Himachal Pradesh High Court
Reserved On: 18.06.2025 vs The Kangra Central Co-Operative Bank … on 21 July, 2025
2025:HHC:23409
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 539 of 2023
Reserved on: 18.06.2025
.
Date of Decision: 21.07.2025
Sanjeev Pathania ...Petitioner
Versus
The Kangra Central Co-Operative Bank Ltd. ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No
For the Petitioner : Mr. Somesh Sharma, Advocate, vice
Mr. Karun Negi, Advocate.
For the Respondent : Mr. Sohan Singh Rathore, Advocate.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 28.06.2023 passed by learned Sessions Judge, Kullu, District
Kullu, H.P. (learned Appellate Court) vide which the judgment of
conviction and order of sentence dated 09.11.2022, passed by
learned Judicial Magistrate, First Class, Manali, District Kullu,
H.P. (learned Trial Court), were upheld. (Parties shall hereinafter be
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |2
2025:HHC:23409
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-Bank filed a complaint against
the accused before the learned Trial Court for the commission of
an offence punishable under Section 138 of the Negotiable
Instruments Act (in short, ‘NI Act‘). It was asserted that the
complainant, Kangra Central Co-operative Bank Ltd., is a
registered society under the Co-operative Society Act. It is
carrying on the business of banking. The accused raised a loan of
₹3,00,000/- from the complainant-Bank. He defaulted on the
payment of monthly instalments. He issued a cheque of
₹2,46,876/- to discharge his liability. The complainant-Bank
presented the cheque for its collection, but it was dishonoured
with an endorsement ‘funds insufficient’. The complainant-Bank
served a notice upon the accused asking him to pay the amount
mentioned in the cheque within 15 days from the date of its
receipt. The accused failed to pay the amount despite the receipt
of the notice of demand. Therefore, a complaint was filed against
the accused for taking action as per the law.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |3
2025:HHC:23409
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-Bank examined Narinder Thakur
(CW-1) to prove its case.
5.
The accused in his statement recorded under Section
313 of CrPC admitted that he had taken a loan of ₹3,00,000/- from
the complainant. He stated that he had handed over a cheque as
security at the time of sanctioning of loan. He did not fill in the
body of the cheque; however, the cheque was signed by him. He
denied the rest of the complainant’s-Bank case. He claimed that
he is innocent. He stated that he wanted to lead the defence
evidence, but failed to produce the evidence despite there
opportunities having been granted. Hence, the evidence was
closed by the Court on 04.06.2022.
6. Learned Trial Court held that issuance of cheque was
not disputed, therefore, presumption under Section 139 and 118(a)
of the NI Act would arise. The accused admitted that he had taken
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |4
2025:HHC:23409
a loan of ₹3,00,000/- from the complainant-Bank. His plea that
he had issued a blank security cheque to the bank at the time of
.
taking the loan was not established. The cheque was dishonoured
due to insufficient funds. The notice was duly served upon the
accused. He failed to pay money despite the receipt of a valid
notice of demand. Hence, the accused was convicted of the
commission of an offence punishable under Section 138 of the NI
imprisonment
for one
Act and was sentenced to undergo simple imprisonment for six
months, pay a compensation of ₹3,46,876/-, and undergo simple
month in default of payment of
compensation.
7. Being aggrieved by the judgment and order passed by
the learned Trial Court, the accused filed an appeal. Learned
Appellate Court concurred with the findings recorded by the
learned Trial Court that the cheque carried with it a presumption
that it was issued to discharge the legal liability. The accused
failed to rebut this presumption. The cheque was dishonoured
with an endorsement ‘insufficient funds’. Notice was served upon
the accused; however, he failed to pay the amount despite the
receipt of the valid notice of demand. An amount of ₹1,28,700/-
paid during the pendency of the proceedings was ordered to be
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |5
2025:HHC:23409
adjusted in the loan account of the accused, and the appeal was
dismissed.
.
8. Feeling aggrieved and dissatisfied with the judgments
and order passed by the learned Courts below, the accused has
filed the present revision, asserting that the learned Courts below
failed to appreciate the evidence in its right perspective.
Inadmissible evidence was considered. Material variations and
contradictions in the statement of the complainant Bank’s witness
were ignored. The complainant-Bank was required to prove its
case beyond a reasonable doubt. There was no evidence of the
advancement of the loan. The amount deposited by the accused
during the pendency of the appeal was not adjusted in the loan
account. The plea that the bank had taken a blank security cheque
at the time of handing over the loan was highly probable.
Therefore, it was prayed that the present revision be allowed and
the judgments and order passed by the learned Courts below be set
aside.
9. I have heard Mr. Somesh Verma, learned counsel
appearing on behalf of the petitioner and Mr. Sohan Singh
Rathour, learned counsel for the respondent.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |6
2025:HHC:23409
10. Mr. Somesh Sharma, learned counsel appearing on
behalf of the petitioner, submitted that the learned Courts below
.
failed to appreciate the material on record properly. The accused
deposited different amounts with the complainant during the
pendency of the proceedings, and this amount was not reflected in
the loan account; therefore, he prayed that the present petition be
allowed and the judgments and order passed by the learned Courts
below be set aside.
11. to
Mr. Sohan Singh Rathour, learned counsel for the
respondent submitted that the accused has not disputed the
taking of the loan in his statement recorded under Section 313 of
Cr.P.C. He did not provide any evidence to establish that a blank
signed security cheque was handed over by him to the
complainant-Bank at the time of sanctioning of the loan. Learned
Courts below had rightly held that the presumption under Section
118(a) and 139 of the NI Act was not rebutted. This Court should
not interfere with the concurred findings recorded by the learned
Courts below. He prayed that the present revision petition be
dismissed. He relied upon judgment of Hon’ble Supreme Court in
C.C. Alavi Haji vs. Palapetty Muhammed and another (2006) 6 SCC
555 in support of his submission.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |7
2025:HHC:23409
12. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
.
13. It was laid down by the Hon’ble Supreme Court in
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022)
3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that 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: –
r to
“10. Before adverting to the merits of the contentions, at
the outset, it is apt to mention that there are concurrent
findings of conviction arrived at by two courts after a
detailed appreciation of the material and evidence brought
on record. The High Court in criminal revision against
conviction is not supposed to exercise the jurisdiction like
the appellate court, and the scope of interference in revision
is extremely narrow. Section 397 of the Criminal Procedure
Code (in short “CrPC“) vests jurisdiction to satisfy itself or
himself as to the correctness, legality or propriety of any
finding, sentence or order, recorded or passed, and as to the
regularity of any proceedings of such inferior court. The
object of the provision is to set right a patent defect or an
error of jurisdiction or law. There has to be a well-founded
error which is to be determined on the merits of individual
cases. It is also well settled that while considering the same,
the Revisional Court does not dwell at length upon the facts
and evidence of the case to reverse those findings.
14. 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:
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |8
2025:HHC:23409
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.
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 inferiorcourt 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 appropriatefor 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 thevarious judgments of this Court, it emerges that the
revisional jurisdiction can be invoked where thedecisions under challenge are grossly erroneous, there is
no compliance with the provisions of law, the finding
recorded is based on no evidence, material evidence isignored 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::: Downloaded on – 21/07/2025 21:25:58 :::CIS
Page |9
2025:HHC:23409mind 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.”
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. RameshChander, (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, itwill 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 butinherently impossible to state such principles with
precision. At best and upon objective analysis of variousjudgments 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 ofcharge 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
criminal proceedings, particularly, the charge framed in
terms of Section 228 of the Code, should be exercised::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 10
2025:HHC:23409very 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
where 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.
r ***
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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 11
2025:HHC:23409
legally permissible. The High Courts ought to be cognizant
of the fact that the trial court was dealing with an
application for discharge.
15. It was held in Kishan Rao v. Shankargouda, (2018) 8 SCC
.
165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine
SC 651 that it is impermissible for the High Court to reappreciate
the evidence and come to its conclusions in the absence of any
perversity. It was observed 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 has
laid down the following: (SCC pp. 454-55, para 5)“5. … In its revisional jurisdiction, the High Court can
call for and examine the record of any proceedings to
satisfy itself as to the correctness, legality or propriety ofany finding, sentence or order. In other words, the
jurisdiction is one of supervisory jurisdiction exercisedby the High Court for correcting a miscarriage of justice.
But the said revisional power cannot be equated with the
power of an appellate court, nor can it be treated even asa second appellate jurisdiction. Ordinarily, therefore, it
would not be appropriate for the High Court to
reappreciate the evidence and come to its conclusion on
the same when the evidence has already been
appreciated by the Magistrate as well as the Sessions
Judge in appeal unless any glaring feature is brought to
the notice of the High Court which would otherwise
tantamount to a gross miscarriage of justice. On
scrutinising the impugned judgment of the High Court::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 12
2025:HHC:23409from 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
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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 13
2025:HHC:23409
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.
16. This position was reiterated in Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)
309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:
“16. It is well settled that in 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 law
that the Revisional Court will not interfere even if a wrongorder is passed by a court having jurisdiction, in the absence
of a jurisdictional error. The answer to the first question is,
therefore, in the negative.”
17. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
18. The accused claimed in his statement recorded under
Section 313 of Cr.P.C. that he had issued a security cheque at the
time of sanctioning of the loan in his favour. He stated that he had
not filled in the body of the cheque and had only put his signature
on the cheque. It was laid down by this Court in Naresh Verma vs.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 14
2025:HHC:23409
Narinder Chauhan 2020(1) ShimLC 398 that where the accused had
not disputed his signatures on the cheque, the Court has to
.
presume that it was issued in discharge of legal liability and the
burden would shift upon the accused to rebut the presumption. It
was observed: –
“8. Once signatures on the cheque are not disputed, the plea
with regard to the cheque having not been issued towards
discharge of lawful liability, rightly came to be rejected 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:
r “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.
19. Similar is the judgment in Basalingappa vs.
Mudibasappa 2019 (5) SCC 418 wherein it was held:
“26. Applying the proposition of law as noted above, in the
facts of the present case, it is clear that the signature on the::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 15
2025:HHC:23409cheque, having been admitted, a presumption shall be
raised under Section 139 that the cheque was issued in
discharge of debt or liability.”
20. This position was reiterated in Kalamani Tex v. P.
.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2
SCC (Cri) 555: 2021 SCC OnLine SC 75 wherein it was held at page
289:
“14. Once the 2nd appellant had admitted his signatures on
the cheque and the deed, the trial court ought to have
presumed that the cheque was issued as consideration for a
legally enforceable debt. The trial court fell into error when
it called upon the respondent complainant to explain thecircumstances 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.”
21. Similar is the judgment in APS Forex Services (P) Ltd. v.
Shakti International Fashion Linkers (2020) 12 SCC 724, wherein it
was observed: –
“7.2. What is emerging from the material on record is that
the issuance of a cheque by the accused and the signature of
the accused on the said cheque are not disputed by theaccused. 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::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 16
2025:HHC:23409that the cheque was given by way of security. Be that as it
may, however, it is required to be noted that earlier the
accused issued cheques which came to be dishonoured on
the ground of “insufficient funds” and thereafter a fresh.
consolidated cheque of ₹9,55,574 was given which has been
returned unpaid on the ground of “STOP PAYMENT”.
Therefore, the cheque in question was issued for the second
time. Therefore, once the accused has admitted the issuance
of a cheque which bears his signature, there is a
presumption that there exists a legally enforceable debt or
liability under Section 139 of the NI Act. However, such a
presumption is rebuttable in nature, and the accused is
required to lead evidence to rebut such presumption. The
accused was required to lead evidence that the entire
amount due and payable to the complainant was paid.
9. Coming back to the facts in the present case and
considering the fact that the accused has admitted the
issuance of the cheques and his signature on the cheque and
that the cheque in question was issued for the second time
after the earlier cheques were dishonoured and that even
according to the accused some amount was due and
payable, there is a presumption under Section 139 of the NI
Act that there exists a legally enforceable debt or liability. Of
course, such presumption is rebuttable in nature. However,
to rebut the presumption, the accused was required to lead
evidence that the full amount due and payable to the
complainant had been paid. In the present case, no such
evidence has been led by the accused. The story put forward
by the accused that the cheques were given by way of
security is not believable in the absence of further evidence
to rebut the presumption, 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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 17
2025:HHC:23409
committed an error in shifting the burden upon the
complainant to prove the debt or liability, without
appreciating the presumption under Section 139 of the NI
Act. As observed above, Section 139 of the Act is an example
.
of reverse onus clause and therefore, once the issuance of
the cheque has been admitted and even the signature on the
cheque has been admitted, there is always a presumption in
favour of the complainant that there exists legally
enforceable debt or liability and thereafter, it is for the
accused to rebut such presumption by leading evidence.”
22. The presumption under Section 139 of the NI Act was
explained by the Hon’ble Supreme Court in Triyambak S. Hegde v.
Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ) 512: 2021 SCC OnLine SC
788 as under at page 747:
“12. From the facts arising in this case and the nature of the
rival contentions, the record would disclose that the
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 theposition, as noted by the courts below, a presumption
would arise under Section 139 in favour of the appellantwho was the holder of the cheque. Section 139 of the NI Act
reads as hereunder:
“139. Presumption in favour of the holder. –It shall be
presumed, unless the contrary is proved, that the
holder of a cheque received the cheque of the nature
referred to in Section 138 for the discharge, in whole
or in part, of any debt or other liability.”
13. Insofar as the payment of the amount by the appellant in
the context of the cheque having been signed by the
respondent, the presumption for passing of the
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 18
2025:HHC:23409
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 everysuch instrument, when it has been accepted,
indorsed, negotiated or transferred, was accepted,
indorsed, negotiated or transferred for
consideration.”
14. The above-noted provisions are explicit to the effect
that such presumption would remain until the contrary is
proved. The learned counsel for the appellant in that regard
has relied on the decision of this Court in K.
Bhaskaran v. Sankaran Vaidhyan Balan [K.
Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510:
1999 SCC (Cri) 1284] wherein it is held as hereunder: (SCC
pp. 516-17, para 9)
“9. As the signature in the cheque is admitted to bethat 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 thedate which the cheque bears. Section 139 of the Act
enjoins the Court to presume that the holder of thecheque 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 notpersuaded 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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 19
2025:HHC:23409
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.
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.
r 25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him or the accused
can also rely on the materials submitted by the
complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be
drawn not only from the materials brought on record
by the parties but also by reference to the
circumstances upon which they rely.
25.4. That it is not necessary for the accused to come
into the witness box in support of his defence, Section
139 imposed an evidentiary burden and not a
persuasive burden.
25.5. It is not necessary for the accused to come into
the witness box to support his defence.
26. Applying the preposition of law as noted above, in
the facts of the present case, it is clear that the
signature on the cheque, having been admitted, a
presumption shall be raised under Section 139 that
the cheque was issued in discharge of debt or liability.
The question to be looked into is as to whether any
probable defence was raised by the accused. In the
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 20
2025:HHC:23409
cross-examination of PW 1, when the specific
question was put that a cheque was issued in relation
to a loan of Rs 25,000 taken by the accused, PW 1 said
that he does not remember. PW 1 in his evidence
.
admitted that he retired in 1997, on which date he
received a monetary benefit of Rs 8 lakhs, which was
encashed by the complainant. It was also brought in
evidence that in the year 2010, the complainant
entered into a sale agreement for which he paid an
amount of Rs 4,50,000 to Balana Gouda towards sale
consideration. Payment of Rs 4,50,000 being
admitted in the year 2010 and further payment of
loan of Rs 50,000 with regard to which Complaint No.
119 of 2012 was filed by the complainant, a copy of
which complaint was also filed as Ext. D-2, there was
a burden on the complainant to prove his financial
r 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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 21
2025:HHC:23409
[Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2
SCC (Cri) 571] relied on by the learned counsel for the
respondent, though on facts the ultimate conclusion
therein was against raising presumption, the facts and
.
circumstances are entirely different as the transaction
between the parties as claimed in the said case is peculiar to
the facts of that case where the consideration claimed to
have been paid did not find favour with the Court keeping in
view the various transactions and extent of amount
involved. However, the legal position relating to the
presumption arising under Sections 118 and 139 of the NI
Act on signature being admitted has been reiterated. Hence,
whether there is a rebuttal or not would depend on the facts
and circumstances of each case.”
23. This position was reiterated in Tedhi Singh v. Narayan
Dass Mahant, (2022) 6 SCC 735: (2022) 2 SCC (Cri) 726: (2022) 3 SCC
(Civ) 442: 2022 SCC OnLine SC 302 wherein it was held at page 739:
“8. It is true that this is a case under Section 138 of the
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 inSection 138 for the discharge, in whole or in part, of any
debt or other liability. This presumption, however, isexpressly made subject to the position being proved to the
contrary. In other words, it is open to the accused to
establish that there is no consideration received. It is in thecontext of this provision that the theory of “probable
defence” has grown. In an earlier judgment, in fact, which
has also been adverted to in Basalingappa [Basalingappa v.
Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571], this
Court notes that Section 139 of the NI Act is an example of
reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri
Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC
(Cri) 184]). It is also true that this Court has found that the
accused is not expected to discharge an unduly high::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 22
2025:HHC:23409standard 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…”
24. Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022
SCC OnLine SC 1131, wherein it was observed:
“As per Section 139 of the N.I. Act, it shall be presumed,
unless the contrary is proved, that the holder of a chequereceived the cheque of the nature referred to in Section 138
for discharge, in whole or in part, of any debt or other
liability. Therefore, once the initial burden is discharged by
the Complainant that the cheque was issued by the accusedand the signature and the issuance of the cheque are not
disputed by the accused, in that case, the onus will shift
upon the accused to prove the contrary that the cheque was
not for any debt or other liability. The presumption under
Section 139 of the N.I. Act is a statutory presumption 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 thatcase, it is for the accused to prove the contrary.”
25. This position was reiterated in Rajesh Jain v. Ajay Singh,
(2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was
observed at page 161:
33. The NI Act provides for two presumptions: Section 118
and Section 139. Section 118 of the Act inter alia directs that
it shall be presumed until the contrary is proved that every
negotiable instrument was made or drawn for
consideration. Section 139 of the Act stipulates that “unless
the contrary is proved, it shall be presumed that the holder
of the cheque received the cheque for the discharge of,::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 23
2025:HHC:23409whole or part of any debt or liability”. It will be seen that
the “presumed fact” directly relates to one of the crucial
ingredients necessary to sustain a conviction under Section
138. [The rules discussed hereinbelow are common to both
.
the presumptions under Section 139 and Section 118 and are
hence not repeated–reference to one can be taken as
reference to another]
34. Section 139 of the NI Act, which takes the form of a
“shall presume” clause, is illustrative of a presumption of
law. Because Section 139 requires that the Court “shall
presume” the fact stated therein, it is obligatory for the
Court to raise this presumption in every case where the
factual basis for the raising of the presumption has 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.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 24
2025:HHC:23409
37. As soon as the complainant discharges the burden to
prove that the instrument, say a cheque, was issued by the
accused for the discharge of debt, the presumptive device
under Section 139 of the Act helps in shifting the burden on
.
the accused. The effect of the presumption, in that sense, is
to transfer the evidential burden on the accused of proving
that the cheque was not received by the Bank towards the
discharge of any liability. Until this evidential burden is
discharged by the accused, the presumed fact will have to be
taken to be true, without expecting the complainant to do
anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of
Evidence: The Hidden Origins of Modern Law] on Evidence states as
follows:
“The peculiar effect of the presumption of law is
merely to invoke a rule of law compelling the Jury toreach the conclusion in the absence of evidence to the
contrary from the opponent but if the opponent does
offer evidence to the contrary (sufficient to satisfy the
Judge’s requirement of some evidence), the
presumption ‘disappears as a rule of law and the caseis in the Jury’s hands free from any rule’.”
39. The standard of proof to discharge this evidential
burden is not as heavy as that usually seen in situations
where the prosecution is required to prove the guilt of an
accused. The accused is not expected to prove the non-
existence of the presumed fact beyond a reasonable doubt.
The accused must meet the standard of “preponderance of
probabilities”, similar to a defendant in a civil proceeding.
[Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11
SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR
2010 SC 1898]]
26. Therefore, the Court has to start with the presumption
that the cheque was issued by the accused in discharge of the legal
liability, and the burden is upon him to rebut the presumption by
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 25
2025:HHC:23409
cross-examination of the witnesses or by leading satisfactory
evidence to this effect.
.
27. Narender Thakur (CW-1) denied in his cross-
examination that the cheque (Ext.CW-1/B) was obtained from the
accused with his signature. He also denied that the cheque was
filled by the bank officials. He stated that the cheque was handed
over to him by the accused after filling it, but he could not say who
had filled the cheque. Thus, the suggestion put to him in the
cross-examination that a blank cheque was given to the bank at
the time of taking the loan was denied by him in his cross-
examination. A denied suggestion does not amount to any proof,
and the same cannot be used to discard the case of the
complainant.
28. The accused did not lead any evidence to support his
plea that he had handed over a filled cheque to the bank at the time
of taking the loan. He relied upon the statement made by him
under Section 313 to establish this fact. It was laid down that it
was held in Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15
SCC 689: 2021 SCC OnLine SC 201 that the accused has to lead
defence evidence to rebut the presumption, and mere denial in his
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 26
2025:HHC:23409
statement under section 313 is not sufficient to rebut the
presumption. It was observed at page 700:
.
“20. That apart, when the complainant exhibited all these
documents in support of his complaints and recorded the
statement of three witnesses in support thereof, the
appellant has recorded her statement under Section 313 ofthe Code but failed to record evidence to disprove or rebut
the presumption in support of her defence available under
Section 139 of the Act. The statement of the accused recorded
under Section 313 of the Code is not substantive evidence ofdefence, but only an opportunity for the accused to explain the
incriminating circumstances appearing in the prosecution’s
case against the accused. Therefore, there is no evidence to
rebut the presumption that the cheques were issued forconsideration.” (Emphasis supplied)”
29. Therefore, the plea taken by the accused in the
statement recorded under Section 313 of Cr.P.C. was not sufficient.
30. The accused admitted that he had taken a loan of
₹3,00,000/-. The cheque was issued for ₹2,46,876/-. There is no
evidence that the accused had repaid the loan taken by him. Thus,
he had a subsisting liability of ₹2,46,876/-. Hence, even if the
cheque was issued as a security, the complainant-Bank was within
its right to present the cheque for the amount mentioned in 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:
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 27
2025:HHC:23409“9. Submission of learned Advocate appearing on behalf of
the revisionist that the cheque in question was issued to the
complainant as security and on this ground, criminal
revision petition be accepted is rejected as being devoid of.
any force for the reasons hereinafter mentioned. As per
Section 138 of the Negotiable Instruments Act 1881, if any
cheque is issued on account of other liability, then the
provisions of Section 138 of the Negotiable Instruments Act
1881 would be attracted. The court has perused the original
cheque, Ext. C-1 dated 30.10.2008, placed on record. There
is no recital in the cheque Ext. C-1, that cheque was issued
as a security cheque. It is well-settled law that a cheque
issued as security would also come under the provision of
Section 138 of the Negotiable Instruments Act 1881. See 2016
(3) SCC page 1 titled Don Ayengia v. State of Assam & another.
It is well-settled law that where there is a conflict between
former law and subsequent law, then subsequent law
always prevails.”
31. 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::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 28
2025:HHC:23409the 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 isadvanced 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 had fallen due on the date of thecheque as per the agreement, the dishonour of such
cheques would fall under Section 138 of the Act. The
cheques undoubtedly represent the outstanding liability.
12. Judgment in Indus Airways (supra) is clearly
distinguishable. As already noted, it was held therein that
liability arising out of a claim for breach of contract under
Section 138, which arises on account of dishonour of a
cheque issued, was not by itself at par with a criminal
liability towards discharge of acknowledged and admitteddebt 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 hadnot 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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 29
2025:HHC:23409
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)
32. This position was reiterated in Sripati Singh v. State of
Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was
held that a cheque issued as security is not waste paper and a
complaint under section 138 of the NI Act can be filed on its
dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece of
paper under every circumstance. ‘Security’ in its true senseis 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 anobligation to which the parties to the transaction are bound.
If in a transaction, a loan is advanced and the borrower
agrees to repay the amount in a specified timeframe and
issues a cheque as security to secure such repayment; if the
loan amount is not repaid in any other form before the due
date or if there is no other understanding or agreement
between the parties to defer the payment of the amount, the
cheque which is issued as security would mature for
presentation and the drawee of the cheque would be entitled::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 30
2025:HHC:23409to present the same. On such a presentation, if the same is
dishonoured, the consequences contemplated under Section
138 and the other provisions of the NI 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 repaymenttowards 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 hasbeen discharged within the agreed period, the cheque issued
as security cannot thereafter be presented. Therefore, the
prior discharge of the loan or there being an altered
situation due to which there would be an understandingbetween 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 acheque, which is issued as security, can never be presented
by the drawee of the cheque. If such is the understanding, a
cheque would also be reduced to an ‘on-demand promissorynote’ and in all circumstances, it would only be civil
litigation to recover the amount, which is not the intentionof the statute. When a cheque is issued even though as
‘security’ the consequence flowing therefrom is also known
to the drawer of the cheque and in the circumstance statedabove if the cheque is presented and dishonoured, the
holder of the cheque/drawee would have the option of
initiating the civil proceedings for recovery or the criminal
proceedings for punishment in the fact situation, but in any
event, it is not for the drawer of the cheque to dictate terms
with regard to the nature of litigation.”
33. It was submitted that the cheque is in different
handwriting and in a different pen, which corroborated the
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 31
2025:HHC:23409
version of the accused that he had handed over a blank signed
cheque. As already stated Narender Thakur (CW-1) denied in his
.
cross-examination that a blank cheque was handed over by the
accused to the bank, and a denied suggestion does not amount
to any proof. The cheque was not sent to the handwriting expert
to establish that the handwriting on the cheque was different
from the signatures; therefore, this plea was not proved before
the learned Trial Court.
34.
r to
In any case, it was laid down by the Hon’ble Supreme
Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC
(Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138, that a
person is liable for the commission of an offence punishable under
section 138 of the NI Act even if the cheque is filled by some other
person. It was observed:
“33. A meaningful reading of the provisions of the
Negotiable Instruments Act including, in particular,Sections 20, 87 and 139, makes it amply clear that a person
who signs a cheque and makes it over to the payee remains
liable unless he adduces evidence to rebut the presumption
that the cheque had been issued for payment of a debt or in
discharge of a liability. It is immaterial that the cheque may
have been filled in by any person other than the drawer if
the cheque is duly signed by the drawer. If the cheque is
otherwise valid, the penal provisions of Section 138 would
be attracted.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 32
2025:HHC:23409
34. If a signed blank cheque is voluntarily presented to a
payee, towards some payment, the payee may fill up the
amount and other particulars. This in itself would not
invalidate the cheque. The onus would still be on the.
accused to prove that the cheque was not in discharge of a
debt or liability by adducing evidence.
35. It is not the case that the respondent accused him of
either signing the cheque or parting with it under any threator coercion. Nor is it the case that the respondent accused
that the unfilled signed cheque had been stolen. The
existence of a fiduciary relationship between the payee of a
cheque and its drawer would not disentitle the payee to thebenefit of the presumption under Section 139 of the
Negotiable Instruments Act, in the absence of evidence of
exercise of undue influence or coercion. The second
question is also answered in the negative.
36. Even a blank cheque leaf, voluntarily signed and handed
over by the accused, which is towards some payment, would
attract presumption under Section 139 of the Negotiable
Instruments Act, in the absence of any cogent evidence to
show that the cheque was not issued in discharge of a debt.”
35. This position was reiterated in Oriental Bank of
Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089,
wherein it was observed:
“12. The submission, which has been urged on behalf of the
appellant, is that even assuming, as the first respondentsubmits, that the details in the cheque were not filled in by
the drawer, this would not make any difference to the
liability of the drawer.
xxxxxx
32. A drawer who signs a cheque and hands it over to
the payee is presumed to be liable unless the drawer
adduces evidence to rebut the presumption that the cheque
has been issued towards payment of a debt or in the::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 33
2025:HHC:23409discharge of a liability. The presumption arises under
Section 139.
36. Therefore, the cheque is not bad even if it is not filled
.
by the drawer.
37. There was no other evidence to rebut the presumption
of consideration attached to the cheque, and the learned Courts
below had rightly held that the cheque was issued by the accused
in discharge of his legal liability.
38. Narender Thakur (CW-1) stated that the cheque was
dishonoured with an endorsement of insufficient funds. The
return memo (Ext.CW-1/C) shows that the cheque was
dishonoured with an endorsement ‘funds insufficient’. There is a
presumption under Section 146 of the NI Act regarding the
correctness of the memo of dishonour. It was laid down by the
Hon’ble Supreme Court in Mandvi Cooperative Bank Ltd. v. Nimesh
B. Thakore, (2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC
(Cri) 1: 2010 SCC OnLine SC 155 that the memo issued by the Bank is
presumed to be correct and the burden is upon the accused to
rebut the presumption. It was observed at page 95:
24. Section 146, making a major departure from the
principles of the Evidence Act, provides that the bank’s slip
or memo with the official mark showing that the cheque::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 34
2025:HHC:23409was dishonoured would, by itself, give rise to the
presumption of dishonour of the cheque, unless and until
that fact was disproved. Section 147 makes the offences
punishable under the Act compoundable.
.
39. In the present case, no evidence was produced to rebut
the presumption, and the learned Courts below had rightly held
that the cheque was dishonoured with an endorsement
‘insufficient funds’.
40. Narender Thakur (CW-1) stated that the notice
(Ext.CW-1/D) was issued to the cheque asking him to pay the
amount within 15 days, which was duly received by the accused.
An acknowledgement (Ext.CW-1/E) was placed on record, which
corroborates his version. The notice was sent to the same address
which was given by the accused in his personal bond furnished by
him, his statement recorded under Section 313 of Cr.P.C. and the
notice of accusation; therefore, it was sent on the correct address
and is deemed to be served as per Section 27 of the General
clauses Act. This presumption was strengthened by the
acknowledgement (Ext. CW-1/E), and the learned Courts below
had rightly held that the notice was served upon the accused.
41. In any case, it was laid down in C.C. Alavi Haji (supra)
that the person who claims that he had not received the notice has
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 35
2025:HHC:23409
to pay the amount within 15 days from the date of the receipt of
the summons from the Court and in case of failure to do so, he
.
cannot take the advantage of the fact that notice was not received
by him. It was observed:
“It is also to be borne in mind that the requirement of giving
notice is a clear departure from the rule of Criminal Law,
where there is no stipulation of giving of notice before filing
a complaint. Any drawer who claims that he did not receive thenotice sent by post, can, within 15 days of receipt of summons
from the court in respect of the complaint under Section 138 of
the Act, make payment of the cheque amount and submit to the
Court that he had made payment within 15 days of receipt ofsummons (by receiving a copy of the complaint with the
summons) and, therefore, the complaint is liable to be rejected.
A person who does not pay within 15 days of receipt of the
summons from the Court along with the copy of the complaint
under Section 138 of the Act, cannot obviously contend that
there was no proper service of notice as required under Section138, by ignoring statutory presumption to the contrary under
Section 27 of the G.C. Act and Section 114 of the Evidence Act. In
our view, any other interpretation of the proviso woulddefeat the very object of the legislation. As observed in
Bhaskaran‘s case (supra), if the giving of notice in thecontext of Clause (b) of the proviso was the same as the
receipt of notice a trickster cheque drawer would get the
premium to avoid receiving the notice by adopting differentstrategies and escape from legal consequences of Section
138 of the Act.” (Emphasis supplied)
42. The accused has not paid any money to the
complainant; hence, it was duly proved that the accused had failed
to pay the money despite the receipt of the notice.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 36
2025:HHC:23409
43. Therefore, it was duly proved before the learned Trial
Court that the cheque was issued in discharge of legal liability. It
.
was dishonoured with an endorsement ‘funds insufficient’ and the
accused had failed to pay the amount despite the receipt of the
notice of demand. Hence, the complainant-Bank had proved its
case beyond a reasonable doubt, and the learned Trial Court had
rightly convicted the accused of the commission of an offence
44. to
punishable under Section 138 of the NI Act.
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 of the N.I.Act
is deterrent in nature. It was observed at page 203:
“6. The object of Section 138 of the Negotiable Instruments
Act is to infuse credibility into negotiable instruments,
including cheques, and to encourage and promote the use 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 in
the issuance of the same.”
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 37
2025:HHC:23409
45. Keeping in view the deterrent nature of the sentence,
the period of six months cannot be said to be excessive.
.
46. Learned Trial Court ordered the accused to pay a
compensation of ₹3,46876/-. The cheque bears the date
20.02.2019. The sentence was imposed on 09.11.2022 after the
lapse of three years. The complainant-Bank lost interest on the
amount which it would have gained by lending the money to other
persons. The complainant-Bank also paid the fees to the Advocate
and bore the litigation expenses; therefore, it was entitled to be
compensated for the same. It was laid down by the Hon’ble
Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC
283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC
75 that the Courts should uniformly levy a fine up to twice the
cheque amount along with simple interest at the rate of 9% per
annum. It was observed at page 291: –
19. As regards the claim of compensation raised on behalf of
the respondent, we are conscious of the settled principles
that the object of Chapter XVII of NIA is not only punitive
but also compensatory and restitutive. The provisions of
NIA envision a single window for criminal liability for the
dishonour of a cheque as well as civil liability for the
realisation of the cheque amount. It is also well settled that
there needs to be a consistent approach towards awarding
compensation, and unless there exist special
circumstances, the courts should uniformly levy fines up to::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 38
2025:HHC:23409twice the cheque amount along with simple interest @ 9%
p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1
SCC (Civ) 79: (2012) 1 SCC (Cri) 520]”
47. Thus, an amount of ₹1,00,000/- paid as compensation
.
on the amount of ₹2,46,876/- cannot be said to be excessive, and
no interference is required with it.
48. Learned Trial Court ordered the accused to undergo
simple imprisonment for one month in case of default of payment
of compensation. 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 ofcompensation, this Court in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127]and in Balraj v. State of U.P. [(1994) 4 SCC 29: 1994 SCC (Cri)
823: AIR 1995 SC 1935], has held that it was open to all the
courts in India to impose a sentence on default of paymentof 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 consideration
while passing an order under the section: (SCC p. 558, para
11)
“11. The payment by way of compensation must,
however, be reasonable. What is reasonable may
depend upon the facts and circumstances of each::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 39
2025:HHC:23409case. The quantum of compensation may be
determined by taking into account the nature of the
crime, the justness of the claim by the victim and the
ability of the accused to pay. If there is more than one.
accused, they may be asked to pay on equal terms
unless their capacity to pay varies considerably. The
payment may also vary depending on the acts of each
accused. A reasonable period for payment of
compensation, if necessary, by instalments, may also
be given. The court may enforce the order by
imposing a sentence in default.”
21. This position also finds support in R. v. Oliver John
Huish [(1985) 7 Cri App R (S) 272]. The Lord Justice Croom
Johnson, speaking for the Bench, has observed:
“When compensation orders may be made, the most
careful examination is required. Documents should beobtained, and evidence, either on affidavit or orally,
should be given. The proceedings should, if
necessary, be adjourned to arrive at the true state of
the defendant’s affairs.
Very often, a compensation order is made and a very
light sentence of imprisonment is imposed, because
the court recognises that if the defendant is to have
an opportunity of paying the compensation, he mustbe enabled to earn the money with which to do so. The
result is therefore an extremely light sentence ofimprisonment. If the compensation order turns out to
be virtually worthless, the defendant has got off with
a very light sentence of imprisonment as well as noorder of compensation. In other words, generally
speaking, he has got off with everything.”
22. The law laid down in Hari Singh v. Sukhbir Singh [(1988)
4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127] was
reiterated by this Court in Suganthi Suresh
Kumar v. Jagdeeshan [(2002) 2 SCC 420: 2002 SCC (Cri) 344].
The Court observed: (SCC pp. 424-25, paras 5 & 10)
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 40
2025:HHC:23409
“5. In the said decision, this Court reminded all
concerned that it is well to remember the emphasis
laid on the need for making liberal use of Section
357(3) of the Code. This was observed by reference to
.
a decision of this Court in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988
SC 2127]. In the said decision, this Court held as
follows: (SCC p. 558, para 11)
’11. … The quantum of compensation may be
determined by taking into account the nature of the
crime, the justness of the claim by the victim and the
ability of the accused to pay. If there is more than one
accused, they may be asked to pay on equal terms
unless their capacity to pay varies considerably. The
payment may also vary depending on the acts of each
accused. A reasonable period for payment of
rcompensation, 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 an order made under the Code shall be recoverable
‘as if it were a fine’. Two modes of recovery of the fine
have been indicated in Section 421(1) of the Code. The
proviso to the sub-section says that if the sentence
directs that in default of payment of the fine, the
offender shall be imprisoned, and if such offender has
undergone the whole of such imprisonment in
default, no court shall issue such warrant for the levy
of the amount.”
The Court further held: (Jagdeeshan case [(2002) 2 SCC 420:
2002 SCC (Cri) 344], SCC p. 425, para 11)
“11. When this Court pronounced in Hari
Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri)
984: AIR 1988 SC 2127] that a court may enforce an
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 41
2025:HHC:23409
order to pay compensation ‘by imposing a sentence in
default’ it is open to all courts in India to follow the
said course. The said legal position would continue to
hold good until it is overruled by a larger Bench of
.
this Court. Hence learned Single Judge of the High
Court of Kerala has committed an impropriety by
expressing that the said legal direction of this Court
should not be followed by the subordinate courts in
Kerala. We express our disapproval of the course
adopted by the said Judge in Rajendran v. Jose [(2001)
3 KLT 431]. It is unfortunate that when the Sessions
Judge has correctly done a course in accordance with
the discipline, the Single Judge of the High Court has
incorrectly reversed it.”
23. In order to set at rest the divergent opinion expressed
in Ahammedkutty case [(2009) 6 SCC 660 : (2009) 3 SCC (Cri)
302], this Court in Vijayan v. Sadanandan K. [(2009) 6 SCC
652 : (2009) 3 SCC (Cri) 296], after noticing the provision of
Sections 421 and 431 CrPC, which dealt with mode of
recovery of fine and Section 64 IPC, which empowered the
courts to provide for a sentence of imprisonment on default
of payment of fine, the Court stated: (Vijayan case [(2009) 6
SCC 652 : (2009) 3 SCC (Cri) 296], SCC p. 658, para 24)
“24. We have carefully considered the submissions
made on behalf of the respective parties. Since a
decision on the question raised in this petition is still
in a nebulous state, there appear to be two 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)
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 42
2025:HHC:23409
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 SC2127] are as important today as they were when they
were made and if, as submitted by Dr. Pillay, recourse
can only be had to Section 421 CrPC for enforcing the
same, the very object of sub-section (3) of Section 357
r 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 refuses to pay
such amount. He, therefore, can always avoid
undergoing imprisonment in default of payment of
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 43
2025:HHC:23409
the fine by paying such amount. It is, therefore, not
only the power but the duty of the court to keep in
view the nature of the offence, circumstances under
which it was committed, the position of the offender
.
and other relevant considerations before ordering the
offender to suffer imprisonment in default of
payment of a fine.” (emphasis in original)
25. In Kuldip Kaur v. Surinder Singh [(1989) 1 SCC 405: 1989
SCC (Cri) 171: AIR 1989 SC 232], in the context of Section 125
CrPC observed that sentencing a person to jail is sometimes
a mode of enforcement. In this regard, the Court stated:
(SCC p. 409, para 6)
“6. A distinction has to be drawn between a mode of
enforcing recovery on the one hand and effecting
actual recovery of the amount of monthly allowance
which has fallen in arrears on the other. Sentencing aperson 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 allowancewho 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 towipe out the liability which he has refused to
discharge. It should also be realised that a personordered 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 wouldindeed 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
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 44
2025:HHC:23409
payment of compensation awarded under Section 357(3)
CrPC. The whole purpose of the provision is to
accommodate the interests of the victims in the criminal
justice system. Sometimes the situation becomes such that
.
there is no purpose served by keeping a person behind bars.
Instead, directing the accused to pay an amount of
compensation to the victim or affected party can ensure the
delivery of total justice. Therefore, this grant of
compensation is sometimes in lieu of sending a person
behind bars or in addition to a very light sentence of
imprisonment. Hence, in default of payment of this
compensation, there must be a just recourse. Not imposing
a sentence of imprisonment would mean allowing the
accused to get away without paying the compensation, and
imposing another fine would be impractical, as it would
mean imposing a fine upon another fine and therefore
would not ensure proper enforcement of the order of
compensation. While passing an order under Section 357(3),
it is imperative for the courts to look at the ability and the
capacity of the accused to pay the same amount as has been
laid down by the cases above; otherwise, the very purpose of
granting an order of compensation would stand defeated.
49. This position was reiterated in R. Mohan v. A.K. Vijaya
Kumar, (2012) 8 SCC 721: (2012) 4 SCC (Civ) 585: (2012) 3 SCC (Cri)
1013: 2012 SCC OnLine SC 486 wherein it was observed at page 729:
29. The idea behind directing the accused to pay
compensation to the complainant is to give him immediate
relief so as to alleviate his grievance. In terms of Section
357(3), compensation is awarded for the loss or injury
suffered by the person due to the act of the accused for
which he is sentenced. If merely an order directing
compensation is passed, it would be totally ineffective. It
could be an order without any deterrence or apprehension
of immediate adverse consequences in case of its non-
observance. The whole purpose of giving relief to the
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 45
2025:HHC:23409
complainant under Section 357(3) of the Code would be
frustrated if he is driven to take recourse to Section 421 of
the Code. An order under Section 357(3) must have the
potential to secure its observance. Deterrence can only be
.
infused into the order by providing for a default sentence. If
Section 421 of the Code puts compensation ordered to be
paid by the court on a par with the fine so far as the mode of
recovery is concerned, then there is no reason why the court
cannot impose a sentence in default of payment of
compensation as it can be done in case of default in
payment of fine under Section 64 IPC. It is obvious that in
view of this, in Vijayan [(2009) 6 SCC 652: (2009) 3 SCC (Cri)
296], this Court stated that the abovementioned provisions
enabled the court to impose a sentence in default of
payment of compensation and rejected the submission that
the recourse can only be had to Section 421 of the Code for
enforcing the order of compensation. Pertinently, it was
made clear that observations made by this Court in Hari
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984] are as important
today as they were when they were made. The conclusion,
therefore, is 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.
50. Thus, there is no infirmity in imposing a sentence of
imprisonment in case of default in the payment of compensation.
51. No other point was urged.
52. In view of the above, the present revision fails, and the
same is dismissed.
::: Downloaded on – 21/07/2025 21:25:58 :::CIS
P a g e | 46
2025:HHC:23409
53. Records of the learned Courts below be sent back
forthwith, along with a copy of this judgment.
.
(Rakesh Kainthla)
Judge
21st July, 2025
(ravinder)
r to
::: Downloaded on - 21/07/2025 21:25:58 :::CIS
[ad_1]
Source link