Himachal Pradesh High Court
Reserved On: 02.06.2025 vs State Bank Of India on 25 June, 2025
2025:HHC:19715
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No.769 of 2024
Reserved on: 02.06.2025
Date of Decision: 25.06.2025
Naresh Kumar …Petitioner
Versus
State Bank of India …Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Mr. Sanjay Jaswal, Advocate.
Rakesh Kainthla, Judge
The petitioner has filed the present petition against the
judgment dated 01.10.2024 passed by learned Additional Sessions
Judge(1), Kangra at Dharamshala, District Kangra, HP (learned
Appellate Court) vide which the judgment of conviction dated
03.08.2023 and order of sentence dated 07.08.2023 passed by
learned Judicial Magistrate, First Class Kangra, H.P. (learned Trial
Court) were upheld. (Parties shall hereinafter be referred to in the
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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same manner as they were arrayed before the learned Trial Court for
convenience.)
2. Briefly stated, the facts giving rise to the present
petition are that the complainant filed a complaint against the
accused before the learned Trial Court for the commission of an
offence punishable under Section 138 of the Negotiable
Instruments Act (in short, ‘NI Act‘). It was asserted that the
complainant is a body corporate engaged in banking activities.
The complainant advanced ₹4,54,020/- on 04.11.2006 to the
accused as a car loan. The accused promised to pay the amount as
per the terms and conditions agreed between the parties; however,
he defaulted, and an amount of ₹7,28,838.72/- became payable till
31.05.2010. The complainant demanded the money from the
accused, and the accused issued a cheque of ₹7,00,000/- drawn on
State Bank of Patiala, Kangra in favour of the complainant to
discharge his legal liability. The complainant presented the
cheque to its banker, but it was dishonoured with the remarks
‘funds insufficient’. The complainant served a notice upon the
accused asking him to pay the money within 15 days of the receipt
of the notice; however, the accused failed to do so. Therefore, the
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complaint was filed before the learned Trial court for taking action
as per the law.
3. The learned Trial Court recorded the preliminary
evidence and found sufficient reasons to summon the accused.
When the accused appeared, a notice of accusation was put to him
for the commission of an offence punishable under Section 138 of
the NI Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined Ajay Kumar (CW1) and
Rajnish Sharma (CW2) to prove its case.
5. The accused admitted in his statement recorded under
Section 313 of Cr.P.C. that he had taken a loan of ₹4,54,020/-. He
stated that the car was involved in an accident and 5 people died.
He did not pay the amount to the Bank. The amount was still
outstanding. He did not issue the cheque of ₹7,00,000/- as he did
not have the amount in his account. He initially stated that he
wanted to lead the defence evidence; however, no defence was led
by him.
6. Learned Trial Court held that the plea of the
complainant was probable that the cheque was issued by the
accused. The accused admitted the taking of loan. It was suggested
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to the complainant’s witnesses that a blank signed security
cheque was misused by the Bank; however, this was not proved.
The accused had not paid the amount, and even if the cheque was
issued as a security, the accused would be liable. The cheque was
dishonoured with an endorsement ‘insufficient funds’ and the
accused failed to pay the amount despite the receipt of a valid
notice of demand; hence, the learned Trial Court convicted the
accused of the commission of an offence punishable under Section
138 of the NI Act and sentenced him to undergo simple
imprisonment for five months and pay a compensation of
₹13,00,000/- to the complainant.
7. Being aggrieved from the judgment and order passed
by the learned Trial Court, the accused filed an appeal, which was
decided by the learned Additional Sessions Judge-I, Kangra at
Dharamshala (learned Appellate Court). Learned Appellate Court
concurred with the findings recorded by the learned Trial Court
that the cheque carries with it a presumption of consideration. The
plea taken by the accused that the complainant misused the blank
security cheque was not acceptable. The accused had not paid the
loan amount, and he admitted that the amount was outstanding;
therefore, the accused was liable to pay the amount to the
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complainant, and the plea that the cheque was issued as security
would not help the accused. The cheque was dishonoured due to
insufficient funds, and the amount was not paid despite the
receipt of a valid notice of demand. The sentence imposed by the
learned Trial Court was adequate and no interference was required
with it; therefore, the appeal filed by the accused was dismissed.
8. Being aggrieved from the judgments and order passed
by the learned Courts below, the accused filed the present
revision, asserting that Ajay Kumar Minhans (CW1) admitted that
the insurance amount was claimed by the Bank. This amount was
not adjusted by the Bank, and the cheque could not have been
presented for the liability of ₹7,00,000/-. The amount of
₹7,28,838.72/- was wrongly calculated by the Bank. The accused
paid ₹20,000/- on 31.12.2022 and ₹1,00,000/- on 20.12.2023. This
amount was not credited to the loan amount. The accused had
rebutted the presumption successfully, and learned Courts below
erred in holding otherwise. Therefore, it was prayed that the
present revision be allowed and the judgments and order passed
by learned Courts below be set aside.
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9. Notice of the revision was issued to the respondent;
however, no one appeared on behalf of the
respondent/complainant despite service.
10. I have heard Mr. Sanjay Jaswal, learned counsel for the
petitioner, who submitted that the accused had issued a security
cheque, which was misused by the complainant bank. Ajay
Minhans admitted that the insurance amount was claimed by the
complainant; however, this amount was not credited to the loan
account, and there is no evidence that the accused had a subsisting
liability of ₹7,00,000/- on the date of the presentation of the
cheque. Learned Courts below did not consider this aspect;
therefore, he prayed that the present revision be allowed and the
judgments and order passed by learned Courts below be set aside.
11. I have given considerable thought to his submissions
made to him 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
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not an appellate court and it can only rectify the patent defect,
errors of jurisdiction or the law. It was observed on page 207: –
“10. Before adverting to the merits of the contentions, at
the outset, it is apt to mention that there are concurrent
findings of conviction arrived at by two courts after a
detailed appreciation of the material and evidence brought
on record. The High Court in criminal revision against
conviction is not supposed to exercise the jurisdiction like
the appellate court, and the scope of interference in revision
is extremely narrow. Section 397 of the Criminal Procedure
Code (in short “CrPC“) vests jurisdiction to satisfy itself or
himself as to the correctness, legality or propriety of any
finding, sentence or order, recorded or passed, and as to the
regularity of any proceedings of such inferior court. The
object of the provision is to set right a patent defect or an
error of jurisdiction or law. There has to be a well-founded
error which is to be determined on the merits of individual
cases. It is also well settled that while considering the same,
the Revisional Court does not dwell at length upon the facts
and evidence of the case to reverse those findings.
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
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2025:HHC:19715Chandra, (2012) 9 SCC 460, where the scope of Section 397
has been considered and succinctly explained as under:
“12. Section 397 of the Code vests the court with the
power to call for and examine the records of an
inferior court for the purposes of satisfying itself as to
the legality and regularity of any proceedings or order
made in a case. The object of this provision is to set
right a patent defect or an error of jurisdiction or law.
There has to be a well-founded error, and it may not
be appropriate for the court to scrutinise the orders,
which, upon the face of it, bear a token of careful
consideration and appear to be in accordance with the
law. If one looks into the various judgments of this
Court, it emerges that the revisional jurisdiction can
be invoked where the decisions under challenge are
grossly erroneous, there is no compliance with the
provisions of law, the finding recorded is based on no
evidence, material evidence is ignored or judicial
discretion is exercised arbitrarily or perversely. These
are not exhaustive classes but are merely indicative.
Each case would have to be determined on its own
merits.
13. Another well-accepted norm is that the revisional
jurisdiction of the higher court is a very limited one and
cannot be exercised in a routine manner. One of the inbuilt
restrictions is that it should not be against an interim or
interlocutory order. The Court has to keep in mind that the
exercise of revisional jurisdiction itself should not lead to
injustice ex facie. Where the Court is dealing with the
question as to whether the charge has been framed properly
and in accordance with law in a given case, it may be
reluctant to interfere in the exercise of its revisional
jurisdiction unless the case substantially falls within the
categories aforestated. Even framing of charge is a much-
advanced stage in the proceedings under the CrPC.”
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
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SC 651 that it is impermissible for the High Court to reappreciate
the evidence and come to its conclusions in the absence of any
perversity. It was observed at page 169:
“12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the ground for exercising the
revisional jurisdiction by the High Court. In State of
Kerala v. Puttumana Illath Jathavedan Namboodiri [State of
Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2
SCC 452: 1999 SCC (Cri) 275], while considering the scope of
the revisional jurisdiction of the High Court, this Court has
laid down the following: (SCC pp. 454-55, para 5)
“5. … In its revisional jurisdiction, the High Court can
call for and examine the record of any proceedings for
the purpose of satisfying itself as to the correctness,
legality or propriety of any finding, sentence or order. In
other words, the jurisdiction is one of supervisory
jurisdiction exercised by the High Court for correcting a
miscarriage of justice. But the said revisional power
cannot be equated with the power of an appellate court,
nor can it be treated even as a second appellate
jurisdiction. Ordinarily, therefore, it would not be
appropriate for the High Court to reappreciate the
evidence and come to its own conclusion on the same
when the evidence has already been appreciated by the
Magistrate as well as the Sessions Judge in appeal unless
any glaring feature is brought to the notice of the High
Court which would otherwise tantamount to a gross
miscarriage of justice. On scrutinising the impugned
judgment of the High Court from the aforesaid
standpoint, we have no hesitation in coming to the
conclusion that the High Court exceeded its jurisdiction
in interfering with the conviction of the respondent by
reappreciating the oral evidence. …”
13. Another judgment which has also been referred to and
relied on by the High Court is the judgment of this Court
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in Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao
Phalke [Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao
Phalke, (2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court
held that the High Court, in the exercise of revisional
jurisdiction, shall not interfere with the order of the
Magistrate unless it is perverse or wholly unreasonable or
there is non-consideration of any relevant material, the
order cannot be set aside merely on the ground that another
view is possible. The following has been laid down in para
14: (SCC p. 135)
“14. … Unless the order passed by the Magistrate is
perverse or the view taken by the court is wholly
unreasonable or there is non-consideration of any
relevant material or there is palpable misreading of
records, the Revisional Court is not justified in setting
aside the order, merely because another view is possible.
The Revisional Court is not meant to act as an appellate
court. The whole purpose of the revisional jurisdiction is
to preserve the power in the court to do justice in
accordance with the principles of criminal jurisprudence.
The revisional power of the court under Sections 397 to
401 CrPC is not to be equated with that of an appeal.
Unless the finding of the court, whose decision is sought
to be revised, is shown to be perverse or untenable in law
or is grossly erroneous or glaringly unreasonable or
where the decision is based on no material or where the
material facts are wholly ignored or where the judicial
discretion is exercised arbitrarily or capriciously, the
courts may not interfere with the decision in exercise of
their revisional jurisdiction.”
14. In the above case, also conviction of the accused was
recorded, and the High Court set aside [Dattatray Gulabrao
Phalke v. Sanjaysinh Ramrao Chavan, 2013 SCC OnLine Bom
1753] the order of conviction by substituting its own view.
This Court set aside the High Court’s order holding that the
High Court exceeded its jurisdiction in substituting its
views, and that too without any legal basis.
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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
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. It was suggested to Ajay Kumar (CW1) in his cross-
examination that the security cheques were taken at the time of
the advancement of the loan. He stated that the Bank does not take
the security cheques. It was never suggested to this witness that
the cheque did not bear the signatures of the accused; therefore,
the part of the statement of this witness that the cheque was
issued by the accused was duly proved. It was laid down by this
Court in Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C. 398
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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.
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
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2025:HHC:19715discharge 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 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.”
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
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2025:HHC:19715accused 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, 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
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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.
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:
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2025:HHC:19715“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 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. Mudibasap
a, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held
as hereunder: (SCC pp. 432-33, paras 25-26)
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“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.
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 ₹ 25,000 taken by the accused, PW 1 said
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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 ₹ 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 ₹ 4,50,000 to Balana Gouda towards sale
consideration. Payment of ₹ 4,50,000 being admitted
in the year 2010 and further payment of loan of ₹
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 ₹ 18 lakhs.
During his cross-examination, when the financial
capacity to pay ₹ 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
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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.”
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
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2025:HHC:19715been established is a matter to be decided on the facts of
each case on the conspectus of evidence and circumstances
that exist…”
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
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138. [The rules discussed hereinbelow are common to both
the presumptions under Section 139 and Section 118 and are
hence not repeated–reference to one can be taken as
reference to another]
34. Section 139 of the NI Act, which takes the form of a
“shall presume” clause, is illustrative of a presumption of
law. Because Section 139 requires that the Court “shall
presume” the fact stated therein, it is obligatory for the
Court to raise this presumption in every case where the
factual basis for the raising of the presumption had been
established. But this does not preclude the person against
whom the presumption is drawn from rebutting it and
proving the contrary, as is clear from the use of the phrase
“unless the contrary is proved”.
35. The Court will necessarily presume that the cheque had
been issued towards the discharge of a legally enforceable
debt/liability in two circumstances. Firstly, when the drawer
of the cheque admits issuance/execution of the cheque
and secondly, in the event where the complainant proves
that the cheque was issued/executed in his favour by the
drawer. The circumstances set out above form the fact(s)
which bring about the activation of the presumptive clause.
[Bharat Barrel & Drum Mfg. Co. v. Amin Chand
Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin Chand
Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of holding
that presumption takes effect even in a situation where the
accused contends that a blank cheque leaf was voluntarily
signed and handed over by him to the complainant. [Bir
Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40] ].
Therefore, the mere admission of the drawer’s signature,
without admitting 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
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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 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 claimed that he did not issue the cheque of
₹7,00,000/-; however, he did not lead any evidence 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
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his statement under Section 313 of Cr.P.C. is not sufficient to rebut
the presumption. It was observed at page 700:
“20. That apart, when the complainant exhibited all these
documents in support of his complaints and recorded 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)”
26. In the present case, the accused did not appear in the
witness box, nor did he examine any witness to establish the plea
taken by him that he had issued a blank signed cheque to raise a
loan, and the learned Courts had rightly rejected this plea.
27. In any case, the issuance of the cheque as a security will
not absolve the accused of the commission of the crime. 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
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2025:HHC:19715force for the reasons hereinafter mentioned. As per Section
138 of the Negotiable Instruments Act 1881, if any cheque is
issued on account of other liability, then the provisions of
Section 138 of the Negotiable Instruments Act 1881 would be
attracted. The court has perused the original cheque, Ext. C-
1 dated 30.10.2008, placed on record. There is no recital in
the cheque Ext. C-1, that cheque was issued as a security
cheque. It is well-settled law that a cheque issued as
security would also come under the provision of Section 138
of the Negotiable Instruments Act 1881. See 2016 (3) SCC
page 1 titled Don Ayengia v. State of Assam & another. It is
well-settled law that where there is a conflict between
former law and subsequent law, then subsequent law
always prevails.”
28. It was laid down by the Hon’ble Supreme Court in
Sampelly Satyanarayana Rao vs. Indian Renewable Energy
Development Agency Limited 2016(10) SCC 458 that issuing a
cheque towards security will also attract the liability for the
commission of an offence punishable under Section 138 of N.I. Act.
It was observed: –
“10. We have given due consideration to the submission
advanced on behalf of the appellant as well as the
observations of this Court in Indus Airways Private Limited
versus Magnum Aviation Private Limited (2014) 12 SCC 53
with reference to the explanation to Section 138 of the Act
and the expression “for the discharge of any debt or other
liability” occurring in Section 138 of the Act. We are of the
view that the question of whether a post-dated cheque is 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.
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11. Reference to the facts of the present case clearly shows
that though the word “security” is used in clause 3.1(iii) of
the agreement, the said expression refers to 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 28th February 2002, which
was prior to the date of the cheques. Once the loan was
disbursed and instalments have fallen due on the date of the
cheque as per the agreement, the dishonour of such
cheques would fall under Section 138 of the Act. The
cheques undoubtedly represent the outstanding liability.
12. Judgment in Indus Airways (supra) is clearly
distinguishable. As already noted, it was held therein that
liability arising out of a claim for breach of contract under
Section 138, which arises on account of dishonour of a
cheque issued, was not by itself at par with a criminal
liability towards discharge of acknowledged and admitted
debt under a loan transaction. Dishonour of a cheque issued
for discharge of a later liability is clearly covered by the
statute in question. Admittedly, on the date of the cheque,
there was a debt/liability in praesenti in terms of the loan
agreement, as against the case of Indus Airways (supra),
where the purchase order had been cancelled and a cheque
issued towards advance payment for the purchase order was
dishonoured. In that case, it was found that the cheque had
not been issued for discharge of liability but as an advance
for the purchase order, which was cancelled. Keeping in
mind this fine, but the real distinction, the said judgment
cannot be applied to a case of the present nature where the
cheque was for repayment of a loan instalment which had
fallen due, though such deposit of cheques towards
repayment of instalments was also described as “security”
in the loan agreement. In applying the judgment in Indus
Airways (supra), one cannot lose sight of the difference
between a transaction of the purchase order which is
cancelled and that of a loan transaction where the loan has
actually been advanced and its repayment is due on the date
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of the cheque.
13. The crucial question to determine the applicability of
Section 138 of the Act is whether the cheque represents the
discharge of existing enforceable debt or liability, or
whether it represents an advance payment without there
being a subsisting debt or liability. While approving the
views of different High Courts noted earlier, this is the
underlying principle as can be discerned from the
discussion of the said cases in the judgment of this Court.”
(Emphasis supplied)
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 NI Act can be filed on its
dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece of
paper under every circumstance. ‘Security’ in its true sense
is the state of being safe, and the security given for a loan is
something given as a pledge of payment. It is given,
deposited or pledged to make certain the fulfilment of an
obligation to which the parties to the transaction are bound.
If in a transaction, a loan is advanced and the borrower
agrees to repay the amount in a specified timeframe and
issues a cheque as security to secure such repayment; if the
loan amount is not repaid in any other form before the due
date or if there is no other understanding or agreement
between the parties to defer the payment of the amount, the
cheque which is issued as security would mature for
presentation and the drawee of the cheque would be entitled
to present the same. On such presentation, if the same is
dishonoured, the consequences contemplated under Section
138 and the other provisions of N.I. Act would flow.
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18. When a cheque is issued and is treated as ‘security’
towards repayment of an amount with a time period being
stipulated for repayment, all that it ensures is that such
cheque which is issued as ‘security cannot be presented
prior to the loan or the instalment maturing for repayment
towards which such cheque is issued as security. Further,
the borrower would have the option of repaying the loan
amount or such financial liability in any other form, and in
that manner, if the amount of the loan due and payable has
been discharged within the agreed period, the cheque issued
as security cannot thereafter be presented. Therefore, the
prior discharge of the loan or there being an altered
situation due to which there would be an understanding
between the parties is a sine qua non to not present the
cheque which was issued as security. These are only the
defences that would be available to the drawer of the cheque
in proceedings initiated under Section 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 presented and dishonoured, the
holder of the cheque/drawee would have the option of
initiating the civil proceedings for recovery or the criminal
proceedings for punishment in the fact situation, but in any
event, it is not for the drawer of the cheque to dictate terms
with regard to the nature of litigation.”
30. The accused replied in response to question No.12 that
the amount was still outstanding, which shows that the accused
was liable to pay the amount; therefore, even if the cheque was
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issued as a security, the same will not absolve the accused of the
liability to pay the amount.
31. Ajay Kumar (CW1) stated in his cross-examination that
he was not aware that the vehicle had met with an accident, and it
was considered a total loss. He admitted that the copy of the
insurance is retained by the Bank. He admitted that the insurance
amount is claimed by the Bank; however, he could not say in which
account the money was deposited. He volunteered to say that this
can be verified from the record. It was submitted based on this
cross-examination that the Bank had taken the insurance amount
of the vehicle, and this was not adjusted. The reading of the cross-
examination of this witness does not lead to any such inference.
He denied that the vehicle had met with an accident. A denied
suggestion does not amount to any proof, and cannot be used to
conclude that the vehicle had met with an accident. There is no
other evidence regarding the accident of the vehicle, and this plea
was not established. He made a general statement that the
insurance amount is claimed by the Bank, but whether it was
claimed in the present case or not was not elicited from him. Even
the accused did not state in his statement under Section 313 of
Cr.P.C. that the Bank had claimed the amount from the insurance
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company; hence, the submission that the insurance amount was
taken by the Bank but was not adjusted cannot be accepted.
32. The accused did not dispute the liability to pay the
amount, and the learned Courts below had rightly held that the
cheque was issued in discharge of the legal liability by the accused.
33. The complainant stated that the cheque was
dishonoured with an endorsement ‘funds insufficient’. The memo
(Ext. C2) shows the reason for dishonour as ‘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.
34. In the present case, the accused admitted in his
statement recorded under Section 313 of CrPC that he did not have
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the balance in the account, which corroborates the memo of
dishonour, and the learned Courts below had rightly held that the
cheque was dishonoured with an endorsement ‘insufficient funds’
35. The complainant stated that a notice (Ext. C3) was
issued to the accused. The registered AD Cover (Ext. C5) was
returned with an endorsement that the addressee was not
available at home despite the repeated visits. It was laid down by
the Hon’ble Supreme Court of India in C.C. Allavi Haji vs. Pala Pelly
Mohd. 2007(6) SCC 555, that when a notice is returned unclaimed,
it is deemed to be served. It was observed:
“8. Since in Bhaskaran‘s case (supra), the notice issued in
terms of Clause (b) had been returned unclaimed and not as
refused, the Court, posed the question: “Will there be any
significant difference between the two so far as the
presumption of service is concerned?” It was observed that
though Section 138 of the Act does not require that the
notice should be given only by “post”, yet in a case where
the sender has dispatched the notice by post with the
correct address written on it, the principle incorporated in
Section 27 of the General Clauses Act, 1897 (for short ‘G.C.
Act‘) could profitably be imported in such a case. It was held
that in this situation service of notice is deemed to have
been effected on the sendee unless he proves that it was not
really served and that he was not responsible for such non-
service.”
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36. This position was reiterated in Priyanka Kumari vs.
Shailendra Kumar (13.10.2023- SC Order): MANU/ SCOR/ 133284/
2023 wherein it was observed:
“As it was held by the Hon’ble Supreme Court in K.
Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, (1999) 7
Supreme Court Cases 510, that when notice is returned as
‘unclaimed’, it shall be deemed to be duly served upon the
addressee, and it is a proper service of notice. In the case of
Ajeet Seeds Limited Vs. K. Gopala Krishnaiah (2014) 12 SCC 685
(2014), the Hon’ble Court, while interpreting Section 27 of
the General Clauses Act 1897 and also Section 114 of the
Evidence Act 1872, held as under: –
“Section 114 of the Evidence Act, 1872 enables the
court to presume that in the common course of
natural events, the communication sent by post would
have been delivered at the address of the addressee.
Further, Section 27 of the General Clauses Act, 1897
gives rise to a presumption that service of notice has
been effected when it is sent to the correct address by
registered post. It is not necessary to aver in the
complaint that in spite of the return of the notice
unserved, it is deemed to have been served or that the
addressee is deemed to have knowledge of the notice.
Unless and until the contrary is proved by the
addressee, service of notice is deemed to have been
effected at the time at which the letter would have
been delivered in the ordinary course of business.”
37. In the present case, the accused has not proved that he
was not responsible for non-service; therefore, the learned Courts
below had rightly held that the notice was duly served upon the
accused.
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38. Therefore, it was duly proved on record that the
accused had issued a cheque to discharge his legal liability, which
cheque was dishonoured with an endorsement ‘funds insufficient’
and the accused failed to pay the amount despite the deemed
receipt of notice of demand; hence, the complainant had proved all
the ingredients of the commission of the offence punishable under
Section 138 of NI Act and the learned Trial Court had rightly
convicted the accused for the commission of an offence
punishable under Section 138 of NI Act.
39. The learned Trial Court sentenced the accused to
undergo simple imprisonment for five months. It was laid down by
the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC
OnLine SC 138 that the penal provisions of Section 138 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 honour the promise implicit in
the issuance of the same.”
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40. Keeping in view the deterrent nature of the sentence to
be awarded, the sentence of five months’ imprisonment cannot be
said to be excessive, and no interference is required with it.
41. Learned Trial Court had ordered the accused to pay a
compensation of ₹13,00,000/- to the complainant. The cheque
was issued on 31.05.2010. The sentence was imposed on
07.08.2023 after a lapse of 13 years. The complainant lost interest
that it would have gained by advancing the loan to various
persons. The complainant had to engage an Advocate and incur the
expenses for the litigation. It was entitled to be compensated for
the same. It was laid down by the Hon’ble Supreme Court in
Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC
(Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the
Courts should uniformly levy a fine up to twice the cheque amount
along with simple interest at the rate of 9% per annum. It was
observed at page 291: –
19. As regards the claim of compensation raised on behalf of
the respondent, we are conscious of the settled principles
that the object of Chapter XVII of NIA is not only punitive
but also compensatory and restitutive. The provisions of
NIA envision a single window for criminal liability for the
dishonour of a cheque as well as civil liability for the
realisation of the cheque amount. It is also well settled that
there needs to be a consistent approach towards awarding
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2025:HHC:19715compensation, 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]”
42. The interest on an amount of ₹ 7,00,000/- for 13 years
at the rate of 9 % would be ₹8,19,000/-, and ₹6,00,000/- as
compensation for the principal amount of ₹7,00,000/- cannot be
said to be excessive.
43. No other point was urged.
44. In view of the above, the present revision fails, and the
same is dismissed.
45. Records of the learned Courts below be sent back
forthwith, along with a copy of this judgment.
(Rakesh Kainthla)
Judge
25th June, 2025
(saurav pathania)