Himachal Pradesh High Court
Reserved On: 15.5.2025 vs Himachal Pradesh Gramin Bank on 2 July, 2025
2025:HHC:20832
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision Nos. 136 of 2022
.
Reserved on: 15.5.2025
Date of Decision: 02.07.2025.
Savitri Devi ...Petitioner
Versus
Himachal Pradesh Gramin Bank, Kharsi
through its Branch Manager.
...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
For the Petitioner : Mr. Sanket Sankhyan, Advocate.
For the Respondent : Ms. Devyani Sharma, Senior
Advocate, with Mr. Shivam
Sharma, Advocate.
Rakesh Kainthla, Judge
The petitioner has filed the present petition against
the judgment dated 25.2.2022, passed by learned Sessions Judge,
Bilaspur, District Bilaspur, H.P. (learned Appellate Court), vide
which the judgment of conviction dated 19.3.2020 and order of
sentence dated 31.10.2020, passed by learned Chief Judicial
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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Magistrate Bilaspur, District Bilaspur, H.P. (learned Trial Court)
were partly upheld and the appeal filed by the petitioner
.
(accused before the learned Trial Court) was partly allowed.
(Parties shall hereinafter be referred to in the same manner as they
were arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present
revision are that the complainant filed a complaint before the
learned Trial Court against the accused for the commission of an
offence punishable under Section 138 of the Negotiable
Instruments Act (NI Act). It was asserted that the complainant is
a Body Corporate constituted under the Regional Rural Bank Act,
1976. It is carrying on banking business throughout Himachal
Pradesh. The accused approached the complainant for grant of a
term loan for the purchase of a new truck/vehicle for
₹21,15,000/-. The complainant agreed to the request made by
the accused and advanced a sum of ₹21,15,000/- on 12.6.2013.
The accused executed the necessary documents. The loan was to
be repaid in 72 equal monthly instalments plus a contractual
rate of interest @13.25% per annum. The accused defaulted on
the payment of the instalment. She issued a cheque of
₹11,84,811.08 to discharge her liability. The complainant
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presented the cheque to its Bank, but it was dishonoured with an
endorsement ‘funds insufficient’. The complainant sent a notice
.
to the accused asking her to repay the amount. The notice was
duly served upon the accused, but the accused failed to repay the
amount. Hence, the complaint was filed to take action against
the accused as per the law.
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, notice of
accusation was put to her for the commission of an offence
punishable under Section 138 of the NI Act, to which she pleaded
not guilty and claimed to be tried.
4. The complainant examined Harinder Kumar (CW1) in
support of its complaint.
5. The accused, in her statement recorded under
Section 313 of Cr.P.C., admitted that she had borrowed a sum of
₹21,15,000/- from the complainant for purchasing a truck. She
denied the rest of the complainant’s case. She stated that the
Bank forcibly took possession of the vehicle and sold it at a
lower price. She denied that she had issued any cheque in favour
of the complainant.
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6. Learned Trial Court held that the cheque carried with
it a presumption that it was issued for consideration in
.
discharge of a legally enforceable debt, and the burden is upon
the accused to rebut this presumption. The accused did not
dispute the taking of the loan. The execution of the document by
the accused was duly proved. The plea taken by the accused that
the complainant had taken the vehicle in possession would not
help her because it was not shown that such a possession
violated the terms and conditions of the agreement. The
complainant proved that the cheque was dishonoured due to
insufficient funds. The notice was sent to the correct address
and is deemed to be served. The accused failed to pay the
amount despite the receipt of a valid notice of demand.
Therefore, the accused was convicted of the commission of an
offence punishable under Section 138 of the NI Act and was
sentenced to undergo simple imprisonment for one year, pay
compensation of ₹13,03,293/- and in default of payment of
compensation, to undergo simple imprisonment for one month.
7. Being aggrieved by the judgment and order passed by
the learned Trial Court, the accused filed an appeal which was
decided by the learned Sessions Judge, Bilaspur (learned
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Appellate Court). Learned Appellate Court concurred with the
findings recorded by the learned Trial Court that the cheque was
.
issued in discharge of the legal liability. The accused failed to
rebut the presumption attached to the cheque, the cheque was
dishonoured because of insufficient funds and the notice was
deemed to be served upon the accused. The accused failed to pay
the amount to the complainant. Hence, she was rightly
convicted by the learned Trial Court. However, the sentence of
imprisonment of one year was held to be harsh and was reduced
to imprisonment till rising of the Court. The compensation was
adequate, and no interference was required with it. Therefore,
the appeal filed by the accused was partly allowed, and the
judgment and order passed by the learned Trial Court were
partly modified.
8. Being aggrieved from the judgments and order
passed by the learned Courts below, the accused has filed the
present revision, asserting that the loan was insured under the
CGTMSC Scheme. The bank had claimed the amount due under
the Scheme; however, this fact was not disclosed in the
complaint. The complainant failed to satisfy the ingredients of
the commission of an offence punishable under Section 138 of
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the NI Act. The cheque was not filled by the accused, and there
were material alterations. No legally enforceable liability existed
.
towards the complainant. The complainant obtained an amount
of ₹7,24,786/- by filing the claim under the Credit Guarantee
Fund Trust for Micro and Small Enterprises. An amount of
₹10,53,241/- was also received. The complainant wants to grab
the whole amount from the accused. It was specifically
mentioned in (Ex.C9) at Serial No. 6(b) that the cheques were
taken in advance. The amount was filled without any liability.
The compensation of ₹13,03,293/- was wrongly awarded.
Therefore, it was prayed that the present revision be allowed
and the judgments and order passed by learned Courts below be
set aside.
9. I have heard Mr. Sanket Sankhyan, learned counsel
for the petitioner/accused, and Ms. Devyani Sharma, learned
Senior Counsel, assisted by Mr. Shivam Sharma, learned counsel
for the respondent/complainant.
10. Mr. Sanket Sankhyan, learned counsel for the
petitioner/accused, submitted that the accused had taken a loan
of ₹21,50,000/- from the complainant. The complainant
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forcibly seized the vehicle and sold it; however, this amount was
not credited to the account of the accused. The complainant also
.
obtained the amount under the CGTMSE Scheme; however, this
amount was not credited to the account of the accused. The
cheque could not have been presented for an amount of
₹11,84,811/- as no such liability existed on the date of the
presentation of the cheque. The cheque was not issued in the
name of the complainant, and no complaint could have been
filed. The notice was duly served upon the accused; therefore, he
prayed that the present petition be allowed and the judgments
and order passed by learned Courts below be set aside. He relied
upon the judgment of the Hon’ble Supreme Court in
Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel &
Anr., Criminal Appeal No. 1497 of 2022 in support of his
submission.
11. Ms. Devyani Sharma, learned Senior Counsel for the
respondent/complainant, submitted that the money credited
under the Scheme is not for the benefit of the loanee and is
recoverable from her. The Scheme generates a revolving fund in
which the money is credited after recovery from the loanee. The
seizure of the vehicle was as per the law, and the amount was
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duly credited to the account of the complainant. The bank had
advanced the loan, and the cheque was drawn on the loan
.
account. Therefore, it was drawn in favour of the bank, and the
submission that it was not drawn in favour of the payee is not
correct. Hence, she prayed that the present petition be
dismissed. She relied upon the judgments of Ajeet Kumar Kurup
v. State Bank of Travancore WP(C) No. 25332 of 2016 (N), Kiran
Sharma Vs. Brinda Jewellers and another, 2024:HHC:7951, India
Saree Museum Vs. P. Kapurchand & others 1989 SCC OnLine Kar
124, Jeet Ram Vs. HP Gramin Bank 2023:HHC:2849, Yashpal Singh
Vs. Guman Singh 2024:HHC:9540, Balak Ram Vs. Ajay Kumar
Sharma and another 2024:HHC:8601, B.R. Bhatia Vs. Amarjit Singh
2024:HHC:10249, Vee Kay Concast Pvt. Ltd. Vs. M/s Stanely
Products and anr. 2025 NCPHHC 20038, Vee Kay Concast Private
Limited Vs. M/s Stanley Products and another 2023:PHHC:028762
and ICICI Bank Ltd. Vs. Prafull Chandra and others ILR (2007) II
Delhi 250 in support of her submission.
12. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
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13. It was laid down by the Hon’ble Supreme Court in
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204:
.
(2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a revisional
court is not an appellate court and it can only rectify the patent
defect, errors of jurisdiction or the law. It was observed at page
207: –
“10. Before adverting to the merits of the contentions, at
the outset, it is apt to mention that there are concurrent
findings of conviction arrived at by two courts after adetailed appreciation of the material and evidence
brought on record. The High Court in criminal revisionagainst conviction is not supposed to exercise the
jurisdiction like the appellate court, and the scope of
interference in revision is extremely narrow. Section 397of the Criminal Procedure Code (in short “CrPC“) vests
jurisdiction to satisfy itself or himself as to the
correctness, legality or propriety of any finding, sentenceor order, recorded or passed, and as to the regularity of
any proceedings of such inferior court. The object of theprovision is to set right a patent defect or an error of
jurisdiction or law. There has to be a well-founded error
which is to be determined on the merits of individualcases. It is also well settled that while considering the
same, the Revisional Court does not dwell at length upon
the facts and evidence of the case to reverse those
findings.
14. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294, wherein it was
observed:
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“13. The power and jurisdiction of the Higher Court under
Section 397 Cr. P.C., which vests the court with the power
to call for and examine records of an inferior court, is for
the purposes of satisfying itself as to the legality and.
regularity of any proceeding or order made in a case. The
object of this provision is to set right a patent defect or an
error of jurisdiction or law or the perversity which has
crept into such proceedings. It would be apposite to refer
to the judgment of this court in Amit Kapoor v. Ramesh
Chandra, (2012) 9 SCC 460, where the scope of Section 397
has been considered and succinctly explained as under:
“12. Section 397 of the Code vests the court with the
power to call for and examine the records of an
inferior court for the purposes of satisfying itself as
to the legality and regularity of any proceedings ororder made in a case. The object of this provision is
to set right a patent defect or an error of jurisdiction
or law. There has to be a well-founded error, and it
may not be appropriate for the court to scrutinise
the orders, which, upon the face of it, bear a tokenof careful consideration and appear to be in
accordance with the law. If one looks into the
various judgments of this Court, it emerges that therevisional jurisdiction can be invoked where the
decisions under challenge are grossly erroneous,there is no compliance with the provisions of law,
the finding recorded is based on no evidence,material evidence is ignored or judicial discretion is
exercised arbitrarily or perversely. These are not
exhaustive classes but are merely indicative. Each
case would have to be determined on its own merits.
13. Another well-accepted norm is that the revisional
jurisdiction of the higher court is a very limited one and
cannot be exercised in a routine manner. One of the
inbuilt restrictions is that it should not be against an
interim or interlocutory order. The Court has to keep in
mind that the exercise of revisional jurisdiction itself
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2025:HHC:20832dealing with the question as to whether the charge has
been framed properly and in accordance with law in a
given case, it may be reluctant to interfere in the exercise
of its revisional jurisdiction unless the case substantially.
falls within the categories aforestated. Even framing of
charge is a much-advanced stage in the proceedings
under the CrPC.”
15. It was held in Kishan Rao v. Shankargouda, (2018) 8
SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC
OnLine SC 651 that it is impermissible for the High Court to
reappreciate the evidence and come to its conclusions in the
absence of any perversity. It was observed at page 169:
“12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the ground for exercising the
revisional jurisdiction by the High Court. In State ofKerala v. Puttumana Illath Jathavedan Namboodiri [State of
Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2
SCC 452: 1999 SCC (Cri) 275], while considering the scopeof the revisional jurisdiction of the High Court, this Court
has laid down the following: (SCC pp. 454-55, para 5)“5. … In its revisional jurisdiction, the High Court can
call for and examine the record of any proceedings forthe purpose of satisfying itself as to the correctness,
legality or propriety of any finding, sentence or order.
In other words, the jurisdiction is one of supervisory
jurisdiction exercised by the High Court for correcting
a miscarriage of justice. But the said revisional power
cannot be equated with the power of an appellate
court, nor can it be treated even as a second appellate
jurisdiction. Ordinarily, therefore, it would not be
appropriate for the High Court to reappreciate the
evidence and come to its own conclusion on the same
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2025:HHC:20832Magistrate as well as the Sessions Judge in appeal
unless any glaring feature is brought to the notice of
the High Court which would otherwise tantamount to
a gross miscarriage of justice. On scrutinising the.
impugned judgment of the High Court from the
aforesaid standpoint, we have no hesitation in coming
to the conclusion that the High Court exceeded itsjurisdiction in interfering with the conviction of the
respondent by reappreciating the oral evidence. …”
13. Another judgment which has also been referred to and
relied on by the High Court is the judgment of this Court
in Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao
Phalke [Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao
Phalke, (2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court
held that the High Court, in the exercise of revisional
jurisdiction, shall not interfere with the order of the
Magistrate unless it is perverse or wholly unreasonable or
there is non-consideration of any relevant material, the
order cannot be set aside merely on the ground that
another view is possible. The following has been laid
down in para 14: (SCC p. 135)
“14. … Unless the order passed by the Magistrate is
perverse or the view taken by the court is wholly
unreasonable or there is non-consideration of any
relevant material or there is palpable misreading of
records, the Revisional Court is not justified in setting
aside the order, merely because another view is
possible. The Revisional Court is not meant to act as an
appellate court. The whole purpose of the revisional
jurisdiction is to preserve the power in the court to do
justice in accordance with the principles of criminal
jurisprudence. The revisional power of the court under
Sections 397 to 401 CrPC is not to be equated with that
of an appeal. Unless the finding of the court, whose
decision is sought to be revised, is shown to be
perverse or untenable in law or is grossly erroneous or
glaringly unreasonable or where the decision is based
on no material or where the material facts are wholly
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ignored or where the judicial discretion is exercised
arbitrarily or capriciously, the courts may not interfere
with the decision in exercise of their revisional
jurisdiction.”
.
14. In the above case, also conviction of the accused was
recorded, and the High Court set aside [Dattatray Gulabrao
Phalke v. Sanjaysinh Ramrao Chavan, 2013 SCC OnLine Bom
1753] the order of conviction by substituting its own view.
This Court set aside the High Court’s order holding that
the High Court exceeded its jurisdiction in substituting its
views, and that too without any legal basis.
16. This position was reiterated in Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)
309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:
“16. It is well settled that in the exercise of revisional
jurisdiction under Section 482 of the Criminal ProcedureCode, the High Court does not, in the absence of
perversity, upset concurrent factual findings. It is not for
the Revisional Court to re-analyse and re-interpret theevidence on record.
17. As held by this Court in Southern Sales &
Services v. Sauermilch Design and Handels GmbH [Southern
Sales & Services v. Sauermilch Design and Handels GmbH,
(2008) 14 SCC 457], it is a well-established principle of lawthat the Revisional Court will not interfere even if a wrong
order is passed by a court having jurisdiction, in the
absence of a jurisdictional error. The answer to the first
question is, therefore, in the negative.”
17. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
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18. A perusal of the cheque (Ex.C2) shows that it has
been drawn in the name of Savitri Devi, Account No.
.
88865K00000058. It is a cross cheque and can only be paid into
the account of the person named in the cheque. A similar cheque
was issued in Sada Vijay Kumar Vs. State of Maharashtra 2012 SCC
Online Bombay 1866. It was submitted that the complainant
could not have filed the complaint, as it was not a payee. This
contention was noticed in paras 8 and 9 as under: –
“8. The cheque was crossed and issued to the HDFC Bank
Account, M/s. K. Sada Vijay Kumar Beedi Leaves Merchant
against Account No. 3752790000051. The drawer of the
cheque was M/s. K. Sada Vijay Kumar Beedi Leaves
Merchant, by authorised signatories of cheque No.414892 drawn on the said Bank, dated 30th September,
2009. The cheque returning memo refers to K. Sada Vijay
Kumar Beedi Leaves Merchant dated 30th September,2009.
9. Mr. Tiwari submits that the legal position in an
identically placed situation was indicated by this Court in
the matter of Credential Finance Limited v. State ofMaharashtra decided on 1st March, 2000, reported
in (2000) 3 Mah LJ 544. The learned Single Judge of this
Court giving reference to the provisions of Sections 7, 123,
124, 125 and 131 of the Negotiable Instrument Act, 1881
has held that there could not be any liability in terms of
Section 138 of the Negotiable Instrument Act against the
Payee of the cheque and the observations of the learned
Additional Sessions Judge was disapproved.”
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19. The Bombay High Court held that the bank would be
a holder in due course and entitled to file a complaint. It was
.
observed: –
10. The same learned Single Judge in the matter
of Ramesh Deshpande v. Panjab and Sind Bank, reported in
(2000) 0 AIJ-MH 123889, by order dated 3rd April, 2000
explained the effect of drawee, drawer’s cheque, bills of
exchange, dishonor of cheque for insufficiency of fund inthe account and placed reliance on the aforementioned
Judgment of Credential Finance Limited Later order was
carried to Supreme Court and the Hon’ble Supreme Court
in the matter of Panjab and Sind Bank v. Vinkar SahakariBank Ltd., reported in (2001) 7 SCC 721 overruled the
Judgment and order dated 3rd April, 2000.
11. The cheques were post-dated cheques, totally valued
at Rs. 3.70 crores. There is non-compliance with the
decision of the meeting with the officials of the HDFCBank in discharging of liability. In the banking system, a
borrower issues a cheque to the financier Bank from his
account, and the same is credited to the loan account. In suchan event, the endorsement as above is not unusual or illegal.
It was thus a payment made by the borrower to HDFC Bank in
the loan account M/s. K. Sada Vijay Kumar and consequently,
in terms of Section 9 of the Negotiable Instrument Act, the
bank will be the holder in due course of the said cheque.
12. Section 9 of Negotiable Instrument Act conceive
“Holder in due course” means any person who for
consideration became the possessor of a promissory note,
bill of exchange or cheque if payable to bearer, or the
payee or indorsee thereof, if (payable to order), before the
amount mentioned in it became payable, and without
having sufficient cause to believe that any defect existed
in the title of the person from whom he derived his title.
Thus, the three stipulations envisaged therein are
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necessarily carved out. These facts are explained by the
Hon’ble Supreme Court in the matter referred above.
13. The argument canvassed by Mr. Tiwari in respect of the
.
non-existence of the drawee or the Payee, M/s. K. Sada Vijay
Kumar and the drawer being the same, could not be
prosecuted, is inconceivable. Section 139 of the Act reveals
that the first factor to be satisfied for presumption is that such
a person should be the Holder of the cheque. The complainant
has to be either a payee or a holder in due course of the
cheque. Legislative object behind the provisions has to be
borne in mind and need not be defeated. The Bedrock of
section 9 is the entitlement of the holder. The
presumption available under Section 118(G) of the
Negotiable Instrument Act comes into operation only at
the time of the trial. In the present case, presumption will
prevail against the Applicant. The cheque was issued by
the Applicant in discharge of the liability of the loan to
the Bank and naturally will have reference to his account
where it was to be credited. The court has to presume a
negotiable instrument to be for consideration unless the
existence of consideration is disproved. Taking a survey
of the above facts, the view expressed by the learned
Single Judge of this Court, having not been approved by
the Supreme Court as recorded hereinabove, I find no
force in the contentions of the Applicant.” (Emphasis
supplied)
20. In the present case, the cheque was drawn in the
account number mentioned on the cheque. The accused did not
dispute in her statement recorded under Section 313 of Cr.P.C.
that she had taken the loan from the complainant. It is not
shown that the account number mentioned in the cheque is
incorrect. Therefore, the cheque was drawn by the accused in the
loan account in her name. Since the loan account was
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maintained by the complainant and the complainant was
entitled to the money deposited in the loan account, therefore,
.
the complainant was the holder in the due course and entitled to
file the complaint. Hence, the submission that the cheque was
not issued in the name of the complainant and the complaint
filed by the complainant is not maintainable cannot be accepted.
21. The accused did not dispute that the cheque was
issued by her. It was stated in para (g) of the grounds of revision
that the complainant had taken the cheque from the accused in
advance and filled the amount as per their connivance, which is
evident from at Serial No. 6(b) and (Ex.C9). It was stated in para
(e) of the grounds of revision that the cheque was never filled by
the accused and there was tampering with the cheque. These two
pleas clearly show that the issuance of the cheque has not been
disputed. It was laid down by this Court in Naresh Verma vs.
Narinder Chauhan 2020(1) ShimLC 398 that where the accused
had not disputed his signatures on the cheque, the Court has to
presume that it was issued in discharge of legal liability and the
burden would shift upon the accused to rebut the presumption.
It was observed: –
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“8. Once signatures on the cheque are not disputed, the
plea with regard to the cheque having not been issued
towards discharge of lawful liability, rightly came to be
rejected by learned Courts below. Reliance is placed upon.
Hiten P. Dalal v. Bartender Nath Bannerji, 2001 (6) SCC 16,
wherein it has been held as under:
“The words ‘unless the contrary is proved’ which
occur in this provision make it clear that the
presumption has to be rebutted by ‘proof’ and not
by a bare explanation which is merely plausible. A
fact is said to be proved when its existence isdirectly established or when, upon the material
before it, the Court finds its existence to be so
probable that a reasonable man would act on the
supposition that it exists. Unless, therefore, theexplanation is supported by proof, the presumption
created by the provision cannot be said to be
rebutted……”
9. S.139 of the Act provides that it shall be
presumed, unless the contrary is proved, that the
holder of a cheque received the cheque of nature
referred to in section 138 for the discharge, in whole
or in part, of any debt or other liability.
22. Similar is the judgment in Basalingappa vs.
Mudibasappa 2019 (5) SCC 418 wherein it was held:
“26. Applying the proposition of law as noted above, in
the facts of the present case, it is clear that the signature
on the cheque, having been admitted, a presumption shall
be raised under Section 139 that the cheque was issued in
discharge of debt or liability.”
23. This position was reiterated in Kalamani Tex v. P.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2
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SCC (Cri) 555: 2021 SCC OnLine SC 75 wherein it was held at page
289:
.
“14. Once the 2nd appellant had admitted his signatures
on the cheque and the deed, the trial court ought to have
presumed that the cheque was issued as consideration fora legally enforceable debt. The trial court fell in error
when it called upon the respondent complainant to
explain the circumstances under which the appellants
were liable to pay. Such an approach of the trial court wasdirectly in the teeth of the established legal position as
discussed above, and amounts to a patent error of law.”
24. Similar is the judgment in APS Forex Services (P) Ltd.
v. Shakti International Fashion Linkers (2020) 12 SCC 724, wherein
it was observed: –
“7.2. What is emerging from the material on record is
that the issuance of a cheque by the accused and the
signature of the accused on the said cheque are not
disputed by the accused. The accused has also notdisputed that there were transactions between the
parties. Even as per the statement of the accused, which
was recorded at the time of the framing of the charge, he
has admitted that some amount was due and payable.
However, it was the case on behalf of the accused that the
cheque was given by way of security, and the same has
been misused by the complainant. However, nothing is on
record that in the reply to the statutory notice, it was the
case on behalf of the accused that the cheque was given by
way of security. Be that as it may, however, it is required
to be noted that earlier the accused issued cheques which
came to be dishonoured on the ground of “insufficient
funds” and thereafter a fresh consolidated cheque of
₹9,55,574 was given which has been returned unpaid on
the ground of “STOP PAYMENT”. Therefore, the cheque in::: Downloaded on – 02/07/2025 21:23:07 :::CIS
20
2025:HHC:20832question was issued for the second time. Therefore, once
the accused has admitted the issuance of a cheque which
bears his signature, there is a presumption that there
exists a legally enforceable debt or liability under Section.
139 of the NI Act. However, such a presumption is
rebuttable in nature, and the accused is required to lead
evidence to rebut such presumption. The accused wasrequired to lead evidence that the entire amount due and
payable to the complainant was paid.
9. Coming back to the facts in the present case and
considering the fact that the accused has admitted theissuance of the cheques and his signature on the cheque
and that the cheque in question was issued for the second
time after the earlier cheques were dishonoured and that
even according to the accused some amount was due andpayable, there is a presumption under Section 139 of the
NI Act that there exists a legally enforceable debt or
liability. Of course, such presumption is rebuttable in
nature. However, to rebut the presumption, the accused
was required to lead evidence that the full amount dueand payable to the complainant had been paid. In the
present case, no such evidence has been led by the
accused. The story put forward by the accused that thecheques were given by way of security is not believable in
the absence of further evidence to rebut the presumption,and more particularly, the cheque in question was issued
for the second time after the earlier cheques weredishonoured. Therefore, both the courts below have
materially erred in not properly appreciating and
considering the presumption in favour of the
complainant that there exists a legally enforceable debt or
liability as per Section 139 of the NI Act. It appears that
both the learned trial court as well as the High Court have
committed an error in shifting the burden upon the
complainant to prove the debt or liability, without
appreciating the presumption under Section 139 of the NI
Act. As observed above, Section 139 of the Act is an
example of reverse onus clause and therefore, once the::: Downloaded on – 02/07/2025 21:23:07 :::CIS
21
2025:HHC:20832issuance of the cheque has been admitted and even the
signature on the cheque has been admitted, there is
always a presumption in favour of the complainant that
there exists legally enforceable debt or liability and.
thereafter, it is for the accused to rebut such presumption
by leading evidence.”
25. The presumption under Section 139 of the NI Act was
explained by the Hon’ble Supreme Court in Triyambak S. Hegde v.
Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ) 512: 2021 SCC OnLine
SC 788 as under at page 747:
“12. From the facts arising in this case and the nature of
the rival contentions, the record would disclose that the
signature on the documents at Exts. P-6 and P-2 are not
disputed. Ext. P-2 is the dishonoured cheque based on
which the complaint was filed. From the evidence
tendered before the JMFC, it is clear that the respondenthas not disputed the signature on the cheque. If that be
the position, as noted by the courts below, a presumption
would arise under Section 139 in favour of the appellantwho was the holder of the cheque. Section 139 of the NI
Act reads as hereunder:
“139. Presumption in favour of the holder. –It shall
be presumed, unless the contrary is proved, thatthe holder of a cheque received the cheque of the
nature referred to in Section 138 for the discharge,
in whole or in part, of any debt or other liability.”
13. Insofar as the payment of the amount by the appellant
in the context of the cheque having been signed by the
respondent, the presumption for passing of the
consideration would arise as provided under Section
118(a) of the NI Act, which reads as hereunder:
“118. Presumptions as to negotiable instruments. —
Until the contrary is proved, the following
presumptions shall be made:
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(a) of consideration: that every negotiable
instrument was made or drawn for consideration,
and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred, was.
accepted, indorsed, negotiated or transferred for
consideration.”
14. The above-noted provisions are explicit to the effect
that such presumption would remain until the contrary is
proved. The learned counsel for the appellant in that
regard has relied on the decision of this Court in K.
Bhaskaran v. Sankaran Vaidhyan Balan [K.
Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510:
1999 SCC (Cri) 1284] wherein it is held as hereunder: (SCC
pp. 516-17, para 9)“9. As the signature in the cheque is admitted to be
that of the accused, the presumption envisaged inSection 118 of the Act can legally be inferred that
the cheque was made or drawn for consideration on
the date which the cheque bears. Section 139 of theAct enjoins the Court to presume that the holder of
the cheque received it for the discharge of any debt
or liability. The burden was on the accused to rebutthe aforesaid presumption. The trial court was not
persuaded to rely on the interested testimony ofDW 1 to rebut the presumption. The said finding
was upheld [Sankaran Vaidhyan Balan v. K.
Bhaskaran, Criminal Appeal No. 234 of 1995, orderdated 23-10-1998 (Ker)] by the High Court. It is not
now open to the accused to contend differently on
that aspect.”
15. The learned counsel for the respondent has, however,
referred to the decision of this Court
in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasa
ppa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is
held as hereunder: (SCC pp. 432-33, paras 25-26)
“25. We having noticed the ratio laid down by this
Court in the above cases on Sections 118(a) and 139,
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2025:HHC:20832
we now summarise the principles enumerated by
this Court in the following manner:
25.1. 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.
25.2. 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.
25.3. 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. Inference of preponderance of
probabilities can be drawn not only from the
materials brought on record by the parties but also
by reference to the circumstances upon which they
rely.
25.4. That it is not necessary for the accused to
come into the witness box in support of his defence,
Section 139 imposed an evidentiary burden and not
a persuasive burden.
25.5. It is not necessary for the accused to come into
the witness box to support his defence.
26. Applying the preposition of law as noted above,
in the facts of the present case, it is clear that the
signature on the cheque, having been admitted, a
presumption shall be raised under Section 139 that
the cheque was issued in discharge of debt or
liability. The question to be looked into is as to
whether any probable defence was raised by the
accused. In the cross-examination of PW 1, when
the specific question was put that a cheque was
issued in relation to a loan of Rs 25,000 taken by
the accused, PW 1 said that he does not remember.
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PW 1 in his evidence admitted that he retired in
1997, on which date he received a monetary benefit
of Rs 8 lakhs, which was encashed by the
complainant. It was also brought in evidence that in
.
the year 2010, the complainant entered into a sale
agreement for which he paid an amount of Rs
4,50,000 to Balana Gouda towards sale
consideration. Payment of Rs 4,50,000 being
admitted in the year 2010 and further payment of
loan of Rs 50,000 with regard to which Complaint
No. 119 of 2012 was filed by the complainant, a copy
of which complaint was also filed as Ext. D-2, there
was a burden on the complainant to prove his
financial capacity. In the years 2010-2011, as per
own case of the complainant, he made a payment of
Rs 18 lakhs. During his cross-examination, when
the financial capacity to pay Rs 6 lakhs to the
accused was questioned, there was no satisfactory
reply given by the complainant. The evidence on
record, thus, is a probable defence on behalf of the
accused, which shifted the burden on the
complainant to prove his financial capacity and
other facts.”
16. In that light, it is contended that the very materials
produced by the appellant and the answers relating to
lack of knowledge of property details by PW 1 in his cross-
examination would indicate that the transaction is
doubtful, and no evidence is tendered to indicate that the
amount was paid. In such an event, it was not necessary
for the respondent to tender rebuttal evidence, but the
case put forth would be sufficient to indicate that the
respondent has successfully rebutted the presumption.
17. On the position of law, the provisions referred to in
Sections 118 and 139 of the NI Act, as also the enunciation
of law as made by this Court, need no reiteration as there
is no ambiguity whatsoever. In Basalingappav.
Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC
418 : (2019) 2 SCC (Cri) 571] relied on by the learned
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counsel for the respondent, though on facts the ultimate
conclusion therein was against raising presumption, the
facts and circumstances are entirely different as the
transaction between the parties as claimed in the said
.
case is peculiar to the facts of that case where the
consideration claimed to have been paid did not find
favour with the Court keeping in view the various
transactions and extent of amount involved. However, the
legal position relating to the presumption arising under
Sections 118 and 139 of the NI Act on signature being
admitted has been reiterated. Hence, whether there is a
rebuttal or not would depend on the facts and
circumstances of each case.”
26. This position was reiterated in Tedhi Singh v. Narayan
Dass Mahant, (2022) 6 SCC 735: (2022) 2 SCC (Cri) 726: (2022) 3
SCC (Civ) 442: 2022 SCC OnLine SC 302 wherein it was held at
page 739:
“8. It is true that this is a case under Section 138 of the
Negotiable Instruments Act. Section 139 of the NI Actprovides that the court shall presume that the holder of a
cheque received the cheque of the nature referred to inSection 138 for the discharge, in whole or in part, of any
debt or other liability. This presumption, however, isexpressly made subject to the position being proved to
the contrary. In other words, it is open to the accused to
establish that there is no consideration received. It is in
the context of this provision that the theory of “probable
defence” has grown. In an earlier judgment, in fact,
which has also been adverted to in Basalingappa
[Basalingappa v. Mudibasappa, (2019) 5 SCC 418: (2019) 2
SCC (Cri) 571], this Court notes that Section 139 of the NI
Act is an example of reverse onus (see Rangappa v. Sri
Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4
SCC (Civ) 477: (2011) 1 SCC (Cri) 184]). It is also true that
this Court has found that the accused is not expected to::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832discharge an unduly high standard of proof. It is
accordingly that the principle has developed that all
which the accused needs to establish is a probable
defence. As to whether a probable defence has been.
established is a matter to be decided on the facts of each
case on the conspectus of evidence and circumstances
that exist…”
27. Similar is the judgment in P. Rasiya v. Abdul Nazer,
2022 SCC OnLine SC 1131, wherein it was observed:
“As per Section 139 of the N.I. Act, it shall be presumed,
unless the contrary is proved, that the holder of a cheque
received the cheque of the nature referred to in Section
138 for discharge, in whole or in part, of any debt or otherliability. Therefore, once the initial burden is discharged
by the Complainant that the cheque was issued by the
accused and the signature and the issuance of the cheque
are not disputed by the accused, in that case, the onus will
shift upon the accused to prove the contrary that thecheque was not for any debt or other liability. The
presumption under Section 139 of the N.I. Act is a
statutory presumption and thereafter, once it ispresumed that the cheque is issued in whole or in part of
any debt or other liability which is in favour of the
Complainant/holder of the cheque, in that case, it is for
the accused to prove the contrary.”
28. This position was reiterated in Rajesh Jain v. Ajay
Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was
observed at page 161:
33. The NI Act provides for two presumptions: Section 118
and Section 139. Section 118 of the Act inter alia directs
that it shall be presumed until the contrary is proved that
every negotiable instrument was made or drawn for
consideration. Section 139 of the Act stipulates that::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832“unless the contrary is proved, it shall be presumed that
the holder of the cheque received the cheque for the
discharge of, whole or part of any debt or liability”. It will
be seen that the “presumed fact” directly relates to one of.
the crucial ingredients necessary to sustain a conviction
under Section 138. [The rules discussed hereinbelow are
common to both the presumptions under Section 139 and
Section 118 and are hence not repeated–reference to one
can be taken as reference to another]
34. Section 139 of the NI Act, which takes the form of a
“shall presume” clause, is illustrative of a presumption of
law. Because Section 139 requires that the Court “shall
presume” the fact stated therein, it is obligatory for the
Court to raise this presumption in every case where the
factual basis for the raising of the presumption had been
established. But this does not preclude the person against
whom the presumption is drawn from rebutting it and
proving the contrary, as is clear from the use of the
phrase “unless the contrary is proved”.
35. The Court will necessarily presume that the cheque
had been issued towards the discharge of a legally
enforceable debt/liability in two circumstances. Firstly,
when the drawer of the cheque admits issuance/execution
of the cheque and secondly, in the event where the
complainant proves that the cheque was issued/executed
in his favour by the drawer. The circumstances set out
above form the fact(s) which bring about the activation of
the presumptive clause. [Bharat Barrel & Drum Mfg.
Co. v. Amin Chand Payrelal [Bharat Barrel & Drum Mfg.
Co. v. Amin Chand Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of holding
that presumption takes effect even in a situation where
the accused contends that a blank cheque leaf was
voluntarily signed and handed over by him to the
complainant. [Bir Singh v. Mukesh Kumar [Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC
(Civ) 309: (2019) 2 SCC (Cri) 40] ]. Therefore, the mere
admission of the drawer’s signature, without admitting
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2025:HHC:20832
the execution of the entire contents in the cheque, is now
sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden to
.
prove that the instrument, say a cheque, was issued by
the accused for discharge of debt, the presumptive device
under Section 139 of the Act helps shifting the burden on
the accused. The effect of the presumption, in that sense,
is to transfer the evidential burden on the accused of
proving that the cheque was not received by the Bank
towards the discharge of any liability. Until this evidential
burden is discharged by the accused, the presumed fact
will have to be taken to be true, without expecting the
complainant to do anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of
Evidence: The Hidden Origins of Modern Law] on Evidence states
as follows:
“The peculiar effect of the presumption of law is
merely to invoke a rule of law compelling the Jury
to reach the conclusion in the absence of evidenceto the contrary from the opponent but if the
opponent does offer evidence to the contrary
(sufficient to satisfy the Judge’s requirement ofsome evidence), the presumption ‘disappears as a
rule of law and the case is in the Jury’s hands freefrom any rule’.”
39. The standard of proof to discharge this evidential
burden is not as heavy as that usually seen in situations
where the prosecution is required to prove the guilt of an
accused. The accused is not expected to prove the non-
existence of the presumed fact beyond a reasonable
doubt. The accused must meet the standard of
“preponderance of probabilities”, similar to a defendant in
a civil proceeding. [Rangappa v. Sri
Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4
SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR 2010 SC 1898]]
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29. Thus, the Court has to start with a presumption that
the cheque was issued by the accused for consideration, and the
.
burden is upon the accused to rebut this presumption.
30. Harinder Kumar (CW1) stated in his cross-
examination that the complainant had seized the vehicle and
sold it. It was submitted that this amount was not credited to the
account of the accused, and the accused is not liable to pay the
amount mentioned in the cheque. This submission cannot be
accepted. It was suggested to Harinder Kumar (CW1) that there
was a hike in interest due to which the accused could not make
the payment. This suggestion clearly shows that the default in
the payment was not disputed. The accused had taken a loan of
₹21,15,000/-, which fact was admitted by her in response to
Question No.3 recorded under Section 313 of Cr.P.C. The cheque
was issued for ₹11,84,811.08, which is admittedly less than
₹21,15,000/-. In the absence of the details of the amount paid by
the accused, it cannot be said that the sale proceeds were not
credited to her account, and the submission made by the accused
that the cheque could not have been presented for ₹11,81,811/-
cannot be accepted. Hence, the judgment in Dashrath (supra)
does not apply to the present case.
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31. It was submitted that the amount was received from
the CGTMSE Scheme. The copy of the Scheme has been filed.
.
Responsibility of the lending institution provided in Para 7(v)
reads that the payment of the guarantee claim by the trust to the
lending institution does not take away the responsibility of the
lending institution to recover the entire outstanding amount
from the borrower and the lender shall initiate necessary actions
for the recovery of the outstanding amount. It was laid down by
the Kerala High Court in Ajit Kumar (supra) that the CTMSE
Scheme is an insurance scheme to protect the interest of the
bank, and the benefits are to be reimbursed after realising the
dues from the borrower. It was observed:
“3. As noted above, the case of the petitioners is that since
the credit facility availed by the second petitioner iscovered by the CGTMSE Scheme, they have no liability to
liquidate the outstanding in the account. The petitioners,
having obtained a judgment from this Court earlierpermitting them to liquidate the liability in the loan
account in instalments, according to me, are not entitled
to file a fresh writ petition on the aforesaid ground. In
other words, this is a contention which might, and ought
to have been raised in the earlier writ petition. Further,
there is also no substance in the contention of the
petitioners that they have no liability to liquidate the
outstanding in the loan account since the credit facility
availed by the second petitioner is covered by the
CGTMSE Scheme. CGTMSE Scheme is an insurance
scheme to protect the interest of the banks in the event of::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832default by the borrowers, and the premium payable for
the coverage of the loan under the scheme is debited from
the account of the borrowers based on the terms of the
agreements executed by the borrowers. The benefits of.
the Scheme are to be reimbursed by the banks after
realising the dues from the borrowers concerned. If the
contention of the petitioners is accepted, the borrowerswill have no obligation to repay the loans/credit facilities
availed.”
32. A similar view was taken by this Court in Jeet Ram
(supra), wherein it was observed:-
“11. During proceedings of the case, Ms. Devyani Sharma,
learned senior counsel appearing for the respondent-
complainant/bank invited attention of this court to Credit
Guarantee Fund Scheme for Micro and Small Enterprises,
under which, some amount is alleged to have been
recovered, to state that amount, if any, recovered underthis scheme is liable to be repaid to the Central
Government.”
33. A similar view was taken in Indian Overseas Bank vs.
Global Marine Products 2003 STPL 580 Kerala, wherein it was
observed:
9. The appellant has contended that though the total loss
claimed by the appellant was much more, the ECGC of
India Ltd. admitted only a lesser amount and paid the
same. It is clear from Clause 18 of Ext. A65 agreement
entered into between the appellant and the ECGC of India
Ltd. that the amount paid by the Corporation to the
appellant is on condition that the appellant should
institute recovery proceedings against exporter or any
other person from whom such recovery can be effected
towards the insured debt and after recovery the amount
as well as the cost incurred for recovery should be::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832apportioned between the appellant and the ECGC of India
Ltd. in accordance with the proportion stipulated in the
agreement. Therefore the payments made by the ECGC to
the appellant, being insured is only for the purpose of.
making good the proportionate loss admitted by the ECGC
subject to recovery of the same under due process of law
from the exporter or from any other person from whom
such amount can be recovered and apportioned as per the
ratio provided in the insurance agreement. Hence, that
amount paid by the ECGC to the appellant in terms of the
insurance agreement cannot be credited to the account of
the first defendant exporter from whom the amounts are
due and to be recovered by the appellant towards the
claim.
34. Therefore, the submission that the money paid under
the Scheme is to be credited to the account of the accused and
she is not liable to pay the amount cannot be accepted.
35. A reference was made to the letter (Ex.C9), wherein it
was mentioned in para 6(b) that post-dated cheques be handed
over to the bank to facilitate regular repayment of the loan
instalment. It was submitted that this clause shows that the
blank security cheques were handed over to the complainant at
the time of advancing the loan. No such conclusion can be drawn
from this clause. It only mentions the post-dated cheques to
make the regular repayment of the loan, and not the blank
cheques. The post-dated cheques would be for the monthly
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instalments and not for ₹11,84,811.08. Thus, no inference can be
drawn that a blank signed security cheque was given to the bank.
.
36. Harinder Kumar (CW1) denied his cross-examination
that the cheque was filled by him or any other employee. He
categorically stated in para-3 of the affidavit that the accused
issued one duly signed and filled cheque and handed it over to
the complainant. It was not suggested to him that the bank had
taken a blank signed security cheque from the accused.
Therefore, his statement does not establish the plea taken in the
memorandum of revision.
37. The accused stated in her statement recorded under
Section 313 of Cr.P.C. that she had not issued any cheque;
therefore, she has even denied the issuance of the cheque. There
is no other evidence to show that post-dated blank signed
security cheque was issued in favour of the petitioner.
38. Even if the cheque was issued as a security, the same
would attract the provisions of the NI Act. It was laid down by
this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ
456, that even if the cheque was issued towards the security, the
accused will be liable. It was observed:
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2025:HHC:20832
“9. Submission of learned Advocate appearing on behalf
of the revisionist that the cheque in question was issued
to the complainant as security and on this ground,
criminal revision petition be accepted is rejected being.
devoid of any force for the reasons hereinafter
mentioned. As per Section 138 of the Negotiable
Instruments Act 1881, if any cheque is issued on account
of other liability, then the provisions of Section 138 of the
Negotiable Instruments Act 1881 would be attracted. The
court has perused the original cheque, Ext. C-1 dated
30.10.2008 placed on record. There is no recital in the
cheque Ext. C-1, that cheque was issued as a security
cheque. It is well-settled law that a cheque issued as
security would also come under the provision of Section
138 of the Negotiable Instruments Act 1881. See 2016 (3)
SCC page 1 titled Don Ayengia v. State of Assam & another. It
is well-settled law that where there is a conflict between
former law and subsequent law, then subsequent law
always prevails.”
39. It was laid down by the Hon’ble Supreme Court in
Sampelly Satyanarayana Rao vs. Indian Renewable Energy
Development Agency Limited 2016(10) SCC 458 that issuing a
cheque toward security will also attract the liability for the
commission of an offence punishable under Section 138 of the NI
Act. It was observed: –
“10. We have given due consideration to the submission
advanced on behalf of the appellant as well as the
observations of this Court in Indus Airways Private Limited
versus Magnum Aviation Private Limited (2014) 12 SCC 53
with reference to the explanation to Section 138 of the Act
and the expression “for the discharge of any debt or other
liability” occurring in Section 138 of the Act. We are of the
view that the question of whether a post-dated cheque is::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832for “discharge of debt or liability” depends on the nature
of the transaction. If on the date of the cheque, liability or
debt exists or the amount has become legally recoverable, the
Section is attracted and not otherwise.
.
11. Reference to the facts of the present case clearly shows
that though the word “security” is used in clause 3.1(iii)
of the agreement, the said expression refers to thecheques being towards repayment of instalments. The
repayment becomes due under the agreement, the
moment the loan is advanced and the instalment falls
due. It is undisputed that the loan was duly disbursed on28th February 2002, which was prior to the date of the
cheques. Once the loan was disbursed and instalments
have fallen due on the date of the cheque as per the
agreement, the dishonour of such cheques would fallunder Section 138 of the Act. The cheques undoubtedly
represent the outstanding liability.
12. Judgment in Indus Airways (supra) is clearly
distinguishable. As already noted, it was held therein thatliability arising out of a claim for breach of contract under
Section 138, which arises on account of dishonour of a
cheque issued, was not by itself at par with a criminalliability towards discharge of acknowledged and admitted
debt under a loan transaction. Dishonour of a chequeissued for discharge of a later liability is clearly covered
by the statute in question. Admittedly, on the date of the
cheque, there was a debt/liability in praesenti in terms ofthe loan agreement, as against the case of Indus Airways
(supra), where the purchase order had been cancelled and
a cheque issued towards advance payment for the
purchase order was dishonoured. In that case, it was
found that the cheque had not been issued for discharge
of liability but as an advance for the purchase order,
which was cancelled. Keeping in mind this fine, but the
real distinction, the said judgment cannot be applied to a
case of the present nature where the cheque was for
repayment of a loan instalment which had fallen due,
though such deposit of cheques towards repayment of::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832instalments was also described as “security” in the loan
agreement. In applying the judgment in Indus Airways
(supra), one cannot lose sight of the difference between a
transaction of the purchase order which is cancelled and.
that of a loan transaction where the loan has actually
been advanced and its repayment is due on the date of the
cheque.
13. The crucial question to determine the applicability of
Section 138 of the Act is whether the cheque represents
the discharge of existing enforceable debt or liability, or
whether it represents an advance payment without there
being a subsisting debt or liability. While approving the
views of different High Courts noted earlier, this is the
underlying principle as can be discerned from the
discussion of the said cases in the judgment of this
Court.” (Emphasis supplied)
40. This position was reiterated in Sripati Singh v. State of
Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was
held that a cheque issued as security is not waste paper and a
complaint under section 138 of the NI Act can be filed on its
dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece of
paper under every circumstance. ‘Security’ in its true
sense is the state of being safe, and the security given for
a loan is something given as a pledge of payment. It is
given, deposited or pledged to make certain the fulfilment
of an obligation to which the parties to the transaction are
bound. If in a transaction, a loan is advanced and the
borrower agrees to repay the amount in a specified
timeframe and issues a cheque as security to secure such
repayment; if the loan amount is not repaid in any other
form before the due date or if there is no other::: Downloaded on – 02/07/2025 21:23:07 :::CIS
37
2025:HHC:20832understanding or agreement between the parties to defer
the payment of the amount, the cheque which is issued as
security would mature for presentation and the drawee of
the cheque would be entitled to present the same. On such.
presentation, if the same is dishonoured, the
consequences contemplated under Section 138 and the
other provisions of N.I. Act would flow.
18. When a cheque is issued and is treated as ‘security’
towards repayment of an amount with a time period being
stipulated for repayment, all that it ensures is that such
cheque which is issued as ‘security cannot be presentedprior to the loan or the instalment maturing for
repayment towards which such cheque is issued as
security. Further, the borrower would have the option of
repaying the loan amount or such financial liability in anyother form, and in that manner, if the amount of the loan
due and payable has been discharged within the agreed
period, the cheque issued as security cannot thereafter be
presented. Therefore, the prior discharge of the loan or
there being an altered situation due to which there wouldbe an understanding between the parties is a sine qua non
to not present the cheque which was issued as security.
These are only the defences that would be available to thedrawer of the cheque in proceedings initiated under
Section 138 of the N.I. Act. Therefore, there cannot be ahard and fast rule that a cheque, which is issued as
security, can never be presented by the drawee of thecheque. If such is the understanding, a cheque would also
be reduced to an ‘on-demand promissory note’ and in all
circumstances, it would only be civil litigation to recover
the amount, which is not the intention of the statute.
When a cheque is issued even though as ‘security’ the
consequence flowing therefrom is also known to the
drawer of the cheque and in the circumstance stated
above if the cheque is presented and dishonoured, the
holder of the cheque/drawee would have the option of
initiating the civil proceedings for recovery or the
criminal proceedings for punishment in the fact situation,::: Downloaded on – 02/07/2025 21:23:07 :::CIS
38
2025:HHC:20832but in any event, it is not for the drawer of the cheque to
dictate terms with regard to the nature of litigation.”
41. Hence, the accused cannot escape from the liability
.
by taking a plea that she had handed over a blank signed security
cheque to the complainant.
42. Harinder Kumar (CW1) admitted in his cross-
examination that the writing in the cheque (Ex.C2) is different
from the signatures. It was submitted that the different
handwriting on the cheque will make the cheque invalid. This
submission is not acceptable. It was laid down by the Hon’ble
Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197:
(2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC
138, that a person is liable for the commission of an offence
punishable under section 138 of the NI Act even if some other
person fills the cheque. It was observed:
“33. A meaningful reading of the provisions of the
Negotiable Instruments Act including, in particular,
Sections 20, 87 and 139, makes it amply clear that a
person who signs a cheque and makes it over to the payee
remains liable unless he adduces evidence to rebut the
presumption that the cheque had been issued for
payment of a debt or in discharge of a liability. It is
immaterial that the cheque may have been filled in by any
person other than the drawer if the cheque is duly signed
by the drawer. If the cheque is otherwise valid, the penal
provisions of Section 138 would be attracted.
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2025:HHC:20832
34. If a signed blank cheque is voluntarily presented to a
payee, towards some payment, the payee may fill up the
amount and other particulars. This in itself would not
invalidate the cheque. The onus would still be on the.
accused to prove that the cheque was not in discharge of a
debt or liability by adducing evidence.
35. It is not the case that the respondent accused him of
either signing the cheque or parted with it under any
threat or coercion. Nor is it the case that the respondent
accused that the unfilled signed cheque had been stolen.
The existence of a fiduciary relationship between thepayee of a cheque and its drawer would not disentitle the
payee to the benefit of the presumption under Section 139
of the Negotiable Instruments Act, in the absence of
evidence of exercise of undue influence or coercion. Thesecond question is also answered in the negative.
36. Even a blank cheque leaf, voluntarily signed and
handed over by the accused, which is towards some
payment, would attract presumption under Section 139 ofthe Negotiable Instruments Act, in the absence of any
cogent evidence to show that the cheque was not issued in
discharge of a debt.”
43. This position was reiterated in Oriental Bank of
Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089,
wherein it was observed:
“12. The submission, which has been urged on behalf of
the appellant, is that even assuming, as the first
respondent submits, that the details in the cheque were
not filled in by the drawer, this would not make any
difference to the liability of the drawer.
xxxxxx
32. A drawer who signs a cheque and hands it over to
the payee is presumed to be liable unless the drawer
adduces evidence to rebut the presumption that the::: Downloaded on – 02/07/2025 21:23:07 :::CIS
40
2025:HHC:20832cheque has been issued towards payment of a debt or in
the discharge of a liability. The presumption arises under
Section 139.
.
44. Therefore, the cheque is not bad even if it is not filled
by the drawer.
45. The accused did not lead any evidence and relied
upon the statement under Section 313 of Cr.P.C. to prove her
defence. This was not sufficient. It was held in Sumeti Vij v.
Paramount Tech Fab Industries, (2022) 15 SCC 689: 2021 SCC
OnLine SC 201 that the accused has to lead defence evidence to
rebut the presumption and mere denial in her statement under
Section 313 of Cr.P.C. is not sufficient to rebut the presumption.
It was observed at page 700:
“20. That apart, when the complainant exhibited all these
documents in support of his complaints and recorded thestatement of three witnesses in support thereof, the
appellant has recorded her statement under Section 313 of
the Code but failed to record evidence to disprove or rebutthe presumption in support of her defence available
under Section 139 of the Act. The statement of the accused
recorded under Section 313 of the Code is not substantive
evidence of defence, but only an opportunity for the accused
to explain the incriminating circumstances appearing in the
prosecution’s case against the accused. Therefore, there is no
evidence to rebut the presumption that the cheques were
issued for consideration.” (Emphasis supplied)”
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2025:HHC:20832
46. Therefore, the learned Trial Court had rightly held
that the accused had failed to rebut the presumption attached to
.
the cheque.
47. Harinder Kumar (CW1) stated that the cheque was
dishonoured with an endorsement ‘insufficient funds’. This
statement is corroborated by the memo of dishonour (Ex.C3),
which shows that the cheque was dishonoured with an
endorsement ‘insufficient funds’. It was laid down by the
Hon’ble Supreme Court in Mandvi Cooperative Bank Ltd. v.
Nimesh B. Thakore, (2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010)
2 SCC (Cri) 1: 2010 SCC OnLine SC 155 that the memo issued by the
Bank is presumed to be correct and the burden is upon the
accused to rebut the presumption. It was observed at page 95:
24. Section 146, making a major departure from the
principles of the Evidence Act, provides that the bank’sslip or memo with the official mark showing that the
cheque was dishonoured would, by itself, give rise to the
presumption of dishonour of the cheque, unless and until
that fact was disproved. Section 147 makes the offences
punishable under the Act compoundable.
48. In the present case, no evidence was produced to
rebut the presumption, and the learned Courts below had rightly
held that the cheque was dishonoured with an endorsement
‘insufficient funds’
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2025:HHC:20832
49. Harinder Kumar (CW1) stated that the notice (Ex.C4)
was issued to the accused. This was sent to the address to which
.
the accused was served. This is the same address which was
mentioned by the accused when the notice of accusation was put
to her, her statement was recorded under Section 313 of Cr.PC
and the personal bond furnished by her. Therefore, notice was
sent to the correct address and was deemed to be served.
50. It was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd.
2007(6) SCC 555 that the person who claims that he had not
received the notice has to pay the amount within 15 days from
the date of the receipt of the summons from the Court and in
case of failure to do so, he cannot take the advantage of the fact
that notice was not received by him. It was observed:
“It is also to be borne in mind that the requirement of
giving of notice is a clear departure from the rule ofCriminal Law, where there is no stipulation of giving of
notice before filing a complaint. Any drawer who claims
that he did not receive the notice sent by post, can, within 15
days of receipt of summons from the court in respect of the
complaint under Section 138 of the Act, make payment of the
cheque amount and submit to the Court that he had made
payment within 15 days of receipt of summons (by receiving a
copy of the complaint with the summons) and, therefore, the
complaint is liable to be rejected. A person who does not pay
within 15 days of receipt of the summons from the Court
along with the copy of the complaint under Section 138 of the
Act, cannot obviously contend that there was no proper::: Downloaded on – 02/07/2025 21:23:07 :::CIS
43
2025:HHC:20832service of notice as required under Section 138, by ignoring
statutory presumption to the contrary under Section 27 of the
G.C. Act and Section 114 of the Evidence Act. In our view, any
other interpretation of the proviso would defeat the very.
object of the legislation. As observed in Bhaskaran‘s case
(supra), if the giving of notice in the context of Clause (b)
of the proviso was the same as the receipt of notice atrickster cheque drawer would get the premium to avoid
receiving the notice by adopting different strategies and
escape from legal consequences of Section 138 of the Act.”
(Emphasis supplied)
51. In the present case, the accused has not paid any
money to the complainant; hence, it was duly proved that the
accused had failed to pay the money despite the receipt of the
notice.
52. Therefore, it was duly proved on record that the
cheque was issued in discharge of the legal liability, which was
dishonoured with an endorsement ‘funds insufficient’, and the
accused failed to pay the amount despite the deemed receipt of
the notice of demand. Hence, the complainant had proved its
case beyond a reasonable doubt, and the learned Trial Court had
rightly convicted the accused of the commission of an offence
punishable under Section 138 of the NI Act.
53. Learned Trial Court sentenced the accused to
undergo simple imprisonment till the rise of the Court. It was
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44
2025:HHC:20832
laid down by the Hon’ble Supreme Court in Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)
.
309: 2019 SCC OnLine SC 138 that the penal provisions of Section
138 of NI Act is deterrent in nature. It was observed at page 203:
“6. The object of Section 138 of the Negotiable
Instruments Act is to infuse credibility into negotiable
instruments, including cheques, and to encourage and
promote the use of negotiable instruments, includingcheques, in financial transactions. The penal provision of
Section 138 of the Negotiable Instruments Act is intended
to be a deterrent to callous issuance of negotiable
instruments such as cheques without serious intention tohonour the promise implicit in the issuance of the same.”
54. Learned Appellate Court has already shown
sympathy towards the accused and imposed sentence till the rise
of the Court, and no interference is required with the sentence
imposed by the learned Appellate Court.
55. Learned Trial Court ordered the payment of
compensation of ₹1,18,481/- being 10% of the cheque amount.
The cheque was issued on 16.10.2015, and the sentence was
imposed on 31.10.2020 after the lapse of five years. The
complainant lost interest on the amount which it would have
obtained by lending the amount to other persons. The
complainant also paid the litigation expenses for filing the
complaint. He was entitled to be compensated for the same. It
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2025:HHC:20832
was laid down by the Hon’ble Supreme Court in Kalamani Tex v.
P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25:
.
(2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts
should uniformly levy a fine up to twice the cheque amount
along with simple interest at the rate of 9% per annum. It was
observed at page 291: –
19. As regards the claim of compensation raised on behalf
of the respondent, we are conscious of the settled
principles that the object of Chapter XVII of NIA is notonly punitive but also compensatory and restitutive. The
provisions of NIA envision a single window for criminalliability for the dishonour of a cheque as well as civil
liability for the realisation of the cheque amount. It is also
well settled that there needs to be a consistent approachtowards awarding compensation, and unless there exist
special circumstances, the courts should uniformly levy
fines up to twice the cheque amount along with simpleinterest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260,
para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]”
56. Hence, the compensation of 10% awarded by the
learned Trial Court is inadequate, but in the absence of any
appeal by the complainant, no interference is required with it.
57. Learned Trial Court ordered the accused to undergo
simple imprisonment for one month in case of default in
payment of compensation. It was submitted that no sentence of
imprisonment in case of default of payment of compensation
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could have been awarded. This submission is not acceptable. It
was laid down by the Hon’ble Supreme Court in K.A. Abbas v.
.
Sabu Joseph, (2010) 6 SCC 230: (2010) 3 SCC (Civ) 744: (2010) 3 SCC
(Cri) 127: 2010 SCC OnLine SC 612, the Courts can impose a
sentence of imprisonment in default of payment of
compensation. It was observed at page 237:
“20. Moving over to the question, whether a default
sentence can be imposed on default of payment of
compensation, this Court in Hari Singh v. SukhbirSingh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127] and in Balraj v. State of U.P. [(1994) 4 SCC 29: 1994SCC (Cri) 823: AIR 1995 SC 1935], has held that it was open
to all the courts in India to impose a sentence on default
of payment of compensation under sub-section (3) ofSection 357. In Hari Singh v. Sukhbir Singh [(1988) 4 SCC
551: 1988 SCC (Cri) 984: AIR 1988 SC 2127], this Court has
noticed certain factors which are required to be taken intoconsideration while passing an order under the section:
(SCC p. 558, para 11)
“11. The payment by way of compensation must,
however, be reasonable. What is reasonable may
depend upon the facts and circumstances of eachcase. The quantum of compensation may be
determined by taking into account the nature of the
crime, the justness of the claim by the victim and
the ability of the accused to pay. If there is more
than one accused, they may be asked to pay on
equal terms unless their capacity to pay varies
considerably. The payment may also vary
depending on the acts of each accused. A reasonable
period for payment of compensation, if necessary,
by instalments, may also be given. The court may::: Downloaded on – 02/07/2025 21:23:07 :::CIS
47
2025:HHC:20832enforce the order by imposing a sentence in
default.”
21. This position also finds support in R. v. Oliver John
.
Huish [(1985) 7 Cri App R (S) 272]. The Lord Justice Croom
Johnson, speaking for the Bench, has observed:
“When compensation orders may be made, the
most careful examination is required. Documentsshould be obtained, and evidence, either on
affidavit or orally, should be given. The proceedings
should, if necessary, be adjourned to arrive at the
true state of the defendant’s affairs.
Very often, a compensation order is made and a
very light sentence of imprisonment is imposed,
because the court recognises that if the defendant isto have an opportunity of paying the compensation,
he must be enabled to earn the money with which
to do so. The result is therefore an extremely light
sentence of imprisonment. If the compensation
order turns out to be virtually worthless, thedefendant has got off with a very light sentence of
imprisonment as well as no order of compensation.
In other words, generally speaking, he has got offwith everything.”
22. The law laid down in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127] was reiterated by this Court in Suganthi Suresh
Kumar v. Jagdeeshan [(2002) 2 SCC 420: 2002 SCC (Cri)
344]. The Court observed: (SCC pp. 424-25, paras 5 & 10)
“5. In the said decision, this Court reminded all
concerned that it is well to remember the emphasis
laid on the need for making liberal use of Section
357(3) of the Code. This was observed by reference
to a decision of this Court in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988
SC 2127]. In the said decision, this Court held as
follows: (SCC p. 558, para 11)
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2025:HHC:20832
’11. … The quantum of compensation may be
determined by taking into account the nature of the
crime, the justness of the claim by the victim and
the ability of the accused to pay. If there is more
.
than one accused, they may be asked to pay on
equal terms unless their capacity to pay varies
considerably. The payment may also vary
depending on the acts of each accused. A reasonable
period for payment of compensation, if necessary,
by instalments, may also be given. The court may
enforce the order by imposing a sentence in default.’
(emphasis in original)
***
10. That apart, Section 431 of the Code has only
prescribed that any money (other than fine)
payable by virtue of an order made under the Code
shall be recoverable ‘as if it were a fine’. Two modes
of recovery of the fine have been indicated in
Section 421(1) of the Code. The proviso to the sub-
section says that if the sentence directs that in
default of payment of the fine, the offender shall be
imprisoned, and if such offender has undergone the
whole of such imprisonment in default, no court
shall issue such warrant for the levy of the
amount.”
The Court further held: (Jagdeeshan case [(2002) 2 SCC
420: 2002 SCC (Cri) 344], SCC p. 425, para 11)
“11. When this Court pronounced in Hari
Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC
(Cri) 984: AIR 1988 SC 2127] that a court may enforce
an order to pay compensation ‘by imposing a
sentence in default’ it is open to all courts in India
to follow the said course. The said legal position
would continue to hold good until it is overruled by
a larger Bench of this Court. Hence learned Single
Judge of the High Court of Kerala has committed an
impropriety by expressing that the said legal
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direction of this Court should not be followed by the
subordinate courts in Kerala. We express our
disapproval of the course adopted by the said Judge
in Rajendran v. Jose [(2001) 3 KLT 431]. It is
.
unfortunate that when the Sessions Judge has
correctly done a course in accordance with the
discipline, the Single Judge of the High Court has
incorrectly reversed it.”
23. In order to set at rest the divergent opinion expressed
in Ahammedkutty case [(2009) 6 SCC 660 : (2009) 3 SCC
(Cri) 302], this Court in Vijayan v. Sadanandan K. [(2009) 6
SCC 652 : (2009) 3 SCC (Cri) 296], after noticing the
provision of Sections 421 and 431 CrPC, which dealt with
mode of recovery of fine and Section 64 IPC, which
empowered the courts to provide for a sentence of
imprisonment on default of payment of fine, the Court
stated: (Vijayan case [(2009) 6 SCC 652 : (2009) 3 SCC (Cri)
296], SCC p. 658, para 24)
“24. We have carefully considered the submissions
made on behalf of the respective parties. Since a
decision on the question raised in this petition is
still in a nebulous state, there appear to be two
views as to whether a default sentence of
imprisonment can be imposed in cases where
compensation is awarded to the complainant under
Section 357(3) CrPC. As pointed out by Mr Basant
in Dilip S. Dahanukar case [(2007) 6 SCC 528 : (2007)
3 SCC (Cri) 209], the distinction between a fine and
compensation as understood under Section 357(1)
(b) and Section 357(3) CrPC had been explained, but
the question as to whether a default sentence clause
could be made in respect of compensation payable
under Section 357(3) CrPC, which is central to the
decision in this case, had not been considered.”
The Court further held: (Vijayan case [(2009) 6 SCC 652:
(2009) 3 SCC (Cri) 296], SCC p. 659, paras 31-32)
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2025:HHC:20832“31. The provisions of Sections 357(3) and 431 CrPC,
when read with Section 64 IPC, empower the court,
while making an order for payment of
compensation, to also include a default sentence in.
case of non-payment of the same.
32. The observations made by this Court in Hari
Singh case [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR
1988 SC 2127] are as important today as they were
when they were made and if, as submitted by Dr.
Pillay, recourse can only be had to Section 421 CrPC
for enforcing the same, the very object of sub-
section (3) of Section 357 would be frustrated and
the relief contemplated therein would be rendered
somewhat illusory.”
24. In Shantilal v. State of M.P. [(2007) 11 SCC 243 : (2008) 1
SCC (Cri) 1], it is stated that the sentence of imprisonment
for default in payment of a fine or compensation is
different from a normal sentence of imprisonment. The
Court also delved into the factors to be taken into
consideration while passing an order under Section
357(3) CrPC. This Court stated: (SCC pp. 255-56, para 31)
“31. … The term of imprisonment in default of
payment of a fine is not a sentence. It is a penalty
which a person incurs on account of non-payment
of a fine. The sentence is something which an
offender must undergo unless it is set aside or
remitted in part or in whole, either in appeal or in
revision or other appropriate judicial proceedings,
or ‘otherwise’. A term of imprisonment ordered in
default of payment of a fine stands on a different
footing. A person is required to undergo
imprisonment either because he is unable to pay
the amount of fine or refuses to pay such amount.
He, therefore, can always avoid undergoing
imprisonment in default of payment of the fine by
paying such amount. It is, therefore, not only
the power but the duty of the court to keep in view
the nature of the offence, circumstances under
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which it was committed, the position of the
offender and other relevant considerations before
ordering the offender to suffer imprisonment in
default of payment of a fine.” (emphasis in
.
original)
25. In Kuldip Kaur v. Surinder Singh [(1989) 1 SCC 405: 1989
SCC (Cri) 171: AIR 1989 SC 232], in the context of Section
125 CrPC observed that sentencing a person to jail is
sometimes a mode of enforcement. In this regard, the
Court stated: (SCC p. 409, para 6)
“6. A distinction has to be drawn between a mode of
enforcing recovery on the one hand and effecting
actual recovery of the amount of monthly
allowance which has fallen in arrears on the other.
Sentencing a person to jail is a ‘mode of
enforcement’. It is not a ‘mode of satisfaction’ of the
liability. The liability can be satisfied only by
making actual payment of the arrears. The whole
purpose of sending to jail is to oblige a person liable
to pay the monthly allowance who refuses to
comply with the order without sufficient cause, to
obey the order and to make the payment. The
purpose of sending him to jail is not to wipe out the
liability which he has refused to discharge. It
should also be realised that a person ordered to pay
a monthly allowance can be sent to jail only if he
fails to pay the monthly allowance ‘without
sufficient cause’ to comply with the order. It would
indeed be strange to hold that a person who,
without reasonable cause, refuses to comply with
the order of the court to maintain his neglected
wife or child would be absolved of his liability
merely because he prefers to go to jail. A sentence
of jail is no substitute for the recovery of the
amount of monthly allowance which has fallen in
arrears.”
26. From the above line of cases, it becomes very clear
that a sentence of imprisonment can be granted for
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default in payment of compensation awarded under
Section 357(3) CrPC. The whole purpose of the provision
is to accommodate the interests of the victims in the
criminal justice system. Sometimes the situation becomes
.
such that there is no purpose served by keeping a person
behind bars. Instead, directing the accused to pay an
amount of compensation to the victim or affected party
can ensure the delivery of total justice. Therefore, this
grant of compensation is sometimes in lieu of sending a
person behind bars or in addition to a very light sentence
of imprisonment. Hence, in default of payment of this
compensation, there must be a just recourse. Not
imposing a sentence of imprisonment would mean
allowing the accused to get away without paying the
compensation, and imposing another fine would be
impractical, as it would mean imposing a fine upon
another fine and therefore would not ensure proper
enforcement of the order of compensation. While passing
an order under Section 357(3), it is imperative for the
courts to look at the ability and the capacity of the
accused to pay the same amount as has been laid down by
the cases above; otherwise, the very purpose of granting
an order of compensation would stand defeated.
58. This position was reiterated in R. Mohan v. A.K. Vijaya
Kumar, (2012) 8 SCC 721: (2012) 4 SCC (Civ) 585: (2012) 3 SCC (Cri)
1013: 2012 SCC OnLine SC 486 wherein it was observed at page
729:
29. The idea behind directing the accused to pay
compensation to the complainant is to give him
immediate relief so as to alleviate his grievance. In terms
of Section 357(3), compensation is awarded for the loss or
injury suffered by the person due to the act of the accused
for which he is sentenced. If merely an order directing
compensation is passed, it would be totally ineffective. It
could be an order without any deterrence or apprehension::: Downloaded on – 02/07/2025 21:23:07 :::CIS
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2025:HHC:20832of immediate adverse consequences in case of its non-
observance. The whole purpose of giving relief to the
complainant under Section 357(3) of the Code would be
frustrated if he is driven to take recourse to Section 421 of
.
the Code. An order under Section 357(3) must have the
potential to secure its observance. Deterrence can only be
infused into the order by providing for a default sentence.
If Section 421 of the Code puts compensation ordered to
be paid by the court on a par with the fine so far as the
mode of recovery is concerned, then there is no reason
why the court cannot impose a sentence in default of
payment of compensation as it can be done in case of
default in payment of fine under Section 64 IPC. It is
obvious that in view of this, in Vijayan [(2009) 6 SCC 652:
(2009) 3 SCC (Cri) 296], this Court stated that the
abovementioned provisions enabled the court to impose a
sentence in default of payment of compensation and
rejected the submission that the recourse can only be had
to Section 421 of the Code for enforcing the order of
compensation. Pertinently, it was made clear thatobservations made by this Court in Hari Singh [(1988) 4
SCC 551: 1988 SCC (Cri) 984] are as important today as they
were when they were made. The conclusion, therefore, isthat the order to pay compensation may be enforced by
awarding a sentence in default.
30. In view of the above, we find no illegality in the order
passed by the learned Magistrate and confirmed by the
Sessions Court in awarding a sentence in default of
payment of compensation. The High Court was in error in
setting aside the sentence imposed in default of payment
of compensation.
59. Thus, there is no infirmity in imposing the sentence
of imprisonment in case of default in the payment of
compensation.
60. No other point was urged.
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2025:HHC:20832
61. In view of the above, the present revision fails, and
the same is dismissed.
.
62. Records of the learned Courts below be sent back
forthwith, along with a copy of this judgment.
(Rakesh Kainthla)
Judge
2nd July, 2025
(Chander)
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