D. Chandran v. S. Anilkumar and Anr

What happened

The cheque (No. 140482 dated 28 January 2013, ₹7,00,000) was returned 'payment stopped by drawer' after presentation on 5 February 2013, a demand notice (Ext. P3) was accepted by the accused (Ext. P5), and the complainant launched prosecution. At trial PW1 was examined and Exts. P1 to P5 marked, the accused being DW1 with Exts. D1 to D7(a). The accused admitted borrowing ₹2,35,000 in 2011 and issuing two signed cheques as security, said the loan had been repaid but the cheques were not returned, and issued a stop memo. The Magistrate acquitted, doubting that the complainant, a retired BSNL employee, kept ₹7 lakh at home, and holding that the complainant had not proved that he was the holder of the cheque in his own right. The accused pointed to PW1's evidence that he did not know who filled in the cheque and that the signature and the entries were in different inks, and produced a bank statement (Ext. D7(a)) showing ₹35,000 transferred to PW1 on 10 January 2012. The complainant argued that the accused admitted the liability and the signature, and relied on Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283, and Modi Cements v. Kuchil Kumar Nandi, (1998) 3 SCC 249.

Questions before the court

• Did the Magistrate rightly acquit, doubting execution of the cheque and the complainant's evidence?

Why the court ruled this way

The accused admitted borrowing ₹2,35,000 in 2011 and issuing Ext. P1 and another cheque bearing his signature, and claimed that he had repaid the loan (paragraph 17). He proved only ₹35,000 by Ext. D7(a), and for the balance ₹2,00,000 had only his oral evidence and his reply notice, whereas a party who asserts discharge must prove it by cogent and convincing evidence (paragraphs 17 and 18). The improbability argued from PW1 keeping cash at home was not made out by any question put to him, and nothing in law requires the date, amount and signature to be in the same ink, so the Magistrate's reasoning failed (paragraph 18). Raising a probable defence does not rebut the presumptions under sections 118 and 139 unless established on a preponderance of probabilities (paragraph 18). In Kuntegoweda v. Thurubaiah, 2026 INSC 790 (4 August 2026), the Supreme Court held that failure to reply to the statutory notice supports the complainant, and an accused who challenges the complainant's financial capacity must plead it in the reply and bears the initial burden (paragraph 19). The complainant discharged his initial burden and was entitled to the presumptions, so the acquittal needed interference (paragraph 19).

Controlling point

The Magistrate was wrong to hold the complainant failed to prove his case, and the accused was guilty under section 138.

Order and next steps

The appeal was allowed and the acquittal set aside. The accused was convicted and sentenced to simple imprisonment for a day till the rising of the court and to a fine of ₹8,15,000, with simple imprisonment for six months in default. He must appear before the trial court at 11.00 am on 14 August 2026 and pay the fine on that date, failing which the Magistrate is to execute the sentence; a copy was to go to the trial court.

Practical implications

An accused who admits a loan and signing a cheque should prove repayment with documents and should plead lack of the complainant's financial capacity in the reply to the demand notice; stop-payment instructions are no defence.

Limits of this ruling

• The result depends on the admissions made and the failure to prove repayment of ₹2,00,000; the Court did not hold that all cheques in different inks are valid in every case.