Tripura HC Reverses Cheque Bounce Acquittal: Mere Doubt Over Lender’s Financial Capacity Cannot Save Accused

Case Details

Case title: Sri Swapan Deb Roy v. State of Tripura and Another, Court: High Court of Tripura, Agartala, Case numbers: Criminal Appeal Nos. 17 and 18 of 2024, Judge: Justice S. Datta Purkayastha, Date of judgment: 7 October 2026, Relevant law: Sections 118, 139 and 138 of the Negotiable Instruments Act, 1881.

Gist of the Case

The Tripura High Court has set aside the acquittal of an accused in two cheque-dishonour cases involving Rupees 1.5 lakh and Rupees 12 lakh. The Court held that once the execution of a cheque is admitted, the statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act operates in favour of the complainant. An accused cannot rebut this presumption merely by denying the debt or suggesting that the complainant lacked the financial capacity to advance the loan.

The Court clarified that the burden shifts back to the complainant to establish financial capacity when the accused first raises a probable defence supported by relevant facts or evidence. Finding that the accused had failed to establish such a defence, the High Court reversed the acquittal and convicted him under Section 138 of the Act. The matter was directed to be listed for a hearing on sentence.

Facts of the Case

The complainant, Swapan Deb Roy, was a businessman from Mohanpur market who claimed to have lent money to Rajendra Dhyani for his business requirements. According to the complainant, he advanced Rupees 1.5 lakh on 15 November 2013 and a further Rupees 12 lakh on 17 December 2013. Dhyani was allegedly operating a brick kiln and had assured the complainant that the amounts would be repaid within seven to eight months.

The complainant stated that Dhyani issued two cheques, one for Rupees 1.5 lakh and another for Rupees 12 lakh, towards repayment of the loans. Both cheques were dishonoured due to insufficient funds. Despite receiving legal notices, Dhyani allegedly failed to make the payments, leading to two complaints under Section 138 of the Negotiable Instruments Act.

On 24 May 2024, the trial court dismissed both complaints and acquitted Dhyani. The court questioned the complainant’s financial capacity and noted the absence of bank statements, written agreements, receipts, income-tax returns and independent witnesses to establish the alleged cash transactions. Aggrieved by the acquittals, Deb Roy approached the Tripura High Court through Criminal Appeal Nos. 17 and 18 of 2024.

Arguments in the Case

The complainant’s counsel argued that the trial court had misapplied Sections 118 and 139 of the Negotiable Instruments Act. It was submitted that the accused had not disputed the signatures or execution of the cheques and had failed to produce convincing evidence to rebut the statutory presumption that the cheques had been issued towards a legally enforceable debt.

The complainant also relied on Supreme Court decisions, including Rohitbhai Jivanlal Patel v. State of Gujarat and APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers, to argue that the complainant is not required to establish financial capacity at the initial stage unless the accused raises a probable challenge to it.

The accused’s counsel argued that the complainant had not sufficiently established the source of the money or the circumstances in which such substantial amounts were allegedly paid in cash. The defence further submitted that the accused had borrowed Rupees 5 lakh in 2011, repaid the loan and issued blank cheques as security, which were allegedly not returned. The defence maintained that the absence of supporting documents and the questions raised about the complainant’s financial position justified the trial court’s decision.

Judgment

Justice S. Datta Purkayastha examined the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act and reiterated that once the execution of a cheque is admitted, the Court must presume that it was issued for consideration and towards the discharge of a legally enforceable debt or liability. The presumption is rebuttable, but a mere denial of the debt is not sufficient. The accused must bring material on record that makes the defence reasonably probable.

The High Court clarified that the complainant is not required to prove financial capacity in every cheque-dishonour case from the outset. The burden shifts back to the complainant only after the accused raises a probable defence that credibly challenges the complainant’s ability to advance the alleged loan. The Court also observed that there is no rigid rule requiring the production of income-tax returns in every case.

Applying these principles, the Court found that the accused’s defence concerning the alleged earlier loan and security cheques was not convincing. The accused claimed that the earlier cheques had been issued on United Bank of India, whereas the cheques involved in the present cases were drawn on Axis Bank. The alleged agreement supporting the defence had also not been proved. The Court further noted that the accused had not specifically challenged the complainant’s financial capacity during cross-examination; a suggestion that the complainant had no taxable income was insufficient to rebut the statutory presumption.

The High Court held that the trial court had misapplied the law and incorrectly appreciated the evidence, resulting in erroneous acquittals. It accordingly allowed both appeals and set aside the judgments dated 24 May 2024. Rajendra Dhyani was convicted under Section 138 of the Negotiable Instruments Act in both cases and directed to appear before the Court on 14 October 2026 for a hearing on sentence.

The judgment reiterates an important principle in cheque-dishonour proceedings: the statutory presumption under Sections 118 and 139 cannot be displaced by a bare denial or an unsupported allegation regarding the complainant’s financial capacity. The accused must first raise a probable defence before the burden shifts back to the complainant.