Himachal Pradesh High Court
Deepak Chauhan vs Sanjay Kumar on 2 May, 2025
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 603 of 2024
Reserved on: 03.04.2025
Date of Decision: 02.5.2025.
Deepak Chauhan ...Petitioner
Versus
Sanjay Kumar ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Mr. Mohd. Aamir, Advocate.
For the Respondent : Mr. Lakshay Thakur, Advocate.
Rakesh Kainthla, Judge
The present revision is directed against the
judgment dated 07.09.2024, passed by learned Additional
Sessions Judge-I, Shimla, H.P. (learned Appellate Court), vide
which the judgment and order dated 05.04.2024, passed by
learned Chief Judicial Magistrate, Shimla, 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.
2
2. Briefly stated, the facts giving rise to the present
revision are that the complainant filed a complaint before the
learned Trial Court against the accused for the commission of
an offence punishable under Section 138 of the Negotiable
Instruments Act (NI Act). It was asserted that the accused
asked for a loan of ₹ 4 lacs from the complainant for domestic
purposes. He promised to pay the amount on or before
25.12.2015. An agreement was executed between the parties
regarding the transaction. The complainant asked the accused
to return the money, however, the accused issued a cheque of
₹ 4 lacs drawn on the State Bank of India, Branch Deha Tehsil
Theog. The complainant presented the cheque before his
banker, the UCO Bank Branch at Kamyana. The cheque was
dishonoured by the bank of the accused with an endorsement
‘insufficient funds’. The complainant issued a notice to the
accused asking him to pay the money within 15 days of the
receipt of the notice. The accused received the notice but
failed to pay the money. Hence, the complainant filed a
complaint before the learned Trial Court to take action against
the accused.
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, notice of
3
accusation was put to him, to which he pleaded not guilty and
claimed to be tried.
4. The complainant examined himself (CW1) to prove
his case.
5. The accused, in his statement recorded under
Section 313 of Cr.P.C., admitted that he had approached the
complainant for seeking financial help. He admitted that an
agreement was executed between the parties. He stated that
he had taken a loan of ₹ 3,70,000/- and had pledged the gold
as security. The complainant had advanced a sum of ₹
1,70,000/- in cash and had issued a cheque of ₹ 2 lacs. He
stated that he had issued the cheque as a security. He
admitted that the cheque was dishonoured with an
endorsement of insufficient funds, and the complainant had
issued a notice to him. He stated that he had sent the reply to
the notice of the complainant. He examined Sanjeev Chauhan
(DW-1).
6. Learned Trial Court held that issuance of the
cheque was not in dispute. There is a presumption under
Section 118(a) and 139 of the NI Act that the cheque was
issued for the consideration and in discharge of the legal
liability. The plea taken by the accused that the complainant
4
had only advanced ₹ 3,70,000/- was not proved on the balance
of probability. The cheque was dishonoured due to insufficient
funds, and the notice was served upon the accused. The
accused failed to pay the amount despite the receipt of the
notice. Hence, the accused was convicted of the commission
of an offence punishable under Section 138 of the NI Act and
was sentenced to undergo six months’ simple imprisonment.
The accused was also directed to pay compensation of
₹ 4,50,000/-.
7. Being aggrieved from the judgment and order
passed by the learned Trial Court, the accused filed an appeal
which was decided by the learned Additional Sessions Judge-1,
Shimla (learned appellate Court). Learned Appellate Court
concurred with the findings recorded by the learned Trial Court
that the cheque was issued in discharge of the legal liability.
Even if the cheque was issued towards the security, the
complainant had sufficient authority to fill the amount and
present the cheque before the bank. The accused did not have
sufficient funds on the date of presentation of the cheque. The
accused failed to pay the money despite the receipt of a valid
notice of demand. The learned Trial Court had rightly
5
convicted and sentenced the accused. Hence, the appeal was
dismissed.
8. Being aggrieved by the judgments and order
passed by the learned Courts below, the accused has filed the
present revision petition, asserting that the judgments and
order were passed without appreciation of the facts. The
evidence was not considered from its right perspective.
Therefore, it was prayed that the present revision petition be
allowed and the judgments and order passed by the learned
Courts below be set aside.
9. I have heard Mr. Mohd Aamir, learned counsel for
the petitioner/accused, and Mr. Lakshay Thakur, learned
counsel for the respondent/complainant.
10. Mr. Mohd. Aamir, learned counsel for the
petitioner/accused, submitted that the learned Courts below
erred in convicting and sentencing the accused. The plea
taken by the accused that the complainant had only advanced
a sum of ₹3,70,000/- was highly probable. The complainant
had no authority to fill an amount of ₹ 4 lacs in the security
cheque issued by the accused, and the learned Courts below
erred in holding that the cheque was issued in discharge of the
legal liability. The statement of the defence witness was not
6
properly appreciated. Therefore, he prayed that the present
revision be allowed and the judgments and order passed by
learned Courts be set aside.
11. Mr. Lakshay Thakur, learned counsel for the
respondent/complainant, submitted that the learned Courts
below had rightly held that the cheque carried with it a
presumption of consideration and it was issued in discharge of
the legal liability. This presumption was strengthened by the
agreement executed between the parties. The accused did
not dispute the execution of the agreement in his statement
recorded under Section 313 of Cr.P.C. The accused admitted
that the cheque was dishonoured with an endorsement of
insufficient funds, and he had not paid any amount to the
complainant. Therefore, he was rightly convicted and
sentenced by the learned Courts below. He prayed that the
present petition be dismissed.
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
7
786 that the revisional court is not an appellate jurisdiction
and it can only rectify the patent defect, errors of jurisdiction
or the law. It was observed on page 207: –
“10. Before adverting to the merits of the contentions,
at the outset, it is apt to mention that there are
concurrent findings of conviction arrived at by two
courts after a detailed appreciation of the material and
evidence brought on record. The High Court in criminal
revision against conviction is not supposed to exercise
the jurisdiction like the appellate court, and the scope of
interference in revision is extremely narrow. Section 397
of the Criminal Procedure Code (in short “CrPC“) vests
jurisdiction to satisfy itself or himself as to the
correctness, legality or propriety of any finding,
sentence or order, recorded or passed, and as to the
regularity of any proceedings of such inferior court. The
object of the provision is to set right a patent defect or
an error of jurisdiction or law. There has to be a well-
founded error which is to be determined on the merits of
individual cases. It is also well settled that while
considering the same, the Revisional Court does not
dwell at length upon the facts and evidence of the case
to reverse those findings.
14. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294,
wherein it was observed:
“13. The power and jurisdiction of the Higher Court
under Section 397 Cr. P.C., which vests the court with
the power to call for and examine records of an inferior
court, is for the purposes of satisfying itself as to the
legality and regularity of any proceeding or order made
in a case. The object of this provision is to set right a
patent defect or an error of jurisdiction or law or the
perversity which has crept into such proceedings. It
would be apposite to refer to the judgment of this court
8in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC
460, where the scope of Section 397 has been
considered and succinctly explained as under:
“12. Section 397 of the Code vests the court with
the power to call for and examine the records of an
inferior court for the purposes of satisfying itself as
to the legality and regularity of any proceedings or
order made in a case. The object of this provision is
to set right a patent defect or an error of jurisdiction
or law. There has to be a well-founded error, and it
may not be appropriate for the court to scrutinise
the orders, which, upon the face of it, bear a token
of careful consideration and appear to be in
accordance with the law. If one looks into the
various judgments of this Court, it emerges that the
revisional jurisdiction can be invoked where the
decisions under challenge are grossly erroneous,
there is no compliance with the provisions of law,
the finding recorded is based on no evidence,
material evidence is ignored or judicial discretion is
exercised arbitrarily or perversely. These are not
exhaustive classes but are merely indicative. Each
case would have to be determined on its own
merits.
13. Another well-accepted norm is that the
revisional jurisdiction of the higher court is a very
limited one and cannot be exercised in a routine
manner. One of the inbuilt restrictions is that it
should not be against an interim or interlocutory
order. The Court has to keep in mind that the
exercise of revisional jurisdiction itself should not
lead to injustice ex facie. Where the Court is dealing
with the question as to whether the charge has
been framed properly and in accordance with law in
a given case, it may be reluctant to interfere in the
exercise of its revisional jurisdiction unless the case
substantially falls within the categories aforestated.
Even framing of charge is a much-advanced stage
in the proceedings under the CrPC.”
9
15. The present revision is decided as per the
parameters laid down by the Hon’ble Supreme Court.
16. The accused did not dispute in his statement
recorded under Section 313 of Cr.P.C. that he had issued the
cheque in favour of the complainant. He claimed that the
cheque was issued as a security. His witness, Sanjeev
Chauhan, also stated in his affidavit (Ex. DW1/A) that the
accused had handed over a blank signed cheque and
Mangalsutra as security to the complainant. Therefore, the
issuance of the cheque is not in dispute. 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 and the burden would shift
upon the accused to rebut the presumption. It was observed: –
“8. Once signatures on the cheque are not disputed, the
plea with regard to the cheque having not been issued
towards discharge of lawful liability, rightly came to be
rejected by learned Courts below. Reliance is placed
upon Hiten P. Dalal v. Bartender Nath Bannerji,
2001 (6) SCC 16, wherein it has been held as under:
“The words ‘unless the contrary is proved’ which
occur in this provision make it clear that the
presumption has to be rebutted by ‘proof’ and not
by a bare explanation which is merely plausible. A
fact is said to be proved when its existence is
directly established or when, upon the material
10before it, the Court finds its existence to be so
probable that a reasonable man would act on the
supposition that it exists. Unless, therefore, the
explanation is supported by proof, the
presumption created by the provision cannot be
said to be rebutted……”
9. S.139 of the Act provides that it shall be
presumed, unless the contrary is proved, that the
holder of a cheque received the cheque of nature
referred to in section 138 for the discharge, in
whole or in part, of any debt or other liability.
17. 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.”
18. This position was reiterated in Kalamani Tex v. P.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ)
25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75,
wherein it was held at page 289:
“14. Once the 2nd appellant had admitted his signatures
on the cheque and the deed, the trial court ought to
have presumed that the cheque was issued as
consideration for a legally enforceable debt. The trial
court fell in error when it called upon the respondent
complainant to explain the circumstances under which
the appellants were liable to pay. Such an approach of
the trial court was directly in the teeth of the
established legal position as discussed above, and
amounts to a patent error of law.”
11
19. Similar is the judgment in APS Forex Services (P)
Ltd. v. Shakti International Fashion Linkers (2020) 12
SCC 724, wherein it was observed: –
7.2. What is emerging from the material on record is
that the issuance of a cheque by the accused and the
signature of the accused on the said cheque are not
disputed by the accused. The accused has also not
disputed that there were transactions between the
parties. Even as per the statement of the accused,
which was recorded at the time of the framing of the
charge, he has admitted that some amount was due and
payable. However, it was the case on behalf of the
accused that the cheque was given by way of security,
and the same has been misused by the complainant.
However, nothing is on record that in the reply to the
statutory notice, it was the case on behalf of the
accused that the cheque was given by way of security.
Be that as it may, however, it is required to be noted
that earlier the accused issued cheques which came to
be dishonoured on the ground of “insufficient funds”
and thereafter a fresh consolidated cheque of ₹9,55,574
was given which has been returned unpaid on the
ground of “STOP PAYMENT”. Therefore, the cheque in
question was issued for the second time. Therefore,
once the accused has admitted the issuance of a
cheque which bears his signature, there is a
presumption that there exists a legally enforceable debt
or liability under Section 139 of the NI Act. However,
such a presumption is rebuttable in nature, and the
accused is required to lead 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
12dishonoured and that even according to the accused
some amount was due and payable, there is a
presumption under Section 139 of the NI Act that there
exists a legally enforceable debt or liability. Of course,
such presumption is rebuttable in nature. However, to
rebut the presumption, the accused was required to
lead evidence that the full amount due and payable to
the complainant had been paid. In the present case, no
such evidence has been led by the accused. The story
put forward by the accused that the cheques were given
by way of security is not believable in the absence of
further evidence to rebut the presumption, and more
particularly, the cheque in question was issued for the
second time after the earlier cheques were dishonoured.
Therefore, both the courts below have materially erred
in not properly appreciating and considering the
presumption in favour of the complainant that there
exists a legally enforceable debt or liability as per
Section 139 of the NI Act. It appears that both the
learned trial court as well as the High Court have
committed an error in shifting the burden upon the
complainant to prove the debt or liability, without
appreciating the presumption under Section 139 of the
NI Act. As observed above, Section 139 of the Act is an
example of reverse onus clause and therefore, once the
issuance of the cheque has been admitted and even the
signature on the cheque has been admitted, there is
always a presumption in favour of the complainant that
there exists legally enforceable debt or liability and
thereafter, it is for the accused to rebut such
presumption by leading evidence.
20. 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
13not disputed. Ext. P-2 is the dishonoured cheque based
on which the complaint was filed. From the evidence
tendered before the JMFC, it is clear that the respondent
has not disputed the signature on the cheque. If that be
the position, as noted by the courts below, a
presumption would arise under Section 139 in favour of
the appellant who was the holder of the cheque. Section
139 of the NI Act reads as hereunder:
“139. Presumption in favour of the holder. —
It shall be presumed, unless the contrary is
proved, that the holder of a cheque received the
cheque of the nature referred to in Section 138 for
the discharge, in whole or in part, of any debt or
other liability.”
13. Insofar as the payment of the amount by the
appellant in the context of the cheque having been
signed by the respondent, the presumption for passing
of the consideration would arise as provided under
Section 118(a) of the NI Act, which reads as hereunder:
“118. Presumptions as to negotiable
instruments. –Until the contrary is proved, the
following presumptions shall be made:
(a) of consideration: that every negotiable
instrument was made or drawn for consideration,
and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or transferred for
consideration.”
14. The above-noted provisions are explicit to the effect
that such presumption would remain until the contrary
is proved. The learned counsel for the appellant in that
regard has relied on the decision of this Court in K.
Bhaskaran v. Sankaran Vaidhyan Balan [K.
Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7
SCC 510: 1999 SCC (Cri) 1284] wherein it is held as
hereunder: (SCC pp. 516-17, para 9)
“9. As the signature in the cheque is admitted to
be that of the accused, the presumption
envisaged in Section 118 of the Act can legally be
inferred that the cheque was made or drawn for
14
consideration on the date which the cheque bears.
Section 139 of the Act enjoins the Court to
presume that the holder of the cheque received it
for the discharge of any debt or liability. The
burden was on the accused to rebut the aforesaid
presumption. The trial court was not persuaded to
rely on the interested testimony of DW 1 to rebut
the presumption. The said finding was upheld
[Sankaran Vaidhyan Balan v. K. Bhaskaran,
Criminal Appeal No. 234 of 1995, order
dated 23-10-1998 (Ker)] by the High Court. It is
not now open to the accused to contend
differently on that aspect.”
15. The learned counsel for the respondent has
however referred to the decision of this Court
in Basalingappa v. Mudibasappa [Basalingappa v.
Mudibasappa, (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.
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
15also by reference to the circumstances upon
which they rely.
25.4. That it is not necessary for the accused to
come into the witness box in support of his
defence, Section 139 imposed an evidentiary
burden and not a persuasive burden.
25.5. It is not necessary for the accused to come
into the witness box to support his defence.
26. Applying the preposition of law as noted
above, in the facts of the present case, it is clear
that the signature on the cheque, having been
admitted, a presumption shall be raised under
Section 139 that the cheque was issued in
discharge of debt or liability. The question to be
looked into is as to whether any probable defence
was raised by the accused. In the cross-
examination of PW 1, when the specific question
was put that a cheque was issued in relation to a
loan of Rs 25,000 taken by the accused, PW 1 said
that he does not remember. PW 1 in his evidence
admitted that he retired in 1997, on which date he
received a monetary benefit of Rs 8 lakhs, which
was encashed by the complainant. It was also
brought in evidence that in the year 2010, the
complainant entered into a sale agreement for
which he paid an amount of Rs 4,50,000 to Balana
Gouda towards sale consideration. Payment of Rs
4,50,000 being admitted in the year 2010 and
further payment of loan of Rs 50,000 with regard
to which Complaint No. 119 of 2012 was filed by
the complainant, a copy of which complaint was
also filed as Ext. D-2, there was a burden on the
complainant to prove his financial capacity. In the
years 2010-2011, as per own case of the
complainant, he made a payment of Rs 18 lakhs.
During his cross-examination, when the financial
capacity to pay Rs 6 lakhs to the accused was
questioned, there was no satisfactory reply given
by the complainant. The evidence on record, thus,
is a probable defence on behalf of the accused,
16
which shifted the burden on the complainant to
prove his financial capacity and other facts.”
16. In that light, it is contended that the very materials
produced by the appellant and the answers relating to
lack of knowledge of property details by PW 1 in his
cross-examination would indicate that the transaction is
doubtful, and no evidence is tendered to indicate that
the amount was paid. In such an event, it was not
necessary for the respondent to tender rebuttal
evidence, but the case put forth would be sufficient to
indicate that the respondent has successfully rebutted
the presumption.
17. On the position of law, the provisions referred to in
Sections 118 and 139 of the NI Act, as also the
enunciation of law as made by this Court, need no
reiteration as there is no ambiguity whatsoever. In
Basalingappav. Mudibasappa [Basalingappa v.
Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC
(Cri) 571] relied on by the learned counsel for the
respondent, though on facts the ultimate conclusion
therein was against raising presumption, the facts and
circumstances are entirely different as the transaction
between the parties as claimed in the said case is
peculiar to the facts of that case where the
consideration claimed to have been paid did not find
favour with the Court keeping in view the various
transactions and extent of amount involved. However,
the legal position relating to the presumption arising
under Sections 118 and 139 of the NI Act on signature
being admitted has been reiterated. Hence, whether
there is a rebuttal or not would depend on the facts and
circumstances of each case.”
21. 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
17Negotiable Instruments Act. Section 139 of the NI Act
provides that the court shall presume that the holder of
a cheque received the cheque of the nature referred to
in Section 138 for the discharge, in whole or in part, of
any debt or other liability. This presumption, however, is
expressly made subject to the position being proved to
the contrary. In other words, it is open to the accused to
establish that there is no consideration received. It is in
the context of this provision that the theory of
“probable defence” has grown. In an earlier judgment,
in fact, which has also been adverted to in
Basalingappa [Basalingappa v. Mudibasappa,
(2019) 5 SCC 418: (2019) 2 SCC (Cri) 571], this
Court notes that Section 139 of the NI Act is an example
of reverse onus (see Rangappa v. Sri Mohan
[Rangappa v. Sri Mohan, (2010) 11 SCC 441:
(2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184]). It
is also true that this Court has found that the accused is
not expected to discharge an unduly high standard of
proof. It is accordingly that the principle has developed
that all which the accused needs to establish is a
probable defence. As to whether a probable defence has
been established is a matter to be decided on the facts
of each case on the conspectus of evidence and
circumstances that exist…”
22. Similar is the judgment in P. Rasiya v. Abdul
Nazer, 2022 SCC OnLine SC 1131, wherein it was observed:
“As per Section 139 of the N.I. Act, it shall be presumed,
unless the contrary is proved, that the holder of a
cheque received the cheque of the nature referred to in
Section 138 for discharge, in whole or in part, of any
debt or other liability. Therefore, once the initial burden
is discharged by the Complainant that the cheque was
issued by the accused and the signature and the
issuance of the cheque are not disputed by the accused,
in that case, the onus will shift upon the accused to
prove the contrary that the cheque was not for any debt
or other liability. The presumption under Section 139 of
the N.I. Act is a statutory presumption and thereafter,
18once it is presumed that the cheque is issued in whole
or in part of any debt or other liability which is in favour
of the Complainant/holder of the cheque, in that case, it
is for the accused to prove the contrary.”
23. 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 hence not repeated–reference to one can be
taken as reference to another]
34. Section 139 of the NI Act, which takes the form of a
“shall presume” clause, is illustrative of a presumption
of law. Because Section 139 requires that the Court
“shall presume” the fact stated therein, it is obligatory
for the Court to raise this presumption in every case
where the factual basis for the raising of the
presumption had been established. But this does not
preclude the person against whom the presumption is
drawn from rebutting it and proving the contrary, as is
clear from the use of the phrase “unless the contrary is
proved”.
35. The Court will necessarily presume that the cheque
had been issued towards the discharge of a legally
enforceable debt/liability in two circumstances. Firstly,
when the drawer of the cheque admits
issuance/execution of the cheque and secondly, in the
19
event where the complainant proves that the cheque
was issued/executed in his favour by the drawer. The
circumstances set out above form the fact(s) which
bring about the activation of the presumptive clause.
[Bharat Barrel & Drum Mfg. Co. v. Amin Chand
Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin
Chand Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of
holding that presumption takes effect even in a situation
where the accused contends that a blank cheque leaf
was voluntarily signed and handed over by him to the
complainant. [Bir Singh v. Mukesh Kumar [Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019)
2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40] ]. Therefore,
the mere admission of the drawer’s signature, without
admitting the execution of the entire contents in the
cheque, is now sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden
to prove that the instrument, say a cheque, was issued
by the accused for discharge of debt, the presumptive
device under Section 139 of the Act helps shifting the
burden on the accused. The effect of the presumption,
in that sense, is to transfer the evidential burden on the
accused of proving that the cheque was not received by
the Bank towards the discharge of any liability. Until this
evidential burden is discharged by the accused, the
presumed fact will have to be taken to be true, without
expecting the complainant to do anything further.
38. John Henry Wigmore [John Henry Wigmore and the
Rules of Evidence: The Hidden Origins of Modern
Law] on Evidence states as follows:
“The peculiar effect of the presumption of law is
merely to invoke a rule of law compelling the Jury
to reach the conclusion in the absence of evidence
to the contrary from the opponent but if the
opponent does offer evidence to the contrary
(sufficient to satisfy the Judge’s requirement of
some evidence), the presumption ‘disappears as a
rule of law and the case is in the Jury’s hands free
from any rule’.”
20
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]]
24. The version of the complainant is duly corroborated
by the Agreement (Ex.CW1/A) in which it was specifically
stated that the complainant had advanced an amount of ₹ 4
lacs by way of a cheque of ₹ 2 lacs, and a cash of ₹ 2 lacs as a
friendly loan to the accused. The accused admitted in his
statement recorded under Section 313 of Cr.PC in reply to
question No.4 that he had executed the agreement
(Ex. CW1/A). He claimed that an amount of ₹ 3,70,000/- was
advanced by the complainant to him. However, in view of the
admission regarding the execution of the agreement
(Ex. CW1/A), it is difficult to rely upon the statement of the
accused that a sum of ₹ 3,70,000/- was advanced to him.
25. The accused examined Sanjeev Chauhan, who
stated that an amount of ₹ 70,000/- was paid in his presence
by the complainant to the accused. This is contrary to the
statement of the accused made under Section 313 of Cr. P.C.,
21
in which it was stated that a cheque of ₹ 2 lacs was issued and
₹ 1,70,000/- was given as cash. Thus, the accused never
claimed that an amount of ₹ 70,000/- was advanced on one
day and ₹ 1 lac was advanced on the other day. Further, it
was also not suggested to the complainant in his cross-
examination that the amount of ₹ 70,000/- was advanced in
the presence of Sanjeev Chauhan, even though it was
suggested that ₹ 70,000/- was paid and a blank cheque and
mangalsutra were retained. Further, the plea taken by the
accused that the cheque and mangalsutra were handed over
at the time of advancing of ₹ 70,000/- is not probable. It is
difficult to believe that a person would hand over an amount of
₹ 3 Lacs (as per showing of the accused) without any security
and will insist upon the security of the cheque and magalsutra
at the time of advancing of ₹ 70,000. Therefore, learned Courts
below had rightly rejected the statement of Sanjeev Chauhan.
26. The accused did not step into the witness box to
claim that the accused had advanced only an amount of
₹ 3,70,000/- to him and not an amount of ₹ 4 lacs. He relied
upon his statement recorded under Section 313 of Cr. P.C. to
establish this fact. It was held in Sumeti Vij v. Paramount
Tech Fab Industries, (2022) 15 SCC 689: 2021 SCC
22
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.P.C is not sufficient to rebut
the presumption. It was observed at page 700:
“20. That apart, when the complainant exhibited all
these documents in support of his complaints and
recorded the statement of three witnesses in support
thereof, the appellant has recorded her statement under
Section 313 of the Code but failed to record evidence to
disprove or rebut the presumption in support of her
defence available under Section 139 of the Act. The
statement of the accused recorded under Section 313 of
the Code is not substantive evidence of defence, but
only an opportunity for the accused to explain the
incriminating circumstances appearing in the
prosecution’s case against the accused. Therefore, there
is no evidence to rebut the presumption that the
cheques were issued for consideration.” (Emphasis
supplied).
27. Therefore, learned Courts below had rightly
discarded the version that the complainant had advanced an
amount of ₹ 3,70,000/- to the accused.
28. The accused claimed that a blank signed security
cheque was issued in the complainant’s favour. The accused
admitted the execution of the agreement (Ex. CW1/A) in which
an amount of ₹ 4 lacs is stated to have been paid by the
complainant to the accused, which means that the accused
had the liability to pay ₹ 4 lacs to the complainant. The
accused nowhere claimed that he had returned any money to
23
the complainant before the issuance of the cheque or before
its presentation. Therefore, the accused had a liability to pay ₹
4 lacs to the complainant. It was laid down by this Court in
Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456,
that even if the cheque was issued towards the security, the
accused will be liable. It was observed:
“9. Submission of learned Advocate appearing on behalf
of the revisionist that the cheque in question was issued
to the complainant as security and on this ground,
criminal revision petition be accepted is rejected being
devoid of any 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.”
29. It was laid down by the Hon’ble Supreme Court in
Sampelly Satyanarayana Rao v. Indian Renewable
Energy Development Agency Ltd., (2016) 10 SCC 458:
(2017) 1 SCC (Cri) 149: (2017) 1 SCC (Civ) 126: 2016
SCC OnLine SC 954 that issuing a cheque toward security will
24also attract the liability for the commission of an offence
punishable under Section 138 of N.I. Act. It was observed: –
“9. 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 [Indus
Airways (P) Ltd. v. Magnum Aviation (P) Ltd.,
(2014) 12 SCC 539: (2014) 5 SCC (Civ) 138: (2014)
6 SCC (Cri) 845] with reference to the explanation to
Section 138 of the Act and the expression “for 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.
10. Reference to the facts of the present case clearly
shows that though the word “security” is used in Clause
3.1(iii) of the agreement, the said expression refers to
the cheques being towards repayment of instalments.
The repayment becomes due under the agreement, the
moment the loan is advanced and the instalment falls
due. It is undisputed that the loan was duly disbursed on
28-2-2002, 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, dishonour of such cheques would fall under
Section 138 of the Act. The cheques undoubtedly
represent the outstanding liability.
11. The judgment in Indus Airways [Indus Airways
(P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12
SCC 539: (2014) 5 SCC (Civ) 138 : (2014) 6 SCC
(Cri) 845] 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 on a par with criminal liability towards discharge of
acknowledged and admitted debt under a loan
transaction. Dishonour of a cheque issued for discharge
25
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 Indus Airways [Indus Airways
(P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12
SCC 539: (2014) 5 SCC (Civ) 138 : (2014) 6 SCC
(Cri) 845] where the purchase order had been
cancelled and cheque issued towards advance payment
for the purchase order was dishonoured. In that case, it
was found that the cheque had not been issued for
discharge of liability but as an advance for the purchase
order, which was cancelled. Keeping in mind this fine
but 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 [Indus Airways (P) Ltd. v. Magnum
Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5
SCC (Civ) 138 : (2014) 6 SCC (Cri) 845], one cannot
lose sight of the difference between a transaction of
purchase order which is cancelled and that of a loan
transaction where loan has actually been advanced and
its repayment is due on the date of the cheque.
12. 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 the 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.”
30. 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
26
not waste paper and a complaint under Section 138 of the N.I.
Act can be filed on its dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece of
paper under every circumstance. ‘Security’ in its true
sense is the state of being safe, and the security given
for a loan is something given as a pledge of payment. It
is given, deposited or pledged to make certain the
fulfilment of an obligation to which the parties to the
transaction are bound. If in a transaction, a loan is
advanced and the borrower agrees to repay the amount
in a specified timeframe and issues a cheque as security
to secure such repayment; if the loan amount is not
repaid in any other form before the due date or if there
is no other understanding or agreement between the
parties to defer the payment of the amount, the cheque
which is issued as security would mature for
presentation and the drawee of the cheque would be
entitled to present the same. On such presentation, if
the same is dishonoured, the consequences
contemplated under Section 138 and the other
provisions of N.I. Act would flow.
18. When a cheque is issued and is treated as ‘security’
towards repayment of an amount with a time period
being stipulated for repayment, all that it ensures is that
such cheque which is issued as ‘security cannot be
presented prior to the loan or the instalment maturing
for repayment towards which such cheque is issued as
security. Further, the borrower would have the option of
repaying the loan amount or such financial liability in
any other form, and in that manner, if the amount of the
loan due and payable has been discharged within the
agreed period, the cheque issued as security cannot
thereafter be presented. Therefore, the prior discharge
of the loan or there being an altered situation due to
which there would be an understanding between the
parties is a sine qua non to not present the cheque
which was issued as security. These are only the
defences that would be available to the drawer of the
27cheque in proceedings initiated under Section 138 of the
N.I. Act. Therefore, there cannot be a hard and fast rule
that a cheque, which is issued as security, can never be
presented by the drawee of the cheque. If such is the
understanding, a cheque would also be reduced to an
‘on-demand promissory note’ and in all circumstances, it
would only be civil litigation to recover the amount,
which is not the intention of the statute. When a cheque
is issued even though as ‘security’ the consequence
flowing therefrom is also known to the drawer of the
cheque and in the circumstance stated above if the
cheque is presented and dishonoured, the holder of the
cheque/drawee would have the option of initiating the
civil proceedings for recovery or the criminal
proceedings for punishment in the fact situation, but in
any event, it is not for the drawer of the cheque to
dictate terms with regard to the nature of litigation.”
31. The accused claimed that he had issued a blank
signed cheque. The complainant denied this fact in his cross-
examination. The statement of Sanjeev Chauhan (DW-1) is not
reliable, as noticed above. It was suggested to the complainant
in his cross-examination that the cheques were kept as
security with Rewa Dass, but he was not examined to establish
this fact. Hence, the version that a blank signed cheque was
issued as security is not established.
32. 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
28N.I 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.
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 parted with it under any
threat or 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 the benefit 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.”
29
33. 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
respondent submits, 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 discharge of a liability. The presumption arises
under Section 139.
34. Therefore, the learned Courts below had rightly held
that the accused had failed to rebut the presumption attached
to the cheque.
35. The complainant stated that the cheque was
dishonoured with an endorsement of insufficient funds. The
accused did not dispute this fact in his statement recorded
under Section 313 of Cr.P.C. The complainant proved the
memo of dishonour (Ex.CW1/C), which shows that the cheque
was dishonoured with an endorsement of insufficient funds.
There is a presumption under Section 146 of the NI Act
regarding the correctness of the contents of the memo of
dishonour. The accused did not produce any evidence to rebut
30
the presumption; rather, he had admitted in his statement
recorded 313 of Cr. P.C., that the cheque was dishonoured with
an endorsement of insufficient funds. Hence, it is duly proved
on record that the cheque was dishonoured due to insufficient
funds.
36. The complainant stated that he issued a notice
(Ex. CW1/D) to the accused asking him to pay the money. The
accused stated in his statement recorded under Section 313 of
Cr. P.C. that he had replied to the notice, which means that the
issuance of the notice and its receipt are not in dispute. Hence,
it is duly proved that the complainant had issued a notice to
the accused, which was received by him. The accused
admitted in his statement recorded under Section 313 of
Cr. P.C. that he had not paid any money to the accused. Thus,
another ingredient of the commission of an offence punishable
under Section 138 of the NI Act, that the accused had failed to
pay the money despite the receipt of a valid notice for
demand, was also satisfied.
37. Therefore, it was duly proved on record that the
accused had issued a cheque in favour of the complainant,
which was dishonoured with an endorsement of insufficient
funds. The accused failed to pay the amount despite the
31
receipt of a valid notice of demand. Therefore, the necessary
ingredients of Section 138 of the N I Act were duly satisfied,
and the accused was rightly convicted by the learned Trial
Court, which conviction was rightly affirmed by the learned
Appellate Court.
38. Learned Trial Court sentenced the accused to
undergo simple imprisonment for six months and pay a
compensation of ₹ 4,50,000/-. It was laid down by the Hon’ble
Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309:
2019 SCC OnLine SC 138 that the penal provisions of section
138 is deterrent in nature. It was observed at page 203:
“6. The object of Section 138 of the Negotiable
Instruments Act is to infuse credibility into negotiable
instruments, including cheques, and to encourage and
promote the use of negotiable instruments, including
cheques, in financial transactions. The penal provision of
Section 138 of the Negotiable Instruments Act is
intended to be a deterrent to callous issuance of
negotiable instruments such as cheques without serious
intention to honour the promise implicit in the issuance
of the same.”
39. Hence, the sentence of imprisonment of six months
is not excessive.
40. The cheque was issued on 26.04.2016, and the
learned trial Court imposed the sentence on 5.4.2024 after a
32
lapse of 8 years. The complainant had incurred expenses on
the litigation, and he also lost interest on the amount
advanced by him. It was laid down by the Hon’ble Supreme
Court in M/S Kalamani Tex and another Versus P.
Balasubramanian JT 2021(2) SC 519 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: –
“20. 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 the 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 a fine up to twice the cheque amount
along with simple interest at the rate of 9% per annum.
[R. Vijian v. Baby, (2012) 1 SCC 260, 20]”
41. In the present case, the amount of ₹ 50,000/- was
awarded as compensation on the principal amount of ₹ 4 lacs,
which is hardly sufficient to compensate the complainant for
the expenses incurred by him for prosecuting the complaint or
the deprivation of the interest on the amount loaned by the
complainant. However, no appeal was preferred by the
complainant against the order of payment of compensation of
33
₹ 4,50,000/-, and no interference is required with this part of
the sentence.
42. No other point was urged.
43. Therefore, there is no infirmity in the judgments
and order passed by learned Courts below, hence, the present
revision fails, and the same is dismissed.
44. Records of the learned Courts below be sent back
forthwith along with the copy of the judgment.
(Rakesh Kainthla)
Judge
02 May, 2025
(G.M)
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