis Court in Sheela Sharma v. Mahendra Pal,[4]noted that in the absence ofdocumentary evidence to support the loan, it becomes relevant to considerwhether the funds were reflected in the Appellant’s income tax returns.However, the Appellant failed to establish the source of the funds. On thisissue, it would be apposite to take note of the recent judgment of theSupreme Court in Sri Dattatraya v. Sharanappa,[5]whereby the Court upheldthe acquittal of the accused in cheque dishonour case, on account ofcontradictions in the Complainant’s statements, his inability to demonstratethe financial capacity to loan the amount, and the lack of acknowledgementof the loan in the Income Tax returns. On this issue, the Court held asfollows:

“27. Applying the aforementioned legal position to the present factualmatrix, it is apparent that there existed contradiction in thecomplaint moved by the Appellant as against his cross-examinationrelatable to the time of presentation of the cheque by the Respondentas per the statements of the Appellant. This is to the effect that whilethe Appellant claimed the cheque to have been issued at the time ofadvancing of the loan as security, however, as per his statement

4 2016 SCC OnLine Del 4696.

5 Crl. Appeal No. 3257/2024, decided on 7th August, 2024.

during the cross examination it was revealed that the same waspresented when an alleged demand for repayment of alleged loanamount was raised before the Respondent, after period of six monthsof advancement.Furthermore, there was no financial capacity oracknowledgement in his Income Tax Returns by the Appellant to theeffect of having advanced loan to the Respondent. Even further theAppellant has not been able to showcase as to when the said loan wasadvanced in favour of the Respondent nor has he been able to explainas to how cheque issued by the Respondent allegedly in favour of MrMallikarjun landed in the hands of the instant holder, that is, theAppellant.

28. Admittedly, the Appellant was able to establish that the signatureon the cheque in question was of the Respondent and in regard to thedecision of this Court in Bir Singh (supra), presumption is to ideallyarise. However, in the above referred context of the factual matrix,the inability of the Appellant to put forth the details of the loanadvanced, and his contradictory statements, the ratio therein wouldnot impact the present case to the effect of giving rise to the statutorypresumption under Section 139 of the NI Act 1881. The Respondenthas been able to shift the weight of the scales of justice in his favourthrough the preponderance of probabilities.

29. The Trial Court had rightly observed that the Appellant was notable to plead even valid existence of legally recoverable debt asthe very issuance of cheque is dubious based on the fallacies andcontradictions in the evidence adduced by the parties.”

[Emphasis Supplied]

11.In light of the aforenoted legal principles, the sAppellant had failed toestablish financial capacity to extend loan of ₹4,00,000/-. Thus, in absence of any supporting material and other facts and discrepancies notedabove, the Trial Court rightly concluded that the Appellant failed todischarge her burden of proving the loan, rendering her claim doubtful.

12.The Trial Court’s findings also reveal that Respondent No. 2 tookreasonable and proactive steps upon realizing that her cheques had beenmisused. She promptly issued instructions to stop the payment. In herresponse to the Appellant’s legal notice, she unequivocally asserted that thecheques in question were part of the documents handed over for loan

purposes. This response (Ex. CW1/G) was consistent with her defencethroughout the proceedings, wherein she maintained that she had taken afriendly loan of ₹1,50,000/-, which was partially repaid through bank transfer and cash. Furthermore, Respondent No. 2 did not remain passive;she escalated her grievance by lodging multiple complaints with the police(Ex. DW1/B) and subsequently filed complaint case (CC No. 52019/2016),leading to the issuance of summoning order. These actions, taken at theearliest opportunity, lend credence to her version and indicate that she wasnot merely raising belated or concocted defence to evade liability. Giventhese facts, the Trial Court rightly concluded that the presumption of alegally enforceable debt under Section 139 of the NI Act stood effectivelyrebutted, and the burden shifted back to the Appellant, who failed todischarge it.13.In light of the above, none of the Appellant’s grounds meritinterference with the impugned judgment. The acquittal of Respondent No.2 is based on reasoned and well-founded analysis of facts and law.Accordingly, this Court finds no reason to interfere with the impugned orderof the Trial Court, acquitting Respondent No. 2 under Section 138 of the NIAct.

14.Dismissed, along with pending applications.

MARCH 6, 2025

d.negi

SANJEEV NARULA, J