The Acquittal Is Reversed, And The Rs 5 Lakh Compensation Is Back
A man accused of bouncing a Rs 5 lakh cheque said he had lost his cheque book. The Sessions Court believed him. The High Court looked at what he had actually proved.
The Court held the accused did not dispute issuing the cheque, changed his story, and never entered the witness box; the police entry he relied on said nothing about him or his cheque book. The presumption under the NI Act was not rebutted. The conviction, six months' imprisonment and Rs 5 lakh compensation were restored — but the Rs 10,000 fine was set aside, as a court cannot impose both.
- A shifting defence is a weak defence. First the cheque went to a middleman; later it was lost.
- Check what a document actually says. The police entry was about someone else's shop.
- Mere denial is not rebuttal. The accused must lead evidence to displace the presumption.
- Fine or compensation, not both. Section 357(3) compensation applies only where no fine is imposed.
- Court
- High Court of Himachal Pradesh at Shimla
- Bench
- Justice HON'BLE MR. JUSTICE RAKESH KAINTHLA
- Citation
- Cr. Appeal No. 4171 of 2013
- Case
- Cr. Appeal No. 4171 of 2013
- Decided
- 9 September 2026
- Outcome
- Appeal partly allowed; conviction and compensation restored, fine set aside
The loan and the cheque
The complainant said the accused, whom he knew, asked for Rs 5,00,000 to take a fruit orchard on lease and gave a post-dated cheque to repay it. The cheque was dishonoured for insufficient funds and a legal notice went unanswered.
The Chief Judicial Magistrate, Kullu, convicted the accused in 2011 and sentenced him to six months' simple imprisonment, a Rs 10,000 fine and Rs 5,00,000 compensation.
The Sessions Judge acquitted him: two defence witnesses showed he had lost his cheque book, the man in whose presence the loan was said to be given was never examined, and the loan itself was not proved.
Why the High Court reversed the acquittal
The Court noted the settled limits on disturbing an acquittal, but also that in cheque cases the holder enjoys a presumption that the cheque was issued for a debt, which the accused must rebut.
The accused never disputed issuing the cheque. In cross-examination he suggested it had been given to a finance agent who passed it on; in his statement under Section 313 he said instead that he had lost the cheque book. The police entry his witness proved was a report by a woman about threats to evict her from a shop — it mentioned neither the accused nor any cheque book, and the appellate court erred in relying on it.
The accused did not step into the witness box to prove the loss. Following Sumeti Vij, mere denial in a Section 313 statement does not rebut the presumption, and the complainant's case could not be doubted just because he produced no separate proof of the loan.
The sentence, corrected
Given the deterrent purpose of Section 138, six months' imprisonment was not excessive.
But following R. Vijayan v. Baby, where a fine is imposed compensation is paid out of it; separate compensation under Section 357(3) is available only where the sentence does not include a fine. The trial court could not do both.
The acquittal was set aside and the conviction, imprisonment and Rs 5,00,000 compensation restored. The fine was set aside, and any fine already deposited is to be adjusted towards the compensation.
Who argued it
Appearances as recorded in the judgment of the Court.
Frequently asked
Is saying I lost my cheque book a defence to a bounced cheque?
Only if you prove it. Here the documents did not support the claim and the accused never testified.
Can a court impose both a fine and compensation for a bounced cheque?
Not separate compensation under Section 357(3) where a fine is imposed; the fine here was set aside.
Defending a cheque case on a lost cheque book
- Pick one version and hold it from the first cross-examination to the Section 313 statement.
- Report the loss to the bank and police at the time, naming the cheque numbers.
- Step into the witness box yourself; a denial in Section 313 will not carry the burden.
- If convicted, check the sentence: fine and separate compensation cannot stand together.
Source. High Court of Himachal Pradesh at Shimla, Cr. Appeal No. 4171 of 2013, decided 9 September 2026 by Justice HON'BLE MR. JUSTICE RAKESH KAINTHLA. This explainer is written from the judgment text as reported.
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