138 N.I. Act | Appellate Court Should Not Interfere With Acquittal Unless Findings Are Perversely Unreasonable: Madras High Court Refuses To Reverse Acquittal

Madras High Court upheld the acquittal of the accused in a cheque dishonour case, reiterating that “unless the findings of the trial Court are manifestly perverse or unreasonable, the High Court, in exercise of appellate jurisdiction, ought not to disturb the acquittal.”

Justice D. Bharatha Chakravarthy, delivering the judgment, noted that the complainant's conduct—marked by the complete denial of his involvement in finance business despite contrary documentary proof—seriously undermined his credibility. The Court held, “When a complainant completely denies material facts which are proved otherwise by unimpeachable documents, the Court is justified in doubting the truthfulness of his case.”

The case arose from a complaint filed under Section 138 of the Negotiable Instruments Act by the appellant Karunanidhi, alleging that the respondent Vasanthamani borrowed ₹2,00,000 and issued a cheque in discharge of the debt. The cheque was dishonoured and the complaint followed. The trial Court, after appreciating evidence, acquitted the accused on the grounds that the complainant had suppressed his identity as a money lender, had failed to produce the promissory note, and the cheque appeared to have been issued in the course of a previous finance transaction rather than for discharge of a legally enforceable debt.

The High Court emphasised, “It is a settled position that the statutory presumption under Section 139 of the NI Act is rebuttable by the accused by preponderance of probability.” Referring to Ex.D4, an RTI reply exposing the unregistered money lending activities of the complainant, the Court found the defence version plausible and corroborated.

Justice Bharatha Chakravarthy observed, “A complete denial of existence of financial business by the complainant stands demolished by unimpeachable documentary proof. Such suppression casts a serious cloud on the entire transaction.”

The Court also commented on the complainant’s failure to produce the promissory note, despite alleging its execution as part of the loan arrangement, noting: “Non-production of primary evidence, especially when the complainant himself pleaded its existence, justifiably leads to adverse inference.”

Critically, the Court observed that the complainant sent notice to an obsolete address, further weakening the chain of evidence. “When the entire case rests on the veracity of oral testimony, and the complainant’s testimony is found false in material particulars, the trial Court’s refusal to convict is fully justified,” the Court concluded.

Dismissing the appeal, the Court pronounced, “In an appeal against acquittal, this Court cannot substitute its own view merely because another conclusion is possible. In the present case, the findings of the trial Court are sound, well-reasoned, and supported by evidence.”

The judgment strengthens the protection available to accused persons in cheque dishonour cases from unfounded claims, particularly where complainants fail to establish the existence of a legally enforceable debt.

Date of Decision: 2nd July 2025