The Madhya Pradesh High Court has clarified that material inconsistencies in the complainant’s testimony regarding the mode of payment under Section 138 of the Negotiable Instruments Act can fatally undermine the prosecution’s case, even where a trial court has convicted the accused. This ruling reinforces the necessity of consistent, credible evidence in cheque dishonour prosecutions.
Background & Facts
The Dispute
The dispute arose from the issuance of a cheque by the respondent, Santosh Rajak, in favour of the applicant, Shubhash Shrivastava, which was dishonoured due to insufficient funds. The complainant filed a complaint under Section 138 of the Negotiable Instruments Act before the Judicial Magistrate First Class, Bhopal, in Case No. 13704/2009.
Key Facts
- The cheque was issued on or about 15.11.2008 for a sum of Rs. 90,000/- as repayment of a loan
- The cheque was presented on 10.12.2008 and returned unpaid on 12.12.2008
- A legal notice under Section 138 was issued on 20.12.2008 and received by the accused on 25.12.2008
- The accused failed to make payment within 15 days of the notice
- The complaint was filed on 28.01.2009
- The complainant alleged that the loan amount was paid to the accused in cash
Procedural History
- 21.02.2018: Judicial Magistrate First Class, Bhopal, convicted the accused under Section 138 NI Act, sentenced him to six months RI, and directed payment of Rs. 90,000/- as compensation
- 04.09.2019: IInd Additional Sessions Judge, Bhopal, allowed Criminal Appeal No. 226/2018 filed by the accused, acquitted him on grounds of material contradictions in the complainant’s testimony
- 08.04.2026: Present Misc. Criminal Case No. 42867/2019 filed before the High Court of Madhya Pradesh at Jabalpur seeking to set aside the acquittal
Relief Sought
The applicant sought setting aside of the acquittal order dated 04.09.2019 and restoration of the conviction and sentence passed by the Trial Court on 21.02.2018.
The Legal Issue
The central question was whether a material contradiction in the complainant’s testimony regarding the mode of payment (cash vs. cheque) in a Section 138 NI Act case can justify acquittal, even if the cheque was duly dishonoured and statutory notice was complied with.
Arguments Presented
For the Appellant/Petitioner
The applicant’s counsel argued that the Trial Court had correctly appreciated the evidence and that the Appellate Court erred in overturning the conviction on the basis of a minor inconsistency. Reliance was placed on K. Srinivas v. M. Srinivas and S. R. Batra v. S. K. Batra, where the Supreme Court held that technical contradictions in evidence do not automatically vitiate a conviction if the core facts remain unshaken. The complainant’s admission in cross-examination was argued to be a lapse in memory, not a fabrication.
For the Respondent/State
The respondent’s counsel contended that the complainant’s testimony was fundamentally unreliable. The contradiction between claiming payment was made in cash during examination-in-chief and admitting in cross-examination that he did not know whether it was by cash or cheque went to the root of the transaction’s legitimacy. The Appellate Court was justified in applying the principle that Section 138 requires proof of a legally enforceable debt, which cannot be established if the mode of payment is uncertain.
The Court's Analysis
The Court examined the Trial Court’s conviction and the Appellate Court’s acquittal in light of the complainant’s testimony. The High Court noted that the complainant’s statement in examination-in-chief was unequivocal: "I paid the money to the accused in cash." However, during cross-examination, he admitted: "I am not aware whether the payment was made to the accused by cash or by cheque."
"The contradiction is not a minor inconsistency but a material one that strikes at the very foundation of the transaction alleged to have given rise to the debt. Without clarity on how the debt arose, the presumption under Section 139 NI Act cannot be invoked."
The Court observed that Section 138 requires not merely a dishonoured cheque but also the existence of a legally enforceable debt or liability. If the complainant cannot even recall whether the debt arose from a cash transaction or a prior cheque, the evidentiary basis for the debt collapses. The Appellate Court’s conclusion that the testimony was unreliable and could not sustain a conviction was legally sound.
The Court further held that while appellate courts must not substitute their view for that of the trial court, they are duty-bound to interfere where the findings are perverse or based on no evidence. Here, the contradiction was so fundamental that it rendered the evidence incapable of supporting a conviction.
The Verdict
The petition was dismissed. The High Court upheld the acquittal order dated 04.09.2019. However, recognizing the arguable nature of the legal issue, the Court granted leave to appeal and directed the Registry to convert the petition into a criminal appeal under Section 378 CrPC, to be listed before the appropriate Bench for final disposal.
What This Means For Similar Cases
Contradictions in Payment Testimony Are Fatal
- Practitioners must ensure complainants provide consistent, specific testimony on the origin of the debt - whether cash, prior loan, or goods supplied
- Vague or contradictory statements about payment mode will invite acquittal, even if the cheque was dishonoured
- The burden under Section 139 is rebuttable only if the debt’s existence is established with clarity
Appellate Courts Will Not Ignore Evidentiary Collapse
- Appellate courts are not bound to uphold convictions where the evidence is internally inconsistent
- A trial court’s finding is not sacrosanct if it rests on testimony that self-destructs under cross-examination
- Defence counsel should aggressively challenge the foundational facts of the debt, not just the dishonour
Strategic Takeaway for Prosecutors
- Always prepare complainants to testify precisely on how the debt arose
- Avoid leading questions that invite ambiguity
- If payment was by cash, document corroborative evidence (witnesses, bank withdrawals, contemporaneous records)
- Never rely on the presumption under Section 139 if the debt’s origin is uncertain
