Himachal Pradesh High Court
Ashwani Kumar vs The Bhagat Urban Cooperative Bank Ltd on 1 August, 2025
( 2025:HHC:25615 )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No.413 of 2025
.
Reserved on: 23.07.2025
Date of Decision: 01.08.2025
Ashwani Kumar ...Petitioner
Versus
The Bhagat Urban Cooperative Bank Ltd. ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Mr. Pavinder, Advocate.
For the Respondent : Ms. Meenakshi Sharma,
Advocate.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 23.04.2025, passed by learned Additional Sessions Judge-I,
Solan, H.P. (learned Appellate Court) vide which the judgment of
conviction dated 18.12.2023 and order of sentence dated
28.03.2024, passed by learned Judicial Magistrate First Class,
Court No.1, Solan, H.P. (learned Trial Court), were upheld. (Parties
shall hereinafter be referred to in the same manner as they were
arrayed before the learned Trial Court for convenience.)
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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2. Briefly stated, the facts giving rise to the present
petition are that the complainant filed a complaint against the
.
accused before the learned Trial Court for the commission of an
offence punishable under Section 138 of the Negotiable
Instruments Act (NI Act). It was asserted that the complainant is a
Cooperative Bank engaged in banking activities. Complainant
advanced a loan of ₹2,00,000/- to the accused on 29.05.2014. The
accused defaulted on the repayment of the loan, and issued a
cheque of ₹60,000/- to discharge his legal liability. The
complainant presented the cheque to its bank, but it was
dishonoured with an endorsement “funds insufficient”. The
notice was served upon the accused, but the accused failed to
repay the amount despite the receipt of the notice. Hence, a
complaint was filed before the learned Trial Court to take action as
per the law.
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared before the
learned Trial Court, 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.
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4. The complainant examined K.C. Sharma (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 ₹2,00,000/-
from the complainant and he had issued a cheque. However, he
claimed that he had issued the cheque as security. He claimed that
his liability was ₹40,000/- and the complainant had misused the
security cheque. He stated that he wanted to lead the defence
evidence, but no defence evidence was produced despite having
been granted many opportunities; hence, his right to lead defence
evidence was closed by the learned Trial Court.
6. Learned Trial Court held that the accused admitted the
issuance of the cheque and taking of the loan. The accused was to
repay the amount in 60 installments of ₹4,750/- as per the
statement of account (Ex-CW1/L). He defaulted on the repayment
of the loan. ₹60,000/- were outstanding. Even if the cheque was
issued as security, the complainant had the right to fill in the
amount and present it to the bank. The cheque was dishonoured
with an endorsement “funds insufficient”. The notice was duly
served upon the accused, but the accused failed to repay the
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amount; hence, the learned Trial Court convicted the accused for
the commission of an offence punishable under Section 138 of N.I.
.
Act and sentenced him to undergo simple imprisonment for 03
months and pay a compensation of ₹80,000/- to the complainant.
7. Being aggrieved by the judgment and order passed by
the learned Trial Court, the accused filed an appeal, which was
decided by the learned Additional Sessions Judge (I), Solan,
District Solan (learned Appellate Court). Learned Appellate Court
concurred with the findings recorded by the learned Trial Court
that the issuance of the cheque was not in dispute, and a
presumption arose that the cheque was issued for consideration in
discharge of the liability. The accused admitted that he had taken
the loan. He asserted that the cheque was issued as security. The
statement of account (Ex-CW1/L) showed that the accused owed a
liability to the complainant, and the complainant could present
the cheque, even if it was issued as security. The cheque was
dishonoured with the endorsement “insufficient funds”. The
accused failed to repay the amount despite the receipt of a valid
notice of demand. All the ingredients of the offence punishable
under Section 138 of the NI Act were satisfied. Learned Trial Court
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had rightly convicted and sentenced the accused. Hence, the
appeal filed by the accused was dismissed.
.
8. Being aggrieved by the judgment and order passed by
the learned Courts below, the accused has filed the present
revision, asserting that the learned Courts below erred in
appreciating the material on record. The complainant misused the
blank cheque issued by the accused. The amount of ₹2,30,662/-
was outstanding as per the statement of account (Ex-CW1/L). A
cheque of ₹60,000/- was not issued in discharge of the legal
liability. The bank had not taken any action against the surety.
Complainant misused the security cheque; 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. Pavinder, learned counsel for the
petitioner/accused, and Ms. Meenakshi Sharma, learned counsel
for the respondent/complainant.
10. Mr. Pavinder, learned counsel for the
petitioner/accused, submitted that the learned Courts below erred
in appreciating the material on record. The statement of account
(Ex-CW1/L) shows that an amount of ₹2,30,662/- was due, and
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the cheque of ₹60,000/- was not issued for discharging of the
legal liability. The cheque was not dishonoured with an
.
endorsement “funds insufficient”. The loan account number
mentioned in the notice (Ex-CW1/H) was wrong. The learned
Courts below failed to appreciate all these aspects. He prayed that
the present revision be allowed and the judgments and order
passed by the learned Courts below be set aside.
11. Ms. Meenakshi Sharma, learned counsel for the
respondent/complainant, supported the judgments and order
passed by the learned Courts below and submitted that no
interference is required with them.
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 the revisional court
does not exercise an appellate jurisdiction 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
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( 2025:HHC:25615 )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 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 anerror of jurisdiction or law. There has to be a well-founded
error which is to be determined on the merits of individual
cases. It is also well settled that while considering the same,
the Revisional Court does not dwell at length upon the factsand evidence of the case to reverse those findings.
14. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, (2023) 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 thepurposes of satisfying itself as to the legality and
regularities of any proceeding or order made in a case. Theobject 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 inferior::: Downloaded on – 01/08/2025 21:28:27 :::CIS
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( 2025:HHC:25615 )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.”
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::: Downloaded on – 01/08/2025 21:28:27 :::CIS
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( 2025:HHC:25615 )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
criminal proceedings, 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
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.
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***
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 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 statements 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.
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::: Downloaded on – 01/08/2025 21:28:27 :::CIS
P a g e | 11
( 2025:HHC:25615 )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 inferior
court for the purposes of satisfying itself as to thelegality 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 hasto be a well-founded error, and it may not be appropriate
for the court to scrutinise the orders, which, upon theface 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 therevisional jurisdiction can be invoked where the
decisions under challenge are grossly erroneous, there is
no compliance with the provisions of law, the findingrecorded is based on no evidence, material evidence is
ignored, or judicial discretion is exercised arbitrarily orperversely. 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::: Downloaded on – 01/08/2025 21:28:27 :::CIS
P a g e | 12
( 2025:HHC:25615 )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 jurisdictionunder 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) 1SCC (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 ofthe Code, and the fine line of jurisdictional distinction, it
will now be appropriate for us to enlist the principleswith reference to which the courts should exercise such
jurisdiction. However, it is not only difficult but
inherently impossible to state such principles withprecision. 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 ofjurisdiction, particularly, with regard to quashing of
charge either in exercise of jurisdiction under Section397 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
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
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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.
***
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 it 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 statements 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.
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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 evidence and come to its conclusions in the absence of any
perversity. It was observed at page 169:
“12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the grounds for exercising therevisional jurisdiction by the High Court. In State of
Kerala v. Puttumana Illath Jathavedan Namboodiri [State of
Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2SCC 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 tosatisfy itself as to the correctness, legality or propriety of
any 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 thepower of an appellate court, nor can it be treated even as
a second appellate jurisdiction. Ordinarily, therefore, itwould 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
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. …”
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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 the 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
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Court exceeded its jurisdiction in substituting its views, and
that too without any legal basis.
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 law
that the Revisional Court will not interfere even if a wrong
order is passed by a court having jurisdiction, in the absenceof 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 accused did not dispute his signatures on the
cheque. He claimed that the cheque was issued as security at the
time of taking the loan. 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 legal liability,
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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 bythe learned Courts below. Reliance is placed upon Hiten P.
Dalal v. Bartender Nath Bannerji, 2001 (6) SCC 16, wherein it
has been held as under:
“The words ‘unless the contrary is proved’ which
occur in this provision make it clear that the
presumption has to be rebutted by ‘proof’ and not by
a bare explanation which is merely plausible. A fact is
said to be proved when its existence is 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.
20. 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.”
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21. 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 signature on
the cheque and the deed, the trial court ought to have
presumed that the cheque was issued as consideration for alegally enforceable debt. The trial court fell into 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 theteeth of the established legal position as discussed above,
and amounts to a patent error of law.”
22. 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 ofthe accused on the said cheque are not disputed by the
accused. The accused has also not disputed that there weretransactions 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::: Downloaded on – 01/08/2025 21:28:27 :::CIS
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( 2025:HHC:25615 )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, and the accused is required to
lead evidence to rebut such presumption. The accused was
required to lead evidence that the entire amount due and
payable to the complainant was paid.
9. Coming back to the facts in the present case and
considering the fact that the accused has admitted the
issuance of the cheques and his signature on the cheque and
that the cheque in question was issued for the second time
after the earlier cheques were dishonoured and that even
according to the accused some amount was due and
payable, there is a presumption under Section 139 of the NI
Act that there exists a legally enforceable debt or liability. Of
course, such presumption is rebuttable in nature. However,
to rebut the presumption, the accused was required to lead
evidence that the full amount due and payable to the
complainant had been paid. In the present case, no such
evidence has been led by the accused. The story put forward
by the accused that the cheques were given by way of
security is not believable in the absence of further evidence
to rebut the presumption, and more particularly, the cheque
in question was issued for the second time after the earlier
cheques were dishonoured. Therefore, both the courts
below have materially erred in not properly appreciating
and considering the presumption in favour of the
complainant that there exists a legally enforceable debt or
liability as per Section 139 of the NI Act. It appears that both
the learned trial court as well as the High Court have
committed an error in shifting the burden upon the
complainant to prove the debt or liability, without
appreciating the presumption under Section 139 of the NI
Act. As observed above, Section 139 of the Act is an example
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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.”
23. 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 at page 747:
“12. From the facts arising in this case and the nature of the
rival contentions, the record would disclose that the
signature on the documents at Exts. P-6 and P-2 are not
disputed. Ext. P-2 is the dishonoured cheque based on
which the complaint was filed. From the evidence tendered
before the JMFC, it is clear that the respondent has notdisputed the signature on the cheque. If that be the
position, as noted by the courts below, a presumption
would arise under Section 139 in favour of the 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 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:
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( 2025:HHC:25615 )
(a) of consideration: that every negotiable instrument
was made or drawn for consideration, and that every
such instrument, when it has been accepted,.
indorsed, negotiated or transferred, was accepted,
indorsed, negotiated or transferred for
consideration.”
14. The above-noted provisions are explicit to the effect
that such presumption would remain until the contrary is
proved. The learned counsel for the appellant in that regard
has relied on the decision of this Court in K.
Bhaskaran v. Sankaran Vaidhyan Balan [K.
Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510:
1999 SCC (Cri) 1284] wherein it is held as hereunder: (SCC
pp. 516-17, para 9)“9. As the signature in the cheque is admitted to be
that of the accused, the presumption envisaged inSection 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 Actenjoins 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 theaforesaid presumption. The trial court was not
persuaded to rely on the interested testimony of DW 1to rebut the presumption. The said finding was
upheld [Sankaran Vaidhyan Balan v. K. Bhaskaran,
Criminal Appeal No. 234 of 1995, order dated 23-10-
1998 (Ker)] by the High Court. It is not now open to
the accused to contend differently on that aspect.”
15. The learned counsel for the respondent has, however,
referred to the decision of this Court
in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasap
pa, (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,
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we now summarise the principles enumerated by this
Court in the following manner:
25.1. Once the execution of the cheque is admitted,
.
Section 139 of the Act mandates a presumption that
the cheque was for the discharge of any debt or other
liability.
25.2. The presumption under Section 139 is a
rebuttable presumption, and the onus is on the
accused to raise the probable defence. The standard of
proof for rebutting the presumption is that of
preponderance of probabilities.
25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him, or the accused
can also rely on the materials submitted by the
complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be
drawn not only from the materials brought on record
by the parties but also by reference to the
circumstances upon which they rely.
25.4. That it is not necessary for the accused to come
into the witness box in support of his defence, Section
139 imposed an evidentiary burden and not a
persuasive burden.
25.5. It is not necessary for the accused to come into
the witness box to support his defence.
26. Applying the preposition of law as noted above, in
the facts of the present case, it is clear that the
signature on the cheque, having been admitted, a
presumption shall be raised under Section 139 that
the cheque was issued in discharge of debt or liability.
The question to be looked into is as to whether any
probable defence was raised by the accused. In the
cross-examination of PW 1, when the specific
question was put that a cheque was issued in relation
to a loan of 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
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( 2025:HHC:25615 )
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 the
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
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( 2025:HHC:25615 )
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.”
24. 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 anydebt or other liability. This presumption, however, is
expressly made subject to the position being proved to the
contrary. In other words, it is open to the accused toestablish that there is no consideration received. It is in the
context of this provision that the theory of “probabledefence” has grown. In an earlier judgment, in fact, which
has also been adverted to in Basalingappa [Basalingappa v.
Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571], this
Court notes that Section 139 of the NI Act is an example of
reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri
Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC
(Cri) 184]). It is also true that this Court has found that the
accused is not expected to discharge an unduly high
standard of proof. It is accordingly that the principle has
developed that all which the accused needs to establish is a
probable defence. As to whether a probable defence has
been established is a matter to be decided on the facts of
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( 2025:HHC:25615 )that exist…”
25. 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 underSection 139 of the N.I. Act is a statutory presumption and
thereafter, once it is presumed that the cheque is issued in
whole or in part of any debt or other liability which is in
favour of the Complainant/holder of the cheque, in thatcase, it is for the accused to prove the contrary.”
26. This position was reiterated in Rajesh Jain v. Ajay Singh,
(2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was
observed at page 161:
33. The NI Act provides for two presumptions: Section 118
and Section 139. Section 118 of the Act inter alia directs that
it shall be presumed until the contrary is proved that every
negotiable instrument was made or drawn for
consideration. Section 139 of the Act stipulates that “unless
the contrary is proved, it shall be presumed that the holder
of the cheque received the cheque for the discharge of,
whole or part of any debt or liability”. It will be seen that
the “presumed fact” directly relates to one of the crucial
ingredients necessary to sustain a conviction under Section
138. [The rules discussed hereinbelow are common to both
the presumptions under Section 139 and Section 118 and are::: Downloaded on – 01/08/2025 21:28:27 :::CIS
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( 2025:HHC:25615 )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 thefactual 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 a 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 the discharge of debt, the presumptive device
under Section 139 of the Act helps shifting the burden on
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( 2025:HHC:25615 )
the accused. The effect of the presumption, in that sense, is
to transfer the evidential burden on the accused of proving
that the cheque was not received by the Bank towards the
.
discharge of any liability. Until this evidential burden is
discharged by the accused, the presumed fact will have to be
taken to be true, without expecting the complainant to do
anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of
Evidence: The Hidden Origins of Modern Law] on Evidence states as
follows:
“The peculiar effect of the presumption of law is
merely to invoke a rule of law compelling the Jury to
reach the conclusion in the absence of evidence to the
contrary from the opponent but if the opponent doesoffer evidence to the contrary (sufficient to satisfy the
Judge’s requirement of some evidence), thepresumption ‘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]]
27. Therefore, the Court has to start with the presumption
that the cheque was issued for valuable consideration in discharge
of the legal liability, and the burden is upon the accused to rebut
this presumption.
28. It was submitted that as per the statement of account
(Ex-CW1/L), an amount of ₹2,30,662/- was due and a cheque of
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( 2025:HHC:25615 )
₹60,000/- was not issued for discharging of the legal liability.
This submission is only stated to be rejected. A perusal of the
.
account statement shows that an amount of ₹1,68,495/- was due
from the accused on 11.01.2017; therefore, the accused was liable to
pay ₹60,000/-, and the submission that the cheque was not issued
in the discharge of the legal liability is not correct. This
submission proceeds on the premise that the cheque has to be
issued to discharge the complete liability and not to discharge the
partial liability. There is nothing in law to prevent a person from
issuing a cheque to discharge his partial liability. When the
accused was liable to pay ₹ 1,68,495/-, he was certainly liable to
pay ₹60,000/- on 11.01.2017.
29. It was submitted that the accused had issued a security
cheque and the complainant had misused the same. This
submission is not acceptable. K.C. Sharma (CW1) specifically
denied in his cross-examination that the cheque was misused by
the complainant at his convenience. A denied suggestion does not
amount to any proof, and no advantage can be derived from the
cross-examination of this witness. The accused did not appear in
the witness box to support his version that he had issued a security
cheque in favour of the complainant. He relied upon his statement
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( 2025:HHC:25615 )
recorded under Section 313 of the CrPC to establish this fact. It was
held in Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15 SCC
.
689: 2021 SCC OnLine SC 201 that the accused has to lead defence
evidence to rebut the presumption and mere denial in his
statement under Section 313 of Cr.PC 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, theappellant recorded her statement under Section 313 of the
Code but failed to record evidence to disprove or rebut thepresumption 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 torebut the presumption that the cheques were issued for
consideration.” (Emphasis supplied)”
30. Thus, a statement under Section 313 of the CrPC was
not sufficient to prove the plea taken by the accused.
31. Even if the cheque was issued as security, it was rightly
held by the learned Courts below that the complainant had a right
to present the same to the bank, when the accused had a
subsisting liability on the date of the issuance of the cheque. It was
laid down by this Court in Hamid Mohammad Versus Jaimal Dass
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2016 (1) HLJ 456, that even if the cheque was issued towards the
security, the accused will be liable. It was observed:
.
“9. Submission of learned Advocate appearing on behalf of
the revisionist that the cheque in question was issued to the
complainant as security, and on this ground, the criminalrevision petition be accepted is rejected being devoid of any
force for the reasons hereinafter mentioned. As per Section
138 of the Negotiable Instruments Act 1881, if any cheque is
issued on account of other liability, then the provisions ofSection 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 securitycheque. 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 betweenformer law and subsequent law, then subsequent law
always prevails.”
32. It was laid down by the Hon’ble Supreme Court in
Sampelly Satyanarayana Rao vs. Indian Renewable Energy
Development Agency Limited 2016 (10) SCC 458 that issuing a
cheque towards security will also attract the liability for the
commission of an offence punishable under Section 138 of N.I. Act.
It was observed: –
“10. We have given due consideration to the submission
advanced on behalf of the appellant as well as the
observations of this Court in Indus Airways Private Limited
versus Magnum Aviation Private Limited (2014) 12 SCC 53
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( 2025:HHC:25615 )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 used towards repayment of instalments. Therepayment becomes due under the agreement, the moment
the loan is advanced and the instalment falls due. It is
undisputed that the loan was duly disbursed on 28th
February 2002, which was prior to the date of the cheques.
Once the loan was disbursed and instalments have fallen
due on the date of the cheque as per the agreement, the
dishonour of such cheques would fall under Section 138 of
the Act. The cheques undoubtedly represent the
outstanding liability.
12. Judgment in Indus Airways (supra) is clearly
distinguishable. As already noted, it was held therein thatliability arising out of a claim for breach of contract under
Section 138, which arises on account of dishonour of acheque issued, was not by itself at par with a criminal
liability towards discharge of acknowledged and admitted
debt under a loan transaction. Dishonour of a cheque issuedfor 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 the 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
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( 2025:HHC:25615 )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 theloan 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 thedischarge 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 theunderlying principle as can be discerned from the
discussion of the said cases in the judgment of this Court.”
(Emphasis supplied)
33. This position was reiterated in Sripati Singh v. State of
Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was
held that a cheque issued as security is not waste paper and a
complaint under Section 138 of the NI Act can be filed on its
dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece of
paper under every circumstance. ‘Security’ in its true sense
is the state of being safe, and the security given for a loan 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
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( 2025:HHC:25615 )loan amount is not repaid in any other form before the due
date or if there is no other understanding or agreement
between the parties to defer the payment of the amount, the.
cheque which is issued as security would mature for
presentation and the drawee of the cheque would be entitled
to present the same. On such presentation, if the same is
dishonoured, the consequences contemplated under Section138 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 suchcheque 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 loanamount or such financial liability in any other form, and in
that manner, if the amount of the loan due and payable has
been discharged within the agreed period, the cheque
issued as security cannot thereafter be presented.
Therefore, the prior discharge of the loan or there being analtered 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 areonly the defences that would be available to the drawer of
the cheque in proceedings initiated under Section 138 of theN.I. Act. Therefore, there cannot be a hard and fast rule that
a cheque, which is issued as security, can never bepresented by the drawee of the cheque. If such is the
understanding, a cheque would also be reduced to an ‘on-
demand promissory note’ and in all circumstances, it would
only be civil litigation to recover the amount, which is not
the intention of the statute. When a cheque is issued even
though as ‘security’ the consequence flowing therefrom is
also known to the drawer of the cheque and in the
circumstance stated above if the cheque is presented and
dishonoured, the holder of the cheque/drawee would have
the option of initiating the civil proceedings for recovery or
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( 2025:HHC:25615 )situation, but in any event, it is not for the drawer of the
cheque to dictate terms with regard to the nature of
litigation.”
.
34. There is no evidence that the accused had paid the
amount to the complainant, and the accused would be liable even
if the cheque was issued as security.
35. It was submitted that the account number was wrongly
mentioned as PL/15 in Para No.1 of the notice, whereas the account
number is 005021000015. This submission will not help the
petitioner. The loan application form (Ex-CW1/J) mentions the
account no. PL/15. The cheque returning memo (Ex-CW1/D) also
mentions PL/15, which shows that the loan account is being
mentioned as PL/15 in the record of bank record. Hence, there is
no error in the loan account no. PL/15 mentioned in the notice.
36. The accused claimed that he was liable to pay
₹40,000/- to the bank. The learned Courts below had rightly held
that there was no proof of this fact. The statement of account
(Ex-CW1/L) mentions the liability of the accused as ₹1,68,495/-
and not ₹40,000/-. The accused did not produce any record to
show the payments made by him, and his plea was rightly rejected
by the learned Courts below.
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37. K.C. Sharma (CW1) admitted in his cross-examination
that two guarantors were taken from the accused. It was submitted
.
that the bank had not proceeded against the guarantor and only
proceeded against the petitioner, which is impermissible. This
submission is not acceptable. It was laid down by the Hon’ble
Supreme Court in BRS Ventures Investments Ltd. v. SREI
Infrastructure Finance Ltd., (2025) 1 SCC 456: 2024 SCC OnLine SC
1767 that the liability of the guarantor and the principal is co-
extensive and the creditor can sue both or either of them. It was
observed at page 471:
“Liability of guarantor/surety
16. As far as the guarantee is concerned, the law is very
well-settled. The liability of the surety and the principal
debtor is coextensive. The creditor has remedies available torecover the amount payable by the principal borrower by
proceeding against both or any of them. The creditor canproceed against the guarantor first without exhausting its
remedies against the principal borrower.”
38. Therefore, it was not necessary to take action against
the guarantor and the bank was justified in taking action against
the principal debtor. Moreover, the accused, being a principal
debtor, had issued the cheque and only he could have been liable
for its dishonour in the proceedings initiated under Section 138 of
the NI Act.
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39. Thus, the learned Courts below had rightly held that
the accused had failed to rebut the presumption attached to the
.
cheque, and there is no infirmity in the findings recorded by the
learned Courts below.
40. Column No. 1 of the memo of dishonour (Ex-CW1/C)
mentioned that the cheque was dishonoured with the
endorsement “funds insufficient”. Therefore, the submission that
the cheque was not proved to be dishonoured for “funds
insufficient” is not correct. It was laid down by the Hon’ble
Supreme Court in Mandvi Cooperative Bank Ltd. v. Nimesh B.
Thakore, (2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1:
2010 SCC OnLine SC 155 that the memo issued by the Bank is
presumed to be correct and the burden is upon the accused to
rebut the presumption. It was observed at page 95:
24. Section 146, making a major departure from the
principles of the Evidence Act, provides that the bank’s slip
or memo with the official mark showing that the cheque
was dishonoured would, by itself, give rise to the
presumption of dishonour of the cheque, unless and until
that fact was disproved. Section 147 makes the offences
punishable under the Act compoundable.
41. In the present case, no evidence was produced to rebut
the presumption, and the learned Courts below had rightly held
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that the cheque was dishonoured with an endorsement
‘insufficient funds’.
.
42. K.C. Sharma (CW1) stated that a notice (Ex-CW1/H) was
issued to the accused. The notice was issued at the same address,
which is mentioned by the accused in the present revision
petition; therefore, it was sent to the correct address. The
acknowledgement (Ex-CW1/G) showed that it was duly served
upon the accused. Therefore, the learned Courts below had rightly
held that the notice was served upon the accused.
43. In any case, it was laid down in C.C. Allavi Haji vs. Pala
Pelly Mohd. 2007(6) SCC 555 that the person who claims that he
had not received the notice has to repay the amount within 15 days
from the date of the receipt of the summons from the Court, and
in case of failure to do so, he cannot take the advantage of the fact
that notice was not received by him. It was observed:
“It is also to be borne in mind that the requirement of giving
of notice is a clear departure from the rule of Criminal Law,
where there is no stipulation of giving of notice before filing
a complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons
from the court in respect of the complaint under Section 138 of
the Act, make payment of the cheque amount and submit to the
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( 2025:HHC:25615 )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 Section
138, by ignoring statutory presumption to the contrary under
Section 27 of the G.C. Act and Section 114 of the Evidence Act. Inour view, any other interpretation of the proviso would
defeat the very object of the legislation. As observed in
Bhaskaran‘s case (supra), if the giving of notice in the
context of Clause (b) of the proviso was the same as thereceipt of notice, a trickster cheque drawer would get the
premium to avoid receiving the notice by adopting different
strategies and escape from legal consequences of Section
138 of the Act.” (Emphasis supplied)
44. The accused has not paid any money to the
complainant; hence, it was duly proved that the accused had failed
to repay the money despite the receipt of the notice.
45. 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 repay the amount despite the receipt of
the notice of demand. Hence, the complainant had proved its case
beyond a reasonable doubt, and the learned Trial Court had rightly
convicted the accused of the commission of an offence punishable
under Section 138 of the NI Act.
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46. The learned Trial Court sentenced the accused to
undergo simple imprisonment for three months and pay
.
compensation of ₹80,000/- to the complainant.
47. 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 NI Act is deterrent in nature. It was
observed at page 203:
“6. The object of Section 138 of the Negotiable Instruments
Act is to infuse credibility into negotiable instruments,
including cheques, and to encourage and promote the use of
negotiable instruments, including cheques, in financialtransactions. 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 chequeswithout serious intention to honour the promise implicit in
the issuance of the same.”
48. Keeping in view the deterrent nature of the sentence to
be awarded, the sentence of three months’ imprisonment cannot
be said to be excessive, and no interference is required with it.
49. Learned Trial Court had ordered the accused to pay a
compensation of ₹80,000/- to the complainant. This order was
announced by the learned Trial Court on 28.03.2024, whereas the
cheque was issued on 10.01.2017. Thus, the order was announced
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after a lapse of 7 years from the date of issuance of the cheque. The
complainant lost interest on the amount, which it would have
.
gained by advancing a loan to other borrowers, and it had to pay
the litigation expenses for filing the complaint. 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 ofNIA 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 awardingcompensation, 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]”
50. Therefore, the compensation of ₹20,000/- on the
principal amount of ₹60,000/- is not excessive.
51. No other point was urged.
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52. In view of the above, the present revision fails and the
same is dismissed, so also the pending miscellaneous
.
application(s), if any.
(Rakesh Kainthla)
Judge
01st August, 2025
(Shamsh Tabrez)
r to
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