Himachal Pradesh High Court
Reserved On: 30.05.2025 vs Bimla Sharma on 25 June, 2025
2025:HHC:19714
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 225 of 2024
Reserved on: 30.05.2025
Date of Decision: 25.06.2025
Hira Lal Kaushal …Petitioner
Versus
Bimla Sharma …Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
For the Petitioner : Mr. G.R. Palsra, Advocate.
For the Respondent : Mr. Heena Chauhan, Advocate, vice
Ms. Ankita, Advocate.
Rakesh Kainthla, Judge
The petitioner has filed the present petition against the
judgment dated 14.02.2024 passed by learned Sessions Judge,
Kullu (learned Appellate Court), vide which the judgment of
conviction dated 21.07.2023 and order of sentence dated
25.07.2023 passed by learned Chief Judicial Magistrate, Lahaul &
Spiti at Kullu (learned Trial Court) were upheld. (Parties shall
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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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
petition are that the complainant filed a complaint before the
learned Trial Court for the commission of an offence punishable
under Section 138 of the Negotiable Instruments Act (in short ‘NI
Act‘). It was asserted that the accused and the complainant are
known to each other. The complainant is a member of the Than
Self Help Group, Puid, Tehsil and District Kullu since 2006. She is
the Secretary of the Group. The accused is an agent of Life
Insurance Corporation of India and a member of Social Awareness
through Human Inosculate Organisation (SATHI). The accused
approached the complainant and other members of the Self Help
Group to invest their money in the LIC Scheme. The complainant
and other members handed over an amount of ₹ 3,65,000/- to the
accused; however, the accused only invested a part of the amount.
The complainant approached the accused to return the money. The
accused issued a cheque for ₹ 2,04,000/- drawn on Central Bank of
India, Branch Bhuntar District Kullu, H.P. to discharge his liability.
This cheque was drawn on the account maintained by Kaushal
Handloom Handicraft and Allied Industry, proprietor Heera Lal.
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The complainant presented the cheque before her Bank, which
sent it to the Bank of the accused; however, the bank of the
accused dishonoured the cheque with an endorsement ‘Exceeds
Arrangement’. The complainant issued a notice on 09.11.2015
through her counsel demanding the money within 15 days from
the receipt of the notice. The notice was duly served upon the
accused, but the accused failed to pay the amount despite the
receipt of the notice; hence, the complaint was filed before the
learned Trial Court for taking action as per the law.
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, a notice of
accusation was put to him for the commission of an offence
punishable under Section 138 of the NI Act, to which the accused
pleaded not guilty and claimed to be tried.
4. The complainant examined herself (CW1) to prove her
case.
5. The accused, in his statement recorded under Section
313 of Cr.P.C., admitted that he knew the complainant. He denied
the rest of the complainant’s case. He admitted that he is the
proprietor of Kaushal Handloom Handicraft and Allied Industry
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but denied that he had issued the cheque to the complainant. He
admitted that he had received the notice. He claimed that a false
complaint was made against him. He examined himself as DW1.
6. Learned Trial Court held that the statement of the
complainant proved the issuance of the cheque. There is a
presumption attached to the cheque that it was issued in discharge
of the legal liability for valid consideration, and the burden is upon
the accused to rebut the presumption. The version of the accused
that Amarjeet was the LIC agent who was introduced by him to the
complainant was not proved. The record from the LIC office was
not summoned to establish this fact. The accused admitted his
signature on the cheque and failed to explain why the cheque was
issued by him. The accused is proprietor of Kaushal Handloom
Handicraft and Allied Industry and would be aware of the
consequences of handing over the signed cheque to any person.
The cheque was dishonoured with an endorsement ‘Exceeds
Arrangement’. The accused admitted the receipt of the notice of
demand. He failed to pay the amount; hence, the learned Trial
Court convicted the accused of the commission of an offence
punishable under Section 138 of NI Act and sentenced him to
undergo simple imprisonment for six months, pay a fine/
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compensation of ₹2,40,000/- (₹2,04,000/- cheque amount plus
₹36,000/- for suffering) and in default of payment to undergo
simple imprisonment for one month.
7. Being aggrieved from the judgment and order passed by
the learned Trial Court, the accused preferred an appeal, which
was decided by the learned Sessions Judge, Kullu (learned
Appellate Court). Learned Appellate Court concurred with the
findings recorded by the learned Trial Court that the issuance of
the cheque was not disputed. The accused failed to rebut the
presumption attached to the cheque. The cheque was dishonoured
with an endorsement ‘Exceeds Arrangement’. The accused
admitted the receipt of the notice; however, he failed to pay any
amount to the complainant. There was no infirmity in the
judgment and order passed by the learned Trial Court; hence, the
appeal was dismissed.
8. Being aggrieved by the judgments and order passed by
the learned Courts below, the accused has filed the present
petition, asserting that the judgments were passed on conjectures
and surmises. The accused is stated to be a proprietor of Kaushal
Handloom Handicraft and Allied Industry, who was not impleaded
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as a party. The complainant is the Secretary of the Than Self Help
Group, which was also not arrayed as a party. The complaint was
defective and could not have been entertained by the learned Trial
Court. Learned Appellate Court failed to examine this aspect. The
accused had rebutted the presumption attached to the cheque by
leading his evidence, and the learned Courts below erred in
holding that the presumption was not rebutted; therefore, it was
prayed that the present revision be allowed and the judgments and
order passed by the learned Courts below be set aside.
9. I have heard Mr. G.R. Palsra, learned counsel for the
petitioner and Ms. Heena Chauhan, learned vice counsel
representing the respondent.
10. Mr. G.R. Palsra, learned counsel for the petitioner,
submitted that the accused was stated to be the proprietor of
Kaushal Handloom Handicraft and Allied Industry. The Firm was
not impleaded as a party, and the complaint was not maintainable.
The complainant was a Secretary of the Than Self Help Group,
which was also not impleaded as a party. The evidence led by the
accused showed that he had no liability towards the complainant.
His evidence was not properly considered by the learned Courts
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below; hence, he prayed that the present revision be allowed and
the judgments and order passed by the learned Courts below be set
aside.
11. Ms. Heena Chauhan, learned vice counsel representing
the respondent, submitted that there is no distinction between a
proprietary concern and a person, and the accused was mentioned
as the proprietor of Kaushal Handloom Handicraft and Allied
Industries, which is sufficient. The money was paid by the
complainant and other members of the society in their individual
capacity, and there was no necessity to implead the society. The
learned Trial Court had rightly held that the accused had failed to
provide any explanation for handing over a blank signed cheque to
the complainant, and his evidence was not sufficient to rebut the
presumption contained in Section 139 of the NI Act; therefore, she
prayed that the present petition be dismissed.
12. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
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
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not an appellate court and it can only rectify the patent defect,
errors of jurisdiction or the law. It was observed on 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 a
detailed appreciation of the material and evidence brought
on record. The High Court in criminal revision against
conviction is not supposed to exercise the jurisdiction like
the appellate court, and the scope of interference in revision
is extremely narrow. Section 397 of the Criminal Procedure
Code (in short “CrPC“) vests jurisdiction to satisfy itself or
himself as to the correctness, legality or propriety of any
finding, sentence or order, recorded or passed, and as to the
regularity of any proceedings of such inferior court. The
object of the provision 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 individual
cases. 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:
“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
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2025:HHC:19714Chandra, (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 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.
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 token of careful
consideration and appear to be in accordance with the
law. If one looks into the various judgments of this
Court, it emerges that the revisional 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 should not lead to
injustice ex facie. Where the Court is dealing 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
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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 of
Kerala v. Puttumana Illath Jathavedan Namboodiri [State of
Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2
SCC 452: 1999 SCC (Cri) 275], while considering the scope of
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 for the
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 when the evidence has
already been appreciated by the Magistrate 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 its jurisdiction 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
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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 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.
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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 Procedure
Code, 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 the evidence 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 law
that 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.
18. The present complaint was filed against Hira Lal
Kaushal, S/o Purkhu Ram, R/o Village Hathithan, PO and Tehsil
Bhunter District Kullu, H.P., Proprietor of Kaushal Handloom
Handicraft and Allied Industry. It was specifically asserted in
para 5 of the complaint that the accused is the proprietor of
Kaushal Handloom Handicraft and Allied Industry. The accused
admitted in his cross-examination that he is the proprietor of
Kaushal Handloom Handicraft and Allied Industry. He also
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admitted this fact in his statement recorded under Section 313 of
Cr.P.C.; hence, he never claimed that the Kaushal Handloom is
owned by more than one person; therefore, the plea that the
accused is the sole proprietor was rightly accepted by the learned
Courts below, and there is no infirmity in it.
19. It was laid down by the Hon’ble Supreme Court in
Shankar Finance & Investments v. State of A.P., (2008) 8 SCC 536:
(2008) 3 SCC (Cri) 558: 2008 SCC OnLine SC 997, that there is no
distinction in law between a proprietary concern and individual
trading under a trading name. It was observed at page 540: –
10. As contrasted with a company incorporated under the
Companies Act, 1956, which is a legal entity distinct from its
shareholders, a proprietary concern is not a legal entity
distinct from its proprietor. A proprietary concern is
nothing but an individual trading under a trade name. In
civil law, where an individual carries on business in a name
or style other than his name, he cannot sue in the trading
name but must sue in his name, though others can sue him
in the trading name. Therefore, if the appellant in this case
had to file a civil suit, the proper description of the plaintiff
should be “Atmakuri Sankara Rao carrying on business
under the name and style of M/s Shankar Finance &
Investments, a sole proprietary concern”. But we are not
dealing with a civil suit. We are dealing with a criminal
complaint to which the special requirements of Section 142
of the Act apply. Section 142 requires that the complainant
be the payee. The payee is M/s Shankar Finance &
Investments. Therefore, in a criminal complaint relating to
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2025:HHC:19714an offence under Section 138 of the Act, it is permissible to
complain about the name of the proprietary concern itself.
11. The next question is where a proprietary concern carries
on business through an attorney holder, and whether the
attorney holder can lodge the complaint. The attorney
holder is the agent of the grantor. When the grantor
authorises the attorney holder to initiate legal proceedings
and the attorney holder accordingly initiates legal
proceedings, he does so as the agent of the grantor, and the
initiation is by the grantor represented by his attorney
holder, and not by the attorney holder in his personal
capacity. Therefore where the payee is a proprietary
concern, the complaint can be filed: (i) by the proprietor of
the proprietary concern, describing himself as the sole
proprietor of the “payee”; (ii) the proprietary concern,
describing itself as a sole proprietary concern, represented
by its sole proprietor; and (iii) the proprietor or the
proprietary concern represented by the attorney holder
under a power of attorney executed by the sole proprietor. It
follows that in this case, the complaint could have been
validly filed by describing the complainant in any one of the
following four methods:
“Atmakuri Shankara Rao, sole proprietor of M/s
Shankar Finance & Investments”
or
“M/s Shankar Finance & Investments, a sole
proprietary concern represented by its proprietor
Atmakuri Shankara Rao”
or
“Atmakuri Shankara Rao, sole proprietor of M/s
Shankar Finance & Investments, represented by his
attorney holder Thamada Satyanarayana”
or
“M/s Shankar Finance & Investments, a proprietary
concern of Atmakuri Shankara Rao, represented by
his attorney holder Thamada Satyanarayana”.
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What would have been improper is for the attorney holder
Thamada Satyanarayana to file the complaint in his own
name as if he was the complainant.”
20. A similar view was taken in Nexus Health & Beauty Care
(P) Ltd. v. National Electrical Office, 2012 SCC OnLine HP 5383,
wherein it was observed: –
“26. The complaint is not happily worded, no doubt, in the
memo of parties, the complainant has referred to the
complainant’s ‘M/s National Electrical Office’, but in para 2
it has been pleaded that the complainant is providing
services of Industrial Electrical fitting under the name and
style of ‘National Electrical’. Again, in the memo of parties,
Subhash Bharwal has been referred to as the proprietor, but
in para 1 of the complaint, the complainant has described
itself as a firm. In evidence by way of affidavit Ex.CW-1/A, it
has been stated that the complainant is providing services
of Industrial Electrical fitting under the name and style of
‘National Electrical’. Subhash Pharwal is its sole proprietor.
The cheque Ex.C-1 has been issued in the name of ‘National
Electricals’. The complaint is loosely drafted. But in the
complaint, the complainant has described itself as ‘National
Electrical’ in the body of the complaint.
27. On the face of the complaint and affidavit, Ex. CW-1/A,
prima facie, it cannot be said that the complainant is a firm,
namely M/s National Electrical Office. The complainant in
the body of the complaint has described the complainant as
‘National Electrical’, a sole proprietorship concern of
Subhash Bharwal. It will be too technical to throw out the
complaint due to loose drafting. At this stage, if the
pleadings of the petition are seen, the petition is also not
less loosely drafted. It starts with the sentence ‘complainant
issued a cheque for Rs. 2.00 lacs’. The complainant did not
issue a cheque of Rs. 2,00,000/-. The cheque was allegedly
issued by the accused petitioners. Not only in the opening
para of the petition, but also in other places also the
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2025:HHC:19714petitioners have used loose expressions. In para 3 of the
petition before grounds, it has been pleaded that the
“complainant aggrieved and dissatisfied with the order
summoning the accused and taking cognisance of the case
by Judicial Magistrate, files this petition”. The substance of
the complaint or petition is to be seen, and it should not be
thrown out merely on technicalities of loose drafting. It
emerges from the complaint that the complainant is the
‘National Electrical’ sole proprietorship concern of Subhash
Bharwal. In view of Milind Shripad Chandurkar (supra), it
cannot be said that the complaint is not maintainable.”
21. Since, there is no distinction between a proprietorship
concerned and a natural person and the complaint was filed
against Heera Lal Kaushal as a proprietor of Kaushal Handloom
Handicraft and Allied Industry, therefore, the complaint was
properly instituted and the submission that the complaint was bad
and learned Courts below erred in entertaining it cannot be
accepted.
22. The accused admitted in his cross-examination that the
cheque (CW1/B) bears his signature. It was laid down by this Court
in Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C. 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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2025:HHC:19714“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 is directly
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, the explanation 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.
23. 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.”
24. This position was reiterated in Kalamani Tex v. P.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2
SCC (Cri) 555: 2021 SCC OnLine SC 75wherein it was held at page
289:
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2025:HHC:19714“13. Adverting to the case in hand, we find on a plain reading
of its judgment that the trial court completely overlooked
the provisions and failed to appreciate the statutory
presumption drawn under Section 118 and Section 139 of
NIA. The statute mandates that once the signature(s) of an
accused on the cheque/negotiable instrument are
established, then these “reverse onus” clauses become
operative. In such a situation, the obligation shifts upon the
accused to discharge the presumption imposed upon him.
This point of law has been crystallised by this Court in
Rohitbhai Jivanlal Patel v. State of Gujarat [Rohitbhai Jivanlal
Patel v. State of Gujarat, (2019) 18 SCC 106, para 18: (2020) 3
SCC (Civ) 800 : (2020) 3 SCC (Cri) 575] in the following
words : (SCC pp. 120-21, para 18)
“18. In the case at hand, even after purportedly
drawing the presumption under Section 139 of the NI
Act, the trial court proceeded to question the want of
evidence on the part of the complainant as regards the
source of funds for advancing loan to the accused and
want of examination of relevant witnesses who
allegedly extended him money for advancing it to the
accused. This approach of the trial court had been at
variance with the principles of presumption in law.
After such presumption, the onus shifted to the
accused and unless the accused had discharged the
onus by bringing on record such facts and
circumstances as to show the preponderance of
probabilities tilting in his favour, any doubt on the
complainant’s case could not have been raised for
want of evidence regarding the source of funds for
advancing loan to the appellant-accused.”
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 for a
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 was directly in the teeth
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of the established legal position as discussed above, and
amounts to a patent error of law.”
25. 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 not disputed 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 question 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 was
required 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 the
issuance of the cheques and his signature on the cheque and
P a g e | 20
2025:HHC:19714
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 and payable,
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 due and 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
the cheques 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 were dishonoured.
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 issuance 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.
26. Learned Courts below had rightly held that there is a
presumption under Section 139 of the N.I. Act that the cheque was
issued in the discharge of the legal liability. This presumption was
explained by the Hon’ble Supreme Court in Triyambak S. Hegde v.
P a g e | 21
2025:HHC:19714
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 respondent has 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 appellant who 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, that the
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:
(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.
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2025:HHC:19714
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 in
Section 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 the Act
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 rebut the
aforesaid presumption. The trial court was not
persuaded to rely on the interested testimony of DW 1
to rebut the presumption. The said finding was upheld
[Sankaran Vaidhyan Balan v. K. Bhaskaran, Criminal
Appeal No. 234 of 1995, order dated 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. Mudibasapp
a, (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, 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.
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2025:HHC:19714
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. 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
P a g e | 24
2025:HHC:19714
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 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.”
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27. 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 Act
provides that the court shall presume that the 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. This presumption, however, is expressly
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 discharge 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…”
28. 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 other
liability. Therefore, once the initial burden is discharged by
P a g e | 26
2025:HHC:19714the 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 the cheque 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 is presumed 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.”
29. 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 “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
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2025:HHC:19714
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 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:
P a g e | 28
2025:HHC:19714“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 evidence to the contrary
from the opponent but if the opponent does offer
evidence to the contrary (sufficient to satisfy the Judge’s
requirement of some evidence), the presumption
‘disappears as a rule of law and the case is in the Jury’s
hands free from 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]]
30. Therefore, the Court has to start with the presumption
that the cheque was issued in discharge of legal liability, and the
burden is upon the accused to prove the contrary.
31. The accused stated that he introduced the complainant
to Amarjeet Singh, an LIC agent. The complainant and other
women obtained a policy from Amarjeet Singh. The complainant
and other persons deposited the amount in the LIC office. They
deposited some instalments and failed to deposit the remaining
instalments subsequently. The policy lapsed due to non-payment.
The complainant and other women filed a complaint against him
before the police. They demanded money from him. He told them
P a g e | 29
2025:HHC:19714
that their money was invested in the LIC office, and that the
money should be obtained from LIC. The complainant obtained a
blank cheque from him after quarrelling with him. He was not
supposed to pay any money to the complainant or any other
person. A false complaint was filed against him.
32. The complainant denied in her cross-examination that
the accused had introduced her to the LIC agent. A denied
suggestion does not amount to any proof, and learned Courts
below had rightly held that the defence taken by the accused that
he had introduced the complainant to Amarjeet was not
established by this suggestion.
33. The accused did not summon any record from the LIC
office to disprove the statement made by the complainant that he
is an LIC agent. He did not examine Amarjeet, who was claimed to
be the LIC agent and who had invested the money of the
complainant and other persons in the LIC policies; therefore, the
learned Courts below had rightly discarded this version.
34. The accused claimed that the complainant obtained the
blank signed cheque after quarrelling with him. The accused
admitted that a complaint was filed by the complainant before the
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2025:HHC:19714
police. The complainant stated in her cross-examination that she
had filed a complaint before the police, and the cheque was handed
over at the police station. Learned Courts below had rightly
observed that the accused never protested about the handing over
of the blank cheque. Further, it is difficult to believe that a blank
signed cheque would have been handed over in the presence of the
police to the complainant; therefore, the version that the cheque
was obtained forcibly by quarrelling has not been proved on the
balance of probability.
35. The complainant admitted in her cross-examination
that she had obtained the documents of the LIC. It was submitted
that these documents were not produced before the Court, and the
complainant failed to establish the existence of legally enforceable
liability. This submission is not acceptable. It was laid down by the
Hon’ble Supreme Court in Ashok Singh v. State of U.P., 2025 SCC
OnLine SC 706 that the complainant is not supposed to give details
of the legal liability because of the presumption contained in
Section 139. It was observed:-
22. The High Court while allowing the criminal revision has
primarily proceeded on the presumption that it was
obligatory on the part of the complainant to establish his
case on the basis of evidence by giving the details of the
P a g e | 31
2025:HHC:19714bank account as well as the date and time of the withdrawal
of the said amount which was given to the accused and also
the date and time of the payment made to the accused,
including the date and time of receiving of the cheque,
which has not been done in the present case. Pausing here,
such presumption on the complainant, by the High Court,
appears to be erroneous. The onus is not on the complainant
at the threshold to prove his capacity/financial wherewithal
to make the payment in discharge of which the cheque is
alleged to have been issued in his favour. Only if an objection
is raised that the complainant was not in a financial position
to pay the amount so claimed by him to have been given as a
loan to the accused, only then the complainant would have
to bring before the Court cogent material to indicate that he
had the financial capacity and had actually advanced the
amount in question by way of loan. In the case at hand, the
appellant had categorically stated in his deposition and
reiterated in the cross-examination that he had withdrawn
the amount from the bank in Faizabad (Typed Copy of his
deposition in the paperbook wrongly mentions this as
‘Firozabad’). The Court ought not to have summarily
rejected such a stand, more so when respondent no. 2 did
not make any serious attempt to dispel/negate such a
stand/statement of the appellant. Thus, on the one hand, the
statement made before the Court, both in examination-in-
chief and cross-examination, by the appellant with regard
to withdrawing the money from the bank for giving it to the
accused has been disbelieved whereas the argument on
behalf of the accused that he had not received any payment
of any loan amount has been accepted. In our decision in S. S.
Production v. Tr. Pavithran Prasanth, 2024 INSC 1059, we
opined:
‘8. From the order impugned, it is clear that though the
contention of the petitioners was that the said amounts
were given for producing a film and were not by way of
return of any loan taken, which may have been a
probable defence for the petitioners in the case, but
rightly, the High Court has taken the view that evidence
P a g e | 32
2025:HHC:19714had to be adduced on this point which has not been done
by the petitioners. Pausing here, the Court would only
comment that the reasoning of the High Court, as well as
the First Appellate Court and Trial Court, on this issue is
sound. Just by taking a counter-stand to raise a probable
defence would not shift the onus on the complainant in
such a case, for the plea of defence has to be buttressed by
evidence, either oral or documentary, which in the
present case has not been done. Moreover, even if it is
presumed that the complainant had not proved the
source of the money given to the petitioners by way of
loan by producing statement of accounts and/or Income
Tax Returns, the same ipso facto, would not negate such
claim for the reason that the cheques having being issued
and signed by the petitioners has not been denied, and no
evidence has been led to show that the respondent lacked
capacity to provide the amount(s) in question. In this
regard, we may make profitable reference to the decision
in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC
735:
’10. The trial court and the first appellate court have
noted that in the case under Section 138 of the NI
Act, the complainant need not show in the first
instance that he had the capacity. The proceedings
under Section 138 of the NI Act is not a civil suit. At
the time, when the complainant gives his evidence,
unless a case is set up in the reply notice to the
statutory notice sent, that the complainant did not
have the wherewithal, it cannot be expected of the
complainant to initially lead evidence to show that
he had the financial capacity. To that extent, the
courts in our view were right in holding on those
lines. However, the accused has the right to
demonstrate that the complainant in a particular
case did not have the capacity and therefore, the
case of the accused is acceptable, which he can do
by producing independent materials, namely, by
examining his witnesses and producing
P a g e | 33
2025:HHC:19714documents. It is also open to him to establish the
very same aspect by pointing to the materials
produced by the complainant himself. He can
further, more importantly, achieve this result
through the cross-examination of the witnesses of
the complainant. Ultimately, it becomes the duty of
the courts to consider carefully and appreciate the
totality of the evidence and then come to a
conclusion whether, in the given case, the accused
has shown that the case of the complainant is in
peril for the reason that the accused has
established a probable defence.’
(emphasis supplied)’
(underlining in original; emphasis supplied by us in bold)
36. Therefore, the complainant’s case cannot be doubted
because she had not produced the documents of LIC.
37. The complainant relied upon the proceedings dated
06.12.2015 (Ext. CW1/F) in which it was mentioned that the LIC
policy was taken on 28.10.2010, but no instalments were deposited;
therefore, it was agreed that the Secretary would file a complaint
regarding the matter. It was submitted that this resolution shows
that the complainant had filed the complaint on behalf of the
society, and she could not have filed the complaint in her name.
This submission is not acceptable. The cheque (Ext. CW1/B) was
issued in the name of the complainant and not in the name of the
society. The resolution further shows that the individuals had
contributed money. The policy is not shown to be issued in the
P a g e | 34
2025:HHC:19714
name of the Society. Complainant asserted that she and other
members had handed over the money to the accused for taking a
policy, but he failed to deposit the instalments; therefore, it was a
case where the individual money was deposited by the members,
and the society was not required to be impleaded as a party.
38. Thus, the learned Courts below had rightly held that the
evidence of the accused was insufficient to rebut the presumption
attached to the cheque (Ext. CW1/B).
39. The complainant stated that the cheque was
dishonoured with an endorsement ‘Exceeds Arrangement’. The
cheque returning memo (Ext. CW1/C) mentions the reasons for
dishonour as ‘Exceeds Arrangement’. 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’s slip
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
P a g e | 35
2025:HHC:19714disproved. Section 147 makes the offences punishable under
the Act compoundable.
40. In the present case, no evidence was led to rebut the
presumption, and the learned Courts below rightly held that the
cheque was dishonoured with an endorsement ‘Exceeds
Arrangement’.
41. The complainant stated that she issued a notice
(Ext. CW1/D) through her Advocate. The accused admitted the
receipt of the notice. He did not state that he had made the
payment of any amount; therefore, it was duly proved that the
accused had failed to pay the money despite the receipt of a valid
notice of demand.
42. Thus, it was duly proved on record that the accused had
issued the cheque in discharge of the legal liability which was
dishonoured with endorsement ‘Exceeds Arrangement’ and the
accused had failed to pay the amount despite the receipt of the
notice of demand; hence, the complainant had proved her case
beyond reasonable doubt and learned Trial Court rightly convicted
the accused of the commission of an offence punishable under
Section 138 of NI Act.
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2025:HHC:19714
43. The learned Trial Court sentenced the accused to
undergo simple imprisonment for a period of six months. 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 the penal provisions of Section 138
are 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, including cheques, 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 to honour the promise implicit in
the issuance of the same.”
44. Keeping in view the deterrent nature of the sentence to
be awarded, the sentence of six months imprisonment cannot be
said to be excessive, and no interference is required with it.
45. Learned Trial Court had ordered the accused to pay a
compensation of ₹2,40,000/-. The cheque was issued on
28.09.2015, and the learned Trial Court imposed the sentence on
25.07.2023 after the expiry of about 8 years. The complainant lost
interest on the amount which she would have obtained by
investing the money in the Bank. She had pursued the litigation
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2025:HHC:19714
and incurred the expenses for it. It 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 not only punitive
but also compensatory and restitutive. The provisions of NIA
envision a single window for criminal liability 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 approach towards awarding
compensation, and unless there exist special circumstances,
the courts should uniformly levy fines up to twice the
cheque amount along with simple interest @ 9% p.a. [R.
Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ)
79: (2012) 1 SCC (Cri) 520]”
46. Therefore, the amount of ₹ 36,000/- cannot be said to
be excessive, and no interference is required with it.
47. Learned Trial Court ordered the imprisonment for one
month in default of payment of compensation. It was submitted
that no sentence of imprisonment in case of default of payment of
compensation could have been awarded. This submission is not
acceptable. It was laid down by the Hon’ble Supreme Court in K.A.
P a g e | 38
2025:HHC:19714Abbas 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. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127]
and in Balraj v. State of U.P. [(1994) 4 SCC 29: 1994 SCC (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) of Section 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 into consideration
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 each case.
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.”
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:
P a g e | 39
2025:HHC:19714“When compensation orders may be made, the most
careful examination is required. Documents should 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 is to 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, the defendant 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 off with 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)
’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
P a g e | 40
2025:HHC:19714accused. 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 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.”
P a g e | 41
2025:HHC:19714
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)
“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
P a g e | 42
2025:HHC:19714
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 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)
P a g e | 43
2025:HHC:19714“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 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
P a g e | 44
2025:HHC:19714
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.
48. 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 of
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],
P a g e | 45
2025:HHC:19714
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 that observations 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, is that 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.
49. Thus, there is no infirmity in imposing the sentence of
imprisonment in case of default in the payment of compensation.
50. No other point was urged.
51. In view of the above, the present revision fails, and the
same is dismissed.
52. Records of the learned Courts below be sent back
forthwith, along with a copy of this judgment.
(Rakesh Kainthla)
Judge
25th June, 2025
(Saurav pathania)
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