Satvinder Singh V. M. Sam Babu and The State of Telangana

CRLA/205/2022

AI Insights

The case revolves around a dispute concerning the non-repayment of a hand loan of Rs. 4,50,000 lent by the complainant, Satvinder Singh, to the accused, M. Sam Babu. The accused issued two cheques as a promise to repay the loan, which were later dishonored due to insufficient funds. The trial court initially convicted the accused, but the first appellate court acquitted him, leading to the present appeal by the complainant. The High Court examined the evidence, including the dishonored cheques and the lack of credible defense from the accused, and reinstated the conviction.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 842668 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 27-02-2026
• Assessment Year: misc
• Other Referred Cases: Ashok Singh v. State of U.P, Tedhi Singh v. Narayan Dass Mahant, Sanjabij Tari v. Kishore S. Borcar & another, R. Chennakesava Rao v. P. Laxmi Narasaiah, K. Venkata Krishna Prasad v. Peram Sai Swarupa, Rohitbhai Jivanlal Patel v. State of Gujarat, Rattiram and others v. State of Madhya Pradesh
• Laws Referred To: Section 378(4) of Cr.P.C, Section 138 of the Negotiable Instruments Act, Section 139 of the Negotiable Instruments Act, Section 313 of Cr.P.C, Section 269 SS of the Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: C KUMAR; D KUMAR
• Assessee Lawyers: NANDITA GUHA; SARDAR SINGH
• Keywords: Cheque Dishonor; Criminal Appeal; Financial capacity; Legal Notice; Loan repayment; Statutory notice
• Section: 139; 269SS; 138; 313; 378(4)

Judgement Text

"[ 338s ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD FRIDAY, THE TWENTY SEVENTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY SIX PRESENT THE HON'BLE SMT. JUSTICE K. SUJANA CRIMINAL APPEAL NO: 205 OF 2022 Appeal under Sectron 378(4) of Cr.P C. aggrieved by the Judgment dated 2B-O3 2022 passed in Crimrnal Appeal No.624 of 2019 on the file of the Court of the lV Addrtronal [,4etropolitan Sessions Judge. Hyderabad, preferred against the Judgment dated 18-06-2019 passed in C.C.No 473 of 2a13 on the file of the Court of the lX Special lilagistrate, Hyderabad Between: Satvinder Singh, s/o G.B. Singh, aged about 40 years, occ business, r/o l ilulgi No. 4 7-1139 College shoe & Company, below: Kamat Hotel tVlunicrpal Building, Koti Bus Stand, Hyderabad, r/o 3-5-590, Flat No. 502 Vittalwadi Narayanaguda, Hyderabad. ...Ap pe llanURes ponde nUCom pla in a nt AND '1 lr4 Sam Babu, s/o [V P.R. Prasad Rao. aged about 45 years, occ Business c/o Loyala School. H.No 5/4 RT State Bank of Hyderabad, Vilayanagar Colony, Hyderabad ...RespondenUAppellanUAccused 2. The State of Telangana, rep. by its Public Prosecutor, High Court, Hyderabad ...Respondent Counsel for the Appellant: Ms. Nandita Guha and Sri Sardar Jasbir Singh Counsel for the Respondent No.'l: Sri C, Kumar Counsel for the Respondent No.2: Sri D. Arun Kumar, Additional Public Prosecutor The Court delivered the following: JUDGMENT Printed from counselvise.com f'li ,.n IN THE HIGH COURT FOR THE STATE OF T]I ,ANGANA AT HYDERABAD THE HONOURABLE SMT. JUSTICE K. SII IANA CRIMINAL APPEAL No.2O5 OF 202'.2 DATE:27.02.2026 Between: Satvinder Singh A r :ellant And M.Sam Babu & another Resp:rdents : JUDGMENT: This criminal appcal is filed bv the appellar.r: aggrievecl by the judgment dated 28.03.2022 passed in Crl.A.N ; 624 of 2Ol9 by the IV-Adclitional Metropolitan Sessions Judge Hyderabad setting aside the conviction and sentence passed r C.C.No.473 of 2013 dated 18.06.2019 passed by the IX Specr: Magistrate, Hyderabad. For the sake of convenience the parti s herein are referred to as arrayed in C.C.No.473 of 2013. Printed from counselvise.com 2 2. Thc facts of the case are that the complainant is the proprietor of M/s business located College Shoe and Company, a lootu,ear beside Koti Bus Stand, Hyderabad. The complainant and the accused are kno$,n to e.lch other. At the request of accused, the complainant lent a hand loan ol Rs.4,50,000/ on 10.11.2012 and accused agreed to repa]. thc amount in t ,o inslallments. Towards discharge of this liabiliB-, the accused issued two chequcs bearing Nos.59892 I dated 1O.12.2O12 for Rs.3,OO,OO0/- and 59a929 dated 09.01.2O13 for Rs.1,SO,OO{J/ Both cheques rrere drawn on Indian Overseas Bar-rk, Vijal anagar Colony Branch, Hydcrabad. Despite repeated demands, the accused failed to repay the loan and requested the complainant to present the cheques in his bank. Accordingi-1,, thc complainant presented the said cheques, u'herein both cheques u.ere dishonored with an endorsement \"Funds Ifrsufhcient\" as per rcturn memos dated 14.02.2013. The complainant then issued a legal notice dated 23.02.2013 to the accused. Despite receipt of the notice, the accused neither repaid the amount nor sent any reply. Hence, complaint was filed. Printed from counselvise.com 3 3. To prove the said casc, cornplainant exami : rd himsell as Pw. 1 and got marked Exs. P. 1 to P.7 . At1.: closurc of complainant's eviclence, ihc accused :as e;iiL rined under Section 313 Cr.P.C, anci clenied the incriminatin 1 rrratcrial :rnci in support of his defence he examinecl Dn s. t. cl 2 and got marked Ex.D.1 statement of account. Crv. I was r ramined and trxs.X. 1 to X.5 arc marked. 4. After considering the oral and documentarr in by both sides, the trial Court conciuded tbi lound guilty for Lhe offence purrishable under !,. N.I.Act and convicted and senrenced him to u r Imprisonment for sk months and r,o pay fine of R:. default to undergo Simple Inprisonment ft:,r. Aggrieved by tl-re said judgmenr, the complaina - herein filed Crl.A. No.624 of 20 19 before the firsr z, i contending that the judgment of trial Court is <;c,r rveight of evidence and probabiiities of thr complainant had no financial capacity to advan: amount covered under Exs.P. 1 and P.2 cheques ar such evidence adduced by him Lo prove his incom: to lend during the relevant time. trxs.p. 1 and p. eviclencer let - ac:cusecl is i'tion 13E o[ Iergo Simple i.50,O007 in r)ne month. -,l respondent pellate Ccrurt trary to lavn , case. The r substant ial d there is no and capacit5r chcques are Printed from counselvise.com 4 not issued in favour of complainant, in fact one Smt Bharati advanced certain amounts ro hrs fatl'rer during his life time ancl in that contcxt, he had issued the said chequcs to Cu,. 1 but the same arc misused br, her b1, plan trng severaL people including the present complarnant and hlecl several cases against the accused and his brother. That the complainant had not disclosed his lerrding of amount in his income tax returns and the trial Court had not lollowed the lau. laid dorvn by the Honble Suprcme Court and erred in trolding that the burden is on the accused to prove the said [act, since l.ris defense that the appellant denied his signature on chcques and the trial Court ought not to have invoked Section 73 of thc trvidence Act to compare the signatures on the subject chequcs. 5. The hrst appellate Court after hearing both sides came to the conclusion that the complair-rant has not shown cogent evidence that he was having an amount of Rs.4,5O,000/- as on the date of lending amount, and he had not hled any documenl to show that he has shown the said advancement of money to the accused in the income tax returns, he has not proved his acquaintance with the accused beyond all reasonable doubt. No document is {iled to show that he gained such acquaintance /) Printed from counselvise.com 5 with the accused, no Bill or any evidence showtl) shoes is filed and no document is filed to : I complainant is proprictor of the saicl firm. Trt, failed to show that he has hnanc;ial capacirv- 1o ll amount and also obserued that el,idence of a,::r: reliable than that of the complainant. Merely bc: is the alleged purchaser of shoes from the complr cannot be said that their relation turned into frie r r advance any loan to the accused because the cor:r -r evidence failed to say the correct resiclenrial er. accused and stated that the accused is residing Colony, evaded to answer the crucial point and I giving answers gives rise to rnterference that [hr] actually do not know the residence of accuserl stated that accused resides in Vijayanagar (', Nampally. It is also observed that complainant t:: that he lent amount to accused on 1O.l 1.2012. ,.., cogent material that trxs.p. 1 and p.2 are given tc accused and there is no evidence to show that cor I advanced such a huge amount as on the date of le I and his absence to show that he shown the said rr the IT returns, it cannot be said that complainir I ; purchasc of o r that the complaina n t d srtch trtrge rsed is more ruse accused rant shop, it ship so as to ainant in tris lress ol tl're 'r Vijayn:rgar e manner of r:ornplainant as such, hc lonv besiclc lcd to prove iled to shorv him by the rlainant has 'ling amount rnsaction in dischargcd Jt ti Printed from counselvise.com 6 his initial burden. With the said obsen ations the first appellate Courl allor,\",ed the appeal and aggrievecl by the said ludgment, the present appeal is hled by tirc complainant 6. Heard Ms.Nandita Guha and Sri Sardar Jasbir Singh, learned counsels appearing for thc appellant/ complainant and Sri C.Kumar, learned counsel appearing for respondent No.1/Accused and Sri D.Arun Kumar, Iearned Additional Public Prosecutor appearing for respondent No.2-State. 7. The contention of learned counsel for the appellant is that the first appellate court erred in setting aside the well considered conviction passed rvithouL appreciatrng the facts and circumstances of thc case. [n lact accused himself falsihed his evidence by examining Dw.2, the Branch Manager of Bank and did not discharge his burden even by preponderance of probabilities as he did not state even the particulars of hou, much amount he repaid to Bharaihi, the date on r,,'.hich he repaid the amount and the persons in rvhose presence he repaid the same. Non-rnentioning of lending of amount to accused in the income tax returns is not latal to the case of complainant and it is a matter between income tax department and the assessee. The Iirst appellate Court erred in accepting the Printed from counselvise.com 7 clefense of accuscd that he had given unsigned r 1 Bharathi. The accused ncither lodged any comi-,l; :rnv nolice regarding the alleged missing chc r '\"r'eakening his owr-r claim. Learned counsel fur11 that instcad of seeking expert opinion on the genrr signatures on Ex.Pl and Ex.P2, the accused filerl r to examine Bharathi's signatures, showing unc i lr.heth er his signatures were forged by Bhir complainant. The Trial Court rightly compar€r( signatures on Ex.Pl and Ex.P2 with the acc, I signatures on Section 251 Cr.P.C., and Sectio I examinations, deposition, and vakalat, and corr(l alI signatures were similar. The first appellate (] appreciate this f rnding. 8. It is further contended that the first it.r u'rongly shifted the burden onto the complaina r r financial capacity to lend Rs.4,5O,OOO/-. As 1-r Singh v, State of UP1, once the drawer adnrii cheques, the presumption under Section 139 NI rr financial capacity cannot be questioned at the thr,r cques to one rt nor issrred L:es. [hci-cbv :r contcnded neness of his n application -Laint), as to athi or the the clisptr ted ;ed admittcd 3lil Cr. F'.C. tlr.' held that )urt failed to rr:lla tc Court io provc his .d in Ashok signing the :( arises, and hold. 1 2O25 Livel-ar.r' (SC) 383 Printed from counselvise.com 8 9. The Honlcle Supreme Court in Tedhi Singh v, Narayan Dass Mahant 2 and Sanjabij Tari v. Kishore S. Borcar & another3 held that failure of accused to reply to sLatutor- noticc under Section 138 NI Act leads to irdverse inference. [n the present case, despite receipt of notice (Ex.PS), the accused remained silent. The first appellate Court erred in holding that non fi1ing of Income Tax returns or violirtion ol Section 269 SS of the Income Tax Act renders the transaction unenforceable. Such omissions do nol invalidate a hnancial transaction under Section 138 of N.I Act. Thc accuscd nelther questioned the complainant's linancial capacity but failed to adduce any evidence, nor examined Income Tax or Bank officials, several other cheque bounce cases under Section i38 NI Act u,cre fi1ed against the accused, showing his habitual conduct of borrowing money and failing to repay. The first appellale Court rvrongly inferred collusion between the complainant and CW1-Bharathi, despite no foundation laid by the accused. Thc Trial Court wers correct in convicting the accused under Section 138 NI Act. The hrst appellate Court's judgmenl is pen erse, contrary to settled law, and has resulted in miscarriage of justice. Hence, the same ' (2o2zl 6 scc 735 ' 2o2s INSC 1158 r ( Printed from counselvise.com -9- 1O. On the other hand, learned counsel for resg rndent No.I has to be set aside by conlirming the conviction r::orded br. the Trial Court. accuscd vchemently opposed the same s[ating thiL lailed to provc hnancial capacity to lcnd amount , and also the amount which was lent to the acc shown in the income tax returns and merely sigri in qucstion of the accused is not a ground to r-i prcsumptiorl in favour of the complainant. He furr 1 that urhen no legally enforceable debt, is pr complainant, the Court cannot convict the acct br-trden of proof o[ lending of money, showing the e income t:rx returns is on the complainant himsel' ls not prove d by the compiainant and tl-r,: crroneouslv convicted the accused and hrst al rightly accluitted him. In support of his contenti, on the judgments in R.Chennakesava Rao Narasaiaha, K.Venkgta Krishna Prasad V Perant and anothers, Rohitbhai Jivanlal Patel V Stat r:onr plaina n t thc accrrsed ised q,as not r9 on checlue ise statutory er contencled ri,ed b), the scd and the mount in lhc )ut the same trial CourI rclla Le Court ns, he rt:lied V P.Laxmi Sai Swarupa ] of Gujarat + 2Ot7 (2) ALT (Crl) 279 IA.P.I : 2017 (1) ALT (Crl) 2s9 (A.P.) Printed from counselvise.com 10- and another6 and Rattiram and others V State of Madhya PradeshT and prayed to dismiss this irppcal. 1 1. Upon careful consideration of the rival submissions and the material placed on record, it is clear that to establish an offence under Section 138 of the Negotiabte Instruments Act, the complainant must prove that there exrsted a legallr. enforceable debt or liability, that the accused issued the chequc in discharge of such debt, and that the cheque u.as dishonored for rcasons contemplated under the Act. ln the present case, the complainant categorically stated that he lent an amount of Rs.4,5O,OO0/ to the accused, who in discharge of thc said liabitity issued two cheques. These chcques, when presented, were dishonored with the endorsement \"Funds Insufficient.\" The compiainant examined himself as PW. 1 and produced Exs.P1 to P7, which include the cheques, return memos, statutory notice, postal receipt, arrd acknowledgment. The accused did not dispute his signatures on Exs.Pl ar,d P2, nor the dishonor ol cheques under Exs.P3 and P4. 6 (2019) 18 Supreme Court Cases 106 7 (2012) 4 Supreme Court Casers 516 N\" t' i ! t F I Printed from counselvise.com - 11- 12. The defencc of the accused that the cheques over to one Bharathi and misused through th: st:rnds falsiliecl, as CW. 1 Bharathi herself depose I Lrnconnected u,ith both partics and unaware of th : accused ncither ioclged a complaint nor issLu:, regarding the alleged misuse of cheques, thereb5, r orr. n claim. Further, instead of seeking expert r l orvn signatrtres, thc accused sought examinatior signatures. rvhich itself shows uncertainty in hi:; 'lri:rl Court rightlv compared the disputed si11 admitted siqnatures under Section 251 Cr.p.C. Cr.P.C., deposition, and vakalat, and found ther-r Ilrst appellate Court failed to appreciate this findir:1 tvere handcd complainan t t hzr: she i.r,as cheques. The any noticc eakening hrs inion on his rf Bhararl-ri's defence. I'he ratures u'ith Sec[ion 313 similar. The 1 3. The contention of the accused that the complainant lacked financial capacity to lend Rs.4,5O,OO0/_ is r ntenable_ As hcld in Ashok Singh v. State of U.p., once the c r awer admits sLgning the cheque, the presumption under Sectio L 139 NI Act arises, and hnancial capacity cannot be quesli rned at the thre shold. Non-disclosure of the transaction ir. income tax rcturns or vioiation of Section 26955 of the Income Tax Act is a matter betrveen the assessee and the department, I nd does not Printed from counselvise.com 72- invalidate the transaction under Section 138 NI Acr. The Honble Supreme Court in Tedhi Singh v. Narayan Dass Mahant and Sanjabij Tari v. Kishore S. Borcar & another has hcld that failure of the accused to replv Lo staturorv notice le:tcls to adverse inference. In the present case, dr:spite receipt of notice (Ex.P5), the accused remained silent, $'hich lLrther strengthens the complainant's case. 14. The accused relied on judgments such as R. Chennakesava Rao v. P. Laxmi Narasaiah, K. Venkata Krishna Prasad v. Peram Sai Swarupa, Rohitbhai Jivanlal Patel v. State of Gujarat, and Rattiram v. State of Madhya Pradesh to contend that mere signing of a cheque does not raise piesumption unless financial capacity and tegally enforceable debt are proved. Howevcr, these authorities arc disLingurshable on facts. In the present case, the complainant has discharged his initial burden by producing cheques, return memos, and statutory notice, while the accused failed to rebut the presumption under Section 139 NI Act. His defcnse of acquaintance and hnancial incapacit5r was not raised in reply to notice and was unsupported by evidence. Printed from counselvise.com - 13 - 15. It is :rlso relevant that several other cheqrrr: bounce cases uncler Scr:lion 138 NI Act were filed against lhe accused, shou'ing lris Iriririttrai condltct of borrowing ancl 1') lutg to relta-r,. Thc first appcllare Court's inference of collusio bclrveen Lhe crimplainarrt and CW. 1 BharaLhi is baseiess, as Lo li)undzrtion rr'as lairl bt' (lre aci:used. Tlrc Trial Court's convic rrr '\",,,a s based on propcr irpprcciarion of evidence, whereas the irst appeliate Court's :rc(lulttal is perverse, contrary to settlecl itu, and has rcsulted in miscarnaqe of justicc. [{ence, this (]o lrt holds that the complainrlnt h.is provecl his case beyond rea; rnablc donbt, s,hile lhr: ;lr:ctrscd had lailed to rebut t tc statutory presumption. The judgmcnt dated 28.O3.2cttt. passed in Cr1.A,Nrr.(r2 I ol\"2()19 by the IV Additional MetroPo it_an Sessions Juclge, I{vclcrzrbad is liablc to bc set aside, ancl lte convicLion recorded bv the Trial Court under Section ll8 NI Act is confirmt'd. 16. Accorclingll', this Criminal Appeal is allowe I rhc judgmcrrt dated 28.O3.2022 passed in Crl.A.ltt, b1. the IV Acldilional Metropolitan Sessions Jud 3 bv confirming the conviction and sentence imposc accused in C.C.No.473 of 2013 dated 18.06.20 1 Special Magistrate, Hyderabad. The respondent sc tt ing aside .624 of 2079 ', Hyderabad 1 against the ) by the IX- Io.1/accused I Printed from counselvise.com is directed to surrender before the trial Court within onc month from tl're date of this judgment 74 Miscellaneous petitions, if any, pending shall srand To, closed SD/. A.V.S.S,C.S.M.SARMA JOINT REGISTRAR //TRUE COPY' SECTION OFFICER The lV Additronal A/letropolitan Sessions Judge, H anY) The lX Special [Vlagistrate, Hyderabad. Two CCs to the Public Prosecutor, High Court for the State of Telangana at Hyderabad [OUT] One CC to Sri Sardar Jasbir Singh, Advocate [OPUC] One CC to Ms Nandita Guha, Advocate [OPUC] One CC to Sri C Kumar, Advocate [OPUC] Two CD Copies bad (with recorcls, rf 2 3 4 5 6 7 Kur/l')SI d Printed from counselvise.com I HIGH COURT DATED: 2710212026 JUDGMENT CRLA.No.205 of 2022 ALLOWING THE CRIMINAL APPEAL ,= ,.- . .: .lc -r-lb. ,'. . . .. tl,t' l,i, l!.- li ' ' 0 e i rn 2026 J 0 Printed from counselvise.com "