Himachal Pradesh High Court
Reserved On: 01.07.2025 vs Pnb And Anr on 9 July, 2025
2025:HHC:21852
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 683 of 2024
.
Reserved on: 01.07.2025
Date of Decision: 09.07.2025
Daleep Singh ...Petitioner
Versus
PNB and anr.
Coram
r to ..Respondents
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
For the Petitioner : Mr. G.R. Palsra, Advocate.
For Respondent No.1 : Mr. Arvind Sharma, Advocate.
For Respondent No.2 : Mr. Tarun Pathak, Deputy Advocate
General.
Rakesh Kainthla, Judge
The petitioner has filed the present petition against the
judgment dated 03.09.2024 passed by the learned Sessions Judge,
Mandi (learned Appellate Court), vide which the judgment of
conviction and order of sentence dated 30.04.2024 passed by
learned Judicial Magistrate, First Class, Chachiot, at Gohar, District
Mandi, (learned Trial Court) were upheld. (Parties shall hereinafter
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |2
2025:HHC:21852
be referred to in the same manner as they were arrayed before the
learned Trial Court for convenience.)
.
2. Briefly stated, the facts giving rise to the present
petition are that the complainant filed a complaint before the
learned Trial Court for the commission of an offence punishable
under Section 138 of the Negotiable Instruments Act (in short ‘NI
Act‘). It was asserted that the complainant is a body corporate
engaged in banking activities. The complainant has its branches
throughout India, and one such branch is located at Badhu, Tehsil
Chachiot, District Mandi, H.P. The accused approached the
complainant for a loan. The complainant sanctioned a loan of
₹9,00,000/-in favour of the accused. The accused defaulted in the
payment of the loan amount, and he issued a cheque of
₹9,39,675/- to discharge his legal liability. The complainant
presented the cheque for realisation, but it was dishonoured with
an endorsement ‘funds insufficient’. The complainant issued a
notice to the accused, asking him to pay the money within 15 days
of receiving the notice. This notice was returned undelivered and is
deemed to be served. The accused failed to pay the amount despite
the deemed receipt of the notice of demand; hence, a complaint
was filed to take action against the accused.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |3
2025:HHC:21852
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, a notice of
.
accusation was put to him for the commission of an offence
punishable under Section 138 of the NI Act, to which he pleaded not
guilty and claimed to be tried.
4. The complainant examined Himat Ram (CW1) to prove
its case.
5. The accused, in his statement recorded under Section
313 of Cr.P.C., admitted that he had taken a loan of ₹9,00,000/-. He
denied that he had agreed to return the amount in instalments or
that he had issued a cheque of ₹9,39,675/- to discharge his legal
liability. He examined himself in defence.
6. Learned Trial Court held that the accused admitted in
his statement on oath that his signatures appeared on the cheque.
He admitted that he had taken the loan from the Bank. The plea
taken by the accused that a blank signed undated cheque was taken
from him, which was misused by the complainant, was not proved.
There is a presumption that the cheque was issued in discharge of
legal liability for valuable consideration, and the burden is upon
the accused to rebut the presumption. He failed to rebut the
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |4
2025:HHC:21852
presumption. The cheque was dishonoured with an endorsement
‘insufficient funds’. The notice was returned undelivered as
.
unclaimed, which is a deemed service. The accused had failed to
pay the money; hence, all the ingredients of Section 138 of the NI
Act were satisfied. Accordingly, the accused was convicted of the
commission of an offence punishable under Section 138 of the NI
Act and was sentenced to undergo simple imprisonment for six
months, pay a compensation of ₹13,00,000/- and in default of
payment of compensation to undergo further simple
imprisonment for one month.
7. Being aggrieved by the judgments and order passed by
the learned Trial Court, the accused filed an appeal, which was
decided by the learned Sessions Judge, Mandi (learned Appellate
Court). Learned Appellate Court concurred with the findings
recorded by the learned Trial Court that the accused admitted his
signature on the cheque. A presumption arose that the cheque was
issued for consideration in discharge of the legal liability, and the
burden shifted upon the accused to rebut this presumption. The
evidence of the accused was not sufficient to rebut the
presumption. The cheque was dishonoured with an endorsement
‘insufficient funds’. The notice was undelivered as unclaimed,
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |5
2025:HHC:21852
which is a deemed service. The accused failed to pay the amount;
therefore, he was rightly convicted by the learned Trial Court.
.
Keeping in view the deterrent nature of the crime, the sentence of
six months was not excessive, and compensation of ₹13,00,000/-
was sufficient to compensate the petitioner; therefore, the appeal
was dismissed.
8. Being aggrieved by the judgment and order passed by
the learned Courts below, the petitioner/accused has filed the
present petition, asserting that the learned Courts below erred in
convicting and sentencing the accused. It was clear from the memo
of the parties that Bhima Kali Enterprises was a firm that was not
arrayed as a party; hence, the complaint was not maintainable. The
complainant did not examine Hari Singh Kaundal, who was
authorised to file the complaint. Rather, one Himat Ram was
examined, who was not conversant with the facts of the case. He
could not say how much amount was deposited by the accused,
who had filled the cheque, and who was the guarantor of the
accused. An adverse inference should have been drawn against the
complainant for withholding the evidence. There was no evidence
to prove that the cheque was issued in discharge of the legal
liability and the plea taken by the accused that he had issued a
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |6
2025:HHC:21852
blank signed undated cheque was highly probable, therefore, it
was prayed that the present revision be allowed and the judgment
.
and order passed by learned Courts below be set aside.
9. I have heard Mr. G.R. Palsra, learned counsel for the
petitioner, Mr. Arvind Sharma, learned counsel for respondent
No.1, and Mr. Tarun Pathak, learned Deputy Advocate General, for
respondent No.2/State.
10. Mr. G.R. Palsra, learned counsel for the petitioner,
submitted that the learned Courts below erred in appreciating the
evidence. The complaint was filed against Daleep Singh, Proprietor
of Bhima Kali Enterprises. Bhima Kali Enterprises was not arrayed
as a party. An authorised person did not appear before the Court,
and the statement of CW1 was not satisfactory to establish the
ingredients of Section 138 of the NI Act; therefore, he prayed that
the present petition be allowed and the judgments and order
passed by the learned Courts below be set aside. He relied upon the
judgments in Dilip Hariramani vs. Bank of Baroda in Cr. Appeal No.
767 of 2022 decided on 09.05.2022 in support of his submission.
11. Mr. Arvind Sharma, learned counsel for respondent
No.1/complainant, submitted that the complaint was filed against
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |7
2025:HHC:21852
Daleep Singh, being the sole proprietor of Bhima Kali Enterprises.
There is no distinction between a proprietorship concern and a
.
natural person. Therefore, there was no necessity to implead
Bhima Kali Enterprises. The accused admitted his signature on the
cheque. He also admitted that he had taken the loan from the Bank.
There is no evidence that the loan was repaid, and even if the
cheque was filled by the complainant bank, there is no infirmity.
Learned Courts below had rightly appreciated the material placed
before them, and this Court should not interfere with the
concurrent findings of fact recorded by learned Courts below while
exercising revisional jurisdiction; therefore, he prayed that the
present petition be dismissed.
12. Mr. Tarun Pathak, learned Deputy Advocate General, for
respondent No.2/State, supported the judgments and order passed
by the learned Courts below and submitted that no interference is
required with the same.
13. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
14. It was laid down by the Hon’ble Supreme Court in
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022)
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |8
2025:HHC:21852
3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a 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 againstconviction 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 orhimself 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-foundederror 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.
15. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC
1294, wherein it was observed at page 695:
14. The power and jurisdiction of the Higher Court under
Section 397CrPC, 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
regularities 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
in such proceedings.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
Page |9
2025:HHC:21852
15. It would be apposite to refer to the judgment of this
Court in Amit Kapoor v. Ramesh Chander [Amit
Kapoor v. Ramesh Chander, (2012) 9 SCC 460: (2012) 4 SCC
.
(Civ) 687: (2013) 1 SCC (Cri) 986], where scope of Section 397
has been considered and succinctly explained as under: (SCC
p. 475, paras 12-13)
“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 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 CrPC.”
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 10
2025:HHC:21852
16. This Court in the aforesaid judgment in Amit Kapoor
case [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 :
(2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986] has also laid
.
down principles to be considered for exercise of jurisdiction
under Section 397 particularly in the context of prayer for
quashing of charge framed under Section 228CrPC is sought
for as under : (Amit Kapoor case [Amit Kapoor v. Ramesh
Chander, (2012) 9 SCC 460 : (2012) 4 SCC (Civ) 687 : (2013) 1
SCC (Cri) 986], SCC pp. 482-83, para 27)
“27. Having discussed the scope of jurisdiction under
these two provisions, i.e. Section 397 and Section 482 of
the Code, and the fine line of jurisdictional distinction, it
will now be appropriate for us to enlist the principles
with reference to which the courts should exercise such
jurisdiction. However, it is not only difficult but
inherently impossible to state such principles with
precision. At best and upon objective analysis of various
judgments of this Court, we are able to cull out some of
the principles to be considered for proper exercise of
jurisdiction, particularly, with regard to quashing of
charge either in exercise of jurisdiction under Section 397
or Section 482 of the Code or together, as the case may
be:
27.1. Though there are no limits to the powers of the
Court under Section 482 of the Code but the more the
power, the more due care and caution is to be exercised in
invoking these powers. The power of quashing criminalproceedings, particularly, the charge framed in terms of
Section 228 of the Code, should be exercised very
sparingly and with circumspection and that too in the
rarest of rare cases.
27.2. The Court should apply the test as to whether the
uncontroverted allegations as made from the record of
the case and the documents submitted therewith prima
facie establish the offence or not. If the allegations are so
patently absurd and inherently improbable that no
prudent person can ever reach such a conclusion, and::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 11
2025:HHC:21852where the basic ingredients of a criminal offence are not
satisfied, then the Court may interfere.
27.3. The High Court should not unduly interfere. No.
meticulous examination of the evidence is needed for
considering whether the case would end in conviction or
not at the stage of framing of charge or quashing of
charge.
***
27.9. Another very significant caution that the courts
have to observe is that it cannot examine the facts,
evidence and materials on record to determine whether
there is sufficient material on the basis of which the case
would end in a conviction; the court is concerned
primarily with the allegations taken as a whole whether
they will constitute an offence and, if so, is it an abuse of
the process of court leading to injustice.
***
27.13. Quashing of a charge is an exception to the rule of
continuous prosecution. Where the offence is even
broadly satisfied, the Court should be more inclined to
permit continuation of prosecution rather than its
quashing at that initial stage. The Court is not expected to
marshal the records with a view to decide admissibility
and reliability of the documents or records, but is an
opinion formed prima facie.”
17. The revisional court cannot sit as an appellate court and
start appreciating the evidence by finding out
inconsistencies in the statement of witnesses, and it is not
legally permissible. The High Courts ought to be cognizant
of the fact that the trial court was dealing with an
application for discharge.
16. 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
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 12
2025:HHC:21852
evidence and come to its conclusions in the absence of any
perversity. It was observed on page 169:
.
“12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the ground for exercising the
revisional jurisdiction by the High Court. In State ofKerala 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 haslaid 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 to satisfy
itself as to the correctness, legality or propriety of anyfinding, 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 thepower 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 conclusion onthe 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 grossmiscarriage of justice. On scrutinising the impugned
judgment of the High Court from the aforesaid
standpoint, we have no hesitation in concluding 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
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 13
2025:HHC:21852
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 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.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 14
2025:HHC:21852
17. This position was reiterated in Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)
.
309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:
“16. It is well settled that in the exercise of revisional
jurisdiction under Section 482 of the Criminal Procedure
Code, the High Court does not, in the absence of perversity,
upset concurrent factual findings. It is not for the Revisional
Court to re-analyse and re-interpret the evidence on record.
17. As held by this Court in Southern Sales &
Services v. Sauermilch Design and Handels GmbH [Southern
Sales & Services v. Sauermilch Design and Handels GmbH,
(2008) 14 SCC 457], it is a well-established principle of lawthat 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.”
18. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
19. The complaint was filed against Daleep Singh, son of
Kunje Ram, proprietor of Bhima Kali Enterprises. It was laid down
by the Hon’ble Supreme Court in Shankar Finance & Investments v.
State of A.P., (2008) 8 SCC 536: (2008) 3 SCC (Cri) 558: 2008 SCC
OnLine SC 997, that there is no distinction in law between a
proprietary concern and individual trading under a trading name.
It was observed at page 540: –
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 15
2025:HHC:21852
10. As contrasted with a company incorporated under the
Companies Act, 1956, which is a legal entity distinct from its
shareholders, a proprietary concern is not a legal entity.
distinct from its proprietor. A proprietary concern is nothing
but an individual trading under a trade name. In civil law,
where an individual carries on business in a name or style
other than his name, he cannot sue in the trading name but
must sue in his name, though others can sue him in the
trading name. Therefore, if the appellant in this case had to
file a civil suit, the proper description of the plaintiff should
be “Atmakuri Sankara Rao carrying on business under the
name and style of M/s Shankar Finance & Investments, a
sole proprietary concern”. But we are not dealing with a civil
suit. We are dealing with a criminal complaint to which the
special requirements of Section 142 of the Act apply. Section
142 requires that the complainant be the payee. The payee is
M/s Shankar Finance & Investments. Therefore, in a
criminal complaint relating to an offence under Section 138
of the Act, it is permissible to complain about the name of
the proprietary concern itself.
11. The next question is where a proprietary concern carries
on business through an attorney holder, and whether the
attorney holder can lodge the complaint. The attorney
holder is the agent of the grantor. When the grantor
authorises the attorney holder to initiate legal proceedings
and the attorney holder accordingly initiates legal
proceedings, he does so as the agent of the grantor, and the
initiation is by the grantor represented by his attorney
holder, and not by the attorney holder in his personal
capacity. Therefore where the payee is a proprietary
concern, the complaint can be filed: (i) by the proprietor of
the proprietary concern, describing himself as the sole
proprietor of the “payee”; (ii) the proprietary concern,
describing itself as a sole proprietary concern, represented
by its sole proprietor; and (iii) the proprietor or the
proprietary concern represented by the attorney holder
under a power of attorney executed by the sole proprietor. It
follows that in this case, the complaint could have been
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 16
2025:HHC:21852
validly filed by describing the complainant in any one of the
following four methods:
“Atmakuri Shankara Rao, sole proprietor of M/s
.
Shankar Finance & Investments”
or
“M/s Shankar Finance & Investments, a sole
proprietary concern represented by its proprietor
Atmakuri Shankara Rao”
or
“Atmakuri Shankara Rao, sole proprietor of M/sShankar Finance & Investments, represented by his
attorney holder Thamada Satyanarayana”
or
“M/s Shankar Finance & Investments, a proprietary
concern of Atmakuri Shankara Rao, represented by his
attorney holder Thamada Satyanarayana”.
What would have been improper is for the attorney holder
Thamada Satyanarayana to file the complaint in his own
name as if he was the complainant.”
20. A similar view was taken in Nexus Health & Beauty Care
(P) Ltd. v. National Electrical Office, 2012 SCC OnLine HP 5383,
wherein it was observed: –
“26. The complaint is not happily worded, no doubt, in the
memo of parties, the complainant has referred to the
complainant’s ‘M/s National Electrical Office’, but in para 2
it has been pleaded that the complainant is providing
services of Industrial Electrical fitting under the name and
style of ‘National Electrical’. Again, in the memo of parties,
Subhash Bharwal has been referred to as the proprietor, but
in para 1 of the complaint, the complainant has described
itself as a firm. In evidence by way of affidavit Ex.CW-1/A, it
has been stated that the complainant is providing services of
Industrial Electrical fitting under the name and style of::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 17
2025:HHC:21852‘National Electrical’. Subhash Pharwal is its sole proprietor.
The cheque Ex.C-1 has been issued in the name of ‘National
Electricals’. The complaint is loosely drafted. But in the.
complaint, the complainant has described itself as ‘National
Electrical’ in the body of the complaint.
27. On the face of the complaint and affidavit, Ex. CW-1/A,
prima facie, it cannot be said that the complainant is a firm,namely M/s National Electrical Office. The complainant in
the body of the complaint has described the complainant as
‘National Electrical’, a sole proprietorship concern of
Subhash Bharwal. It will be too technical to throw out thecomplaint due to loose drafting. At this stage, if the
pleadings of the petition are seen, the petition is also not
less loosely drafted. It starts with the sentence ‘complainant
issued a cheque for ₹ 2.00 lacs’. The complainant did notissue a cheque of ₹ 2,00,000/-. The cheque was allegedly
issued by the accused petitioners. Not only in the opening
para of the petition, but also in other places also the
petitioners have used loose expressions. In para 3 of the
petition before grounds, it has been pleaded that the“complainant aggrieved and dissatisfied with the order
summoning the accused and taking cognisance of the case
by Judicial Magistrate, files this petition”. The substance ofthe complaint or petition is to be seen, and it should not be
thrown out merely on technicalities of loose drafting. Itemerges from the complaint that the complainant is the
‘National Electrical’ sole proprietorship concern of SubhashBharwal. In view of Milind Shripad Chandurkar (supra), it
cannot be said that the complaint is not maintainable.”
21. Therefore, the submission that Bhima Kali Enterprises
should have been impleaded as a party is not acceptable. Since
Bhima Kali Enterprises is not a juristic person; hence, the
judgment in Dilip Hariramani (supra) will not apply to the present
case.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 18
2025:HHC:21852
22. It was submitted that the complaint was filed through
its Branch Manager, Hari Kaundal. The complainant examined
.
Himat Ram, Deputy Manager. The Branch Manager, who had filed
the complaint, was not examined, and this is a serious infirmity in
the complainant’s case. This submission is not acceptable. It was
laid down by the Hon’ble Supreme Court in Associated Company
Limited versus Keshvanand, 1998 (1) SCC 687, that the company is a
juristic persona and has to act through a natural person in a
proceedings before the Court. It is not necessary that the person
who had filed the complaint should continue to represent it
throughout the trial. It was observed:
“23. The above scheme of the new Code makes it clear that
the complainant must be a corporeal person who is capable
of making a physical presence in the court. Its corollary is
that even if a complaint is made in the name of an
incorporeal person (like a company or corporation) it is
necessary that a natural person represents such a juristic
person in the court and it is that natural person who is
looked upon, for all practical purposes, to be the
complainant in the case. In other words, when the
complainant is a body corporate, it is the de jure
complainant, and it must necessarily associate a human
being as a de facto complainant to represent the former in
court proceedings.
xxxxxx
25. Be that so, we suggest as a pragmatic proposition that no
magistrate shall insist that the particular person, whose
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 19
2025:HHC:21852
statement was taken on oath at the first instance, alone can
continue to represent the company till the end of the
proceedings. There may be occasions when a different
.
person can represent the company, e.g. the particular person
who represents the company at the first instance may either
retire from the company’s services or may otherwise cease
to associate therewith, or he may be transferred to a distant
place. In such cases, it would be practically difficult for the
company to continue to make the same person represent the
company in court. In any such eventuality, it is open to the
de jure complainant company to seek permission from the
court for sending any other person to represent the
company in court. At any rate, the absence of the
complainant envisaged in Section 249 or Section 256 of the
new Code would include the absence of the corporeal person
representing the incorporeal complainant.”
23. This judgment was followed in MMTC Limited versus M/s
Medchl Chemicals and Pharma Private Limited, 2002 (1) SCC 234,
wherein it was observed:
“12. In the case of Associated Cement Co.
Ltd. v. Keshvanand [(1998) 1 SCC 687: 1998 SCC (Cri) 475], ithas been held by this Court that the complainant has to be a
corporeal person who is capable of making a physical
appearance in the court. It has been held that if a complaintis made in the name of an incorporeal person (like a
company or corporation), it is necessary that a natural
person represents such juristic person in the court. It is held
that the court looks upon the natural person to be the
complainant for all practical purposes. It is held that when
the complainant is a body corporate, it is the de jure
complainant, and it must necessarily associate a human
being as a de facto complainant to represent the former in
court proceedings. It has further been held that no
Magistrate shall insist that the particular person, whose
statement was taken on oath at the first instance, alone can::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 20
2025:HHC:21852continue to represent the company till the end of the
proceedings. It has been held that there may be occasions
when different persons can represent the company. It has.
been held that it is open to the de jure complainant company
to seek permission from the court for sending any other
person to represent the company in court. Thus, even
presuming that initially there was no authority, still thecompany can, at any stage, rectify that defect. At a subsequent
stage, the company can send a person who is competent to
represent the company. The complaints could thus not have
been quashed on this ground.” (Emphasis supplied)
24. A similar view was taken by this Court in Uttam Traders
Ranghri versus Tule Ram, Menu/HP/1499/2018, and it was observed:
“12. In M.M.T.C.Ltd. And another vs. Medchl Chemicals and
Pharma (P)Ltd. And another (2002) 1 SCC 234, the Hon’ble
Supreme Court held that the only eligibility criteria
prescribed by Section 142 for maintaining a complaint underSection 138are that the complaint must be by the payee or
the holder in due course and once this criterion is satisfied
as the complaint is in the name and on behalf of the
appellant-Company. Therefore, even presuming thatinitially there was no authority, still, the company can, at
any stage, rectify that defect at a subsequent stage, and the
company can send a person who is competent to represent
the Company. It is apt to reproduce the relevantobservations as contained in paras 11 and 12 of the
judgment, which reads thus:
“11. This Court has, as far back as, in the case of Vishwa
Mitter v. O. P. Poddar reported in (1983) 4 SCC 701, held
that it is clear that anyone can set the criminal law in
motion by filing a complaint of facts constituting an
offence before a Magistrate entitled to take
cognisance. It has been held that no court can decline
to take cognisance on the sole ground that the
complainant was not competent to file the complaint.
It has been held that if any special statute prescribes::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 21
2025:HHC:21852offences and makes any special provision for taking
cognisance of such offences under the statute, then
the complainant requesting the Magistrate to take.
cognisance of the offence must satisfy the eligibility
criterion prescribed by the statute. In the present case,
the only eligibility criterion prescribed by Section 142
is that the complaint must be by the payee or theholder in due course. This criterion is satisfied as the
complaint is in the name and on behalf of the
appellant company.
12. In the case of Associated Cement Co. Ltd. v.
Keshvanand (1998) 1 SCC 687, it has been held by this
Court that the complainant has to be a corporeal
person who is capable of making a physical
appearance in the court. It has been held that if acomplaint is made in the name of an incorporeal
person (like a company or corporation), it is necessary
that a natural person represents such juristic person
in the court. It is held that the court looks upon the
natural person to be the complainant for all practicalpurposes. It is held that when the complainant is a
body corporate, it is the de jure complainant, and it
must necessarily associate a human being as a de factocomplainant to represent the former in court
proceedings. It has further been held that noMagistrate shall insist that the particular person,
whose statement was taken on oath at the firstinstance, alone can continue to represent the company
till the end of the proceedings. It has been held that
there may be occasions when different persons can
represent the company. It has been held that it is open
to the de jure complainant company to seek
permission from the court to send any other person to
represent the company in court. Thus, even presuming
that initially there was no authority, still the Company
can, at any stage, rectify that defect. At a subsequent
stage, the Company can send a person who is::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 22
2025:HHC:21852competent to represent the company. The complaints
could thus not have been quashed on this ground.”
13. Likewise in Samrat Shipping Co. Pvt. Ltd. vs. Dolly George
.
(2002) 9 SCC 455, the Hon’ble Supreme Court termed the
dismissal of the complaint at the threshold by the
Magistrate on the ground that the individual through whom
the complaint was filed had not produced the certified copy
of the resolution of the Board of Directors of the Company
authorising him to represent the Company before the
Magistrate has also not justified and termed this exercise to
be “too hasty an action”. It is apt to reproduce the
observation as contained in para 3 of the judgment, which
reads thus:
“3. Having heard both sides, we find it difficult to
support the orders challenged before us. A Company
can file a complaint only through a human agency.
The person who presented the complaint on behalf of
the Company claimed that he was the authorised
representative of the company. Prima facie, the trialcourt should have accepted it at the time when a
complaint was presented. If it is a matter of evidence
when the accused disputed the authority of the saidindividual to present the complaint, the opportunity
should have been given to the complainant to provethe same, but that opportunity needs to be given only
when the trial commences. The dismissal of the
complaint at the threshold on the premise that theindividual has not produced a certified copy of the
resolution appears to be too hasty an action. We,
therefore, set aside the impugned orders and directed
the trial court to proceed with the trial and dispose of
it in accordance with the law. Parties are directed to
appear before the trial court on 31.01.2000.”
14. A similar matter of dishonour of cheque came before a
three-judge Bench of the Hon’ble Supreme Court in M/s
Haryana State Co.Op., Supply and Marketing Federation Ltd. vs.
M/s Jayam Textiles and another AIR 2014 SC 1926 wherein it
was held that the dismissal of the complaint for mere failure
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 23
2025:HHC:21852
to produce authorisation would not be proper and an
opportunity ought to be granted to produce and prove the
authorisation. It is apt to reproduce the apposite
.
observations as contained in paras 6 and 7 of the judgment,
which read thus:
“6. Having heard learned counsel for the parties and
after perusing the material on record, we find thatadmittedly, authorisation by the Board of Directors of
the appellant federation was not placed before the
Courts below. But, we may notice that a specific
averment was made by the appellant- Federationbefore the learned Judicial Magistrate that the said
General Power of Attorney has been filed in a
connected case being CC No. 1409/1995, which has
neither been denied nor disputed by the respondents.
In any case, in our opinion, if the Courts below were
not satisfied, an opportunity ought to have been
granted to the appellant Federation to place the
document containing authorisation on record and
prove the same in accordance with the law. This is sobecause procedural defects and irregularities, which
are curable, should not be allowed to defeat
substantive rights or to cause injustice. The procedure,a handmaiden to justice, should never be made a tool
to deny justice or perpetuate injustice by anyoppressive or punitive use. {See Uday Shankar Triyar
Vs. Ram Kalewar Prasad Singh, (2006) 1 SCC 75. (AIR2006 SC 269: 2005 AIR SCW 5851).
7. In view of the fact that in spite of the arbitration
award against the respondents, there was non-
payment of amount by the respondents to the
appellant-Federation, and also in the light of
authorisation contained in Annexure-P/7, we are of
the opinion that, in the facts and circumstances of the
case, an opportunity should be given to the appellant-
Federation to produce and prove the authorisation
before the Trial Court, more so, when money involved
is public money. We, therefore, set aside the::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 24
2025:HHC:21852judgments of the Courts below and remit the matters
back to the Trial Court with a direction to conduct the
trial afresh, taking into consideration the.
authorisation placed before us and dispose of the
matter as expeditiously as possible in accordance with
the law.”
15. Bearing in mind the aforesaid exposition of the law, I am
of the considered view that the appellant-applicant ought to
be granted one chance to place and prove on record the
partnership deed. Accordingly, Cr.M.P. No. 464 of 2018 is
allowed.”
25. This position was reiterated in Naresh Potteries v. Aarti
Industries, (2025) 256 Comp Cas 606: 2025 SCC OnLine SC 18,
wherein it was observed:
15. This court in the case of National Small Industries
Corporation Ltd v. State (NCT of Delhi) [(2009) 147 Comp Cas 11(SC); (2009) 1 SCC 407; (2009) 1 SCC (Civ) 192; (2009) 1 SCC
(Cri) 513; 2008 SCC OnLine SC 1710; [2008] INSC 1308.] had an
occasion to consider the validity of a complaint undersection 138 of the Negotiable Instruments Act and the
satisfaction of the requirement under section 142 thereof, aswell as to determine as to who could be considered to be the
complainant/representative in a case where the complaint isto be filed by an incorporated body. This court held as
follows [ See page 18 of 147 Comp Cas.]:
“The term ‘complainant’ is not defined under the
Code. Section 142 of the Negotiable Instruments Act
requires a complaint under section 138 of that Act to be
made by the payee (or by the holder in due course). It
is thus evident that in a complaint relating to
dishonour of a cheque (which has not been endorsed
by the payee in favour of anyone), it is the payee alone
who can be the complainant. The Negotiable
Instruments Act only provides that dishonour of a::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 25
2025:HHC:21852cheque would be an offence and the manner of taking
cognisance of offences punishable under section 138 of
that Act. However, the procedure relating to the.
initiation of proceedings, trial and disposal of such
complaints is governed by the Code. Section 200 of the
Code requires that the Magistrate, on taking
cognisance of an offence on complaint, shall examineupon oath the complainant and the witnesses present,
and the substance of such examination shall be
reduced to writing and shall be signed by the
complainant and the witnesses. The requirement ofsection 142 of the Negotiable Instruments Act that the
payee should be the complainant is met if the
complaint is in the name of the payee. If the payee is acompany, necessarily the complaint should be filed in
the name of the company. Section 142 of the
Negotiable Instruments Act does not specify who
should represent the company if a company is the
complainant. A company can be represented by anemployee or even by a non-employee authorised and
empowered to represent the company either by a
resolution or by a power of attorney…
Resultantly, when in a complaint in regard to
dishonour of a cheque issued in favour of a companyor corporation, for the purpose of section 142 of the
Negotiable Instruments Act, the company will be thecomplainant, and for purposes of section 200 of the
Code, its employee who represents the company or
corporation, will be the de facto complainant. In such a
complaint, the de jure complainant, namely, the
company or corporation, will remain the same, but the
de facto complainant (employee) representing such de
jure complainant can change from time to time. And if
the de facto complainant is a public servant, the
benefit of exemption under clause (a) of the proviso to
section 200 of the Code will be available, even though::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 26
2025:HHC:21852the complaint is made in the name of a company or
corporation.” (emphasis supplied)
16. While this court was primarily concerned with the issue
.
relating to the exemption available against examining a
public servant in view of section 200(a) of the Code of
Criminal Procedure, this court nevertheless clarified thatthe requirement of section 142 of the Negotiable
Instruments Act that the payee should be the complainant
would be met if the complaint is in the name of the payee.
Where the payee is a company, this court observed that thecomplaint should necessarily be filed in the name of the
company if the company is the complainant. In such cases,
this court held that a company can be represented by an
employee or even a non-employee authorised andempowered to represent the company either by a resolution
or by a power of attorney. As a consequence of the aforesaid
discussion, this court concluded that for the purposes of
section 142 of the Negotiable Instruments Act, the company
will be the complainant and for the purposes of section 200of the Code of Criminal Procedure, its employee who
represents the company, will be the de facto complainant
while the company will remain the de jure complainant,regardless of any change in the de facto complainant.
17. Having discussed as to who could file a complaint on
behalf of an incorporated body, it would be apposite to
consider the legal validity of a complaint by the power ofattorney holder of such an incorporated body. A three-judge
Bench of this court in the case of A.C. Narayanan [A.C.
Narayanan v. State of Maharashtra, (2013) 180 Comp Cas 258
(SC); (2014) 11 SCC 790; (2014) 4 SCC (Civ) 343; 2013 SCC
OnLine SC 839; [2015] INSC 69.] was called upon to answer a
reference with regard to the conflicting decisions delivered
by two Division Benches of this court in M.M. T.C.
Ltd. v. Medchl Chemicals and Pharma P. Ltd. [(2002) 108 Comp
Cas 48 (SC); (2002) 1 SCC 234; 2002 SCC (Cri) 121; 2001 SCC
OnLine SC 1364; [2001] INSC 572.] and Janki Vashdeo::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 27
2025:HHC:21852Bhojwani v. IndusInd Bank Ltd. [(2005) 123 Comp Cas 154 (SC);
(2005) 2 SCC 217; 2004 SCC OnLine SC 1538; [2004] INSC 695.]While answering the reference, what fell for consideration
.
before this court was the maintainability of a complaint
under section 138 of the Negotiable Instruments Act filed by
the power of attorney holder on behalf of the original
complainant and the necessity of specific averments as to
the knowledge of the power of attorney holder with respect
to the facts and circumstances leading to the dishonour of
the cheque(s) and the preference of the criminal
proceedings. This court held as follows [ See page 269 of 180
Comp Cas.] :
“In terms of the reference order, the following
questions have to be decided by this Bench:
Whether a power of attorney holder can sign and
file a complaint petition on behalf of the
complainant?/whether the eligibility criteria
prescribed by section 142(a) of the NegotiableInstruments Act would stand satisfied if the
complaint petition itself is filed in the name of
the payee or the holder in due course of thecheque?
Whether a power of attorney holder can be
verified on oath under section 200 of the Code?
Whether specific averments as to the knowledge
of the power of attorney holder in the impugned
transaction must be explicitly asserted in the
complaint?
If the power of attorney holder fails to assert
explicitly his knowledge in the complaint, then
can the power of attorney holder verify the
complaint on oath on such presumption of
knowledge?
Whether the proceedings contemplated under
section 200 of the Code can be dispensed with in::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 28
2025:HHC:21852the light of section 145 of the Negotiable
Instruments Act, which was introduced by an
amendment in the year 2002?
.
The power of attorney holder is the agent of the
grantor. When the grantor authorises the attorney
holder to initiate legal proceedings and the attorneyholder accordingly initiates such legal proceedings, he
does so as the agent of the grantor, and the initiation
is by the grantor represented by his attorney holder
and not by the attorney holder in his personal capacity.
Therefore, where the payee is a proprietary concern,
the complaint can be filed by the proprietor of the
proprietary concern, describing himself as the sole
proprietor of the payee, the proprietary concern,describing itself as a sole proprietary concern,
represented by its sole proprietor, and the proprietor
or the proprietary concern represented by the attorney
holder under a power of attorney executed by the sole
proprietor. However, we make it clear that the powerof attorney holder cannot file a complaint in his own
name as if he was the complainant. In other words, he
can initiate criminal proceedings on behalf of theprincipal.
From a conjoint reading of sections 138, 142 and 145 of
the Negotiable Instruments Act as well as section 200
of the Code, it is clear that it is open to the Magistrateto issue process on the basis of the contents of the
complaint, documents in support thereof and the
affidavit submitted by the complainant in support of
the complaint. Once the complainant files an affidavit
in support of the complaint before issuance of the
process under section 200 of the Code, it is thereafter
open to the Magistrate, if he thinks fit, to call upon the
complainant to remain present and to examine him as
to the facts contained in the affidavit submitted by the
complainant in support of his complaint. However, it
is a matter of discretion and the Magistrate is not::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 29
2025:HHC:21852bound to call upon the complainant to remain present
before the court and to examine him upon oath for
taking a decision whether or not to issue process on.
the complaint under section 138 of the Negotiable
Instruments Act. For the purpose of issuing a process
under section 200 of the Code, it is open to the
Magistrate to rely upon the verification in the form ofan affidavit filed by the complainant in support of the
complaint under section 138 of the Negotiable
Instruments Act. It is only if and where the Magistrate,
after considering the complaint under section 138 ofthe Negotiable Instruments Act, documents produced
in support thereof and the verification in the form of
affidavit of the complainant, is of the view thatexamination of the complainant or his witness(s) is
required, the Magistrate may call upon the
complainant to remain present before the court and
examine the complainant and/or his witness upon
oath for taking a decision whether or not to issueprocess on the complaint under section 138 of the
Negotiable Instruments Act…
While holding that there is no serious conflict between
the decisions in M.M. T.C. Ltd. v. Medchl Chemicals and
Pharma P. Ltd. [(2002) 108 Comp Cas 48 (SC); (2002) 1SCC 234; 2002 SCC (Cri) 121; 2001 SCC OnLine SC 1364;
[2001] INSC 572.] and Janki Vashdeo
Bhojwani v. IndusInd Bank Ltd. [(2005) 123 Comp Cas
154 (SC); (2005) 2 SCC 217; 2004 SCC OnLine SC 1538;
[2004] INSC 695.], we clarify the position and answer
the questions in the following manner:
Filing of a complaint petition under section 138
of the Negotiable Instruments Act through a
power of attorney is perfectly legal and
competent.
The power of attorney holder can depose and
verify on oath before the court in order to prove::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 30
2025:HHC:21852the contents of the complaint. However, the
power of attorney holder must have witnessed
the transaction as an agent of the payee/holder.
in due course or possess due knowledge
regarding the said transactions.
It is required by the complainant to make a
specific assertion as to the knowledge of the
power of attorney holder in the said transaction
explicitly in the complaint, and the power of
attorney holder who has no knowledgeregarding the transactions cannot be examined
as a witness in the case.
In the light of section 145 of the Negotiable
Instruments Act, it is open to the Magistrate torely upon the verification in the form of affidavit
filed by the complainant in support of the
complaint under section 138 of the Negotiable
Instruments Act and the Magistrate is neithermandatorily obliged to call upon the
complainant to remain present before the court,
nor to examine the complainant of his witnessupon oath for taking the decision whether or not
to issue process on the complaint under section138 of the Negotiable Instruments Act.
The functions under the general power of
attorney cannot be delegated to another person
without a specific clause permitting the same in
the power of attorney. Nevertheless, the general
power of attorney itself can be cancelled and be
given to another person.
We answer the reference on the above terms and
remit the matter to the appropriate Bench for
deciding the case on merits.” (emphasis
supplied)
18. This court, while answering the reference, has
thoroughly considered the scope and requirement of section
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 31
2025:HHC:21852
142(1)(a) of the Negotiable Instruments Act. This court held
that from a conjoint reading of sections 138, 142 and 145 of
the Negotiable Instruments Act as well as section 200 of the
.
Code of Criminal Procedure, it is clear that calling upon the
complainant to remain present and to examine him as to the
facts contained in the affidavit submitted by the
complainant to support his complaint, is a matter of
discretion on the part of the Magistrate. This court clarified
that it is only if and where the Magistrate, after considering
all the relevant documents, is of the view that examination
of the complainant or his witness(s) is required, the
Magistrate may call upon the complainant to remain present
before the court and examine the complainant and/or his
witness upon oath for taking a decision whether or not to
issue process on the complaint under section 138 of the
Negotiable Instruments Act.
19. After discussing the discretionary powers of the
Magistrate, this court went on to hold that the power of
attorney holder may be allowed to file, appear and depose
for the purpose of issue of process for the offence punishable
under section 138 of the Negotiable Instruments Act. This
court, however, cautioned that an exception to the above
would be when the power of attorney holder does not have
personal knowledge about the transactions, in which case,
he cannot be examined. Nevertheless, this court clarified
that where the power of attorney holder of the complainant
is in charge of the business of the complainant payee and the
power of attorney holder alone is personally aware of the
transactions, there is no reason why he cannot depose as a
witness, however, such personal knowledge must be
explicitly asserted in the complaint and a power of attorney
holder who has no personal knowledge of the transactions
cannot be examined as a witness in the case.
20. More recently, in the case of TRL Krosaki Refractories
Ltd. [TRL Krosaki Refractories Ltd. v. SMS Asia P. Ltd., (2022) 7
SCC 612; (2022) 3 SCC (Cri) 224; (2022) 3 SCC (Civ) 782; 2022
SCC OnLine SC 217.] similar facts as the present matter arose
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 32
2025:HHC:21852
for consideration by this court. In the said case, a complaint
came to be filed by the payee company through its general
manager (accounting) under sections 138 and 142 of the
.
Negotiable Instruments Act. The complaint was registered
based on the affidavit filed on behalf of the complainant, in
lieu of an oral sworn statement. Upon being satisfied that
there was sufficient material and the complaint under
section 138 of the Negotiable Instruments Act against the
accused was in accordance with law, the SDJM took
cognisance of the complaint and issued a summons to the
accused firm therein. Assailing the summoning order, the
accused-firm filed a petition before the High Court under
section 482 of the Code of Criminal Procedure for quashing
of the summoning order, being aggrieved by the fact that the
complaint had been filed by an incompetent person
inasmuch as the complainant neither had knowledge about
the alleged transaction, nor had he witnessed the same, nor
was there any averment in the complaint that the
complainant had been duly authorised by the payee-firm to
initiate criminal proceedings on its behalf. The High Court
had allowed the petition under section 482 of the Code of
Criminal Procedure and set aside the summoning order,
which led to an appeal being filed before this court. A three-
judge Bench of this court, upon a thorough consideration of
the judgments of this court by which the law on the subject
matter at hand has been crystallised, allowed the appeal and
set aside the judgment of the High Court. This court held as
follows [ See page 623 of (2022) 7 SCC] :
“21. A meaningful reading of the above would indicate
that the company having authorised the general
manager (accounting) and the general manager
(accounting) having personal knowledge, had in fact
been averred. What can be treated as an explicit
averment cannot be put in a straitjacket, but within
therein was the background of the complainant being
an individual, and the complaint filed was based on the
power of attorney issued by the ‘payee’ who was also
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 33
2025:HHC:21852
an individual. In such an event, the manner in which
the power was being exercised was to be explicitly
stated so as to establish the right of the person
.
prosecuting the complaint to represent the payee, i.e.,
the complainant. The position that would emerge
when the complainant is a company or a corporate
entity will have to be viewed from a different
standpoint.
23. In this regard, in Samrat Shipping Co. P. Ltd. v. Dolly
George [(2002) 9 SCC 455; 2003 SCC (Cri) 1224; 1999 SCC
OnLine SC 1309], While disapproving of the manner in
which cognisance was refused to be taken and the
complaint had been dismissed by the learned
Magistrate at the threshold, this court has held as
hereunder : (SCC page 456, paragraph 3)
‘3. Having heard both sides, we find it difficult to
support the orders challenged before us. A
company can file a complaint only through a
human agency. The person who presented the
complaint on behalf of the company claimed
that he is the authorised representative of the
company. Prima facie, the trial court should
have accepted it at the time when a complaint
was presented. If it is a matter of evidence when
the accused disputed the authority of the said
individual to present the complaint, opportunity
should have been given to the complainant to
prove the same, but that opportunity need be
given only when the trial commences. The
dismissal of the complaint at the threshold on
the premise that the individual has not produced
a certified copy of the resolution appears to be
too hasty an action. We, therefore, set aside the
impugned orders and direct the trial court to
proceed with the trial and dispose of it in
accordance with law. Parties are directed to
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 34
2025:HHC:21852
appear before the trial court on January 31,
2000.’…
25. In that view, the position that would emerge is that
.
when a company is the payee of the cheque based on
which a complaint is filed under section 138 of the
Negotiable Instruments Act, the complainant
necessarily should be the company which would be
represented by an employee who is authorised. Prima
facie, in such a situation, the indication in the
complaint and the sworn statement (either orally or by
affidavit) to the effect that the complainant (company)
is represented by an authorised person who has
knowledge would be sufficient. The employment of the
terms ‘specific assertion as to the knowledge of the
power of attorney holder’ and such assertion about
knowledge should be ‘said explicitly’ as stated in A.C.
Narayanan v. State of Maharashtra [(2013) 180 Comp Cas
258 (SC); (2014) 11 SCC 790; (2014) 4 SCC (Civ) 343; 2013
SCC OnLine SC 839; [2015] INSC 69.], cannot be
understood to mean that the assertion should be in
any particular manner, much less only in the manner
understood by the accused in the case. All that is
necessary is to demonstrate before the learned
Magistrate that the complaint filed is in the name of
the ‘payee’ and if the person who is prosecuting the
complaint is different from the payee, the
authorisation therefor and that the contents of the
complaint are within his knowledge. When the
complainant/payee is a company, an authorised
employee can represent the company. Such averment
and prima facie material is sufficient for the learned
Magistrate to take cognizance and issue process. If at
all, there is any serious dispute with regard to the
person prosecuting the complaint not being
authorised or if it is to be demonstrated that the
person who filed the complaint has no knowledge of
the transaction and, as such that person could not
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 35
2025:HHC:21852
have instituted and prosecuted the complaint, it would
be open for the accused to dispute the position and
establish the same during the trial. As noted in Samrat
.
Shipping Co. P. Ltd. v. Dolly George [(2002) 9 SCC 455;
2003 SCC (Cri) 1224; 1999 SCC OnLine SC 1309],
dismissal of a complaint at the threshold by the
Magistrate on the question of authorisation would not
be justified. Similarly, we are of the view that in such
circumstances, entertaining a petition under section
482 to quash the order taking cognisance by the
Magistrate would be unjustified when the issue of
proper authorisation and knowledge can only be an
issue for trial.
26. In that view of the matter, we are of the opinion
that the High Court was not justified in entertaining
the petition filed under section 482 of the Code of
Criminal Procedure and quashing the order dated
November 5, 2015, taking cognisance of the complaint
filed by the appellant.” (emphasis supplied)
21. It could thus be seen that this court distinguished the
position of a complainant filing a complaint on behalf of an
individual from the position of a complainant filing a
complaint on behalf of a company. This court clarified that
although the decision in the case of A.C. Narayanan [A.C.
Narayanan v. State of Maharashtra, (2013) 180 Comp Cas 258
(SC); (2014) 11 SCC 790; (2014) 4 SCC (Civ) 343; 2013 SCC
OnLine SC 839; [2015] INSC 69.] had taken centre stage, the
facts involved in that case were in the background that the
complaint filed was based on the power of attorney issued by
the “payee” who was also an individual. In such cases, the
manner in which the power was being exercised had to be
explicitly stated. However, this court clarified that the
position that would emerge when the complainant is a
company or a corporate entity will have to be viewed from a
different standpoint. This court held that when the company
is the payee of the cheque based on which a complaint is
filed under section 138 of the Negotiable Instruments Act,
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 36
2025:HHC:21852
the complainant should necessarily be the company which is
to be represented by an authorised employee and in such a
situation, the indication in the complaint and the sworn
.
statement, oral or by affidavit, to the effect that complainant
is represented by an authorised person who has knowledge,
would be sufficient. Drawing a distinction from the “specific
assertion as to the knowledge of the power of attorney
holder” which is to be “stated explicitly” as categorically
laid down in A.C. Narayanan [A.C. Narayanan v. State of
Maharashtra, (2013) 180 Comp Cas 258 (SC); (2014) 11 SCC 790;
(2014) 4 SCC (Civ) 343; 2013 SCC OnLine SC 839; [2015] INSC
69.], this court held that in cases where the
payee/complainant is the company, all that is necessary to
be demonstrated before the Magistrate is that the complaint
is filed in the name of the payee and if the complaint is being
prosecuted by someone other than the payee, he has
knowledge of the contents of the complaint and he is duly
authorised to prosecute the complaint. This court further
clarified that if there is any dispute with regard to the person
prosecuting the complaint not being authorised or it is to be
demonstrated that the complainant had no knowledge of the
transaction, and as such could not have instituted and
prosecuted the complaint, it would be open for the accused
person to dispute the position and establish the same during
the course of the trial. However, dismissal or quashing of the
complaint at the threshold would not be justified. It was held
that the issue of proper authorisation and knowledge can
only be an issue for trial.”
26. In the present case, the authority of Hari Kaundal to file
the complaint was not disputed. Therefore, the complaint cannot
be dismissed on the ground that the person, who had filed the
complaint did not step into the witness box.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 37
2025:HHC:21852
27. Himat Ram stated in his cross-examination that he was
not aware of the amount deposited by the accused or who had filled
.
the cheque. It was submitted that failure to state the amount
deposited by the accused or name the person who had filled the
cheque shows that he did not know the material facts and an
adverse inference should be drawn against the complainant. This
submission cannot be accepted. The failure to state the amount
deposited by the accused does not show that he was not a
competent witness especially when the statement of account was
filed to prove the details of the amount deposited by the accused.
Even the accused could not give the details of the amount paid by
him. Himat Ram stated that the cheque was filled when it was
handed over to him; therefore, he could not have stated who had
filled the cheque because it was not filled in his presence.
Therefore, an adverse inference cannot be drawn against the
complainant.
28. The accused admitted while appearing as DW1 that the
cheque (Ext. CW1/B) contains his signatures. It was laid down by
this Court in Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C.
398 that where the accused had not disputed his signatures on the
cheque, the Court has to presume that it was issued in discharge of
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 38
2025:HHC:21852
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 bylearned 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 directlyestablished 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 supportedby 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.
29. Similar is the judgment in Basalingappa vs. Mudibasappa
2019 (5) SCC 418 wherein it was held:
“26. Applying the proposition of law as noted above, in the
facts of the present case, it is clear that the signature on the
cheque, having been admitted, a presumption shall be raised
under Section 139 that the cheque was issued in discharge of
debt or liability.”
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 39
2025:HHC:21852
30. This position was reiterated in Kalamani Tex v. P.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2
.
SCC (Cri) 555: 2021 SCC OnLine SC 75wherein it was held at page 289:
“13. Adverting to the case in hand, we find on a plain reading
of its judgment that the trial court completely overlooked
the provisions and failed to appreciate the statutory
presumption drawn under Section 118 and Section 139 of
NIA. The statute mandates that once the signature(s) of anaccused on the cheque/negotiable instrument are
established, then these “reverse onus” clauses become
operative. In such a situation, the obligation shifts upon the
accused to discharge the presumption imposed upon him.
This point of law has been crystallised by this Court in
Rohitbhai Jivanlal Patel v. State of Gujarat [Rohitbhai Jivanlal
Patel v. State of Gujarat, (2019) 18 SCC 106, para 18: (2020) 3
SCC (Civ) 800: (2020) 3 SCC (Cri) 575] in the following words :
(SCC pp. 120-21, para 18)
“18. In the case at hand, even after purportedly
drawing the presumption under Section 139 of the NI
Act, the trial court proceeded to question the want ofevidence on the part of the complainant as regards the
source of funds for advancing loan to the accused andwant of examination of relevant witnesses who
allegedly extended him money for advancing it to theaccused. This approach of the trial court had been at
variance with the principles of presumption in law.
After such presumption, the onus shifted to the
accused and unless the accused had discharged the
onus by bringing on record such facts and
circumstances as to show the preponderance of
probabilities tilting in his favour, any doubt on the
complainant’s case could not have been raised for
want of evidence regarding the source of funds for
advancing loan to the appellant-accused.”
14. Once the 2nd appellant had admitted his signatures on
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 40
2025:HHC:21852
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.”
31. Similar is the judgment in APS Forex Services (P) Ltd. v.
Shakti International Fashion Linkers (2020) 12 SCC 724, wherein it
was observed: –
7.2. What is emerging from the material on record is that the
issuance of a cheque by the accused and the signature of the
accused on the said cheque are not disputed by the accused.
The accused has also not disputed that there were
transactions between the parties. Even as per the statement
of the accused, which was recorded at the time of the
framing of the charge, he has admitted that some amount
was due and payable. However, it was the case on behalf of
the accused that the cheque was given by way of security,
and the same has been misused by the complainant.
However, nothing is on record that in the reply to the
statutory notice, it was the case on behalf of the accused that
the cheque was given by way of security. Be that as it may,
however, it is required to be noted that earlier the accused
issued cheques which came to be dishonoured on the ground
of “insufficient funds” and thereafter a fresh consolidated
cheque of ₹9,55,574 was given which has been returned
unpaid on the ground of “STOP PAYMENT”. Therefore, the
cheque in question was issued for the second time.
Therefore, once the accused has admitted the issuance of a
cheque which bears his signature, there is a presumption
that there exists a legally enforceable debt or liability under
Section 139 of the NI Act. However, such a presumption is
rebuttable in nature, and the accused is required to lead
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 41
2025:HHC:21852
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
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.
32. Learned Courts below had rightly held that there is a
presumption under Section 139 of the N.I. Act that the cheque was
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 42
2025:HHC:21852
issued in the discharge of the legal liability. This presumption 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 notdisputed. 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 bythe 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 theholder of a cheque received the cheque of the nature
referred to in Section 138 for the discharge, in whole or
in part, of any debt or other liability.”
13. Insofar as the payment of the amount by the appellant in
the context of the cheque having been signed by the
respondent, the presumption for passing of the
consideration would arise as provided under Section 118(a)
of the NI Act, which reads as hereunder:
“118. Presumptions as to negotiable instruments. –Until
the contrary is proved, the following presumptions
shall be made:
(a) of consideration: that every negotiable
instrument was made or drawn for
consideration, and that every such instrument,
when it has been accepted, indorsed, negotiated
or transferred, was accepted, indorsed,
negotiated or transferred for consideration.”
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 43
2025:HHC:21852
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. Mudibasapp
a, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held
as hereunder: (SCC pp. 432-33, paras 25-26)
“25. We having noticed the ratio laid down by this
Court in the above cases on Sections 118(a) and 139, we
now summarise the principles enumerated by this
Court in the following manner:
25.1. Once the execution of the cheque is
admitted, Section 139 of the Act mandates a
presumption that the cheque was for the
discharge of any debt or other liability.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 44
2025:HHC:21852
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.
r 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.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 45
2025:HHC:21852
Payment of Rs 4,50,000 being admitted in the year
2010 and further payment of loan of Rs 50,000 with
regard to which Complaint No. 119 of 2012 was filed by
.
the complainant, a copy of which complaint was also
filed as Ext. D-2, there was a burden on the
complainant to prove his financial capacity. In the
years 2010-2011, as per own case of the complainant,
he made a payment of Rs 18 lakhs. During his cross-
examination, when the financial capacity to pay Rs 6
lakhs to the accused was questioned, there was no
satisfactory reply given by the complainant. The
evidence on record, thus, is a probable defence on
behalf of the accused, which shifted the burden on the
complainant to prove his financial capacity and other
facts.”
16. In that light, it is contended that the very materials
produced by the appellant and the answers relating to 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
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 46
2025:HHC:21852
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.”
33. 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 debtor 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 Section139 of the NI Act is an example of reverse onus (see
Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184]). It is also
true that this Court has found that the accused is notexpected to discharge an unduly high standard of proof. It is
accordingly that the principle has developed that all which
the accused needs to establish is a probable defence. As to
whether a probable defence has been established is a matter
to be decided on the facts of each case on the conspectus of
evidence and circumstances that exist…”
34. Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022
SCC OnLine SC 1131, wherein it was observed:
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 47
2025:HHC:21852“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 notdisputed 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 andthereafter, 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.”
35. 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 holder of the cheque
received the cheque for the discharge of, whole or part of any
debt or liability”. It will be seen that the “presumed fact”
directly relates to one of the crucial ingredients necessary to
sustain a conviction under Section 138. [The rules discussed
hereinbelow are common to both the presumptions under
Section 139 and Section 118 and are hence not repeated–
reference to one can be taken as reference to another]
34. Section 139 of the NI Act, which takes the form of a “shall
presume” clause, is illustrative of a presumption of law.
Because Section 139 requires that the Court “shall presume”
the fact stated therein, it is obligatory for the Court to raise
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 48
2025:HHC:21852
this presumption in every case where the factual basis for
the raising of the presumption had been established. But this
does not preclude the person against whom the presumption
.
is drawn from rebutting it and proving the contrary, as is
clear from the use of the phrase “unless the contrary is
proved”.
35. The Court will necessarily presume that the cheque had
been issued towards the discharge of a legally enforceable
debt/liability in two circumstances. Firstly, when the drawer
of the cheque admits issuance/execution of the cheque
and secondly, in the event where the complainant proves that
the cheque was issued/executed in his favour by the drawer.
The circumstances set out above form the fact(s) which
bring about the activation of the presumptive clause. [Bharat
Barrel & Drum Mfg. Co. v. Amin Chand Payrelal [Bharat Barrel
& Drum Mfg. Co. v. Amin Chand Payrelal, (1999) 3 SCC 35] ]
36. Recently, this Court has gone to the extent of holding
that presumption takes effect even in a situation where the
accused contends that a blank cheque leaf was voluntarily
signed and handed over by him to the complainant. [Bir
Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40] ].
Therefore, the mere admission of the drawer’s signature,
without admitting the execution of the entire contents in the
cheque, is now sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden to
prove that the instrument, say a cheque, was issued by the
accused for discharge of debt, the presumptive device under
Section 139 of the Act helps shifting the burden on 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.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 49
2025:HHC:21852
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 offerevidence 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]]
36. Therefore, the Court has to start with the presumption
that the cheque was issued in discharge of legal liability, and the
burden is upon the accused to prove the contrary.
37. The accused admitted in his cross-examination that he
had taken the loan. He stated that he had returned some money,
but did not remember the details. He admitted that he wanted to
repay the loan; therefore, the accused has not disputed his liability
to pay the amount. The statement of account (Ext. CW1/G) shows
that an amount of ₹9,39,675.20/- was due on 06.04.2019. The
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 50
2025:HHC:21852
cheque was issued for an amount of ₹9,39,675/- and is dated
08.04.2019. Thus, the accused had a subsisting liability of
.
₹9,39,675/- on the date of the issuance of the cheque. Since the
accused has not disputed his liability to pay the amount, therefore
learned Courts below had rightly held that the accused had failed to
rebut the presumption attached to the cheque.
38. The accused claimed that a blank signed cheque was
taken from him. Even if this plea is accepted as correct, the accused
had a liability to pay ₹9,39,675/- on the date of the issuance of the
cheque. 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 thecomplainant as security and on this ground, criminal
revision petition be accepted is rejected being devoid of anyforce 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-
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 51
2025:HHC:21852settled law that where there is a conflict between former law
and subsequent law, then subsequent law always prevails.”
39. 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 the NI 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.
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.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 52
2025:HHC:21852
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
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)
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 53
2025:HHC:21852
40. 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 ofpaper 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 theloan 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 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::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 54
2025:HHC:21852discharge 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 issuedas 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 theamount, 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 ispresented 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 oflitigation.”
41. Hence, the accused cannot escape from the liability by
taking a plea that he had handed over a blank signed security
cheque to the complainant.
42. Himat Ram (CW1) stated that the cheque was
dishonoured with an endorsement ‘insufficient funds’. This is
corroborated by the memo (Ext. CW1/C) in which the reason for
dishonour has been mentioned as ‘funds insufficient’. The accused
did not claim that he had a sufficient amount in his bank account,
and the cheque was wrongly dishonoured. It was laid down by the
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 55
2025:HHC:21852
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 slipor 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 wasdisproved. Section 147 makes the offences punishable under
the Act compoundable.
43. Therefore, it was duly proved that the cheque was
dishonoured with an endorsement ‘funds insufficient’.
44. Himat Ram (CW1) stated that the notice was issued to
the accused, which was received undelivered. The notice was sent
to the same address where the summons was sent and delivered.
This address was furnished by the accused in his statement
recorded under Section 313 of Cr.P.C., the notice of accusation, the
personal bond furnished by him, and the statement on oath. Thus,
notice was sent to the correct address. The notice was returned
unclaimed. 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
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 56
2025:HHC:21852
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 anysignificant 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 thesender 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 thatin 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.”
45. 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) 7Supreme 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.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 57
2025:HHC:21852Further, 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.”
46. 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.
47. 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 an 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.
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 58
2025:HHC:21852
48. The learned Trial Court sentenced the accused to
undergo simple imprisonment for six months. It was laid down by
.
the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC
OnLine SC 138 that the penal provisions of Section 138 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 ofnegotiable 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 inthe issuance of the same.”
49. Keeping in view the deterrent nature of the sentence to
be awarded, the sentence of six months’ imprisonment cannot be
said to be excessive, and no interference is required with it.
50. Learned Trial Court had ordered the accused to pay a
compensation of ₹13,00,000/- to the complainant. The cheque was
issued on 08.04.2019. The sentence was imposed on 30.04.2024
after a lapse of 05 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
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 59
2025:HHC:21852
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 butalso 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 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]”
51. The interest on ₹13,00,000/- for five years at the rate of
9 % per annum is ₹5,85,000/-, and the compensation of
₹3,60,325/- is not excessive, but inadequate.
52. The learned Trial Court had imposed a default sentence
of one month on failure to pay compensation. It was submitted
that no sentence of imprisonment in case of default of payment of
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 60
2025:HHC:21852
compensation could have been awarded. This submission is not
acceptable. It was laid down by the Hon’ble Supreme Court in K.A.
.
Abbas v. Sabu Joseph, (2010) 6 SCC 230: (2010) 3 SCC (Civ) 744: (2010)
3 SCC (Cri) 127: 2010 SCC OnLine SC 612, that the Courts can impose a
sentence of imprisonment in default of payment of compensation.
It was observed at page 237:
“20. Moving over to the question, whether a default
sentence can be imposed on default of payment of
compensation, this Court in Hari Singh v. SukhbirSingh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127]
and in Balraj v. State of U.P. [(1994) 4 SCC 29: 1994 SCC (Cri)823: AIR 1995 SC 1935], has held that it was open to all the
courts in India to impose a sentence on default of payment
of compensation under sub-section (3) of Section 357.
In Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC
(Cri) 984: AIR 1988 SC 2127], this Court has noticed certain
factors which are required to be taken into considerationwhile passing an order under the section: (SCC p. 558, para
11)
“11. The payment by way of compensation must,
however, be reasonable. What is reasonable may
depend upon the facts and circumstances of each case.
The quantum of compensation may be determined by
taking into account the nature of the crime, the
justness of the claim by the victim and the ability of
the accused to pay. If there is more than one accused,
they may be asked to pay on equal terms unless their
capacity to pay varies considerably. The payment may
also vary depending on the acts of each accused. A
reasonable period for payment of compensation, if
necessary, by instalments, may also be given. The
court may enforce the order by imposing a sentence in
default.”
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 61
2025:HHC:21852
21. This position also finds support in R. v. Oliver John
Huish [(1985) 7 Cri App R (S) 272]. The Lord Justice Croom
Johnson, speaking for the Bench, has observed:
.
“When compensation orders may be made, the most
careful examination is required. Documents should be
obtained, and evidence, either on affidavit or orally,
should be given. The proceedings should, if necessary,be adjourned to arrive at the true state of the
defendant’s affairs.
Very often, a compensation order is made and a very
light sentence of imprisonment is imposed, becausethe court recognises that if the defendant is to have an
opportunity of paying the compensation, he must be
enabled to earn the money with which to do so. Theresult is therefore an extremely light sentence of
imprisonment. If the compensation order turns out tobe virtually worthless, the defendant has got off with a
very light sentence of imprisonment as well as no
order of compensation. In other words, generallyspeaking, he has got off with everything.”
22. The law laid down in Hari Singh v. Sukhbir Singh [(1988) 4
SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127] was reiterated
by this Court in Suganthi Suresh Kumar v. Jagdeeshan [(2002)
2 SCC 420: 2002 SCC (Cri) 344]. The Court observed: (SCC pp.
424-25, paras 5 & 10)
“5. In the said decision, this Court reminded all
concerned that it is well to remember the emphasis
laid on the need for making liberal use of Section
357(3) of the Code. This was observed by reference to a
decision of this Court in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127]. In the said decision, this Court held as follows:
(SCC p. 558, para 11)
’11. … The quantum of compensation may be
determined by taking into account the nature of the
crime, the justness of the claim by the victim and the
ability of the accused to pay. If there is more than one::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 62
2025:HHC:21852accused, they may be asked to pay on equal terms
unless their capacity to pay varies considerably. The
payment may also vary depending on the acts of each.
accused. A reasonable period for payment of
compensation, if necessary, by instalments, may also
be given. The court may enforce the order by imposing a
sentence in default.’(emphasis in original)
***
10. That apart, Section 431 of the Code has only
prescribed that any money (other than fine) payable
by virtue of an order made under the Code shall be
recoverable ‘as if it were a fine’. Two modes of
recovery of the fine have been indicated in Section421(1) of the Code. The proviso to the sub-section says
that if the sentence directs that in default of payment
of the fine, the offender shall be imprisoned, and if
such offender has undergone the whole of such
imprisonment in default, no court shall issue suchwarrant for the levy of the amount.”
The Court further held: (Jagdeeshan case [(2002) 2 SCC 420:
2002 SCC (Cri) 344], SCC p. 425, para 11)
“11. When this Court pronounced in Hari
Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri)
984: AIR 1988 SC 2127] that a court may enforce an
order to pay compensation ‘by imposing a sentence indefault’ it is open to all courts in India to follow the
said course. The said legal position would continue to
hold good until it is overruled by a larger Bench of this
Court. Hence learned Single Judge of the High Court of
Kerala has committed an impropriety by expressing
that the said legal direction of this Court should not be
followed by the subordinate courts in Kerala. We
express our disapproval of the course adopted by the
said Judge in Rajendran v. Jose [(2001) 3 KLT 431]. It is
unfortunate that when the Sessions Judge has
correctly done a course in accordance with the::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 63
2025:HHC:21852discipline, the Single Judge of the High Court has
incorrectly reversed it.”
23. In order to set at rest the divergent opinion expressed
.
in Ahammedkutty case [(2009) 6 SCC 660 : (2009) 3 SCC (Cri)
302], this Court in Vijayan v. Sadanandan K. [(2009) 6 SCC
652 : (2009) 3 SCC (Cri) 296], after noticing the provision of
Sections 421 and 431 CrPC, which dealt with mode of
recovery of fine and Section 64 IPC, which empowered the
courts to provide for a sentence of imprisonment on default
of payment of fine, the Court stated: (Vijayan case [(2009) 6
SCC 652 : (2009) 3 SCC (Cri) 296], SCC p. 658, para 24)
“24. We have carefully considered the submissions
made on behalf of the respective parties. Since a
decision on the question raised in this petition is still
in a nebulous state, there appear to be two views as to
whether a default sentence of imprisonment can be
imposed in cases where compensation is awarded to
the complainant under Section 357(3) CrPC. As
pointed out by Mr Basant in Dilip S. Dahanukar
case [(2007) 6 SCC 528 : (2007) 3 SCC (Cri) 209], the
distinction between a fine and compensation as
understood under Section 357(1)(b) and Section 357(3)
CrPC had been explained, but the question as to
whether a default sentence clause could be made in
respect of compensation payable under Section 357(3)
CrPC, which is central to the decision in this case, had
not been considered.”
The Court further held: (Vijayan case [(2009) 6 SCC 652:
(2009) 3 SCC (Cri) 296], SCC p. 659, paras 31-32)
“31. The provisions of Sections 357(3) and 431 CrPC,
when read with Section 64 IPC, empower the court,
while making an order for payment of compensation,
to also include a default sentence in case of non-
payment of the same.
32. The observations made by this Court in Hari Singh
case [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127] are as important today as they were when they
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 64
2025:HHC:21852
were made and if, as submitted by Dr. Pillay, recourse
can only be had to Section 421 CrPC for enforcing the
same, the very object of sub-section (3) of Section 357
.
would be frustrated and the relief contemplated
therein would be rendered somewhat illusory.”
24. In Shantilal v. State of M.P. [(2007) 11 SCC 243 : (2008) 1
SCC (Cri) 1], it is stated that the sentence of imprisonment
for default in payment of a fine or compensation is different
from a normal sentence of imprisonment. The Court also
delved into the factors to be taken into consideration while
passing an order under Section 357(3) CrPC. This Court
stated: (SCC pp. 255-56, para 31)
“31. … The term of imprisonment in default of
payment of a fine is not a sentence. It is a penalty
which a person incurs on account of non-payment of
a fine. The sentence is something which an offender
must undergo unless it is set aside or remitted in part
or in whole, either in appeal or in revision or other
appropriate judicial proceedings, or ‘otherwise’. A
term of imprisonment ordered in default of payment
of a fine stands on a different footing. A person is
required to undergo imprisonment either because he
is unable to pay the amount of fine or refuse to pay
such amount. He, therefore, can always avoid
undergoing imprisonment in default of payment of
the fine by paying such amount. It is, therefore, not
only the power but the duty of the court to keep in view
the nature of the offence, circumstances under which
it was committed, the position of the offender and
other relevant considerations before ordering the
offender to suffer imprisonment in default of payment
of a fine.” (emphasis in original)
25. In Kuldip Kaur v. Surinder Singh [(1989) 1 SCC 405: 1989
SCC (Cri) 171: AIR 1989 SC 232], in the context of Section 125
CrPC observed that sentencing a person to jail is sometimes
a mode of enforcement. In this regard, the Court stated:
(SCC p. 409, para 6)
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 65
2025:HHC:21852“6. A distinction has to be drawn between a mode of
enforcing recovery on the one hand and effecting
actual recovery of the amount of monthly allowance.
which has fallen in arrears on the other. Sentencing a
person to jail is a ‘mode of enforcement’. It is not a
‘mode of satisfaction’ of the liability. The liability can
be satisfied only by making actual payment of the
arrears. The whole purpose of sending to jail is to
oblige a person liable to pay the monthly allowance
who refuses to comply with the order without
sufficient cause, to obey the order and to make the
payment. The purpose of sending him to jail is not to
wipe out the liability which he has refused to
discharge. It should also be realised that a person
ordered to pay a monthly allowance can be sent to jail
only if he fails to pay the monthly allowance ‘without
sufficient cause’ to comply with the order. It would
indeed be strange to hold that a person who, without
reasonable cause, refuses to comply with the order of
the court to maintain his neglected wife or child would
be absolved of his liability merely because he prefers
to go to jail. A sentence of jail is no substitute for the
recovery of the amount of monthly allowance which
has fallen in arrears.”
26. From the above line of cases, it becomes very clear that a
sentence of imprisonment can be granted for default in
payment of compensation awarded under Section 357(3)
CrPC. The whole purpose of the provision is to accommodate
the interests of the victims in the criminal justice system.
Sometimes the situation becomes such that there is no
purpose served by keeping a person behind bars. Instead,
directing the accused to pay an amount of compensation to
the victim or affected party can ensure the delivery of total
justice. Therefore, this grant of compensation is sometimes
in lieu of sending a person behind bars or in addition to a
very light sentence of imprisonment. Hence, in default of
payment of this compensation, there must be a just
recourse. Not imposing a sentence of imprisonment would
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 66
2025:HHC:21852
mean allowing the accused to get away without paying the
compensation, and imposing another fine would be
impractical, as it would mean imposing a fine upon another
.
fine and therefore would not ensure proper enforcement of
the order of compensation. While passing an order under
Section 357(3), it is imperative for the courts to look at the
ability and the capacity of the accused to pay the same
amount as has been laid down by the cases above; otherwise,
the very purpose of granting an order of compensation
would stand defeated.
53. This position was reiterated in R. Mohan v. A.K. Vijaya
Kumar, (2012) 8 SCC 721: (2012) 4 SCC (Civ) 585: (2012) 3 SCC (Cri)
1013: 2012 SCC OnLine SC 486 wherein it was observed at page 729:
29. The idea behind directing the accused to pay
compensation to the complainant is to give him immediate
relief so as to alleviate his grievance. In terms of Section
357(3), compensation is awarded for the loss or injurysuffered by the person due to the act of the accused for
which he is sentenced. If merely an order directing
compensation is passed, it would be totally ineffective. Itcould be an order without any deterrence or apprehension of
immediate adverse consequences in case of its non-
observance. The whole purpose of giving relief to the
complainant under Section 357(3) of the Code would be
frustrated if he is driven to take recourse to Section 421 of
the Code. An order under Section 357(3) must have the
potential to secure its observance. Deterrence can only be
infused into the order by providing for a default sentence. If
Section 421 of the Code puts compensation ordered to be
paid by the court on a par with the fine so far as the mode of
recovery is concerned, then there is no reason why the court
cannot impose a sentence in default of payment of
compensation as it can be done in case of default in payment
of fine under Section 64 IPC. It is obvious that in view of
this, in Vijayan [(2009) 6 SCC 652: (2009) 3 SCC (Cri) 296],
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
P a g e | 67
2025:HHC:21852
this Court stated that the abovementioned provisions
enabled the court to impose a sentence in default of
payment of compensation and rejected the submission that
.
the recourse can only be had to Section 421 of the Code for
enforcing the order of compensation. Pertinently, it was
made clear that observations made by this Court in Hari
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984] are as important
today as they were when they were made. The conclusion,
therefore, is that the order to pay compensation may be
enforced by awarding a sentence in default.
30. In view of the above, we find no illegality in the order
passed by the learned Magistrate and confirmed by the
Sessions Court in awarding a sentence in default of payment
of compensation. The High Court was in error in setting
aside the sentence imposed in default of payment of
compensation.
54. Thus, there is no infirmity in imposing a sentence of
imprisonment in case of default in the payment of compensation.
55. No other point was urged.
56. In view of the above, the present revision fails, and the
same is dismissed.
57. Records of the learned Courts below be sent back
forthwith, along with a copy of this judgment.
(Rakesh Kainthla)
Judge
9th July, 2025
(Chander)
::: Downloaded on – 09/07/2025 21:22:38 :::CIS
[ad_1]
Source link