Himachal Pradesh High Court
Reserved On: 01.05.2025 vs Ramesh Chauhan on 14 May, 2025
2025:HHC:13901
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 209 of 2025
Reserved on: 01.05.2025
Date of Decision: 14.05.2025.
Joginder Singh Chauhan ...Petitioner
Versus
Ramesh Chauhan ...Respondent
Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Mr. D.N. Sharma, Advocate.
Rakesh Kainthla, Judge
The present petition is directed against the judgment
dated 29.03.2025, passed by learned Additional Sessions Judge
(CBI Court), Shimla, H.P. (learned Appellate Court), vide which
the judgment of conviction and order of sentence dated
11.09.2024 passed by learned Chief Judicial Magistrate, Shimla,
H.P. (learned Trial Court) were upheld (Parties shall hereinafter be
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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referred to in the same manner as they were arrayed before the
learned Trial Court for convenience).
2. Briefly stated, the facts giving rise to the present
petition are that the complainant filed a complaint before the
learned Trial Court, asserting that the accused approached the
complainant for financial assistance in 2019. The complainant
advanced a sum of ₹12,60,000/- to the accused for three years.
The complainant paid ₹11,00,000/- to the accused through a
cheque and ₹1,60,000/- in cash. An agreement (Ex.CW1/K) was
executed between the parties regarding this transaction on
31.10.2019. The accused issued two security cheques for
₹1,60,000/- and ₹11,00,000/- drawn on H.P. State Cooperative
Bank Ltd., Sanjauli, District Shimla, H.P. It was agreed that the
cheque would be presented in case of non-return of the loan. The
accused failed to return the loan, and the complainant presented
the cheque. However, the cheques were dishonoured with an
endorsement "insufficient funds". The complainant served legal
notice (Ex.CW1/G) upon the accused, asking him to make the
payment of the cheque amount within 15 days. The notice was
served upon the accused, but he failed to pay the amount. Hence,
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the complaint was filed 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, the notice of
accusation was put to him for the commission of an offence
punishable under Section 138 of the Negotiable Instruments (NI)
Act, 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., asserted that he had returned the amount taken by
him from the complainant and the complainant misused the
security cheques issued to him. He did not lead any defence.
6. Learned Trial Court held that the issuance of the
cheques were not disputed. Therefore, a presumption arose that
the cheques were issued for consideration in discharge of his
legal liability. The accused was required to rebut the
presumption. However, he did not present any evidence to rebut
the presumption. His plea that he had returned the amount was
not proved by any evidence. No suggestion was given to the
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complainant that the amount was returned. The cheques were
dishonoured with endorsement "insufficient funds". The
complainant had issued a notice to the accused, which was
served upon the accused. This was evident from the confirmation
report (Ex. CW1/G) placed on record. All the ingredients of the
commission of an offence punishable under Section 138 of the NI
Act were duly satisfied. Hence, the accused was convicted for the
commission of an offence punishable under Section 138 of the NI
Act, and he was sentenced to undergo simple imprisonment for
'six months' and a fine of ₹19,00,000/-, which was ordered to be
paid as compensation to the complainant.
7. Being aggrieved from the judgment and order passed
by the learned Trial Court, the accused preferred an appeal which
was decided by the learned Additional Sessions Judge (CBI
Court), Shimla (learned Appellate Court). Learned Appellate
Court held that the statement of the complainant was reliable.
The accused had not disputed the financial transaction between
him and the complainant. He claimed that he had returned the
amount in cash. However, he did not provide any evidence to
establish this fact, and his plea regarding the payment of the
amount was not believable. The signatures on the cheque were
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not disputed by the accused, and a presumption under Section
118(a) and Section 139 of the NI Act would arise. The accused had
to rebut the presumption by leading evidence, but he failed to do
so. The cheques were dishonoured with an endorsement
"insufficient funds". The notice was served upon the accused,
but he failed to pay the amount. Hence, the learned Trial Court
had rightly convicted the accused. The financial transaction took
place on 28.07.2019. The complainant lost interest on the
amount advanced to him. The amount of ₹19,00,000/- was
harsh. Hence, the compensation amount was reduced to
₹15,60,000/-. Consequently, the appeal was partly allowed, and
the fine amount was reduced by the learned Appellate Court.
8. Being aggrieved by the judgments and order passed
by the learned Courts below, the accused has filed the present
petition, asserting that the learned Courts below erred in
appreciating the evidence. The judgments are against the facts of
the case. The evidence was not properly appreciated. The
complainant was required to prove his case beyond a reasonable
doubt. The view taken by the learned Courts below was contrary
to the record. The accused had no legal liability. There were
material contradictions in the statements of the witnesses.
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Therefore, it was prayed that the present petition be allowed and
the judgments and order passed by the learned Courts below be
set aside.
9. I have heard Mr. D.N. Sharma, learned counsel for the
petitioner/accused.
10. Learned counsel for the petitioner/accused submitted
that the learned Courts below failed to properly appreciate the
material placed before them. The plea taken by the accused that
he had returned the money was probable, and learned Courts
below erred in rejecting it. Therefore, he prayed that the revision
petition be allowed and the judgments and order passed by the
learned Courts below be set aside.
11. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
12. 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 can only rectify the patent defect, errors of jurisdiction or
the law. The revisional Court cannot dwell at length upon the
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facts and evidence to reverse those findings. 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.
13. 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 in Amit Kapoor v. Ramesh
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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."
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14. 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 own conclusions in the
absence of any perversity. It was observed at page 169:
"12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the ground for exercising the
revisional jurisdiction by the High Court. In State of
Kerala v. Puttumana Illath Jathavedan Namboodiri [State of
Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2
SCC 452: 1999 SCC (Cri) 275], while considering the scope
of 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 for
the purpose of satisfying itself as to the correctness,
legality or propriety of any finding, sentence or order.
In other words, the jurisdiction is one of supervisory
jurisdiction exercised by the High Court for correcting
a miscarriage of justice. But the said revisional power
cannot be equated with the power of an appellate court,
nor can it be treated even as a second appellate
jurisdiction. Ordinarily, therefore, it would not be
appropriate for the High Court to reappreciate the
evidence and come to its own conclusion on the same
when the evidence has already been appreciated by the
Magistrate as well as the Sessions Judge in appeal,
unless any glaring feature is brought to the notice of
the High Court which would otherwise tantamount to
gross miscarriage of justice. On scrutinising the
impugned judgment of the High Court from the
aforesaid standpoint, we have no hesitation in coming
to the conclusion that the High Court exceeded its
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jurisdiction in interfering with the conviction of the
respondent by reappreciating the oral evidence. ..."
13. Another judgment which has also been referred to and
relied on by the High Court is the judgment of this Court
in Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao
Phalke [Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao
Phalke, (2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court
held that the High Court, in 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
decision in exercise of their revisional jurisdiction."
14. In the above case, also conviction of the accused was
recorded, the High Court set aside [Dattatray Gulabrao
Phalke v. Sanjaysinh Ramrao Chavan, 2013 SCC OnLine Bom
1753] the order of conviction by substituting its own view.
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This Court set aside the High Court's order holding that
the High Court exceeded its jurisdiction in substituting its
views, and that too without any legal basis.
15. The present revision is to be decided as per the
parameters laid down by the Hon'ble Supreme Court.
16. The accused did not dispute the issuance of the
cheque in his statement recorded under Section 313 of the Cr. P.C.
He claimed that the cheques were issued as security. 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
before it, the Court finds its existence to be so
probable that a reasonable man would act on the
supposition that it exists. Unless, therefore, the
explanation is supported by proof, the presumption
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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."
19. Similar is the judgment in APS Forex Services (P) Ltd. v.
Shakti International Fashion Linkers (2020) 12 SCC 724, wherein it
was observed: -
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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 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
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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 not
disputed. Ext. P-2 is the dishonoured cheque based on
which the complaint was filed. From the evidence
tendered before the JMFC, it is clear that the respondent
has not disputed the signature on the cheque. If that be the
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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 consideration on the
date which the cheque bears. Section 139 of the Act
enjoins the Court to presume that the holder of the
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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. Mudibasa
ppa, (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 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,
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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, which
shifted the burden on the complainant to prove his
financial capacity and other facts."
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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
Negotiable Instruments Act. Section 139 of the NI Act
provides that the court shall presume that the holder of a
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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, once it is presumed
that the cheque is issued in whole or in part of any debt or
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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 event where the
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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),
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the presumption 'disappears as a rule of law and the
case is in the Jury's hands free from any rule'."
39. The standard of proof to discharge this evidential
burden is not as heavy as that usually seen in situations
where the prosecution is required to prove the guilt of an
accused. The accused is not expected to prove the non-
existence of the presumed fact beyond a reasonable doubt.
The accused must meet the standard of "preponderance of
probabilities", similar to a defendant in a civil proceeding.
[Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11
SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR
2010 SC 1898]]
24. The version of the complainant regarding the
advancement of the loan was not disputed by the accused, and
the accused claimed that he had returned the amount. The
accused did not step into the witness box to prove his version
that he had returned the amount to the complainant. 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.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
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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).
25. Therefore, learned Courts below had rightly rejected
the version of the accused.
26. It was mentioned by the complainant that the
cheques were issued as security, however, this will not make any
difference. The complainant specifically stated that an amount of
₹12,60,000/- was to be returned, and it was agreed that in case
of failure to return the amount, the cheques would be presented
before the Bank. The accused failed to repay the amount. Hence,
he presented the cheques to the Bank.
27. 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
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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."
28. 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 also 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.
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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 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
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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."
29. 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 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
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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 cheque in proceedings initiated under
Section 138 of the N.I. Act. Therefore, there cannot be a
hard and fast rule that a cheque, which is 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
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not for the drawer of the cheque to dictate terms with
regard to the nature of litigation."
30. Therefore, the accused was rightly held liable based
on the security cheques.
31. The cheques were dishonoured with an endorsement
"insufficient funds". There is a presumption under Section 146
of the NI Act regarding the correctness of the memo of
dishonour. The accused did not lead any evidence to rebut the
presumption, and the learned Courts below had rightly held that
the cheques were dishonoured with endorsement "insufficient
funds".
32. The complainant stated that he had issued a legal
notice (Ex.CW1/G). He produced a postal receipt (Ex.CW1/H) and
tracking report (Ex.CW1/J). Therefore, it was duly proved that
notice was served upon the accused. The complainant stated that
the accused did not pay any amount despite the receipt of a valid
notice of demand. The accused has not claimed that he had paid
any amount after the issuance of the notice. He pleaded that the
amount was paid before the presentation of the cheque, which
plea was not proved.
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33. Therefore, it was duly proved on record that accused
had issued the cheques in favour of the complainant to discharge
his legal liability to repay the amount taken by him as loan, the
cheques were dishonoured with an endorsement "insufficient
funds" and the accused failed to pay the amount despite the
receipt of valid notice of demand. Therefore, all the ingredients
of Section 138 of the NI Act were duly satisfied, and the accused
was rightly convicted by the learned Trial Court, which
conviction was rightly upheld by the learned Appellate Court.
34. The learned Trial Court sentenced the accused to
undergo simple imprisonment for six months. It was laid down
by the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar,
(2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309:
2019 SCC OnLine SC 138 that the penal provision of Section 138 of
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 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."
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35. Hence, the sentence of imprisonment of six months is
not excessive.
36. The transaction had taken place in the year 2019. The
fine was imposed in the year 2024 after a lapse of 5 years.
Learned Appellate Court had rightly pointed out that the
complainant lost the interest on the amount, and he also
incurred expenses on litigation. 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]"
37. Learned Appellate Court awarded an amount of
₹15,60,000/- as compensation. The interest @9% on an amount
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of ₹12,60,000/- for five years is ₹5,67,000/-. Hence, the amount
of ₹3,00,000/- awarded by the learned Appellate Court on the
original amount of ₹12,60,000/- cannot be said to be excessive.
Therefore, no interference is required with the sentence imposed
by the learned Trial Court as modified by the learned Appellate
Court.
38. No other point was urged.
39. In view of the above, the present petition fails, and
the same is dismissed.
(Rakesh Kainthla)
Judge
14th May, 2025
(Rupsi)
