Himachal Pradesh High Court
Reserved On: 25.3.2025 vs Krishna Devi on 24 April, 2025
2025:HHC:10809
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 531 of 2023
Reserved on: 25.3.2025
Date of Decision: 24.4.2025.
Gillu @ Gulab Chand ...Petitioner
Versus
Krishna Devi ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Ms. Heena Chauhan, Advocate.
For the Respondent : Mr. Arun Kaushal, Advocate.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 25.5.2023, passed by learned Sessions Judge, Kullu,
District Kullu, H.P. (learned Appellate Court), vide which the
judgment of conviction and order of sentence dated 9.9.2022,
passed by learned Judicial Magistrate First Class, Manali,
District Kullu, H.P. (learned Trial Court) was upheld and the
appeal filed by the petitioner (accused before the learned Trial
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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Court) was dismissed. (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 parties were
known to each other. The accused needed money, and he
approached the complainant in June 2015. The accused agreed to
sell his land measuring 0-01-61 hectares, being 161/2310 share
comprised in Khasra No. 475, situated at Mohal Karasu, to the
complainant for a total consideration of ₹8.00 lacs. An
agreement to sell was executed between the parties. The accused
received an amount of ₹1.00 lac in cash and ₹5.00 lac by way of
cheque. It was agreed that the balance amount would be paid on
or before 15.9.2015 at the time of execution of the sale deed,
however, the accused failed to execute the sale deed in favour of
the complainant. He extended the date of execution of the sale
deed till 15.3.2016. The accused again failed to execute the sale
deed on that day, and the time was extended till 31.10.2016 and
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thereafter till 17.12.2016. The accused received ₹60,000/- on
11.11.2016 from the complainant and agreed to execute the sale
deed on 17.12.2016. The complainant visited the Tehsil office on
17.12.2016 for the registration of the sale deed, however, the
accused did not visit the office. The complainant requested the
accused to execute the sale deed or to return the money given to
him as an advance. The accused issued a cheque of ₹6.00 lacs
drawn on Kangra Central Cooperative Bank to discharge part of
his liability. The complainant presented the cheque before his
bank, however, the cheque was dishonoured with an
endorsement ‘funds insufficient’ vide memo dated 17.11.2017.
The complainant sent a registered notice to the accused asking
him to pay the amount within 15 days from the date of receipt of
the notice. This notice was duly served upon the accused, but the
accused failed to pay the amount despite a valid notice of
demand. Hence, the complaint was filed before the learned Trial
Court for the commission of an offence punishable under
Section 138 of the Negotiable Instruments Act (NI Act).
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, notice of
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accusation was put to him, to which he pleaded not guilty and
claimed to be tried.
4. The complainant examined herself (CW1) in support
of her complaint. The accused, in his statement recorded under
Section 313 of Cr.P.C., stated that he had taken a loan of ₹1.00 lac
and handed over a blank cheque. He had returned ₹1.00 lac to
the complainant. He examined Vinod Kumar (DW1).
5. Learned Trial Court held that issuance of the cheque
was not in dispute. The accused failed to rebut the presumption
of consideration attached to the cheque by leading any
satisfactory evidence. The version of the complainant was duly
proved by the Agreement to Sell executed between the parties.
The cheque was dishonoured due to insufficient funds, and the
accused failed to pay the amount despite receipt of a valid notice
of demand. The defence witness only proved that the accused
had withdrawn ₹1.00 lac from his account in 2013, whereas the
present transaction relates to the year 2016. The withdrawal of
the amount is not connected to the present transaction. Hence,
the learned Trial Court convicted the accused for the
commission of an offence punishable under Section 138 of the NI
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Act and sentenced him to undergo simple imprisonment for one
year, pay compensation of ₹12.00 lacs, and in default of
payment of compensation, to undergo simple imprisonment for
one month.
6. Being aggrieved from the judgment passed by the
learned Trial Court, the accused preferred an appeal which was
decided by the learned Sessions Judge, Kullu. Learned Sessions
Judge, Kullu, concurred with the findings recorded by the
learned Trial Court that the accused had failed to rebut the
presumption of consideration attached to the cheque. The
version of the complainant was proved by the agreement to sell
(Ex.CW1/F). The statement of Vinod Kumar (DW1) was not
sufficient to rebut the presumption because the amount was
withdrawn in the year 2013, whereas the present transaction
relates to the year 2015. The complainant served a notice upon
the accused, but he failed to pay the amount despite receipt of a
valid notice of demand. Hence, the appeal was dismissed.
7. Being aggrieved from the judgments and order
passed by learned Courts below, the accused has filed the
present petition asserting that the learned Courts below did not
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properly appreciate the material placed before them. They
misread the statements of witnesses. The statement of the
defence witness was wrongly ignored. The accused had paid
₹2.00 lacs to the complainant on the date of the pronouncement
of the judgment of conviction and the order of sentence. This
fact was not noticed by learned Appellate Court. Therefore, it
was prayed that the present revision be allowed and the
judgment and order passed by the learned Courts below be set
aside.
8. I have heard Ms. Heena Chauhan, learned counsel for
the petitioner/accused, and Mr. Arun Kaushal, learned counsel
for the respondent/complainant.
9. Ms. Heena Chauhan, learned counsel for the
petitioner/accused, submitted that the learned Courts below
erred in appreciating the evidence placed before them. The
evidence led by the accused was probable, and the learned
Courts below erred in discarding it. Therefore, she prayed that
the present petition be allowed and the judgments and order
passed by learned Courts below be set aside.
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10. Mr. Arun Kaushal, learned counsel for the
respondent/complainant, submitted that the issuance of the
cheque is not in dispute. Learned Courts below had rightly
applied the presumption under Sections 139 and 118 of the NI
Act. The accused failed to rebut the presumption by leading any
satisfactory evidence. Therefore, it was prayed that the present
petition be dismissed.
11. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
12. 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 the revisional
court is not an appellate jurisdiction 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
8
2025:HHC:10809jurisdiction 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.
13. 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
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 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
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2025:HHC:10809with 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.”
14. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
15. The accused did not dispute in his statement
recorded under Section 313 of Cr.P.C. that he had issued the
cheque in favour of the complainant. He stated in reply to
question No. 4 that he had taken an amount of ₹1.00 lac and had
issued a blank cheque to the complainant. This clearly shows the
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admission made by the accused regarding the issuance of the
cheque. 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: –
“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.
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16. 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.”
17. 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 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 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 of the established legal position as
discussed above, and amounts to a patent error of law.”
18. 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
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2025:HHC:10809of 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 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,
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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.
19. 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 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:
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“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.
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
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2025:HHC:10809DW 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. 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,
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.
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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 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
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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.”
20. 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
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2025:HHC:10809Section 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…”
21. 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 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 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
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2025:HHC:10809any 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.”
22. 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 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
20
2025:HHC:10809complainant 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:
“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
21
2025:HHC:10809rule 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]]
23. The version of the complainant is duly corroborated
by the Agreement to Sell (Ex.CW1/F) in which it was mentioned
that the accused had agreed to sell the land for ₹8.00 lacs, out of
which the complainant had paid ₹6.00 lacs and the remaining
amount of ₹2.00 lacs would be paid at the time of execution of
the sale deed.
24. The accused examined Vinod Kumar (DW1), who
stated that the accused had withdrawn ₹1.00 lac on 15.5.2013. In
the present case, the cheque was issued on 21.8.2017. The
Agreement to Sell was executed on 15.6.2015. Therefore, the
amount withdrawn by the accused in 2013 will not show that it
was towards the repayment of the loan stated to have been taken
by him. Vinod Kumar (DW1) stated that he was not aware of the
purpose of withdrawing the money. The accused did not step
22
2025:HHC:10809
into the witness box to state that he had taken an amount of
₹1.00 lac from the accused, which was returned by him after
withdrawing it from his account. He relied upon his statement
recorded under Section 313 of Cr.P.C. to establish this fact. 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 his
statement under Section 313 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 the
statement 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 rebut
the 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)”
25. Therefore, learned Courts below had rightly held that
the statement of Vinod Kumar (DW1) was not sufficient to rebut
the presumption of consideration attached to the cheque.
23
2025:HHC:10809
26. It was submitted that the accused had issued a blank
cheque as a security, which was misused by the complainant, as
is evident from the fact that there is a difference in the
handwriting of the cheque. This submission is not acceptable.
No witness was examined to prove that the handwriting on the
cheque is different. The cheque was not sent to the handwriting
expert to analyze the handwriting and compare it with the
signatures. Therefore, the plea that the blank cheque was given
is not acceptable.
27. The agreement to sell shows that the amount of
₹6.00 lacs was paid by the complainant to the accused as an
advance. Thus, the accused had a liability to return ₹6.00 lacs
when he had failed to execute the sale deed under the agreement
to sell executed by him. 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:
“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,
24
2025:HHC:10809if 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.”
28. It was laid down by the Hon’ble Supreme Court in
Sampelly Satyanarayana Rao v. Indian Renewable Energy
Development Agency Ltd., (2016) 10 SCC 458: (2017) 1 SCC (Cri)
149 : (2017) 1 SCC (Civ) 126: 2016 SCC OnLine SC 954 that issuing a
cheque toward security will also attract the liability for the
commission of an offence punishable under Section 138 of N.I.
Act. It was observed: –
“9. 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 [Indus Airways
(P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539:
(2014) 5 SCC (Civ) 138: (2014) 6 SCC (Cri) 845] with
reference to the explanation to Section 138 of the Act and
the expression “for discharge of any debt or other
liability” occurring in Section 138 of the Act. We are of the
view that the question whether a post-dated cheque is for
“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.
25
2025:HHC:10809
10. 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 the
cheques 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 on 28-2-
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, dishonour of
such cheques would fall under Section 138 of the Act. The
cheques undoubtedly represent the outstanding liability.
11. The judgment in Indus Airways [Indus Airways (P)
Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014)
5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] is clearly
distinguishable. As already noted, it was held therein that
liability arising out of a claim for breach of contract under
Section 138, which arises on account of dishonour of
cheque issued was not by itself on a par with criminal
liability towards discharge of acknowledged and admitted
debt under a loan transaction. Dishonour of a cheque
issued for discharge of 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 of
the loan agreement, as against Indus Airways [Indus
Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC
539: (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] where
the purchase order had been cancelled and 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
advance for the purchase order which was cancelled.
Keeping in mind this fine but real distinction, the said
judgment cannot be applied to a case of the present
nature where the cheque was for repayment of loan
instalment which had fallen due though such deposit of
cheques towards repayment of instalments was also
described as “security” in the loan agreement. In
applying the judgment in Indus Airways [Indus Airways (P)
26
2025:HHC:10809
Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014)
5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845], one cannot lose
sight of the difference between a transaction of purchase
order which is cancelled and that of a loan transaction
where loan has actually been advanced and its repayment
is due on the date of the cheque.
12. 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 subsisting debt or liability. While approving the
views of the different High Courts noted earlier, this is the
underlying principle as can be discerned from discussion
of the said cases in the judgment of this Court.”
29. 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 N.I. 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 bor-
rower agrees to repay the amount in a specified time-
frame and issues a cheque as security to secure such re-
payment; if the loan amount is not repaid in any other
form before the due date or if there is no other under-
standing or agreement between the parties to defer the
payment of the amount, the cheque which is issued as se-
curity would mature for presentation and the drawee of
27
2025:HHC:10809the cheque would be entitled to present the same. On such
presentation, if the same is dishonoured, the conse-
quences 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’ to-
wards 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 presented
prior to the loan or the instalment maturing for repay-
ment 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 any other
form and in that manner, if the amount of 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 would be an un-
derstanding 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 the
drawer of the cheque in proceedings initiated under Sec-
tion 138 of the N.I. Act. Therefore, there cannot be a hard
and fast rule that a cheque, which is issued as security can
never be presented by the drawee of the cheque. 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 pre-
sented 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, but in any event, it is not for the
drawer of the cheque to dictate terms with regard to the
nature of litigation.”
28
2025:HHC:10809
30. It was submitted that there is a difference in the
handwriting of the cheque, which shows that the cheque was
filled out by someone other person. This submission will not
help the accused. 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 NI Act even if the cheque is filled by some other
person. It was observed:
“33. A meaningful reading of the provisions of the Nego-
tiable 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 li-
able 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.
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 in-
validate the cheque. The onus would still be on the ac-
cused 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.
29
2025:HHC:10809
The existence of a fiduciary relationship between the
payee 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 evi-
dence of exercise of undue influence or coercion. The sec-
ond 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 pay-
ment, would attract presumption under Section 139 of the
Negotiable Instruments Act, in the absence of any cogent
evidence to show that the cheque was not issued in dis-
charge of a debt.”
31. 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
16. 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 cheque has
been issued towards payment of a debt or in the discharge
of a liability. The presumption arises under Section 139”
32. The complainant stated that the cheque was
dishonoured with an endorsement ‘insufficient funds’. She has
proved the memo (Ex.CW1/C), which shows that the cheque was
dishonoured with an endorsement ‘funds insufficient’. There is
a presumption attached to the memo of dishonour under Section
30
2025:HHC:10809
146 of the NI Act. The accused did not lead any evidence to rebut
the presumption, and the learned Courts below had rightly held
that the cheque was dishonoured due to insufficient funds.
33. The complainant asserted that she had issued a
notice (Ex.CW1/D) to the accused asking him to pay the amount
within 15 days from the date of receipt of the notice. She has also
produced a receipt (Ex.CW1/E) to show that the notice was
delivered to the Post Office. The address mentioned in the notice
is the same address which was mentioned by the accused in the
notice of accusation and the statement recorded under Section
313 of Cr.P.C. Hence, it was sent to the correct address. There is a
presumption under Section 27 of the General Clauses Act that a
letter sent to the correct address is deemed to be delivered to the
addressee. The accused denied in his statement recorded under
Section 313 of Cr.P.C. that notice was delivered to him, however,
he did not lead any evidence to rebut the presumption.
Therefore, learned Courts below had rightly held that the notice
was deemed to have been served upon the accused.
34. In any case, it was laid down in C.C. Allavi Haji vs. Pala
Pelly Mohd. 2007(6) SCC 555 that the person who claims that he
31
2025:HHC:10809
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 of
Criminal 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
service 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 a
trickster 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)
35. In the present case, the accused did not pay the
cheque amount after the receipt of notice from the Court. Hence,
his plea that no notice was served upon him will not help him.
32
2025:HHC:10809
36. Thus, the learned Courts below had rightly held that
the accused had issued the cheque in discharge of his legal
liability, which cheque was dishonoured with an endorsement
‘insufficient funds’ and the accused failed to pay the amount
despite deemed receipt of a valid notice of demand. Hence, the
learned Trial Court had rightly convicted the accused of the
commission of an offence punishable under Section 138 of the NI
Act, and the learned Appellate Court had rightly upheld the
conviction of the accused.
37. Learned Trial Court sentenced the accused to
undergo simple imprisonment for one year and pay a
compensation of ₹12.00 lacs. 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 provision of Section 138 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, 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
33
2025:HHC:10809honour the promise implicit in the issuance of the same.”
38. Thus, the sentence of imprisonment for one year is
not excessive.
39. The cheque was issued on 21.8.2017, and the learned
Trial Court imposed the sentence on 9.9.2022 after the lapse of
more than five years. The complainant had to incur expenses on
the litigation, and he also lost interest on the amount advanced
by him. It was laid down by the Hon’ble Supreme Court in M/S
Kalamani Tex and another Versus P. Balasubramanian JT 2021(2)
SC 519 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:-
“20. 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 the 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 a
fine up to twice the cheque amount along with simple
interest at the rate of 9% per annum. [R. Vijian v. Baby,
(2012) 1 SCC 260, 20]”
34
2025:HHC:10809
40. In the present case the interest on ₹ 6,00,000/- for
five years @ 9% per annum would be ₹2,70,000/-. Learned Trial
Court had imposed double the amount of the cheque, which is
not justified. Therefore, the amount of ₹6.00 lacs ordered to be
paid is reduced to ₹3.00 lacs and the amount of compensation is
reduced to ₹9.00 lacs to ₹12.00 lacs awarded by the learned Trial
Court.
41. It was submitted that the learned Trial Court erred in
imposing the sentence of imprisonment in case of default in the
payment of compensation. This submission cannot be accepted.
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. 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
35
2025:HHC:10809noticed 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:
“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 recognizes 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
36
2025:HHC:10809of 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 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
37
2025:HHC:10809
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.”
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
38
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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 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
39
2025:HHC:10809
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 refuse to pay such amount.
He, therefore, can always avoid to undergo
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)
“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
40
2025:HHC:10809
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 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.
41
2025:HHC:10809
42. 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], 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
42
2025:HHC:10809that 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.
43. Thus, there is no infirmity in the order passed by the
learned Trial Court imposing a sentence of imprisonment in case
of default in the payment of compensation.
44. No other point was urged.
45. In view of the above, the present revision is partly
allowed and the judgment passed by the learned Trial Court is
partly modified. The compensation amount of ₹12.00 lacs
awarded by the learned Trial Court, as affirmed by the learned
Appellate Court, is ordered to be reduced to ₹9.00 lacs, subject to
this modification, the rest of the judgment is upheld.
46. Records of the learned Courts below be sent back
forthwith.
(Rakesh Kainthla)
Judge
24th April, 2025
(Chander)
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