Issues: Whether the complainant proved the existence of a legally enforceable debt or liability so as to sustain conviction under Section 138 of the Negotiable Instruments Act, 1881, and whether the respondent rebutted the statutory presumptions by a probable defence.

Analysis: The respondent admitted signatures on the cheque and therefore the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 arose. Those presumptions, however, are rebuttable and can be displaced on a preponderance of probabilities by showing that the alleged liability is improbable or does not exist. On the evidence, the complainant failed to establish that Rs. 7,50,000/- had been advanced for investment in shares or debentures, as no supporting investment material, account trail, or other corroboration was produced. The bank entries and surrounding circumstances supported the respondent's version that only a smaller loan had been taken and repaid, while the complainant's case of a larger enforceable liability remained unproved. A civil decree obtained after non-compliance with a condition for leave to defend was held not to be conclusive proof of the alleged liability in the criminal complaint.

Conclusion: The respondent successfully rebutted the presumptions to the extent necessary, and the complainant failed to prove a legally enforceable debt of Rs. 7,50,000/-; the acquittal was upheld.

Issues: Whether the cheque was issued in discharge of a legally enforceable debt or liability so as to attract Section 138 of the Negotiable Instruments Act, 1881, and whether the statutory presumptions under Sections 118 and 139 stood rebutted.

Analysis: The cheque was admitted to bear the signatures of the respondents, so the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arose. However, those presumptions were rebuttable on a preponderance of probability. The complainant failed to prove the foundational transaction of the alleged agreement to sell, did not establish the alleged cash component of the payment, and could not satisfactorily support the claim that liability of Rs. 1.5 crore subsisted. On the evidence, only a liability of Rs. 75 lakh stood reflected or admitted, while the cheque in question was for Rs. 1.5 crore. A cheque issued for an amount substantially in excess of the proved liability could not be treated as having been drawn in discharge of the existing debt or liability required by Section 138.

Conclusion: The presumptions were rebutted and the complaint under Section 138 of the Negotiable Instruments Act, 1881 was rightly dismissed; the appeal failed.

Issues: (i) Whether a director can be proceeded against under Section 141(1) of the Negotiable Instruments Act, 1881 in the absence of specific averments showing that he was in charge of and responsible for the conduct of the company's business at the time of the offence; (ii) Whether documentary material showing resignation of the director from the company, being a public document and undisputed on record, can be considered at the stage of discharge/quashing to determine liability under Section 138 of the Negotiable Instruments Act, 1881.

Issue (i): Whether a director can be proceeded against under Section 141(1) of the Negotiable Instruments Act, 1881 in the absence of specific averments showing that he was in charge of and responsible for the conduct of the company's business at the time of the offence.

Analysis: Vicarious criminal liability under Section 141(1) is exceptional and can arise only if the complaint contains clear allegations that, at the time the offence was committed, the director was in charge of and responsible for the conduct of the company's business. Mere reference to the accused as a director or a general assertion that the company acted through its directors is insufficient. The complaint and legal notice contained only omnibus allegations and did not attribute any specific role to the petitioner. The cheques were also signed by another director, not by the petitioner.

Conclusion: The complaint did not disclose the necessary foundational averments to fasten vicarious liability on the petitioner, and the issue is decided in favour of the petitioner.

Issue (ii): Whether documentary material showing resignation of the director from the company, being a public document and undisputed on record, can be considered at the stage of discharge/quashing to determine liability under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: Although defence material is ordinarily not appreciated at the threshold, an exception exists for public documents or documents whose authenticity is not in dispute. A resignation record duly notified to the Registrar of Companies is of such character and can be looked into at the prima facie stage. On the facts, the petitioner's resignation had been accepted before the cheques were issued, so he had ceased to be in control of the company when the alleged offence occurred.

Conclusion: The resignation documents were rightly considered, and they negatived the petitioner's liability. This issue is decided in favour of the petitioner.

Final Conclusion: The criminal proceedings could not be maintained against the petitioner, as no prima facie basis existed to invoke vicarious liability after his resignation from the company.

Ratio Decidendi: For prosecution of a director under Section 141(1) of the Negotiable Instruments Act, 1881, the complaint must contain specific averments showing that the director was in charge of and responsible for the company's business at the relevant time, and undisputed public documents demonstrating prior resignation may be considered at the threshold to prevent abuse of process.

Issues: (i) Whether the discharge order passed by the revisional court, after evaluating the disputed documents and applying presumptions under the Negotiable Instruments Act, was sustainable at the stage of charge. (ii) Whether the complainant company's authorised representative could be permitted to prosecute the petition after the demise of the earlier director-representative.

Issue (i): Whether the discharge order passed by the revisional court, after evaluating the disputed documents and applying presumptions under the Negotiable Instruments Act, was sustainable at the stage of charge.

Analysis: At the stage of charge, the court is only to see whether the material collected by the prosecution discloses a prima facie case and gives rise to grave suspicion; it cannot weigh defence material or decide the genuineness of disputed documents. The complainant's version, the contemporaneous NCR, bank intimation, newspaper notices, witness statements, and the handwriting/FSL material were sufficient to show a prima facie case of theft and forgery. The revisional court went beyond the permissible scope by treating defence documents as established facts and by applying presumptions under the Negotiable Instruments Act to conclude that the cheques and covering letters were genuine. Such disputed questions of authenticity had to be tested in trial.

Conclusion: The discharge order was set aside and the order framing charges was restored.

Issue (ii): Whether the complainant company's authorised representative could be permitted to prosecute the petition after the demise of the earlier director-representative.

Analysis: The complainant was the company, and its representation had earlier been carried by its director. After his , the company produced a board resolution authorising the new representative, who had already been acting on behalf of the company before the lower courts. The request was only to regularise the company's representation in the proceedings.

Conclusion: The application was allowed and the authorised representative was permitted to represent the complainant company.

Final Conclusion: The proceedings resulted in restoration of the prosecution, with the revisional discharge being overturned and the matter directed to continue before the trial court on the basis of the prima facie material.

Ratio Decidendi: At the stage of charge, disputed documents and defence versions cannot be conclusively assessed, and an order of discharge is unwarranted where the prosecution material discloses a prima facie case and grave suspicion requiring trial.

Issues: (i) Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 was liable to be interfered with on the ground that the cheque was not issued towards a subsisting liability and the statutory presumption stood rebutted. (ii) Whether the fine imposed by the Metropolitan Magistrate was without jurisdiction under Section 29(2) of the Code of Criminal Procedure, 1973.

Issue (i): Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 was liable to be interfered with on the ground that the cheque was not issued towards a subsisting liability and the statutory presumption stood rebutted.

Analysis: The loan transaction was supported by the complainant's bank records, income-tax documents and cash withdrawals, which were treated as corroboration of financial capacity. The defence that the petitioner had no dealings with the complainant was not accepted because the evidence showed that the intermediary had arranged the loan on her behalf, and there was no effective cross-examination to dislodge that version. The petitioner admitted her signatures on the cheque but failed to produce evidence of repayment or any credible material showing misuse. Her silence after service of legal notice and absence of steps to stop payment against the cheque also weighed against her. On these facts, the presumption in favour of a legally enforceable debt was not rebutted on the standard of preponderance of probabilities.

Conclusion: The conviction under Section 138 of the Negotiable Instruments Act, 1881 was upheld and the challenge on merits failed.

Issue (ii): Whether the fine imposed by the Metropolitan Magistrate was without jurisdiction under Section 29(2) of the Code of Criminal Procedure, 1973.

Analysis: The sentencing was examined in the context of a prosecution under a special statute, where Section 138 itself authorises imprisonment and fine up to twice the cheque amount. The special provision was treated as controlling over the general limitation in the Code of Criminal Procedure, 1973. Since the fine imposed was within the statutory ceiling linked to the cheque amount, the jurisdictional objection was rejected.

Conclusion: The fine imposed was held to be within jurisdiction and valid.

Final Conclusion: The revision failed on both liability and sentence, and the conviction as well as the sentence were left undisturbed.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the accused must rebut the presumption of legally enforceable liability on a preponderance of probabilities, and the sentencing power under the special statute prevails over the general limitation in the Code of Criminal Procedure, 1973 where the fine remains within the statutory maximum under the special law.

Issues: Whether the statutory presumption under the Negotiable Instruments Act arose from the admitted signatures on the cheque, and whether the complainant successfully proved the loan transaction, the execution of the supporting document, and his financial capacity to advance the alleged loan.

Analysis: The cheque signatures were not in dispute, but the presumption under Sections 118 and 139 of the Negotiable Instruments Act remained rebuttable. The complainant's version suffered from material inconsistencies on the date of lending, the manner of execution of the supporting agreement, and the filling up of cheque particulars. The witness to the document did not prove its contents or execution in a reliable manner. The complainant also failed to produce bank statements, income-tax returns, business accounts, or credible proof of the alleged sources of funds. The claimed explanation regarding savings and sale of gold was unsupported by evidence. On the facts, the surrounding circumstances made the alleged loan transaction improbable and insufficient to establish a legally enforceable debt.

Conclusion: The presumption stood rebutted and the complainant failed to prove the debt or liability. The acquittal was upheld.

Issues: (i) Whether cheques issued as security could sustain a prosecution under Section 138 of the Negotiable Instruments Act, 1881; (ii) Whether the commencement of CIRP and the moratorium under the Insolvency and Bankruptcy Code, 2016 barred initiation or continuation of proceedings under Section 138 against the company and its directors; (iii) Whether the complaint was maintainable when the cheques were dishonoured for the reason "drawers signature differs" and the corporate account had already been placed under insolvency control.

Issue (i): Whether cheques issued as security could sustain a prosecution under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: A cheque issued as security is not, by that fact alone, outside the reach of Section 138. Where the cheque is voluntarily signed and delivered, and a liability exists when it is presented, the cheque may mature for presentation. A signed blank or incomplete cheque also attracts the statutory presumptions under Sections 139 and 20 of the Negotiable Instruments Act, 1881, unless the accused rebuts them with cogent evidence. The record did not support the plea that the cheques were incapable of being presented merely because they originated as security cheques.

Conclusion: The challenge based on the cheques being security cheques was rejected.

Issue (ii): Whether the commencement of CIRP and the moratorium under the Insolvency and Bankruptcy Code, 2016 barred initiation or continuation of proceedings under Section 138 against the company and its directors.

Analysis: Once CIRP had commenced, the corporate debtor's management and the powers of the board stood suspended and vested in the resolution professional, and later the liquidator. In that situation, proceedings to enforce a debt by a complaint under Section 138 could not be initiated or continued against the corporate debtor during the moratorium. On the liability of directors, vicarious liability under Section 141 of the Negotiable Instruments Act, 1881 is strict and depends on the company being prosecutable as the principal offender. Since the company itself was not amenable to continuation of the complaint in the face of the insolvency process, the directors could not be fastened with liability on these facts. The Court also noted that the complainant had notice of the insolvency proceedings and had filed claims therein.

Conclusion: The complaint could not validly proceed against the company, and the directors were also not liable to be summoned on these facts.

Issue (iii): Whether the complaint was maintainable when the cheques were dishonoured for the reason "drawers signature differs" and the corporate account had already been placed under insolvency control.

Analysis: The dishonour memo recorded "drawers signature differs," which was consistent with the bank account having been rendered inoperative after the insolvency process and the directions issued by the resolution professional. On that footing, and in the absence of a legally sustainable basis to continue the Section 138 proceedings, the complaint could not be maintained against the petitioners.

Conclusion: The complaint was not maintainable on this ground as well.

Final Conclusion: The summoning order was set aside, the petitioners were discharged, and the proceedings stood allowed and disposed of.

Ratio Decidendi: After commencement of CIRP, a Section 138 prosecution cannot be initiated or continued against the corporate debtor, and directors cannot be vicariously prosecuted in the absence of a legally sustainable proceeding against the company as principal offender.

Issues: Whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 was liable to be interfered with in leave to appeal proceedings; and whether the respondents had rebutted the statutory presumption by raising a probable defence so as to shift the burden back to the complainant to prove the debt or liability.

Analysis: Once execution of the cheques was admitted, the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 arose in favour of the complainant. Those presumptions were, however, rebuttable, and the respondents could discharge their burden by showing a probable defence on a preponderance of probabilities. The record showed a consistent defence that the parties were in a business relationship, that the cheques were security cheques, and that the complainant had not proved the alleged cash loan by any document, witness, date, purpose, or material showing financial capacity to advance such a large amount. On the respondents raising a probable defence, the burden shifted back to the complainant to establish the debt as a matter of fact. The challenged acquittal was based on that evidentiary failure and not on a mere adverse inference from non-production of income-tax returns.

Conclusion: The respondents had successfully rebutted the statutory presumptions, and the complainant failed to prove the existence of a legally enforceable debt or liability. The acquittal called for no interference.

Final Conclusion: The leave petitions were not entertained and the acquittal of the respondents under Section 138 of the Negotiable Instruments Act, 1881 stood undisturbed.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, once the accused raises a probable defence on a preponderance of probabilities, the presumptions under Sections 118(a) and 139 stand displaced and the complainant must then prove the debt or liability as a matter of fact; an acquittal based on such failure does not warrant appellate interference absent perversity.

Issues: (i) Whether the petitioner's restraint and movement under police control from 25 October 2024 constituted arrest for the purpose of Article 22(2) of the Constitution of India and Section 57 of the Code of Criminal Procedure, 1973. (ii) Whether the time spent in pre-arrest medical examination could be excluded while computing the 24-hour period for production before the Magistrate, and whether rejection of bail barred the present habeas corpus challenge.

Issue (i): Whether the petitioner's restraint and movement under police control from 25 October 2024 constituted arrest for the purpose of Article 22(2) of the Constitution of India and Section 57 of the Code of Criminal Procedure, 1973.

Analysis: Arrest was treated as commencing when a person's personal liberty is restrained and not from the time it is formally recorded by the police. Custody, control, and deprivation of free movement were held to be the real indicators of arrest. On the facts, the petitioner's liberty was found to have been restrained when he was taken into custody on 25 October 2024 and, in any event, when he reached Baramati Police Station at 5:07 p.m. The period for production before the Magistrate therefore began from that point and the production at 12:20 p.m. on 27 October 2024 fell beyond the constitutional limit.

Conclusion: The petitioner was in arrest from 25 October 2024, and the production before the Magistrate was beyond 24 hours, making the arrest unlawful.

Issue (ii): Whether the time spent in pre-arrest medical examination could be excluded while computing the 24-hour period for production before the Magistrate, and whether rejection of bail barred the present habeas corpus challenge.

Analysis: No statutory provision permitted exclusion of time spent for a pre-arrest medical examination. The statutory scheme contemplated medical examination after arrest, not as a device to postpone the constitutional requirement of production before the Magistrate. The contention that the petitioner's son was present or that the petitioner remained in contact with family members did not negate police custody and control. The prior rejection of bail did not bar habeas corpus relief where the arrest itself was illegal and violative of Article 22(2).

Conclusion: The pre-arrest medical examination period could not be excluded, and the earlier bail rejection did not prevent the Court from granting habeas corpus relief.

Final Conclusion: The detention was held to be constitutionally impermissible, and the petitioner was entitled to be released with conditions.

Ratio Decidendi: Arrest begins when police restraint deprives a person of free movement, and the only excluded time for the 24-hour rule is the journey from the place of arrest to the Magistrate's Court; medical examination time cannot be used to defeat the mandate of Article 22(2).

1. Whether the issuance of cheques by the accused creates a presumption that the cheques were issued in discharge of a legal liability under Sections 118(a) and 139 of the NI Act.

2. Whether the accused successfully rebutted the statutory presumption by adducing evidence or pointing out contradictions in the complainant's case.

3. The evidentiary value of documents such as bills and ledger entries in proving the existence of a legal liability.

4. The legal effect of cheques issued as security and the requirement to prove the subsistence of liability on the date of presentation of the cheque.

5. The standard of proof required to rebut the statutory presumption under Section 139 of the NI Act.

Issue 1: Presumption under Sections 118(a) and 139 of the NI Act upon admission of cheque issuance

The legal framework establishes that once the execution of the cheque is admitted, Sections 118(a) and 139 of the NI Act mandate a rebuttable presumption that the cheque was issued for the discharge of any debt or other liability. This principle was reiterated by the Supreme Court in Basalingappa v. Mudibasappa (2019), which summarized the law as follows:

- Section 139 creates a presumption that the cheque was issued to discharge a legal liability once the cheque's execution is admitted.

- This presumption is rebuttable, and the accused bears the evidentiary burden to raise a probable defence on the preponderance of probabilities standard.

- The accused may rely on evidence led by himself or on the complainant's materials to rebut the presumption.

- The accused is not required to personally testify to support the defence; the burden is evidentiary, not persuasive.

The Court also cited Rajaram v. Maruthachalam (2023) and S. Murugan v. M.K. Karunagaran (2023), which reaffirmed these principles.

In the present case, the accused admitted issuing the cheques, thereby initially attracting the presumption under Section 139. The complainant's counsel contended that minor contradictions in the complainant's statements were insufficient to rebut this presumption.

Issue 2: Whether the accused successfully rebutted the presumption

The Trial Court found that the accused rebutted the presumption by highlighting contradictions and deficiencies in the complainant's evidence. Key findings include:

- The complainant gave contradictory statements regarding the date of issuance of the cheques, stating 2020 in examination-in-chief but 2017 in cross-examination.

- The complainant admitted that the cheques were issued as security.

- The bills produced in support of the claim were unsigned by the accused, despite having a column for customer signatures, undermining their reliability.

- Ledger entries relied upon by the complainant were held insufficient to establish liability, as per the Supreme Court's ruling in Manohar Lal Sharma v. Union of India (2017), which clarified that entries in books of account are corroborative but not independently sufficient evidence to fasten legal liability.

These factors collectively cast doubt on the complainant's version and enabled the accused to rebut the statutory presumption.

Issue 3: Evidentiary value of documents (Bills and Ledger entries)

The Court applied the principle from Manohar Lal Sharma v. Union of India (2017) and CBI v. V.C. Shukla (1998), which hold that entries in books of account or unsigned bills cannot alone establish liability. Independent corroborative evidence is necessary to prove the authenticity and correctness of such entries.

In this case, the complainant failed to produce independent evidence linking the bills and ledger entries to the accused, weakening the claim that the accused owed a debt to the complainant.

Issue 4: Legal effect of cheques issued as security and proof of subsisting liability

The Court emphasized that cheques issued as security attract Section 138 of the NI Act only if the liability subsisted on the date of presentation of the cheque. This principle was drawn from Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited (2016) and Sripati Singh v. State of Jharkhand (2021).

In the present case, the complainant admitted that the cheques were issued as security in 2017 but failed to prove the existence of any legal liability on the date of presentation of the cheques. The complainant's failure to produce the accountant who filled in the cheque details further weakened the claim.

Issue 5: Standard of proof to rebut presumption

The Court reiterated that the accused must rebut the presumption on the preponderance of probabilities. It is not necessary for the accused to prove the defence beyond reasonable doubt or to personally testify. The accused may rely on contradictions in the complainant's evidence or other materials to raise a probable defence.

In this case, the accused effectively raised doubts about the complainant's version, and the Trial Court's conclusion that the presumption was rebutted was held to be a reasonable view.

Conclusions on issues:

The Court concluded that the complainant failed to prove the existence of a legal liability on the date of cheque presentation, as required under Section 138 of the NI Act, especially given the admission that the cheques were issued as security. The contradictions in the complainant's testimony and the lack of independent corroborative evidence rendered the complainant's case doubtful. Consequently, the accused successfully rebutted the presumption under Sections 118(a) and 139 of the NI Act.

The Court held that the Trial Court had taken a reasonable view in dismissing the complaint and declined to interfere with the acquittal, even if another view was possible.

Significant holdings and core principles established:

"Once the execution of the cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability."

"The presumption under Section 139 is a rebuttable presumption, and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities."

"To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence."

"Entries in books of account are not by themselves sufficient to charge any person with liability... There must be independent evidence of the transaction to which the entries relate."

"A cheque issued as security pursuant to a financial transaction will attract Section 138 of the NI Act only if the liability subsisted on the date of presentation of the cheque."

"The inability of the complainant to prove the existence of legal liability on the date of presentation of the cheque is fatal to the complaint under Section 138."

"The Court will not interfere with the reasonable view taken by the learned Trial Court while deciding the appeal against the acquittal even if another view is possible."

Final determinations:

- The presumption under Sections 118(a) and 139 of the NI Act was initially attracted due to admission of cheque issuance.

- The accused successfully rebutted the presumption by exposing contradictions and lack of independent evidence of liability.

- The complainant failed to prove the existence of a subsisting legal liability on the date of cheque presentation.

- The Trial Court's dismissal of the complaint was justified and reasonable.

- The application for special leave to appeal was dismissed, and the proposed appeal disposed of accordingly.

(i) Whether Investigating Agencies, Prosecuting Agencies, or Police can directly issue summons to question a counsel who is appearing for a party in a case, particularly when the counsel's role is limited to legal representation and advice.

(ii) If such direct summons are permissible, under what circumstances and safeguards, including whether judicial oversight is necessary before such summons can be issued to a lawyer.

(iii) The extent to which communications between an Advocate and client, protected under statutory provisions analogous to legal professional privilege, can be subjected to investigation or inquiry by law enforcement agencies.

(iv) The implications of permitting or restraining direct summons on the autonomy, independence, and effective functioning of the legal profession and the administration of justice.

Issue-wise Detailed Analysis

1. Authority of Investigating Agencies to Summon Counsel Directly

The Court examined the statutory framework under which the summons was issued, specifically Section 179 of the Bhartiya Nagrik Suraksha Sanhita, 2023 ("BNSS"). This provision empowers Investigating Agencies to summon individuals for inquiry as part of investigation. However, the petitioner was summoned in his capacity as counsel representing the accused, not as an accused or witness personally connected to the facts beyond his professional role.

The Court noted that the petitioner challenged the summons on the ground that he was neither an accused nor a witness but was discharging professional duties as an Advocate. The Court acknowledged the fundamental rights of legal professionals under Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession, including law, subject to reasonable restrictions. Further, the Court considered Section 132 of the Bhartiya Sakshya Adhiniyam, 2023 ("BSA"), which corresponds to Section 126 of the Indian Evidence Act, 1872, protecting privileged communications between an Advocate and client from being disclosed in legal proceedings.

The Court reasoned that permitting Investigating Agencies to directly summon counsel risks undermining the confidentiality and privilege essential to the administration of justice. It emphasized that the autonomy and independence of the legal profession are integral to the justice system, and direct summons to a lawyer could threaten these principles. The Court found merit in the petitioner's contention that such direct summons impinge upon the rights of Advocates and the autonomy of the profession.

2. Scope of Legal Professional Privilege and Confidentiality

The Court highlighted that communications between an Advocate and client are protected under Section 132 of the BSA, which prohibits disclosure of confidential communications made for the purpose of legal advice or representation. This privilege is a cornerstone of the legal system, ensuring clients can freely communicate with their counsel without fear of exposure.

The Court observed that the Investigating Agency's attempt to summon the petitioner potentially threatens this confidentiality, as questioning counsel could lead to disclosure of privileged communications. The Court underscored that such privilege cannot be lightly overridden and must be respected unless exceptional circumstances justify otherwise.

3. Need for Judicial Oversight and Safeguards

The Court raised the question of whether, even if the Investigating Agency suspects that the individual's role is more than that of counsel, direct summons without judicial oversight is appropriate. The Court suggested that judicial scrutiny should be a prerequisite before Investigating Agencies can summon a lawyer, particularly to ensure that the lawyer is not being questioned merely for their professional role or privileged communications.

This approach balances the need for effective investigation with the protection of legal professional independence and client confidentiality. The Court indicated that such safeguards are necessary to prevent misuse of investigative powers and to uphold the integrity of the legal profession.

4. Impact on Administration of Justice and Legal Profession

The Court emphasized that the legal profession is an integral component of the administration of justice. The autonomy and independence of Advocates are essential for them to discharge their duties fearlessly and conscientiously. Subjecting counsel to the "beck and call" of Investigating Agencies without proper safeguards would undermine the administration of justice.

Accordingly, the Court expressed concern that permitting direct summons to counsel without judicial oversight would be "completely untenable" and could have a chilling effect on the legal profession's ability to function effectively.

Treatment of Competing Arguments

The Investigating Agency's position, as reflected in the High Court's dismissal of the quashing petition, was that the summons was issued under statutory authority and that the petitioner was summoned as a witness under Section 179 of BNSS. The High Court held that there was no violation of fundamental rights since the Investigating Agency had the power to investigate and summon witnesses.

The Supreme Court, however, distinguished the petitioner's role as counsel from that of a witness or accused. It found that the High Court did not adequately consider the implications of summoning a lawyer in their professional capacity and the protections afforded to legal professionals under constitutional and statutory provisions. The Court thus rejected the reasoning that mere statutory authority to summon witnesses extends to counsel without limitations or safeguards.

Key Evidence and Findings

The Court relied on the petitioner's role as an Advocate, the nature of the FIR and investigation, the statutory provisions protecting privileged communication, and the fundamental rights guaranteed to legal professionals. The report submitted by the Assistant Commissioner of Police noted the petitioner's non-cooperation but did not establish any role beyond that of counsel. The Court found no justification for the Investigating Agency's direct summons without judicial oversight.

Conclusions

The Court concluded that:

• Direct summons issued by Investigating Agencies to counsel acting in their professional capacity are prima facie impermissible.
• Legal professional privilege and the autonomy of the legal profession must be protected from intrusion by investigative authorities.
• Judicial oversight is necessary before such summons can be issued in exceptional cases where the role of the lawyer may extend beyond legal representation.
• Pending further directions, the State is restrained from summoning the petitioner, and the notice dated 24.03.2025 is stayed.

The Court further directed issuance of notices to the Attorney General, Solicitor General, Bar Council of India, and apex legal professional bodies to assist in addressing the broader questions raised.

Significant Holdings

"The legal profession is an integral component of the process of administration of justice. Counsel, who are engaged in their legal practice apart from their fundamental rights under Article 19(1)(g) of the Constitution of India, have certain rights and privileges guaranteed because of the fact that they are legal professionals and also due to statutory provisions like Section 132 of BSA."

"Permitting the Investigating Agencies/Prosecuting Agency/Police to directly summon defence counsel or Advocates, who advise parties in a given case would seriously undermine the autonomy of the legal profession and would even constitute a direct threat to the independence of the administration of justice."

"Subjecting the Counsel in a case to the beck and call of the Investigating Agency/Prosecuting Agency/Police prima facie appears to be completely untenable."

"Judicial scrutiny should be a prerequisite before Investigating Agencies can summon a lawyer, particularly to ensure that the lawyer is not being questioned merely for their professional role or privileged communications."

The Court's final determination is that direct summons to counsel by Investigating Agencies without judicial oversight is impermissible in ordinary circumstances, and the autonomy and privilege of legal professionals must be preserved to maintain the integrity of the justice system.

Issues: Whether an over-age candidate could claim appointment after being permitted to participate in the recruitment process and included in a provisional list, despite an earlier final decision on her ineligibility.

Analysis: The recruitment advertisement prescribed an upper age limit and did not confer any power to relax it. An authority cannot depart from the stipulated eligibility conditions without an express statutory or advertised power. The earlier writ proceeding had conclusively determined that crossing the upper age limit disentitled the candidate from offering candidature. The subsequent acceptance of the online application and participation in recruitment resulted from an error and could not create an indefeasible right to appointment. The issue of age eligibility was directly and substantially decided earlier and could not be reagitated through a challenge to non-appointment. A plea for relaxation that ought to have been raised in the earlier proceeding was also barred by constructive res judicata under Explanation IV to Section 11 of the Code of Civil Procedure, 1908.

Conclusion: The candidate was ineligible on account of the prescribed upper age limit and was precluded from reopening that determination; her participation in the selection process and provisional inclusion conferred no right to appointment.

The core legal questions considered in this appeal are:

• Whether the respondent committed the offence under Section 138 of the Negotiable Instruments Act, 1881 by issuing a cheque that was dishonored due to stoppage of payment;
• Whether the appellant successfully proved the existence of a debt or liability owed by the respondent to the appellant;
• Whether the trial court erred in acquitting the respondent by misreading or omitting to consider material evidence on record;
• Whether the appellate court should interfere with the acquittal recorded by the trial court in the absence of patent perversity or compelling reasons;
• Whether the respondent's defense of loss/misplacement of the cheque book and prior stoppage of payment on the cheque was rightly accepted by the trial court;
• Whether the appellant's failure to produce certain witnesses and documentary evidence affected the prosecution's case;
• Whether the conduct of the respondent in reporting the loss of cheque book and stopping payment on the cheque before presentation raises suspicion or creates doubt about his guilt.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the respondent committed offence under Section 138 of the Negotiable Instruments Act

Legal framework and precedents: Section 138 of the Negotiable Instruments Act penalizes the drawer of a cheque if it is returned unpaid due to insufficient funds or stoppage of payment, provided certain procedural requirements such as issuance of notice and failure to repay the amount within stipulated time are met. The Supreme Court's guidelines in appeals against acquittals emphasize that interference is warranted only if the acquittal is perverse or based on misreading of evidence.

Court's interpretation and reasoning: The trial court acquitted the respondent on the ground that the appellant failed to prove the essential ingredient of debt or liability. The appellate court noted that the respondent denied borrowing the money or issuing the cheque and contended that the cheque book was lost and payment was stopped prior to presentation. The appellant's claim of loan was not corroborated by independent witnesses or documentary proof beyond a diary entry.

Key evidence and findings: The appellant produced two witnesses but did not call them for trial. The diary maintained by the appellant purportedly containing loan entries was not sufficient to establish the transaction conclusively. The respondent's evidence and bank records showed that he had reported loss of cheque book and requested stoppage of payment before the cheque was presented. The trial court disbelieved the appellant's witnesses and accepted the respondent's defense.

Application of law to facts: Given the lack of cogent evidence proving the loan and issuance of cheque for discharge of debt, and the presence of plausible explanation for dishonor of cheque, the trial court held that the offence under Section 138 was not made out.

Treatment of competing arguments: The appellant argued that the respondent's conduct in reporting loss of cheque book just prior to cheque presentation was suspicious and amounted to conspiracy to evade liability. The appellant also contended that failure to call witnesses was fatal to the defense. However, the court observed that suspicion alone cannot substitute for proof and that the appellant's own failure to produce material witnesses weakened the prosecution case.

Conclusions: The court upheld the trial court's finding that the offence under Section 138 was not established beyond reasonable doubt.

Issue 2: Whether the trial court erred in acquitting the respondent by misreading or omitting material evidence

Legal framework and precedents: The appellate court referred to the Supreme Court's ruling that interference with acquittal is justified only if the judgment suffers from patent perversity or is based on misreading/omission of material evidence, and where no two reasonable views are possible except the one consistent with guilt.

Court's interpretation and reasoning: The appellate court found the trial court's reasoning to be elaborate and convincing. The appellant failed to demonstrate any misreading or omission of material evidence. The court noted that the appellant did not challenge the trial court's findings with any substantial ground.

Key evidence and findings: The trial court had considered the appellant's diary entries, respondent's denial, bank records of stoppage of payment, and the absence of witnesses supporting the appellant's claim. The appellate court found no material on record overlooked or misapprehended.

Application of law to facts: The appellate court applied the principle of judicial restraint in appeals against acquittals and declined to interfere in the absence of compelling reasons or perversity.

Treatment of competing arguments: The appellant's reliance on suspicion and non-production of witnesses was insufficient to overturn acquittal. The respondent's defense was plausible and accepted by trial court.

Conclusions: The appellate court held that the acquittal was justified and did not warrant interference.

Issue 3: Whether the appellate court should interfere with acquittal in absence of perversity or compelling reasons

Legal framework and precedents: The court relied on the Supreme Court's guidelines emphasizing that appellate courts should be slow in interfering with acquittals to protect the presumption of innocence and should do so only when "very substantial and compelling reasons" exist.

Court's interpretation and reasoning: The appellate court reiterated that the presumption of innocence is reinforced by acquittal and that the power to review evidence must be exercised with great care and caution.

Key evidence and findings: The appellant failed to produce substantial grounds for interference. The trial court's judgment was well reasoned and supported by record.

Application of law to facts: The appellate court applied the settled legal position that acquittals should not be disturbed lightly.

Treatment of competing arguments: The appellant's arguments did not meet the threshold for interference.

Conclusions: The appeal was dismissed for lack of merit.

3. SIGNIFICANT HOLDINGS

"It is a settled legal position that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record."

"The appellate court should reverse an acquittal only when it has 'very substantial and compelling reasons'."

"In order to ensure that the innocents are not punished, the appellate court should attach due weight to the lower court's acquittal because the presumption of innocence is further strengthened by the acquittal."

The court concluded that the appellant failed to prove the essential ingredients of Section 138 of the Negotiable Instruments Act, and the trial court rightly acquitted the respondent. The appellate court found no illegality or perversity in the impugned judgment and dismissed the appeal accordingly.

The core legal questions considered by the Court are:

- Whether the impugned order withdrawing the charge of MPB Kandwal from the petitioner and assigning him the complete charge of Nurpur Circle amounts to a transfer violating the Government Transfer Policy.

- Whether the petitioner was denied the opportunity to complete his normal tenure at the place of posting, thereby infringing upon the Transfer Policy.

- Whether the impugned order was passed with an ulterior motive to accommodate another officer who had already served at MPB Kandwal for more than one and a half years.

- Whether the petitioner's family would be dislodged due to the alleged transfer and lack of government accommodation at Nurpur.

- Whether the petitioner's contention that he was performing duty at MPB Kandwal without formal charge is sustainable.

- Whether the impugned order can be construed as a transfer order under the applicable legal framework and Transfer Policy.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the impugned order amounts to a transfer violating the Transfer Policy

The relevant legal framework includes the Government Transfer Policy of Himachal Pradesh, which stipulates that Excise Officers can be transferred from one station to another only after completing one year at the existing station. The petitioner alleged that the impugned order violated this policy by withdrawing his charge prematurely.

The Court examined the impugned order dated 18.10.2024, which withdrew the petitioner's charge of MPB Kandwal and assigned him complete charge of Nurpur Circle. The Court noted that the petitioner was already posted at Nurpur Circle and was holding additional charge of MPB Kandwal. Thus, the order did not transfer the petitioner from one station to another but merely withdrew the additional charge.

The Deputy Advocate General clarified that the distance between MPB Kandwal and Nurpur is less than 12 kilometers, indicating that the petitioner's primary posting remained the same. Additionally, the petitioner had been working at MPB Kandwal since October 2024 and continued there after a Court order dated 23.10.2024, amounting to more than eight months of service at that location.

Applying the law to these facts, the Court held that the impugned order cannot be construed as a transfer order in violation of the Transfer Policy. The petitioner was not moved from his primary station but was relieved of an additional charge.

Issue 2: Whether the petitioner was denied the opportunity to complete normal tenure

The petitioner contended that the withdrawal of charge was premature and intended to accommodate the private respondent who had previously served at MPB Kandwal for over one and a half years. The Court noted the Transfer Policy's provision that no Excise Officer should be posted at Barriers for more than one year.

The Court observed that the private respondent had already served at MPB Kandwal prior to his posting at Una and suggested that the department should consider posting another person at MPB Kandwal to comply with the Transfer Policy. However, the Court found no evidence that the petitioner was denied his normal tenure, given that he was not transferred but only relieved of additional charge.

Issue 3: Whether the petitioner's family would be dislodged due to lack of government accommodation at Nurpur

The petitioner raised a plea that no government accommodation was available at Nurpur, which would dislodge his family upon transfer. Pursuant to the Court's direction, the Deputy Advocate General submitted that government accommodation was available at MPB Kandwal but not for Assistant State Taxes and Excise Officers in Revenue District Nurpur.

The Court accepted that the petitioner's primary posting was at Nurpur Circle but noted the proximity of MPB Kandwal to Nurpur (less than 12 kilometers), implying that the petitioner's residence need not be shifted drastically. This reasoning undermined the petitioner's claim of dislodgement.

Issue 4: Whether the petitioner was performing duty at MPB Kandwal without formal charge

The petitioner argued that he was not formally given charge of MPB Kandwal but was performing duties there. The Court rejected this contention after perusing the impugned transfer order, which clearly indicated that the petitioner had been given charge of MPB Kandwal in addition to Nurpur Circle, and that charge was now withdrawn.

Issue 5: Whether the impugned order can be construed as a transfer order

The Court analyzed the language and effect of the impugned order and found that it did not amount to a transfer order. The petitioner's primary posting remained Nurpur Circle, and only the additional charge of MPB Kandwal was withdrawn. The Court emphasized that the petitioner had continued at MPB Kandwal for over eight months and that the impugned order simply restored his status to a single charge holder.

The Deputy Advocate General also highlighted that the petitioner's petition concealed facts by portraying the order as a transfer when it was not.

3. SIGNIFICANT HOLDINGS

- "The impugned transfer order itself suggests that though petitioner prior to his transfer was posted at Nurpur was given additional charge of MPB Kandwal, which has now been withdrawn."

- "Petitioner has not been transferred from MPB Kandwal, rather charge of aforesaid MPB Kandwal, Revenue District Nurpur (GST Wing) issued vide office order dated 13.09.2024 has been cancelled and petitioner has been given complete charge of Nurpur Circle."

- "Distance between MPB Kandwal and Nurpur is less than 12 Kms and as such, it cannot be said that petitioner has been transferred."

- "As per Transfer Policy formulated by Government of Himachal Pradesh, Excise Officer can be transferred from one station to other after expiry of one year."

- "Petitioner had been working at MPB Kandwal w.e.f October, 2024 and thereafter, pursuant to order dated 23.10.2024 passed by this Court, he is still continuing of the same place, meaning thereby, he has almost completed more than eight months."

- "Present petition fails and dismissed accordingly."

- The Court also noted the departmental obligation to consider posting another person at MPB Kandwal, given the Transfer Policy's limitation on posting duration.

Issues: Whether leave to appeal against the acquittal under Section 138 of the Negotiable Instruments Act, 1881 should be granted in view of the complainant's proof of debt, the accused's rebuttal of the statutory presumption, and the complainant's financial capacity.

Analysis: The complaint rested on the assertion that the accused had borrowed a substantial cash amount and issued cheques in discharge of that liability. The statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operates once execution of the cheque is established, but it remains rebuttable on the standard of preponderance of probabilities. On the record, the complainant's cross-examination created serious doubt about the existence of the alleged loan, including the absence of documentary support, the omission of the transaction from income tax returns, the lack of proof of financial capacity to advance such a large cash amount, and the non-production of the alleged power of attorney. The defence version, supported by the accused's complaint material and a suicide note, was found sufficient to raise a probable defence and to rebut the presumption.

Conclusion: Leave to appeal was not warranted and was refused; the acquittal was left undisturbed.

Issues: (i) Whether the complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881 could be sustained against a Company Secretary in the absence of specific averments showing that she was in charge of and responsible for the conduct of the company's business at the relevant time; (ii) Whether issuance of process against the petitioner was vitiated for non-compliance with Section 202 of the Code of Criminal Procedure, 1973 when she was residing outside the territorial jurisdiction of the trial court.

Issue (i): Whether the complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881 could be sustained against a Company Secretary in the absence of specific averments showing that she was in charge of and responsible for the conduct of the company's business at the relevant time.

Analysis: Liability under Section 141 arises only when a person was in charge of and responsible for the conduct of the business of the company at the relevant time. Mere designation in the company is not enough. The materials before the Court showed that the petitioner was only a Company Secretary, had ceased to be associated with the company on 31.03.2013, was not the signatory of the cheque, and no specific role in the transaction or day-to-day business affairs was pleaded or shown. The complaint contained only general allegations without particulars establishing the statutory ingredients for fastening vicarious criminal liability.

Conclusion: The complaint was not sustainable against the petitioner on merits under Sections 138 and 141 of the Negotiable Instruments Act, 1881.

Issue (ii): Whether issuance of process against the petitioner was vitiated for non-compliance with Section 202 of the Code of Criminal Procedure, 1973 when she was residing outside the territorial jurisdiction of the trial court.

Analysis: Where the accused resides beyond the territorial jurisdiction of the Magistrate, Section 202 requires postponement of process and an inquiry or investigation for deciding whether there is sufficient ground for proceeding. The trial court issued process without such scrutiny and without satisfying itself on the basis of materials as to how the petitioner could be treated as responsible for the company's business or cheque issuance. The order issuing process was therefore mechanical and did not reflect the mandatory consideration required by law.

Conclusion: The issuance of process was vitiated for non-compliance with Section 202 of the Code of Criminal Procedure, 1973.

Final Conclusion: Continuation of the criminal proceeding against the petitioner would amount to abuse of process, and the revisional court exercised its inherent jurisdiction to quash the proceeding insofar as the petitioner was concerned.

Ratio Decidendi: Vicarious criminal liability under Section 141 of the Negotiable Instruments Act, 1881 cannot be inferred from office or designation alone, and where the accused resides outside jurisdiction, the Magistrate must comply with Section 202 of the Code of Criminal Procedure, 1973 before issuing process.

Issues: (i) Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 was liable to be set aside on the grounds that the cheque was issued as a security cheque, the complainant did not produce receipts, and the accused had rebutted the statutory presumption; (ii) whether the sentence of simple imprisonment for one year and compensation awarded were liable to interference in revision.

Issue (i): Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 was liable to be set aside on the grounds that the cheque was issued as a security cheque, the complainant did not produce receipts, and the accused had rebutted the statutory presumption.

Analysis: The cheque was admitted by the accused, including his signature, which attracted the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881. The accused was required to rebut those presumptions by raising a probable defence on the touchstone of preponderance of probabilities. His defence was found to be contradictory, as he alternately claimed that the cheque was issued as security for the apple transaction and as security for repayment of a loan. Mere denial, absence of goods receipts, or the plea of a security cheque did not dislodge the statutory presumption. The cheque was dishonoured for insufficiency of funds and the notice of demand was held duly served, with no payment made within the statutory period.

Conclusion: The conviction was upheld and the challenge to the finding of guilt failed.

Issue (ii): Whether the sentence of simple imprisonment for one year and compensation awarded were liable to interference in revision.

Analysis: The sentence was considered in the light of the deterrent and compensatory object of Section 138 of the Negotiable Instruments Act, 1881. The award of compensation, being linked to the cheque amount and the passage of time, was treated as justified. No exceptional circumstance was shown to warrant interference with the quantum of sentence or compensation in revisional jurisdiction.

Conclusion: No interference was called for with the sentence or compensation.

Final Conclusion: The revision was found to be without merit, and the conviction, sentence, and compensation order were left undisturbed.

Ratio Decidendi: Once execution of the cheque and signature are admitted, the statutory presumptions under Sections 118(a) and 139 operate, and the accused can escape liability only by proving a probable defence on preponderance of probabilities; a bare or contradictory defence, including one based on a security cheque, is insufficient to rebut the presumption.

Issues: (i) Whether the interim restraint on operation of the respondent's bank account should be continued, varied, or vacated in proceedings under section 9 of the Arbitration and Conciliation Act, 1996; (ii) Whether a continuing injunction should be imposed on the respondent's disclosed and future investments and allied disclosure obligations should be directed.

Issue (i): Whether the interim restraint on operation of the respondent's bank account should be continued, varied, or vacated in proceedings under section 9 of the Arbitration and Conciliation Act, 1996.

Analysis: The disputed facility was prima facie admitted in the respondent's books, but the Court found that the additional restraint on the bank account was not justified on the material then available. The existing protection under the SARFAESI regime over the secured assets was considered sufficient, and the Court held that continuation of the bank-account freeze would interfere with the respondent's ordinary business. The Court also took note of the broader insolvency and resolution context and the control exercised through the resolution framework.

Conclusion: The bank-account injunction was vacated.

Issue (ii): Whether a continuing injunction should be imposed on the respondent's disclosed and future investments and allied disclosure obligations should be directed.

Analysis: The Court found that the hypothecation covered present and future investments and that the petitioner was entitled to protection of the charged assets. At the same time, the Court declined to go into a fresh valuation exercise or expand the protection beyond the securities created by the parties. Since the respondent's disclosures showed investments that remained within the charged field, the Court considered it appropriate to preserve protection against disposal, transfer, or redemption of such investments and to require periodic disclosure of financial information.

Conclusion: The injunction over disclosed and future investments, together with disclosure directions, was sustained.

Final Conclusion: The interim order was modified rather than wholly sustained or wholly set aside. Protection was retained over the charged investments, but the special restraint on the bank account was withdrawn, and the applications were disposed of accordingly.

Ratio Decidendi: In a section 9 proceeding, interim protection must be confined to what is necessary to secure the charged assets on a prima facie basis, and a broader restraint that unduly hampers ordinary business will be vacated where the existing security framework affords adequate protection.

Issues: Whether the accused had rebutted the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 so as to displace the finding of guilt under Section 138 of that Act.

Analysis: The accused admitted his signatures and the issuance of at least one cheque, while setting up a defence that the cheques were security cheques and that the liability had already been discharged. In such a situation, the statutory presumptions of consideration and of a legally enforceable debt arose in favour of the complainant. The defence evidence did not establish that the amount shown in the bank entry was paid to the complainant, since the witness could not identify the recipient and the suggestion of repayment was denied. The plea that the complainant was an unregistered moneylender was not proved, and the alleged non-production of the agreement or income-tax material did not, by itself, rebut the presumptions. The dishonour memos showed insufficiency of funds, service of notice stood admitted, and the accused failed to prove repayment.

Conclusion: The presumption under the Negotiable Instruments Act was not rebutted, and the conviction under Section 138 was sustained.

Final Conclusion: No ground was made out to interfere with the concurrent findings of conviction and sentence, and the challenge failed.

Ratio Decidendi: Once the drawer admits the cheque and signature, the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 operate in favour of the holder, and they can be displaced only by a proved probable defence on the touchstone of preponderance of probabilities.

- Whether the accused issued the cheques in discharge of a legally enforceable debt or liability under section 138 of the Negotiable Instruments Act (N.I. Act).

- Whether the complainant proved the existence of a legally enforceable debt or consideration for the cheques issued by the accused.

- Whether the demand notice under section 138 of the N.I. Act was properly served upon the accused at the correct address.

- Whether the entries in the complainant's exercise book (exhibit-9) are reliable and admissible evidence to prove the loan transaction.

- Whether the accused rebutted the statutory presumption under sections 118 and 139 of the N.I. Act by adducing evidence or raising probable defence.

- Whether the trial court erred in acquitting the accused based on alleged procedural and evidentiary deficiencies.

2. ISSUE-WISE DETAILED ANALYSIS

Existence of Legally Enforceable Debt and Issuance of Cheques

The legal framework under section 138 of the N.I. Act mandates that the cheque must be issued for discharge of a legally enforceable debt or liability. The complainant alleged that she and her husband advanced Rs. 2,30,000/- to the accused on various occasions between June and December 2005, supported by entries in an exercise book (exhibit-9). The accused issued two post-dated cheques in 2007 and 2008 which were dishonoured due to account closure.

The trial court disbelieved the complainant's evidence primarily due to overwriting in exhibit-9, lack of documentary proof of financial capacity, and suspicious timing and amounts of payments. The court also noted that the accused's bank account was inoperative well before the cheques were issued. However, the Court emphasized the principle from Kumar Exports Vs. Sharma Carpets that the accused must either prove non-existence of debt or show that such non-existence is probable enough to raise doubt.

The complainant's husband (PW-3) corroborated the entries in exhibit-9, and no cross-examination challenged the authenticity or correctness of these entries. The accused did not adduce any evidence to rebut the presumption of debt under section 139 of the N.I. Act. Mere denial or creation of doubt is insufficient to discharge this burden. The Court found the trial court's rejection of exhibit-9 on grounds of overwriting and suspicion to be perverse and unsupported by evidence.

Thus, the Court held that the complainant successfully established the existence of a legally enforceable debt, and the accused failed to rebut the statutory presumption.

Service of Demand Notice

Section 138 requires the complainant to serve a demand notice at the correct address of the accused. The trial court held that the demand notice was not properly served as it was sent to '19/2 Baisnab Para Lane' while the accused allegedly resided at '19 Baisnab Para Lane'. The complainant produced the postal acknowledgment (A/D card) signed by Ani Das, the wife of the accused, and the accused himself had used the '19/2' address in court documents and bail bonds.

The Court noted that summons were also sent to '19/2 Baisnab Para Lane' and received by Ani Das, who identified herself as the wife of the accused. The accused appeared in court and obtained bail using the same address. There was no denial by the accused regarding the identity of his wife or the address used.

The Court held that the trial court's finding that the demand notice was not served properly was perverse and contradicted by documentary evidence. The service of notice was valid and fulfilled the procedural requirement under section 138.

Reliability and Admissibility of Exhibit-9 (Exercise Book)

The trial court doubted the evidentiary value of the handwritten exercise book due to overwriting and because it was not produced by the complainant herself but by her husband. The respondent argued that such handwritten notes are relevant only in civil proceedings and not sufficient to prove criminal liability under section 138.

The Court rejected this narrow view, holding that the entries in exhibit-9 were admitted in evidence without effective challenge to handwriting or authenticity. The complainant explained that she maintained no formal balance sheet but recorded transactions in the exercise book. The husband's testimony supported this. The accused did not challenge the entries or produce any evidence to disprove the transaction recorded.

The Court emphasized that the trial court erred in disbelieving exhibit-9 on irrelevant grounds and that such evidence, when unchallenged, is admissible and relevant to prove the existence of debt.

Burden of Proof and Rebuttal of Presumption under Sections 118 and 139 of the N.I. Act

The statutory presumption under section 139 places the initial burden on the accused to prove that the cheque was not issued for discharge of debt or liability. The complainant's evidence, including the cheques, dishonour memos, demand notice, and exhibit-9, raised the presumption in her favor.

The accused's only defence was a bare denial, without adducing any evidence or explanation. The Court held that mere denial or creation of doubt is insufficient to rebut the statutory presumption. The accused failed to establish any probable defence or show the non-existence of debt to a degree that a prudent person would doubt the complainant's claim.

The Court relied on the Supreme Court's ruling in Rohitbhai Jivanlal Patel, which clarified that the trial court committed a fundamental error by acquitting on mere creation of doubt without requiring proof beyond reasonable doubt from the complainant. The complainant need only establish a prima facie case, after which the burden shifts to the accused.

Financial Capacity of Complainant and Other Procedural Considerations

The trial court doubted the complainant's capacity to advance Rs. 2,30,000/- because she earned Rs. 20,000/- monthly and had not produced income tax returns or bank passbooks. The Court held such considerations irrelevant to the issue of existence of legally enforceable debt. The complainant was not required to produce formal loan documents or tax returns to prove the debt, especially when the accused failed to challenge the entries in exhibit-9 or produce contrary evidence.

Similarly, the trial court's reliance on earlier dishonoured cheques and the inoperative status of the accused's bank account was insufficient to acquit when the accused did not explain these facts or rebut the presumption of debt.

3. SIGNIFICANT HOLDINGS

"The accused in a trial under section 138 of the Act has two options. He can either show that consideration or debt did not exist or that under the particular circumstances of the case, the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed."

"Mere creation of doubt is not sufficient. The trial court appears to have proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the appellant had successfully rebutted the presumption as envisaged by Section 139 of the NI Act."

"The burden of proving non-existence of legally enforceable debts always lies on the accused/respondent herein. Therefore, mere inability on the part of the complainant/appellant to produce any explicit loan document cannot discharge the accused/respondent from his liability to repay his debt."

"The finding of the trial court regarding the non-existence of legally enforceable debt is perverse and is not sustainable in the eye of law."

"The finding of court below that complainant failed to establish that demand notice was served upon the accused, as it was sent in a wrong address, is clearly perverse and not based on the materials available in record."

Final determination: The Court allowed the appeal, set aside the acquittal, convicted the accused under section 138 of the N.I. Act, and sentenced him to pay a fine of Rs. 4,50,000/- within 60 days, failing which he would undergo six months' simple imprisonment. The fine amount, if paid, would be given to the complainant as compensation.