The Jharkhand High Court has dismissed an appeal challenging the acquittal of two persons in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, holding that a “friendly loan” without a legally enforceable contract cannot automatically attract criminal liability.
Justice Rajesh Kumar delivered the judgment on May 7, 2026, while hearing an acquittal appeal filed by complainant Md. Masudul Haque Ansari.
Background of the Case
According to the complaint, the appellant claimed he had advanced a total loan of ₹2 lakh to the accused in January 2007 due to friendly relations between them. He alleged that ₹1 lakh was paid through cheque and another ₹1 lakh in cash. In return, the accused allegedly issued two post-dated cheques as security.
The complainant told the court that both cheques were later dishonoured due to insufficient funds. After issuing a legal notice and not receiving payment, he initiated proceedings under Section 138 of the Negotiable Instruments Act before the Judicial Magistrate, Jamshedpur.
The trial court, however, acquitted the accused in 2008, leading to the present appeal before the High Court.
The High Court noted that although signatures on the cheques were not denied, the legal presumption under the Negotiable Instruments Act is not absolute and can be rebutted if surrounding circumstances show the absence of a legally enforceable debt.
The bench referred to the Supreme Court’s ruling in Rajesh Jain v. Ajay Singh and observed that once the accused raises a probable defence, the burden shifts back to the complainant to prove the existence of a legally enforceable liability.
Justice Rajesh Kumar further emphasized that every financial transaction between friends does not automatically become a legally recoverable debt under contract law.
“The friendship cannot be a consideration to form a contract,” the court observed while discussing the ingredients of a legally enforceable agreement under the Indian Contract Act.
The court also noted inconsistencies in the complainant’s testimony regarding the amount allegedly paid in cash and through cheque, which weakened the prosecution’s case.
After examining the evidence and the law governing cheque dishonour cases, the High Court concluded that no interference was required in the acquittal order passed by the trial court.
The court ultimately dismissed the acquittal appeal and upheld the judgment of the Judicial Magistrate, Jamshedpur.
Case Details
Case Title: Md. Masudul Haque Ansari @ M.H. Ansari v. State of Jharkhand & Ors.
Case Number: Acquittal Appeal No. 10 of 2012
Judge: Justice Rajesh Kumar
Decision Date: May 7, 2026
