Himachal Pradesh High Court
Reserved On: 30.5.2025 vs Surender Kumar Sharma on 18 June, 2025
2025:HHC:18541
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 75 of 2024
Reserved on: 30.5.2025
Date of Decision: 18.6.2025.
Kuram Dev ...Petitioner
Versus
Surender Kumar Sharma ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
For the Petitioner : Mr. Nitin Rishi, Advocate.
For the Respondent : Mr. Javed Khan, Advocate.
Rakesh Kainthla, Judge
The present petition is directed against the judgment
dated 18.12.2023, passed by learned Sessions Judge, Kullu,
District Kullu, H.P. (learned Appellate Court), vide which the
judgment of conviction and order of sentence dated 1.4.2023,
passed by learned Judicial Chief Judicial Magistrate, Lahaul &
Spiti, at Kullu, H.P. (learned Trial Court) were upheld. (Parties
shall hereinafter be referred to in the same manner as they were
arrayed before the learned Trial Court for convenience.)
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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2. Briefly stated, the facts giving rise to the present
petition 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 (in short “NI Act“). It was asserted that the
complainant and the accused knew each other. The accused
borrowed a sum of ₹1,50,000/- from the complainant on
19.5.2014. He issued post-dated cheque for ₹1,50,000/- drawn
on Central Bank of India to discharge his liability. The accused
again borrowed a sum of ₹3.00 lacs on 19.7.2014 from the
complainant. The accused issued a post-dated cheque of ₹3.00
lacs drawn on Central Bank of India to discharge his liability.
The complainant presented both the cheques to his Bank, but
these were dishonoured with the memo ‘funds insufficient’. The
complainant served a legal notice upon the accused asking him
to pay the amount within 15 days of the receipt of the notice. The
notice was duly received by the accused, but he failed to pay the
amount; hence, the complaint was filed before the learned Trial
Court for taking action as per law.
3. The learned Trial Court recorded the preliminary
evidence and summoned the accused. When the accused
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appeared, notice of accusation was put to him for the
commission of an offence punishable under Section 138 of the NI
Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined himself as (CW1). The
accused, in his statement recorded under Section 313 of Cr.P.C.,
admitted that he knew the complainant, he had borrowed a sum
of ₹3.00 lacs from the complainant and issued a cheque of ₹3.00
lacs to discharge his liability. He denied that he had borrowed a
sum of ₹1,50,000/- and issued a cheque for the repayment of
the amount. He stated that he had taken an amount of ₹3.00 lacs
from the complainant, which was returned by him through a
cheque. He had also paid an extra amount of ₹50,000/- to the
complainant. The complainant had taken blank cheques as
security. He admitted that the notice was received by him. He
examined Vikas Kumar (DW1) in his defence.
5. Learned Trial Court held that the accused admitted
the issuance of one cheque. He claimed that the cheques were
taken by the complainant as security, which shows that the
issuance of the second cheque was not denied by the accused.
There is a presumption under Section 118(a) and 139 of the NI
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Act that the cheque was issued for valid consideration to
discharge the legal liability. The burden shifted upon the
accused to rebut the presumption. The accused examined Vikas
Kumar (DW1), who proved the statement of account (Ex.DW1/A),
which shows that ₹3.00 lacs and ₹50,000/- were debited in
favour of Surender on 11.11.2014; however, there is no evidence
to establish that Surender is the complainant. Hence, this
evidence was insufficient to rebut the presumption. The cheques
were dishonoured with an endorsement ‘insufficient funds’. The
accused admitted the receipt of the notice, but he failed to pay
the amount; hence, the accused was convicted of the
commission of an offence punishable under Section 138 of the NI
Act and he was sentenced to undergo simple imprisonment for
three months and to pay compensation of ₹4,50,000/- to the
complainant.
6. Being aggrieved from the judgment and order passed
by the learned Trial Court, the accused preferred an appeal
which was decided by the learned Appellate Court. Learned
Appellate Court concurred with the findings recorded by the
learned Trial Court that the accused had issued the cheques in
discharge of his legal liability, he had failed to rebut the
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presumption of consideration attached to the cheque, the
cheques were dishonoured with an endorsement ‘insufficient
funds’ and the defence witness could not establish the identity
of Surender to whom ₹3,00,000/- were transferred from the
account of the complainant. The accused tried to demonstrate
that the complainant was a moneylender, and a suggestion to
this effect was given to the complainant, but the complainant
denied the same, and a denied suggestion does not amount to
any proof. Therefore, this plea was not established. The cheques
were dishonoured with an endorsement ‘funds insufficient’, and
notice was duly served upon the accused but the accused failed
to pay the amount of the cheque to the complainant. Hence, he
was rightly convicted and sentenced by the learned Trial Court.
Consequently, the appeal preferred by the accused was
dismissed.
7. Being aggrieved by the judgment passed by the
learned Courts below, the accused has filed the present revision,
asserting that the judgments passed by the learned Courts below
are based on conjectures and surmises. The provisions of
Section 138 of the NI Act were ignored. There was some dispute
related to the sale of land. This fact was admitted by the
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complainant in his cross-examination. The complainant
admitted that he was contesting similar litigation about the
agreements involving a huge amount of ₹96.00 lacs. The
complainant failed to produce the Income Tax Returns to prove
his financial capacity. The plea that the accused is a money
lender is highly probable and learned Courts erred in rejecting
this plea. The agreement executed between the parties mentions
that the cheques were given to the complainant as security and
were to be presented after 19.9.2014. However, the complainant
presented the cheque before the due date without serving any
notice upon the accused. The accused had discharged his part
liability through the cheques of ₹3,00,000/-, and this was duly
proved by the statement of account. The cheque returning
memo was not a certified copy and could not have been admitted
in evidence. The money borrowed by the accused was repaid to
the complainant. Therefore, it was prayed that the present
petition be allowed and the judgments and orders passed by
learned Courts below be set aside.
8. I have heard Mr. Nitin Rishi, learned counsel for the
petitioner/accused, and Mr. Javed Khan, learned counsel, for the
respondent/complainant.
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9. Mr. Nitin Rishi, learned counsel for the
petitioner/complainant, submitted that the learned Courts
below erred in convicting and sentencing the accused. The
accused had proved that ₹3,00,000/- was transferred to the
complainant. This evidence was wrongly ignored by the learned
Courts below. The accused admitted that he had filed many cases
pertaining to the cheques, which shows that he is a
moneylender. He could not have filed the complaints without
the registration under the H.P. Registration of Money Lenders
Act. He relied upon the judgment of this Court in Bal Krishan
Rawat v. Gian Lal 2020:HHC:6491 and the judgment of the
Hon’ble Supreme Court in Rajendra Anant Varik Vs. Govind B.
Prabhugaonkar 2025 INSC 633 in support of his submission.
10. Mr. Javed Khan, learned counsel for the
respondent/complainant, submitted that the learned Courts
below had rightly appreciated the evidence. This Court should
not interfere with the reasonable view of the learned Courts
below, even if another view is possible. Learned Courts below
had rightly held that the cheque carried with it a presumption of
consideration that it was issued in discharge of the legal
liability. The accused failed to prove that the amount of
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₹3,00,000/- was paid to the complainant. There was no
evidence to connect the complainant to Surender Kumar
mentioned in the statement of account, and the learned Trial
Court had rightly discarded this evidence. Therefore, he prayed
that the present appeal 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 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
9
2025:HHC:18541provision 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 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,
10
2025:HHC:18541there 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. It was held in Kishan Rao v. Shankargouda, (2018) 8
SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC
OnLine SC 651 that it is impermissible for the High Court to
reappreciate the evidence and come to its conclusions in the
absence of any perversity. It was observed on 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)
11
2025:HHC:18541“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
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
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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.
15. 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 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
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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.”
16. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
17. The accused stated in his statement recorded under
Section 313 of Cr.P.C. that the complainant had obtained blank
cheques as security. This statement clearly shows that the
accused has not disputed his signatures on the cheque. He has
only disputed that the cheques were filled at the time of their
issuance. 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 his 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
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2025:HHC:18541occur 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.
18. 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.”
19. 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
15
2025:HHC:18541explain 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.”
20. 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.
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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,
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.”
21. The presumption under Section 139 of the NI Act was
explained by the Hon’ble Supreme Court in Triyambak S. Hegde v.
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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
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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
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. 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
19
2025:HHC:18541of proof for rebutting the presumption is that of
preponderance of probabilities.
25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him or the
accused can also rely on the materials submitted by
the complainant in order to raise a probable
defence. Inference of preponderance of
probabilities can be drawn not only from the
materials brought on record by the parties but also
by reference to the circumstances upon which they
rely.
25.4. That it is not necessary for the accused to
come into the witness box in support of his defence,
Section 139 imposed an evidentiary burden and not
a persuasive burden.
25.5. It is not necessary for the accused to come into
the witness box to support his defence.
26. Applying the preposition of law as noted above,
in the facts of the present case, it is clear that the
signature on the cheque, having been admitted, a
presumption shall be raised under Section 139 that
the cheque was issued in discharge of debt or
liability. The question to be looked into is as to
whether any probable defence was raised by the
accused. In the cross-examination of PW 1, when
the specific question was put that a cheque was
issued in relation to a loan of Rs 25,000 taken by
the accused, PW 1 said that he does not remember.
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
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loan of Rs 50,000 with regard to which Complaint
No. 119 of 2012 was filed by the complainant, a copy
of which complaint was also filed as Ext. D-2, there
was a burden on the complainant to prove his
financial capacity. In the years 2010-2011, as per
own case of the complainant, he made a payment of
Rs 18 lakhs. During his cross-examination, when
the financial capacity to pay Rs 6 lakhs to the
accused was questioned, there was no satisfactory
reply given by the complainant. The evidence on
record, thus, is a probable defence on behalf of the
accused, which shifted the burden on the
complainant to prove his financial capacity and
other facts.”
16. In that light, it is contended that the very materials
produced by the appellant and the answers relating to
lack of knowledge of property details by PW 1 in his cross-
examination would indicate that the transaction is
doubtful, and no evidence is tendered to indicate that the
amount was paid. In such an event, it was not necessary
for the respondent to tender rebuttal evidence, but the
case put forth would be sufficient to indicate that the
respondent has successfully rebutted the presumption.
17. On the position of law, the provisions referred to in
Sections 118 and 139 of the NI Act, as also the enunciation
of law as made by this Court, need no reiteration as there
is no ambiguity whatsoever. In Basalingappav.
Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC
418 : (2019) 2 SCC (Cri) 571] relied on by the learned
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
21
2025:HHC:18541
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.”
22. 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…”
22
2025:HHC:18541
23. 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
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.”
24. 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
23
2025:HHC:18541Section 118 and are hence not repeated–reference to one
can be taken as reference to another]
34. Section 139 of the NI Act, which takes the form of a
“shall presume” clause, is illustrative of a presumption of
law. Because Section 139 requires that the Court “shall
presume” the fact stated therein, it is obligatory for the
Court to raise this presumption in every case where the
factual basis for the raising of the presumption had been
established. But this does not preclude the person against
whom the presumption is drawn from rebutting it and
proving the contrary, as is clear from the use of the
phrase “unless the contrary is proved”.
35. The Court will necessarily presume that the cheque
had been issued towards the discharge of a legally
enforceable debt/liability in two circumstances. Firstly,
when the drawer of the cheque admits issuance/execution
of the cheque and secondly, in the event where the
complainant proves that the cheque was issued/executed
in his favour by the drawer. The circumstances set out
above form the fact(s) which bring about the activation of
the presumptive clause. [Bharat Barrel & Drum Mfg.
Co. v. Amin Chand Payrelal [Bharat Barrel & Drum Mfg.
Co. v. Amin Chand Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of holding
that presumption takes effect even in a situation where
the accused contends that a blank cheque leaf was
voluntarily signed and handed over by him to the
complainant. [Bir Singh v. Mukesh Kumar [Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC
(Civ) 309: (2019) 2 SCC (Cri) 40] ]. Therefore, the mere
admission of the drawer’s signature, without admitting
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
24
2025:HHC:18541
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
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]]
25. The accused also claimed in his statement recorded
under Section 313 of Cr.P.C. that he had borrowed ₹3.00 lacs
from the complainant and he had returned the amount of
₹3.00 lacs by way of a cheque. He had also paid an extra
amount of ₹50,000/- to the complainant. He examined Vikas
25
2025:HHC:18541
Kumar (DW1), who proved the statement of account
(Ex.DW1/A), in which an entry of payment of ₹3.00 lacs by
means of cheque to Surender Kumar was mentioned. Vikas
Kumar admitted in his cross-examination that he could not
say which Surender Kumar had taken the money. He
volunteered to say that he could disclose this fact by checking
the voucher. The record of the voucher was not requisitioned
from him.
26. Learned Courts below had rightly held that the
testimony of this witness did not prove the defence of the
accused. This witness could not identify the person to whom
the money was paid. The complainant denied his cross-
examination that the accused had returned the money by way
of cheque No. 007069, and he had also returned ₹50,000/- to
the complainant. A denied suggestion does not amount to any
proof, and learned Courts below had rightly held that there
was no evidence to prove that the money was paid to the
complainant.
27. It was submitted that the payment was to be made
after ascertaining the identity of the person to whom the
26
2025:HHC:18541
money was being paid. The bank failed to maintain the record
regarding the identity for which the accused should not be
penalised. This submission is only stated to be rejected.
Vikash Kumar (DW1) categorically stated that the identity of
the person could be verified by checking the vouchers;
however, the vouchers were not requisitioned from him. His
statement shows that the complete record was not
requisitioned by the accused to prove his defence. Hence,
there is no evidence that the proper record regarding the
disbursal of the money was not maintained.
28. Moreover, the accused could have issued an
account payee cheque, and there was no need to issue a bearer
cheque. He had taken money from the complainant through a
cheque, and it was expected of him to return the money by
using an account payee cheque so as to retain the proof of the
payment. If he had issued the cheque in favour of the bearer,
he could only blame himself and not the Bank.
29. The complainant stated in his cross-examination
that an agreement dated 19.7.2014 was executed between the
parties. He had litigation with the accused regarding the
27
2025:HHC:18541
earnest money for some land. The earnest money was
₹3,50,000/- out of which he had paid ₹3.00 lacs, and
₹50,000/- was to be paid by him at the time of the sale deed.
The sale deed was not executed in this case. He had 10 cases
pending against Jagdish Sharma regarding the cheque and the
earnest money for ₹96.00 lacs. One case was pending with
Anil Kumar for ₹1,90,000/-, one case was pending with Ram
Singh for ₹3,10,000/-, one case was pending with Fun Chong
Tashi for ₹50,000/-, one case was pending against Prem
Singh for ₹2.00 lacs, and one case pertaining to earnest
money was pending with Lekh Raj for ₹10.00 lacs and ₹7.00
lacs. He denied that he used to advance money on interest. He
admitted that he had not mentioned the amount in his Income
Tax Return.
30. It was submitted that the cross-examination of the
complainant shows that he is a moneylender and, in the
absence of registration, he could not have filed the present
complaint. This submission is not acceptable. The
complainant specifically denied in his cross-examination that
he is a moneylender and denied suggestion does not amount
28
2025:HHC:18541
to any proof. Further, the cross-examination of the
complainant shows that the cases pertain to the earnest
money and not to the return of money advanced by the
complainant. The term money lender has been defined in
Section 2(a) of the H.P. Registration of Money Lenders Act,
1976 as a person carrying on the business of advancing loans.
The term loan means advancing money at interest. The
cross-examination of the complainant does not show that he
is engaged in the business of advancing money on interest.
Therefore, the findings recorded by the learned Courts that
the complainant was not proved to be the moneylender
cannot be faulted.
31. It was submitted that the loan of ₹1,50,000/- was
advanced in cash as per the complainant, which is contrary to
the provision of Section 269(SS) of the Income Tax Act. The loan
was not reflected in the income tax returns, and the complaint is
liable to be dismissed. This submission is not acceptable. It was
laid down by this Court in Surinder Singh vs. State of H.P. 2018(1)
D.C.R. 45 that contravention of Section 269 SS of the Income Tax
29
2025:HHC:18541
Act will give rise to a penalty, but will not invalidate the
transaction. It was observed:-
5. The relevant portion of Section 269 SS of the IT Act
reads thus:-
“(a) the amount of such loan or deposit or the
aggregate amount of such loan and deposit’ or
(b) on the date of taking or accepting such loan or
deposit, any loan or deposit taken or accepted earlier
by such person from the depositor is remaining
unpaid (whether repayment has fallen due or not),
the amount or the aggregate amount remaining
unpaid; or
(c) the amount or the aggregate amount referred to
in clause (a) together with the amount or the
aggregate amount referred to in clause (b), is
(twenty) thousand rupees or more. Provided……”
6. Section 271D provides for a penalty for failure to comply
with the aforesaid provisions which reads thus:
“271D. Penalty for failure to comply with the
provisions of Section 269-SS – (1) If a person takes or
accepts any loan or deposit in contravention of the
provisions of Section 269-SS, he shall be liable to
pay, by way of penalty, a sum equal to the amount of
the loan or deposit so taken or accepted.
(2) Any penalty impossible under sub-section (1)
shall be imposed by the Joint Commissioner.”
7. A collective reading of both the aforesaid Sections would
go to show that even though contravention of Section
269-SS of the IT Act would be visited with a strict penalty
on the person taking the loan or deposit. However, Section
271D does not in any manner suggest or even provide that
such a transaction would be null and void. The payer of
money in cash, in violation of Section 269 SS of the IT Act
can always have the money recovered.
30
2025:HHC:18541
8. The object of introducing Section 269 of the IT Act has
been succinctly set out by the Hon’ble Supreme Court in
Asstt. Director of Inspection Investigation vs. A.B.
Shanthi (2002) 6 SCC 259, wherein it was observed as
under:-
“8. The object of introducing Section 269-SS is to
ensure that a taxpayer is not allowed to give a false
explanation for his unaccounted money, or if he has
given some false entries in his accounts, he shall not
escape by giving false entries in his accounts, he shall
not escape by giving a false explanation for the same.
During search and seizures, unaccounted money is
unearthed and the taxpayer would usually give the
explanation that he had borrowed or received
deposits from his relatives or friends and it is easy
for the so-called lender also to manipulate his
records later to suit the plea of the taxpayer. The
main objection of Section 269-SS was to curb this
menace.”
9. In light of the aforesaid observations it cannot but be
said that Section 269-SS only provides for the mode of
accepting payment or repayment in certain cases so as to
counteract evasion of tax. However, Section 269-SS does
not declare all transactions of loan by cash in excess of
₹20,000/- as invalid, illegal or null and void as the main
object of introducing the provision was to curb and
unearth black money.
32. It was further held that the failure to mention the
loan in the income tax return will not entitle the accused to
acquittal. It was observed:-
10. It would further be noticed that the learned trial
Magistrate has acquitted the accused on the ground that
the loan has not been shown in the Income Tax Return
31
2025:HHC:18541furnished by the complainant and while recording such
finding has placed reliance upon the judgment of the
Hon’ble Delhi High Court in Vipul Kumar Gupta vs. Vipin
Gupta 2012 (V) AD (CRI) 189. However, after having perused
the said judgment, it would be noticed that the amount
in the said case was ₹ 9 lacs and it is in that background
that the Court observed as under:-
“9. I find myself in agreement with the reasoning
given by the learned ACMM that before a person is
convicted for having committed an offence
under Section 138 of the Act, it must be proved
beyond a reasonable doubt that the cheque in
question, which has been made as a basis for
prosecuting the respondent/accused, must have
been issued by him in the discharge of his liability
or a legally recoverable debt. In the facts and
circumstances of this case, there is every reason to
doubt the version given by the appellant that the
cheque was issued in the discharge of a liability or a
legally recoverable debt. The reasons for this are a
number of factors which have been enumerated by
the learned ACMM also. Some of them are that non-
mentioning by the appellant in his Income Tax
Return or the Books of Accounts, the factum of the
loan having been given by him because by no
measure, an amount of ₹ 9,00,000/- can be said to
be a small amount which a person would not reflect
in his Books of Accounts or the Income Tax Return,
in case the same has been lent to a person. The
appellant, neither in the complaint nor in his
evidence, has mentioned the date, time or year
when the loan was sought or given. The appellant
has presented a cheque, which obviously is written
with two different inks, as the signature is
appearing in one ink, while the remaining portion,
which has been filled up in the cheque, is in
different ink. All these factors prove the defence of
the respondent to be plausible to the effect that he
32
2025:HHC:18541had issued these cheques by way of security to the
appellant for getting a loan from Prime Minister
Rojgar Yojana. The respondent/accused has only to
create doubt in the version of the appellant, while
the appellant has to prove the guilt of the accused
beyond a reasonable doubt, in which, in my
opinion, he has failed miserably. There is no cogent
reason which has been shown by the appellant
which will persuade this Court to grant leave to
appeal against the impugned order, as there is no
infirmity in the impugned order.”
33. Therefore, the submission that the complaint was
liable to be dismissed because the amount was given in
violation of Section 269(SS) and was not reflected in the
income tax return cannot be accepted.
34. It was submitted that the complainant admitted
the execution of an agreement between the parties; however,
this agreement was not placed on record. Therefore, an
adverse inference should be drawn against the complainant.
This submission is not acceptable. It was rightly pointed out
by the learned Courts below that the cheque carries with it a
presumption of consideration and the complainant is not
required to prove the consideration before the Court. This
proposition was laid down by Hon’ble Supreme Court in Uttam
Ram v. Devinder Singh Hudan, (2019) 10 SCC 287: (2020) 1 SCC
33
2025:HHC:18541
(Cri) 154: (2020) 1 SCC (Civ) 126: 2019 SCC OnLine SC 1361 wherein
it was observed:-
“19. A negotiable instrument including a cheque carries a
presumption of consideration in terms of Section 118(a)
and under Section 139 of the Act. Sections 118(a) and 139
read as under:
“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;
***
139. Presumption in favour of 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.”
20. The trial court and the High Court proceeded as if, the
appellant is to prove a debt before civil court wherein, the
plaintiff is required to prove his claim on the basis of
evidence to be laid in support of his claim for the recovery
of the amount due. A dishonour of a cheque carries a
statutory presumption of consideration. The holder of the
cheque in due course is required to prove that the cheque
was issued by the accused and that when the same
presented, it was not honoured. Since there is a statutory
presumption of consideration, the burden is on the
accused to rebut the presumption that the cheque was
issued not for any debt or other liability.
21. There is the mandate of presumption of consideration
in terms of the provisions of the Act. The onus shifts to
34
2025:HHC:18541
the accused on proof of issuance of cheque to rebut the
presumption that the cheque was issued not for discharge
of any debt or liability in terms of Section 138 of the Act
which reads as under:
“138. Dishonour of cheque for insufficiency, etc. of funds
in the account.–Where any cheque drawn by a person
on an account maintained by him with a banker for
payment of any amount of money to another person
from out of that account for the discharge, in whole or
in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to
have committed an offence and shall, …”
22. In Kumar Exports [Kumar Exports v. Sharma Carpets,
(2009) 2 SCC 513: (2009) 1 SCC (Civ) 629: (2009) 1 SCC (Cri)
823], it was held that mere denial of the existence of debt
will not serve any purpose but the accused may adduce
evidence to rebut the presumption. This Court held as
under: (SCC pp. 520-21, para 20)
“20. The accused in a trial under Section 138 of the Act
has two options. He can either show that consideration
and debt did not exist or that, under the particular
circumstances of the case, the non-existence of
consideration and debt is so probable that a prudent
man ought to suppose that no consideration and debt
existed. To rebut the statutory presumptions, an
accused is not expected to prove his defence beyond a
reasonable doubt, as is expected of the complainant in
a criminal trial. The accused may adduce direct
evidence to prove that the note in question was not
supported by consideration and that there was no debt
or liability to be discharged by him. However, the court
need not insist in every case that the accused should
disprove the non-existence of consideration and debt
by leading direct evidence because the existence of
35
2025:HHC:18541
negative evidence is neither possible nor
contemplated. At the same time, it is clear that bare
denial of the passing of the consideration and existence of
debt, apparently, would not serve the purpose of the
accused. Something which is probable has to be brought
on record for getting the burden of proof shifted to the
complainant. To disprove the presumptions, the accused
should bring on record such facts and circumstances, upon
consideration of which, the court may either believe that
the consideration and debt did not exist or their non-
existence was so probable that a prudent man would
under the circumstances of the case, act upon the plea that
they did not exist. Apart from adducing direct evidence
to prove that the note in question was not supported by
consideration or that he had not incurred any debt or
liability, the accused may also rely upon circumstantial
evidence, and if the circumstances so relied upon are
compelling, the burden may likewise shift again onto
the complainant. The accused may also rely upon
presumptions of fact, for instance, those mentioned in
Section 114 of the Evidence Act, to rebut the
presumptions arising under Sections 118 and 139 of the
Act.” (emphasis supplied)
23. In the judgment Kishan Rao v. Shankargouda [Kishan
Rao v. Shankargouda, (2018) 8 SCC 165 : (2018) 4 SCC (Civ)
37 : (2018) 3 SCC (Cri) 544], this Court referring to Kumar
Exports [Kumar Exports v. Sharma Carpets, (2009) 2 SCC
513 : (2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823]
and Rangappa [Rangappa v. Sri Mohan, (2010) 11 SCC 441 :
(2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] returned the
following findings : (Kishan Rao case [Kishan
Rao v. Shankargouda, (2018) 8 SCC 165 : (2018) 4 SCC (Civ)
37 : (2018) 3 SCC (Cri) 544], SCC pp. 173-74, para 22)
“22. Another judgment which needs to be looked into
is Rangappa v. Sri Mohan [Rangappa v. Sri Mohan,
(2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC
(Cri) 184]. A three-judge Bench of this Court had
occasion to examine the presumption under Section
36
2025:HHC:18541139 of the 1881 Act. This Court in the aforesaid case has
held that in the event the accused is able to raise a
probable defence which creates doubt with regard to
the existence of a debt or liability, the presumption
may fail. The following was laid down in paras 26 and
27: (SCC pp. 453-54)
’26. In light of these extracts, we are in agreement
with the respondent claimant that the presumption
mandated by Section 139 of the Act does indeed
include the existence of a legally enforceable debt or
liability. To that extent, the impugned observations
in Krishna Janardhan Bhat [Krishna Janardhan
Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54: (2008)
2 SCC (Cri) 166] may not be correct. However, this
does not in any way cast doubt on the correctness of
the decision in that case since it was based on the
specific facts and circumstances therein. As noted
in the citations, this is, of course, in the nature of a
rebuttable presumption, and it is open to the
accused to raise a defence wherein the existence of
a legally enforceable debt or liability can be
contested. However, there can be no doubt that
there is an initial presumption which favours the
complainant.
27. Section 139 of the Act is an example of a reverse
onus clause that has been included in furtherance of
the legislative objective of improving the credibility
of negotiable instruments. While Section 138 of the
Act specifies a strong criminal remedy in relation to
the dishonour of cheques, the rebuttable
presumption under Section 139 is a device to
prevent undue delay in the course of litigation.
However, it must be remembered that the offence
made punishable by Section 138 can be better
described as a regulatory offence since the
bouncing of a cheque is largely in the nature of a
civil wrong whose impact is usually confined to the
private parties involved in commercial transactions.
37
2025:HHC:18541
In such a scenario, the test of proportionality
should guide the construction and interpretation of
reverse onus clauses, and the defendant-accused
cannot be expected to discharge an unduly high
standard of proof.”
24. In the judgment Bir Singh v. Mukesh Kumar [Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Civ)
309: (2019) 2 SCC (Cri) 40], this Court held that
presumption under Section 139 of the Act is a
presumption of law. The Court held as under: (SCC pp. 206
& 208-09, paras 20, 33 & 36)
“20. Section 139 introduces an exception to the general
rule as to the burden of proof and shifts the onus on
the accused. The presumption under Section 139 of the
Negotiable Instruments Act is a presumption of law, as
distinguished from a presumption of fact.
Presumptions are rules of evidence and do not conflict
with the presumption of innocence, which requires the
prosecution to prove the case against the accused
beyond a reasonable doubt. The obligation on the
prosecution may be discharged with the help of
presumptions of law and presumptions of fact unless
the accused adduces evidence showing the reasonable
possibility of the non-existence of the presumed fact
as held in Hiten P. Dalal [Hiten P., Dalal v. Bratindranath
Banerjee, (2001) 6 SCC 16: 2001 SCC (Cri) 960].
***
33. A meaningful reading of the provisions of the
Negotiable Instruments Act including, in particular,
Sections 20, 87 and 139, makes it amply clear that a
person who signs a cheque and makes it over to the
payee remains liable unless he adduces evidence to
rebut the presumption that the cheque had been issued
for payment of a debt or in discharge of a liability. It is
immaterial that the cheque may have been filled in by
any person other than the drawer if the cheque is duly
38
2025:HHC:18541
signed by the drawer. If the cheque is otherwise valid,
the penal provisions of Section 138 would be attracted.
***
36. Even a blank cheque leaf, voluntarily signed and
handed over by the accused, which is towards some
payment, would attract presumption under Section 139
of the Negotiable Instruments Act, in the absence of
any cogent evidence to show that the cheque was not
issued in discharge of a debt.”
25. In other judgment Rohitbhai Jivanlal Patel v. State of
Gujarat [Rohitbhai Jivanlal Patel v. State of Gujarat, (2019)
18 SCC 106: 2019 SCC OnLine SC 389: AIR 2019 SC 1876] this
Court held as under: (SCC paras 15, 17 and 22)
“15. So far the question of the existence of basic
ingredients for drawing of presumption under
Sections 118 and 139 of the NI Act is concerned,
apparent it is that the appellant-accused could not
deny his signature on the cheques in question that
had been drawn in favour of the complainant on a
bank account maintained by the accused for a sum
of Rs 3 lakhs each. The said cheques were presented
to the bank concerned within the period of their
validity and were returned unpaid for the reason of
either the balance being insufficient or the account
being closed. All the basic ingredients of Section
138, as also of Sections 118 and 139, are apparent on
the face of the record. The trial court had also
consciously taken note of these facts and had drawn
the requisite presumption. Therefore, it is required
to be presumed that the cheques in question were
drawn for consideration and the holder of the
cheques, i.e. the complainant, received the same in
discharge of an existing debt. The onus, therefore,
shifts on the appellant-accused to establish a
probable defence so as to rebut such a presumption.
***
39
2025:HHC:18541
17. On the aspects relating to a preponderance of
probabilities, the accused has to bring on record such
facts and such circumstances which may lead the Court
to conclude either that the consideration did not exist
or that its non-existence was so probable that a
prudent man would, under the circumstances of the
case, act upon the plea that the consideration did not
exist. This Court has, time and again, emphasised that
though there may not be sufficient negative evidence
which could be brought on record by the accused to
discharge his burden, yet mere denial would not fulfil
the requirements of rebuttal as envisaged under
Sections 118 and 139 of the NI Act….
***
22. The result of the discussion in the foregoing
paragraphs is that the major considerations on which
the trial court chose to proceed clearly show its
fundamental error of approach, where, even after
drawing the presumption, it had proceeded as if the
complainant was to prove his case beyond a reasonable
doubt. Such being the fundamental flaw on the part of
the trial court, the High Court [Shashi Mohan
Goyanka v. State of Gujarat, 2018 SCC OnLine Guj 3674]
cannot be said to have acted illegally or having
exceeded its jurisdiction in reversing the judgment of
acquittal. As noticed hereinabove, in the present
matter, the High Court has conscientiously and
carefully taken into consideration the views of the trial
court and, after examining the evidence on the record
as a whole, found that the findings of the trial court are
vitiated by perversity. Hence, interference by the High
Court was inevitable; rather had to be made for a just
and proper decision of the matter.”
“20. The Trial Court and the High Court proceeded as if
the appellant were to prove a debt before a civil court,
wherein the plaintiff is required to prove his claim on the
basis of evidence to be laid in support of his claim for the
recovery of the amount due. Dishonour of a cheque
40
2025:HHC:18541carries a statutory presumption of consideration. The
holder of the cheque in due course is required to prove
that the cheque was issued by the accused and that when
the same was presented, it was not honoured. Since there
is a statutory presumption of consideration, the burden is
on the accused to rebut the presumption that the cheque
was issued not for any debt or other liability.”
35. A similar view was taken in Rohitbhai Jivanlal Patel v.
State of Gujarat (2019) 18 SCC 106, and it was held that once a
presumption has been drawn, the onus shifts to the accused. It
was observed: –
12. According to the learned counsel for the appellant-
accused, the impugned judgment is contrary to the
principles laid down by this Court in Arulvelu [Arulvelum v.
State, (2009) 10 SCC 206 : (2010) 1 SCC (Cri) 288] because
the High Court has set aside the judgment of the trial
court without pointing out any perversity therein. The
said case of Arulvelu [Arulvelum v. State, (2009) 10 SCC
206 : (2010) 1 SCC (Cri) 288] related to the offences under
Sections 304-B and 498-A IPC. Therein, on the scope of
the powers of the appellate court in an appeal against
acquittal, this Court observed as follows : (SCC p. 221,
para 36)
“36. Careful scrutiny of all these judgments leads to
the definite conclusion that the appellate court should
be very slow in setting aside a judgment of acquittal,
particularly in a case where two views are possible. The
trial court judgment cannot be set aside because the
appellate court’s view is more probable. The appellate
court would not be justified in setting aside the trial
court judgment unless it arrives at a clear finding on
marshalling the entire evidence on record that the
judgment of the trial court is either perverse or wholly
unsustainable in law.”
41
2025:HHC:18541
The principles aforesaid are not of much debate. In other
words, ordinarily, the appellate court will not be
upsetting the judgment of acquittal, if the view taken by
the trial court is one of the possible views of the matter
and unless the appellate court arrives at a clear finding
that the judgment of the trial court is perverse i.e. not
supported by evidence on record or contrary to what is
regarded as normal or reasonable; or is wholly
unsustainable in law. Such general restrictions are
essential to remind the appellate court that an accused is
presumed to be innocent unless proved guilty beyond a
reasonable doubt, and a judgment of acquittal further
strengthens such presumption in favour of the accused.
However, such restrictions need to be visualised in the
context of the particular matter before the appellate court
and the nature of the inquiry therein. The same rule with
the same rigour cannot be applied in a matter relating to
the offence under Section 138 of the NI Act, particularly
where a presumption is drawn that the holder has
received the cheque for the discharge, wholly or in part,
of any debt or liability. Of course, the accused is entitled
to bring on record the relevant material to rebut such
presumption and to show that preponderance of
probabilities are in favour of his defence but while
examining if the accused has brought about a probable
defence so as to rebut the presumption, the appellate
court is certainly entitled to examine the evidence on
record in order to find if preponderance indeed leans in
favour of the accused.
13. For determination of the point as to whether the High
Court was justified in reversing the judgment and orders
of the trial court and convicting the appellant for the
offence under Section 138 of the NI Act, the basic
questions to be addressed are twofold: as to whether the
complainant Respondent 2 had established the
ingredients of Sections 118 and 139 of the NI Act, so as to
justify drawing of the presumption envisaged therein;
and if so, as to whether the appellant-accused had been
42
2025:HHC:18541
able to displace such presumption and to establish a
probable defence whereby, the onus would again shift to
the complainant?
36. This position was reiterated in Ashok Singh v. State of
U.P., 2025 SCC OnLine SC 706, wherein 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 bank
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
43
2025:HHC:18541
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 had 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
44
2025:HHC:18541capacity and therefore, the case of the accused is
acceptable, which he can do by producing independent
materials, namely, by examining his witnesses and
producing documents. 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)’
37. The accused has not disputed the loan of ₹3.00 lacs.
His claim is that he had repaid the amount, which was not
proved satisfactorily. Thus, the production of the agreement
was not essential to prove the consideration.
38. Therefore, the complainant’s version cannot be
doubted because of the failure to produce the agreement
executed between the parties.
39. Therefore, learned Courts below had rightly held
that the accused had failed to rebut the presumption
contained in Sections 118 (a) and 139 of the NI Act. This was a
reasonable view which could have been taken based on the
evidence led before the learned Trial Court.
45
2025:HHC:18541
40. The complainant stated that the cheque was
dishonoured with an endorsement ‘funds insufficient’. The
memos of dishonour (Ex. CW1/E and Ex.CW1/G) show that the
cheques were returned with an endorsement of ‘funds
insufficient’. 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 disproved. Section 147 makes the offences
punishable under the Act compoundable.
41. It was submitted that the cheque return memo does
not contain the certificate under the Banker Book Evidence
Act. This submission will not help the accused because the
memo is the original and does not require any certificate.
42. The accused admitted in his statement recorded
under Section 313 of Cr.P.C. that he had received the notice.
46
2025:HHC:18541
Thus, the receipt of the notice is undisputed. The accused
claimed that he had paid ₹3,50,000/-; however, it was not
proved that this amount was paid to the complainant;
therefore, no advantage can be derived from the payment
made by the accused.
43. Thus, it was duly proved on record that the cheque
was issued in discharge of legal liability, the cheque was
dishonoured due to insufficient funds, and the accused failed
to repay the amount despite the receipt of a valid notice of
demand; therefore, all the ingredients of Section 138 of NI Act
were duly satisfied and the accused was rightly convicted of
the commission of offence punishable under Section 138 of
the NI Act.
44. The Learned Trial Court sentenced the accused to
undergo simple imprisonment for three 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 provision of section
138 is deterrent in nature. It was observed at page 203:
47
2025:HHC:18541
“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.”
45. Keeping in view the deterrent nature of the sentence
to be awarded, the sentence of three months’ imprisonment
cannot be said to be excessive, and no interference is required
with it.
46. Learned Trial Court had ordered the accused to pay a
compensation of ₹4,50,000/- to the complainant, which is the
cheque amount. 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
48
2025:HHC:18541liability 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]”
47. Therefore, the amount of ₹4,50,000/- awarded by
the learned Trial Court was inadequate, but no appeal was
preferred; therefore, no interference is required with the
sentence awarded by the learned Trial Court as affirmed by the
learned Appellate Court.
48. No other point was urged.
49. In view of the above, the present petition fails, and
the same is dismissed.
50. A copy of the judgment and the record of the learned
Trial Court be sent back forthwith.
(Rakesh Kainthla)
Judge
18th June, 2025
(Chander)