Failure to Prove Debt Transaction and Cheque Execution Voids NI Act Conviction: Kerala HC

Ignorance of the transaction date and the execution details of a cheque is fatal to a prosecution under Section 138 of the Negotiable Instruments Act, stripping the complainant of the initial burden of proof required to trigger legal presumptions. The Kerala High Court has upheld the acquittal of an accused, ruling that a complainant cannot secure a conviction when they are unable to specify the date of a substantial loan or identify who authored the signature on the disputed instrument.

In a detailed judgment delivered by Justice A. Badharudeen, the Court examined a challenge against an appellate order that had reversed a conviction. The matter arose from a complaint involving a cheque of Rs. 4,00,000, where the complainant failed to provide foundational details of the financial transaction during the trial.

Key Takeaways

Initial Burden of Proof

Complainants must establish the fundamental facts of the transaction, including dates, to invoke the legal presumptions of debt under the Negotiable Instruments Act.

Precision in Financial Claims

Inability to recall the specific date of a 'substantial' loan amount (Rs. 4 Lakhs in this case) casts a shadow of doubt on the credibility of the prosecution's narrative.

Execution Knowledge Mandatory

Lack of knowledge regarding who signed or filled out the cheque particulars significantly weakens the claim of valid execution.

Presumptions are Not Automatic

Sections 118 and 139 of the Negotiable Instruments Act cannot be leveraged if the complainant fails to discharge the initial burden of proving the underlying transaction.

Inadequacy of Evidence on Transaction and Execution

The Court observed that the complainant, examined as PW1, could not state the exact date of borrowing or the date of issuance of the cheque. The Bench noted that for a substantial sum like Rs. 4,00,000, a creditor is naturally expected to know the specifics of the transaction. The Court, in its reasoning, observed: "When a person alleges before a Court of law that a person borrowed a specific amount from him, naturally he is expected to know atleast the date of such borrowing. Here, the case of the complainant is that the accused borrowed Rs.4,00,000/- from her during the year 2012, and the same is substantially a bigger amount. When the complainant is not able to tell the date of borrowing of a substantial big sum during 2012 with certainty, atleast during cross-examination would shadow doubt as regards to her evidence regarding borrowing of the said amount as alleged"

Furthermore, the Court emphasized that the complainant did not know who wrote or signed the cheque, stating that "such evidence given by the complainant to prove the transaction and execution of the cheque is quite insufficient to discharge the initial burden cast upon the complainant so as to avail presumptions under Sections 118 and 139 of the NI Act."

Impact of Unproven Source of Funds

Regarding the source of money, the Court noted that the complainant's claim of obtaining the amount through a loan from a Co-operative Bank was not supported by any documentary evidence. The Sessions Judge's observation that advancing a large sum without any security was improbable was also highlighted as a valid ground for acquittal. The Court referred to the principles in Ramesh K. v. K. Kothandaraman, Bir Singh v. Mukesh Kumar ( "(2019) 4 SCC 197": 2019 CaseBase(SC) 1292), and Shabir Ali v. S.Ramesh ( "2025 KHC 1774": 2025 CaseBase(KER) 24701) regarding the rebuttal of presumptions and the requirement for a rational explanation of the source of funds when challenged.

The Court has following directions:

"In the result, this appeal fails and is dismissed, confirming the verdict impugned."

Ratio

A complainant under Section 138 of the Negotiable Instruments Act must discharge the initial burden of proving the transaction and execution of the cheque with sufficient certainty. Failure to disclose or remember the date of a substantial loan, and a lack of knowledge regarding the authorship of the cheque's contents/signature, renders the complainant's case improbable and prevents the invocation of statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act.

Background

The dispute began when the complainant alleged that the accused borrowed Rs. 4,00,000 in May 2012 and issued a cheque for repayment, which was subsequently dishonoured for insufficient funds. The Trial Court (Judicial First Class Magistrate Court-VI, Thiruvananthapuram) initially convicted the accused. However, the Additional Sessions Court-VII reversed this finding, noting that the complainant's testimony was unreliable due to a lack of details regarding the transaction date and source of funds. The High Court, upon re-appreciation of the evidence, found that the complainant's failure to provide a believable account of the execution of the cheque meant the acquittal did not require interference.

Case Details:
Case No.: Crl. Appeal No. 739 of 2017
Neutral Citation: 2026:KER:78039
Case Title: Bindhu Lekha v. State of Kerala & Anr.
Appearances:
For the Petitioner(s): Sri. Shajin S. Hameed, Advocate
For the Respondent(s): Sri. Thirumala P.K. Mani, Advocate; Adv. M.A. Shihab, Public Prosecutor

Source: 2026 CaseBase(KER) 29498