Himachal Pradesh High Court
Reserved On: 16.06.2025 vs Kamal Dev on 4 July, 2025
2025:HHC:21209
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No.724 of 2024
Reserved on: 16.06.2025
.
Date of Decision: 04.07.2025
Gurdyal Singh ...Petitioner
Versus
Kamal Dev ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Mr. Naveen K. Bhardwaj, Advocate.
For the Respondent : Mr. Rahil Mahajan, Advocate.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 01.08.2024 passed by learned Additional Sessions Judge,
Kullu, District Kullu, H.P. (learned Appellate Court) vide which,
the judgment and order dated 08.01.2024 passed by learned
Judicial Magistrate First Class, Banjar, District Kullu, H.P. (learned
Trial Court) were upheld. (Parties shall hereinafter be referred to in
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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the same manner as they were arrayed before the learned Trial Court
for convenience.)
.
2. Briefly stated, the facts giving rise to the present
revision are that the complainant filed a complaint before the
learned Trial Court 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 were
financial
r help of to
known to each other. The accused approached the complainant
for ₹3,00,000/- in January 2021. The
complainant advanced ₹3,00,000/- to the accused. He assured to
return the amount within seven months. The complainant
demanded the money from the accused. The accused handed over
a cheque of ₹3,00,000/- drawn on KCC Bank, Branch Banjar to
discharge his legal liability. The complainant presented the
cheque to his bank, but it was dishonoured with an endorsement
‘insufficient funds’. The complainant issued a legal notice to the
accused, which was duly served upon the accused; however, the
accused failed to pay the amount despite receipt of the valid notice
of demand. Hence, the complaint was filed before the learned Trial
Court to take action as per the law.
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3. The learned Trial Court found sufficient reasons to
.
summon the accused. When the accused 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 to prove his
complaint.
5.
The accused, in his statement recorded under Section
313 of Cr.P.C., stated that his signatures appeared on the cheque,
but he denied that he had issued the cheque to the complainant.
He stated that the complainant misused the blank cheque handed
over to him. He stated that he wanted to lead defence evidence;
however, no evidence was produced despite having been granted
sufficient opportunities. Hence, his evidence was closed by the
order of the Court on 29.09.2023.
6. Learned Trial Court held that the signatures on the
cheque were not disputed. A presumption would arise that the
cheque was issued in discharge of the legal liability for
consideration. The burden shifted upon the accused to rebut the
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presumption. The accused failed to produce any evidence to rebut
the presumption. The cheque was dishonoured with an
.
endorsement ‘insufficient funds’. The accused had failed to pay
the amount despite receipt of the valid notice of demand. All the
ingredients of the commission of an offence punishable under
Section 138 of the NI Act were satisfied. Hence, the accused was
convicted of the commission of an offence punishable under
r to
Section 138 of the NI Act and was sentenced to undergo simple
imprisonment for two months and pay compensation of
₹3,20,000/- to the complainant.
7. Being aggrieved from the judgment and order passed
by the learned Trial Court, the accused filed an appeal before the
learned Appellate Court. The learned Appellate Court concurred
with the findings recorded by the learned Trial Court that a cheque
carries with it a presumption that it was issued in consideration of
legal liability, and the burden is upon the accused to rebut the
presumption. However, no evidence was produced by the accused
to rebut the presumption. The cheque was dishonoured with an
endorsement ‘insufficient funds’. A legal notice was served upon
the accused, and the accused had failed to pay the amount;
therefore, he was rightly convicted by the learned Trial Court. The
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learned Trial Court had imposed an adequate sentence upon the
accused, and no interference was required with the judgment and
.
order passed by the learned Trial Court. Hence, the appeal was
dismissed.
8. Feeling aggrieved and dissatisfied with the judgments
and order passed by the learned Courts below, the accused has
filed the present revision petition asserting that the learned Trial
Court failed to appreciate the law and the facts properly. The
cheque was issued as a security cheque. There was no evidence
that any legal liability existed in favour of the complainant. The
complaint was barred by limitation. Therefore, it was prayed that
the present petition be allowed and judgments and orderspassed
by the learned Courts below be set aside.
9. I have heard Mr. Naveen K. Bhardwaj, learned counsel
for the petitioner/accused and Mr. Rahil Mahajan, learned counsel
for the respondent/complainant.
10. Mr. Naveen K. Bhardwaj, learned counsel for the
petitioner, submitted that the learned Courts below erred in
appreciating the law and facts. The complainant failed to prove
the existence of the legal liability. He admitted that the vehicle
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was financed by the accused. The plea that the cheque was issued
as a security was probable. The learned Trial Court erred in
.
ignoring this plea; therefore, it was prayed that the present
petition be allowed and the judgments and order passed by the
learned Courts below be set aside.
11. Mr. Rahil Mahajan, learned counsel for the respondent,
supported the judgments and order passed by the learned Trial
12. to
Court and submitted that no interference is required with them.
I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
13 It was laid down by the Hon’ble Supreme Court in
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022)
3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that 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 at page 207: –
“10. Before adverting to the merits of the contentions, at
the outset, it is apt to mention that there are concurrent
findings of conviction arrived at by two courts after 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209himself 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 factsand evidence of the case to reverse those findings.
14. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294, wherein it was
observed:
“13. The power and jurisdiction of the Higher Court under
Section 397 Cr. P.C., which vests the court with the power to
call for and examine records of an inferior court, is for the
purposes of satisfying itself as to the legality and regularity
of any proceeding or order made in a case. The object of this
provision is to set right a patent defect or an error ofjurisdiction 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. RameshChandra, (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 tothe 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
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2025:HHC:21209be 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 orinterlocutory 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 properlyand in accordance with law in a given case, it may be
reluctant to interfere in the exercise of its revisional
jurisdiction unless the case substantially falls within the
categories aforestated. Even framing of charge is a much-
advanced stage in the proceedings under the CrPC.”
15. It was held in Kishan Rao v. Shankargouda, (2018) 8 SCC
165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine
SC 651 that it is impermissible for the High Court to reappreciate
the evidence and come to its conclusions in the absence of any
perversity. It was observed at page 169:
“12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the ground for exercising the
revisional jurisdiction by the High Court. In State 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209the 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 amiscarriage 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 beappropriate 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 unlessany 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 theconclusion 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
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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.
16. This position was reiterated in Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)
309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:
“16. It is well settled that in 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209Sales & Services v. Sauermilch Design and Handels GmbH,
(2008) 14 SCC 457], it is a well-established principle of law
that the Revisional Court will not interfere even if a wrong
order is passed by a court having jurisdiction, in the absence.
of a jurisdictional error. The answer to the first question is
therefore, in the negative.”
17. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
18. The accused admitted his statement recorded under
Section 313 of Cr.P.C. that his signature appeared on the cheque.
Learned Courts below had rightly held that presumption under
Section 118(a) and 139 of the NI Act would arise that the cheque
was issued for consideration in discharge of the legal liability. It
was laid down by this Court in Naresh Verma vs. Narinder Chauhan
2020(1) Shim LC 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 the 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
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2025:HHC:21209a 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.
19. 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 indischarge of debt or liability.”
20. 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
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2025:HHC:21209and amounts to a patent error of law.”
21. 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 statementof 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 theaccused 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 beenreturned 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
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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.”
22. 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209signature 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 Actreads 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 naturereferred 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 followingpresumptions 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
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2025:HHC:21209“9. As the signature in the cheque is admitted to be
that of the accused, the presumption envisaged in
Section 118 of the Act can legally be inferred that the
cheque was made or drawn for consideration on the.
date which the cheque bears. Section 139 of the Act
enjoins the Court to presume that the holder of the
cheque received it for the discharge of any debt or
liability. The burden was on the accused to rebut the
aforesaid presumption. The trial court was not
persuaded to rely on the interested testimony of DW 1
to rebut the presumption. The said finding was
upheld [Sankaran Vaidhyan Balan v. K. Bhaskaran,
Criminal Appeal No. 234 of 1995, order dated 23-10-
1998 (Ker)] by the High Court. It is not now open to
the accused to contend differently on that aspect.”
15. The learned counsel for the respondent has, however,
referred to the decision of this Court
in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasapp
a, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held
as hereunder: (SCC pp. 432-33, paras 25-26)
“25. We having noticed the ratio laid down by this
Court in the above cases on Sections 118(a) and 139,
we now summarise the principles enumerated by this
Court in the following manner:
25.1. Once the execution of the cheque is admitted,
Section 139 of the Act mandates a presumption thatthe 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.
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Inference of preponderance of probabilities can be
drawn not only from the materials brought on record
by the parties but also by reference to the
circumstances upon which they rely.
.
25.4. That it is not necessary for the accused to come
into the witness box in support of his defence, Section
139 imposed an evidentiary burden and not a
persuasive burden.
25.5. It is not necessary for the accused to come into
the witness box to support his defence.
26. Applying the preposition of law as noted above, in
the facts of the present case, it is clear that the
signature on the cheque, having been admitted, a
presumption shall be raised under Section 139 that
the cheque was issued in discharge of debt or liability.
The question to be looked into is as to whether any
probable defence was raised by the accused. In the
cross-examination of PW 1, when the specific
question was put that a cheque was issued in relation
to a loan of Rs 25,000 taken by the accused, PW 1 said
that he does not remember. PW 1 in his evidence
admitted that he retired in 1997, on which date he
received a monetary benefit of Rs 8 lakhs, which was
encashed by the complainant. It was also brought in
evidence that in the year 2010, the complainant
entered into a sale agreement for which he paid an
amount of Rs 4,50,000 to Balana Gouda towards sale
consideration. Payment of Rs 4,50,000 being
admitted in the year 2010 and further payment of
loan of Rs 50,000 with regard to which Complaint No.
119 of 2012 was filed by the complainant, a copy of
which complaint was also filed as Ext. D-2, there was
a burden on the complainant to prove his financial
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
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the complainant. The evidence on record, thus, is a
probable defence on behalf of the accused, which
shifted the burden on the complainant to prove his
financial capacity and other facts.”
.
16. In that light, it is contended that the very materials
produced by the appellant and the answers relating to lack
of knowledge of property details by PW 1 in his cross-
examination would indicate that the transaction is
doubtful, and no evidence is tendered to indicate that the
amount was paid. In such an event, it was not necessary for
the respondent to tender rebuttal evidence, but the case put
forth would be sufficient to indicate that the respondent has
successfully rebutted the presumption.
17. On the position of law, the provisions referred to in
Sections 118 and 139 of the NI Act, as also the enunciation of
law as made by this Court, need no reiteration as there is no
ambiguity whatsoever. In Basalingappav. Mudibasappa
[Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2
SCC (Cri) 571] relied on by the learned counsel for the
respondent, though on facts the ultimate conclusion
therein was against raising presumption, the facts and
circumstances are entirely different as the transaction
between the parties as claimed in the said case is peculiar to
the facts of that case where the consideration claimed to
have been paid did not find favour with the Court keeping in
view the various transactions and extent of amount
involved. However, the legal position relating to the
presumption arising under Sections 118 and 139 of the NI
Act on signature being admitted has been reiterated. Hence,
whether there is a rebuttal or not would depend on the facts
and circumstances of each case.”
23. 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
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2025:HHC:21209Negotiable 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 thecontext 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], thisCourt 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 theaccused is not expected to discharge an unduly high
standard of proof. It is accordingly that the principle hasdeveloped 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 circumstancesthat exist…”
24. 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 chequereceived 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209thereafter, 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.”
.
25. 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 thatit 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 holderof the cheque received the cheque for the discharge of,
whole or part of any debt or liability”. It will be seen that
the “presumed fact” directly relates to one of the crucial
ingredients necessary to sustain a conviction under Section
138. [The rules discussed hereinbelow are common to both
the presumptions under Section 139 and Section 118 and are
hence not repeated–reference to one can be taken as
reference to another]
34. Section 139 of the NI Act, which takes the form of a
“shall presume” clause, is illustrative of a presumption oflaw. 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 thefactual 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209and secondly, in the event where the complainant proves
that the cheque was issued/executed in his favour by the
drawer. The circumstances set out above form the fact(s)
which bring about the activation of the presumptive clause.
.
[Bharat Barrel & Drum Mfg. Co. v. Amin Chand
Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin Chand
Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of holding
that presumption takes effect even in a situation where the
accused contends that a blank cheque leaf was voluntarily
signed and handed over by him to the complainant. [Bir
Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40] ].
Therefore, the mere admission of the drawer’s signature,
without admitting the execution of the entire contents in
the cheque, is now sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden to
prove that the instrument, say a cheque, was issued by the
accused for discharge of debt, the presumptive device under
Section 139 of the Act helps shifting the burden on the
accused. The effect of the presumption, in that sense, is to
transfer the evidential burden on the accused of proving
that the cheque was not received by the Bank towards the
discharge of any liability. Until this evidential burden is
discharged by the accused, the presumed fact will have to be
taken to be true, without expecting the complainant to do
anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of
Evidence: The Hidden Origins of Modern Law] on Evidence states as
follows:
“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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209presumption ‘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]]
26. Therefore, the Court has to start with the presumption
that the cheque was issued in discharge of the legal liability, and
the burden is upon the accused to rebut this presumption.
27. The complainant stated in his cross-examination that
he works as a financier of the vehicle. He is an authorised agent of
three companies. He denied that the accused had got the vehicle
financed from him and issued a blank signed cheque as security to
get his vehicle financed. He denied that the accused had paid the
whole amount to him, and he did not return the cheque given by
the accused.
28. The complainant admitted that he is the financier of
the vehicle, but that by itself is insufficient; he categorically
denied that the accused had obtained the vehicle from the
complainant. A denied suggestion does not amount to any proof,
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2025:HHC:21209
and no advantage can be derived from the same; hence, the plea
taken by the accused that the complainant admitted the financing
.
of the vehicle is not correct.
29. It was suggested to the complainant that the accused
had failed to pay the whole amount to him, and he had not
returned the security cheque. This suggestion shows that liability
is not disputed, and the only dispute is regarding the discharge of
the liability. It was laid down by the Hon’ble Supreme Court in
Balu Sudam Khalde v. State of Maharashtra, (2023) 13 SCC 365: 2023
SCC OnLine SC 355 that the suggestion put to the witness can be
taken into consideration while determining the innocence or guilt
of the accused. It was observed at page 382: –
“34. According to the learned counsel, such suggestions
could be a part of the defence strategy to impeach thecredibility of the witness. The proof of guilt required of the
prosecution does not depend on the satisfaction made to awitness.
35. In Tarun Bora v. State of Assam [Tarun Bora v. State of
Assam, (2002) 7 SCC 39: 2002 SCC (Cri) 1568], a three-judge
Bench of this Court was dealing with an appeal against the
order passed by the Designated Court, Guwahati, in TADA
Sessions case wherein the appellant was convicted under
Section 365IPC read with Sections 3(1) and 3(5) of the
Terrorist and Disruptive Activities (Prevention) Act, 1987.
36. In Tarun Bora case [Tarun Bora v. State of Assam, (2002) 7
SCC 39: 2002 SCC (Cri) 1568], this Court, while considering
the evidence on record, took note of a suggestion which was::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209put to one of the witnesses and considering the reply given
by the witness to the suggestion put by the accused,
concluded that the presence of the accused was admitted.
We quote with profit the following observations made by.
this Court in paras 15, 16 and 17, respectively, as under :
(Tarun Bora case [Tarun Bora v. State of Assam, (2002) 7 SCC
39: 2002 SCC (Cri) 1568], SCC pp. 43-44)
“15. The witness further stated that during the assault,the assailant accused him of giving information to the
army about the United Liberation Front of Assam
(ULFA). He further stated that on the third night, he was
carried away blindfolded on a bicycle to a different place,and when his eyes were unfolded, he could see his
younger brother Kumud Kakati (PW 2) and his wife Smt
Prema Kakati (PW 3). The place was Duliapather, which
is about 6-7 km away from his Village, Sakrahi. Thewitness identified the appellant, Tarun Bora, and stated
that it is he who took him in an Ambassador car from the
residence of Nandeswar Bora on the date of the incident.
16. In cross-examination, the witness stated as under:
‘Accused Tarun Bora did not blind my eyes, nor did he
assault me.’
17. This part of the cross-examination is suggestive of
the presence of the accused Tarun Bora in the whole
episode. This will suggest the presence of the accused,Tarun Bora, as admitted. The only denial is that the
accused did not participate in blind-folding the eyes of
the witness, nor assaulted him.”
37. In Rakesh Kumar v. State of Haryana [Rakesh
Kumar v. State of Haryana, (1987) 2 SCC 34: 1987 SCC (Cri)
256], this Court was dealing with an appeal against the
judgment of the High Court affirming the order of the
Sessions Judge whereby the appellant and three other
persons were convicted under Section 302 read with Section
34IPC. While reappreciating the evidence on record, this
Court noticed that in the cross-examination of PW 4 Sube
Singh, a suggestion was made with regard to the colour of::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209the shirt worn by one of the accused persons at the time of
the incident. This Court, taking into consideration the
nature of the suggestion put by the defence and the reply,
arrived at the conclusion that the presence of the accused,.
namely, Dharam Vir, was established on the spot at the time
of the occurrence. We quote the following observations
made by this Court in paras 8 and 9, respectively, as under
(SCC p. 36)
“8. PW 3, Bhagat Singh, stated in his examination-in-
chief that he had identified the accused at the time of the
occurrence. But curiously enough, he was not cross-
examined as to how and in what manner he could
identify the accused, as pointed out by the learned
Sessions Judge. No suggestion was also given to him that
the place was dark and that it was not possible to identify
the assailants of the deceased.
9. In his cross-examination, PW 4 Sube Singh stated that
the accused, Dharam Vir, was wearing a shirt of white
shirt. It was suggested to him on behalf of the accused
that Dharam Vir was wearing a cream-coloured shirt of
cream colour. In answer to that suggestion, PW 4 said it
is not correct that Dharam Vir, the accused, was wearing
a shirt of a cream colour and not a white colour at that
time.’ The learned Sessions Judge has rightly observed
that the above suggestion at least proves the presence of
accused Dharam Vir on the spot at the time of
occurrence.”
38. Thus, from the above, it is evident that the suggestion
made by the defence counsel to a witness in the cross-
examination, if found to be incriminating in nature in any
manner, would definitely bind the accused, and the accused
cannot get away on the plea that his counsel had no implied
authority to make suggestions in the nature of admissions
against his client.
39. Any concession or admission of a fact by a defence
counsel would definitely be binding on his client, except the
concession on a point of law. As a legal proposition, we
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2025:HHC:21209
cannot agree with the submission canvassed on behalf of
the appellants that an answer by a witness to a suggestion
made by the defence counsel in the cross-examination does
not deserve any value or utility if it incriminates the
.
accused in any manner.”
30. The accused did not claim in his statement recorded
under Section 313 of Cr.P.C. that he had discharged the liability. He
did not examine any witnesses to prove this fact. Therefore, there
was no evidence that the accused had discharged the liability.
31.
Even if the suggestion of the accused is accepted to be
correct that the cheque was issued as security, the same will not
help the accused in the absence of the discharge of the legal
liability. 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, criminalrevision petition be accepted is rejected being devoid of any
force for the reasons hereinafter mentioned. As per Section
138 of the Negotiable Instruments Act 1881, if any cheque is
issued on account of other liability, then the provisions of
Section 138 of the Negotiable Instruments Act 1881 would be
attracted. The court has perused the original cheque, Ext. C-
1 dated 30.10.2008, placed on record. There is no recital in
the cheque Ext. C-1, that cheque was issued as a security
cheque. It is well-settled law that a cheque issued as::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209security 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.”
32. It was laid down by the Hon’ble Supreme Court in
Sampelly Satyanarayana Rao vs. Indian Renewable Energy
Development Agency Limited 2016(10) SCC 458 that issuing a
cheque toward security will also attract the liability for the
commission of an offence punishable under Section 138 of 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 53with 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 theview that the question of whether a post-dated cheque is
for “discharge of debt or liability” depends on the nature ofthe transaction. If on the date of the cheque, liability or debt
exists or the amount has become legally recoverable, the
Section is attracted and not otherwise.
11. Reference to the facts of the present case clearly shows
that though the word “security” is used in clause 3.1(iii) of
the agreement, the said expression refers to 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209disbursed 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 acheque 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 thestatute 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 chequeissued 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 judgmentcannot 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 towardsrepayment 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
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
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discussion of the said cases in the judgment of this Court.”
(Emphasis supplied)
33. 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 issomething 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 andissues 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, thecheque which is issued as security would mature for
presentation and the drawee of the cheque would be entitledto present the same. On such presentation, if the same is
dishonoured, the consequences contemplated under Section
138 and the other provisions of N.I. Act would flow.
18. When a cheque is issued and is treated as ‘security’
towards repayment of an amount with a time period being
stipulated for repayment, all that it ensures is that such
cheque which is issued as ‘security cannot be 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209that 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 chequein 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, acheque 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 statedabove 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 anyevent, it is not for the drawer of the cheque to dictate terms
with regard to the nature of litigation.”
34. Thus, the plea that the cheque was issued in discharge
of the legal liability is not sufficient to absolve the accused of the
commission of a crime.
35. The accused did not lead any evidence and relied upon
the statement under Section 313 of Cr.P.C. to prove his defence.
This was not sufficient. It was held in Sumeti Vij v. Paramount Tech
Fab Industries, (2022) 15 SCC 689: 2021 SCC OnLine SC 201 that the
accused has to lead defence evidence to rebut the presumption and
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2025:HHC:21209
mere denial in 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 ofthe 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 ofdefence, 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 forconsideration.” (Emphasis supplied)”
36. In the present case, the accused did not appear in the
witness box nor did he examine any witness to establish his plea
that he had issued a blank signed cheque; therefore, this plea was
rightly rejected by the learned Courts below.
37. The complainant stated in his cross-examination that
the accused had taken a loan of ₹3,00,000/- in January 2021. He
had not prepared any document regarding the handing over of the
loan. He handed over the money to the accused once in his home.
There was no person present at that time. It was submitted that
the accused had failed to produce any document to show the
payment of money to the complainant. No witness was examined
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by him to establish his plea that he had handed over ₹3,00,000/-
to the accused. This submission will not help the accused. It was
.
laid down by the Hon’ble Supreme Court in Ashok Kumar Versus
State of U.P, 2025 SCC Online SC 706 that the complainant is not to
prove the advancement of the loan because it is a matter of
presumption. 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 withdrawalof 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 isalleged to have been issued in his favour. Only if an
objection is raised that the complainant was not in afinancial 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 cogentmaterial 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
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dispel/negate such a stand/statement of the appellant.
Thus, on the one hand, the statement made before the
Court, both in examination-in-chief and cross-
examination, by the appellant with regard to withdrawing
.
the money from the bank for giving it to the accused has
been disbelieved whereas the argument on behalf of the
accused that he had not received any payment of any loan
amount has been accepted. In our decision in S. S.
Production v. Tr. Pavithran Prasanth, 2024 INSC 1059, we
opined:
‘8. From the order impugned, it is clear that though the
contention of the petitioners was that the said amounts weregiven 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 pointwhich 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 thecomplainant 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 ispresumed that the complainant had not proved the source of
the money given to the petitioners by way of loan byproducing 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 andsigned 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::: Downloaded on – 04/07/2025 21:31:36 :::CIS
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2025:HHC:21209the 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 demonstratethat the complainant in a particular case did not have
the capacity and therefore, the case of the accused is
acceptable, which he can do by producing independent
materials, namely, by examining his witnesses andproducing 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 thecourts 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 accusedhas established a probable defence.’ (emphasis
supplied)’(underlining in original; emphasis supplied by us in bold)
38. Therefore, the case of the complainant cannot be
doubted because no document was prepared at the time of
sanctioning of the loan, or no witness was examined to establish
this fact.
39. There is nothing in the cross-examination of the
complainant to show that he was making a false statement. The
accused admitted his signature on the cheque, and a presumption
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would arise under Section 139 and 118(a) of the NI Act that the
cheque was issued in discharge of the legal liability. The accused
.
failed to rebut the presumption by leading any legally admissible
evidence, and the learned Courts below had rightly held that the
case of the complainant that the cheque was issued in discharge of
the legal liability was duly proved.
40. The complainant stated that the cheque was
dishonoured with an endorsement ‘insufficient funds’. Memo
(Ext.CW-1/C) shows the reason for dishonour as ‘insufficient
funds’. It was laid down by the Hon’ble Supreme Court in Mandvi
Cooperative Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC 83: (2010)
1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1: 2010 SCC OnLine SC 155 that the
memo issued by the Bank is presumed to be correct and the
burden is upon the accused to rebut the presumption. It was
observed at page 95:
“24. Section 146, making a major departure from the
principles of the Evidence Act, provides that the bank’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.”
41. In the present case, no evidence was produced to rebut
the presumption, and the learned Courts below had rightly held
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that the cheque was dishonoured with an endorsement
‘insufficient funds’
.
42. The complainant stated that he had issued a notice
(Ext.PW-1/E) to the accused asking him to pay the money within
15 days, and this notice was sent to the address furnished in the
notice of accusation, personal bonds and the statement recorded
under Section 313 of Cr.P.C. There is a presumption that notice
was duly served as per Section 27 of the General Clauses Act. The
accused did not present any evidence to rebut this presumption.
Hence, the learned Courts below had rightly held that the notice
was duly served upon the accused.
43. In any case, it was laid down in C.C. Allavi Haji vs. Pala
Pelly Mohd. 2007(6) SCC 555 that the person who claims that he
had not received the notice has to pay the amount within 15 days
from the date of the receipt of the summons from the Court and in
case of failure to do so, he cannot take the advantage of the fact
that notice was not received by him. It was observed:
“It is also to be borne in mind that the requirement of giving
of notice is a clear departure from the rule of Criminal Law,
where there is no stipulation of giving of notice before filing
a complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons
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2025:HHC:21209the Act, make payment of the cheque amount and submit to the
Court that he had made payment within 15 days of receipt of
summons (by receiving a copy of the complaint with the
summons) and, therefore, the complaint is liable to be rejected.
.
A person who does not pay within 15 days of receipt of the
summons from the Court along with the copy of the complaint
under Section 138 of the Act, cannot obviously contend that
there was no proper service of notice as required under Section138, by ignoring statutory presumption to the contrary under
Section 27 of the G.C. Act and Section 114 of the Evidence Act. In
our view, any other interpretation of the proviso would
defeat the very object of the legislation. As observed inBhaskaran‘s case (supra), if the giving of notice in the
context of Clause (b) of the proviso was the same as the
receipt of notice a trickster cheque drawer would get the
premium to avoid receiving the notice by adopting differentstrategies and escape from legal consequences of Section
138 of the Act.” (Emphasis supplied)
44. The accused has not paid any money to the
complainant during the pendency of the proceedings; therefore,
the plea that notice was not received will not help him.
45. Thus, it was proved on record that the accused had
issued a cheque of ₹3,00,000/- to the complainant in discharge of
his legal liability, but the same was dishonoured with an
endorsement ‘insufficient funds’ and the accused has failed to pay
the amount despite the deemed receipt of the notice of demand.
Hence, all the ingredients of the commission of an offence
punishable under Section 138 of the NI Act were duly fulfilled, and
the learned Trial Court had rightly convicted the accused for the
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commission of an offence punishable under Section 138 of the NI
Act
.
46. Learned Trial sentenced the accused to simple
imprisonment for a period of two 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 of the N.I. Act is
deterrent in nature. It was observed at page 203:
“6. The object of Section 138 of the Negotiable Instruments
Act is to infuse credibility into negotiable instruments,
including cheques, and to encourage and promote the use of
negotiable instruments, including cheques, in financial
transactions. The penal provision of Section 138 of the
Negotiable Instruments Act is intended to be a deterrent tocallous issuance of negotiable instruments such as cheques
without serious intention to honour the promise implicit in
the issuance of the same.”
47. Keeping in view the deterrent nature of the sentence,
the period of two months cannot be said to be excessive.
48. Learned Trial Court awarded the compensation of
₹3,20,000/- for the loss suffered by the complainant. The cheque
was issued on 02.08.2021, and the sentence was awarded on
08.01.2024 after the lapse of three years. The Complainant lost
interest on the amount which he would have gained by depositing
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the same in his bank. He also paid the fees to the Advocate and
bore the litigation expenses; therefore, he 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 therealisation of the cheque amount. It is also well settled that
there needs to be a consistent approach towards awarding
compensation, and unless there exist specialcircumstances, 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]”
49. Thus, the amount of 20,000/- awarded on the principal
amount of ₹3,00,000/- is inadequate; however, no appeal was
preferred by the complainant, and no interference is required with
the sentence imposed by the learned Trial Court as affirmed by the
learned Appellate Court.
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50. No other point was urged.
51. In view of the above, the present revision fails, and the
.
same is dismissed.
52. A copy of this judgment, along with the records of the
learned Courts below, be sent back forthwith. Pending
miscellaneous application(s), if any, also stand(s) disposed of.
04th July, 2025
(ravinder)
r to (Rakesh Kainthla)
Judge
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