Himachal Pradesh High Court
Reserved On: 7.8.2024 vs Surender Kumar on 27 September, 2024
2024:HHC:9995
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 645 of 2023
Reserved on: 7.8.2024
Date of Decision: 27.9.2024.
Bodh Raj ...Petitioner
Versus
Surender Kumar ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the Petitioner : Mr. J.R. Poswal, Advocate.
For the Respondent : Mr. Vivek Thakur, Advocate, vice
Mr. Vinod Chauhan, Advocate.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 27.2.2023, passed by learned Additional Sessions Judge,
Sundernagar, District Mandi, H.P. (learned Appellate Court),
vide which the judgment dated 1.6.2022 and sentence dated
13.7.2022, passed by learned Judicial Magistrate First Class,
Court No.2, Sundernagar, District Mandi, H.P. (learned Trial
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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Court) were upheld. (Parties shall hereinafter be referred to in the
same manner as they were arrayed before the learned Trial Court for
convenience).
2. Briefly stated, the facts giving rise to the present
revision are that the complainant filed a complaint before the
learned Trial Court against the accused for committing an
offence punishable under Section 138 of the Negotiable
Instruments Act, 1881 (NI Act). It was asserted that the accused
issued a cheque of ₹65,000/- to the complainant for valuable
consideration. The complainant presented the cheque in his
bank; however, it was returned with an endorsement ‘Payment
stopped by the drawer’. The complainant issued a legal notice to
the accused asking him to pay the amount within 15 days from
the date of the receipt of the notice. The accused failed to pay the
amount despite the receipt of a valid notice on demand. Hence,
the complaint was filed against the accused.
3. Learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, a notice of
accusation was put to him for the commission of an offence
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punishable under Section 138 of the NI Act. The accused 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. stated that he had issued a cheque as security to the
complainant because he had borrowed ₹35,000/- from the
complainant. He issued a reply to the notice of the complainant.
He had returned the amount taken by him as a loan. He
demanded the security cheque from the complainant. The
complainant asked him to take a security cheque after one week.
When the accused went to the house of the complainant, the
Coplainant threatened to kill him. He also slapped him. He
stated (the accused) that he wanted to lead defence evidence but
no evidence was led despite repeated opportunities. Hence, the
evidence was closed by the order of the Court on 1.1.2022.
6. Learned Trial Court held that the issuance of the
cheque was not disputed. The defence taken by the accused that
he had issued a security cheque will not help him because
dishonour of a security cheque can give rise to a complaint
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under Section 138 of the NI Act. The accused admitted his
signatures on the cheque and a presumption of consideration
would apply. The accused failed to rebut the presumption. The
cheque was dishonoured with an endorsement ‘Payment
stopped by the drawer’ which would attract the provisions of
Section 138 of the NI Act. The accused did not dispute the receipt
of the notice. All the ingredients of the commission of an offence
punishable under Section 138 of the NI Act were satisfied. Hence,
the accused was convicted of the commission of an offence
punishable under Section 138 of the NI Act and sentenced to
undergo rigorous imprisonment for three months, pay a fine of
₹65,000/- and in default of payment of the fine to further
undergo simple imprisonment for one month.
7. Being aggrieved from the judgment and order passed
by the learned Trial Court, the accused filed an appeal which was
decided by learned Additional Sessions Judge, Sundernagar,
(learned Appellate Court), who concurred with the findings
recorded by the learned Trial Court that the cheque carried with
it a presumption of correctness which presumption was not
rebutted by the accused by leading any cogent evidence. The
cheque was dishonoured with an endorsement ‘payment
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stopped by drawer’ which would attract the provisions of
Section 138 of the NI Act. The plea taken by the accused that the
cheque was issued as a security would not help him. The accused
admitted the receipt of the notice and the ingredients of the
commission of an offence punishable under Section 138 of the NI
Act were duly satisfied. Therefore, the appeal was dismissed.
8. Being aggrieved from the judgments and order
passed by learned Courts below, the petitioner/accused filed the
present revision asserting that learned Courts below failed to
properly appreciate the material placed before them. The
evidence and documents were misread. Reliance was wrongly
placed upon the presumption. Therefore, it was prayed that the
present revision be allowed and the Judgment and order passed
by learned Courts below be set aside.
9. I have heard Mr. J.R. Poswal, learned counsel for the
petitioner and Mr. Vivek Thakur, Advocate, learned counsel for
the respondent.
10. Mr. J.R. Poswal, learned counsel for the petitioner
submitted that the complainant had failed to establish his
financial capacity. The plea taken by him that the cheque was
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issued as security was highly improbable. The learned Trial
Court erred in convicting and sentencing the accused. The
learned Appellate Court erred in affirming the judgment and
order passed by the learned Trial Court. He prayed that the
present revision be allowed and the Judgment and order passed
by learned Courts below be set aside. He relied upon the
judgment of the Kerala High Court in Santhi C. Santhi Bhavan Vs.
Mary Sherly and another (2011) STPL 22030 Kerala and C. Anoop
alias Anu Vs. Krishnappa Narasimhaiah (2024) STPL 4020
Karnataka in support of his submission.
11. Mr. Vivek Thakur, learned counsel for the respondent
supported the judgments and order passed by the learned Courts
below and submitted that no interference is required with them.
12. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
13. It was laid down by the Hon’ble Supreme Court in
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204:
(2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional
court is not an appellate jurisdiction and it can only rectify the
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2024:HHC:9995patent 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 to 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
regularities of any proceeding or order made in a case.
The object of this provision is to set right a patent defect
or an error of jurisdiction or law or the perversity which
has crept into such proceedings. It would be apposite to
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2024:HHC:9995refer to the judgment of this court in 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.”
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15. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
16. The complainant reiterated the contents of the
complaint in his proof affidavit (Ex.CW1/A). He stated in his
cross-examination that the cheque was not issued by the
accused as a security but it was issued for the repayment of the
amount advanced to him. He had not filed any complaint
regarding the dishonour of the cheque except the present
complaint. He was not lending money on interest. He was
working as Safai Karamchari with BBMB. The accused had taken
the money at the time of the illness of his mother. He knew the
accused because the accused was running a business outside the
Bank of India. He used to visit the Bank of India. He denied that
the accused had returned the amount. He denied that the
accused lost the cheque, which he found and he filed a false
complaint. He denied that the accused had returned ₹35,000/-.
He stated that he had not maintained any record of his dealings.
He had paid ₹65,000/- as cash to the accused. He was an income
tax payee.
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17. There is nothing on record in the cross-examination
of this witness to show that he was making a false statement. It
was suggested to him that the accused had lost the cheque and
he found the lost cheque. This is contrary to the plea taken by
the accused in a statement recorded under Section 313 of Cr.P.C.,
wherein he had stated that he had issued the cheque as a
security. The complainant denied this fact in his cross-
examination. A denied suggestion does not amount to any proof
and no evidence was led by the accused to establish the fact that
he had issued the cheque as security. Hence, the judgment of
Kerala High Court in Santhi C. Santhi Bhavan (supra) does not
apply to the present case.
18. It was submitted that the accused is a Safai
Karamchari and is not in a position to lend ₹65,000/-. He had
not filed an income tax return to show his financial capacity.
This submission will not help the accused. It was laid down by
the Hon’ble Supreme Court 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 that the complainant is not to
lead the evidence of his financial capacity unless it is disputed in
reply to the statutory notice. It was observed at page 740:
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10. The trial court and the first appellate court have noted
that in the case under Section 138 of the NI Act the
complainant need not show in the first instance that he
had the capacity. The proceedings under Section 138 of
the NI Act is not a civil suit. At the time, when the
complainant gives his evidence, unless a case is set up in
the reply notice to the statutory notice sent, that the
complainant did not have the wherewithal, it cannot be
expected of the complainant to initially lead evidence to
show that he had the financial capacity. To that extent,
the courts in our view were right in holding on those
lines. However, the accused has the right to demonstrate
that the complainant in a particular case did not have the
capacity and therefore, the case of the accused is
acceptable which he can do by producing independent
materials, namely, by examining his witnesses and
producing documents. It is also open to him to establish
the very same aspect by pointing to the materials
produced by the complainant himself. He can further,
more importantly, achieve this result through the cross-
examination of the witnesses of the complainant.
Ultimately, it becomes the duty of the courts to consider
carefully and appreciate the totality of the evidence and
then come to a conclusion whether in the given case, the
accused has shown that the case of the complainant is in
peril for the reason that the accused has established a
probable defence.
19. The accused has not disputed the issuance of the
cheque in his statement recorded under Section 313 of Cr.P.C. He
claimed that he had issued a cheque as security. Learned Courts
below had rightly held that the presumption of consideration
would apply in such a situation. It was laid down by this Court in
Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C. 398 that
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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 NathBannerji, 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
created by the provision cannot be said to be
rebutted……”
9. S.139 of the Act provides that it shall be presumed
unless the contrary is proved, that the holder of a
cheque received the cheque of nature referred to in
section 138 for the discharge, in whole or in part, of
any debt or other liability.
20. Similar is the judgment in Basalingappa vs.
Mudibasappa 2019 (5) SCC 418 wherein it was held:
“26. Applying the proposition of law as noted above, in
the facts of the present case, it is clear that the signature
on the cheque having been admitted, a presumption shall
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2024:HHC:9995be raised under Section 139 that the cheque was issued in
discharge of debt or liability.”
21. This position was reiterated in Kalamani Tex v. P.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25 : (2021)
2 SCC (Cri) 555: 2021 SCC OnLine SC 75wherein it was held at page
289:
“13. Adverting to the case in hand, we find on a plain
reading of its judgment that the trial court completely
overlooked the provisions and failed to appreciate the
statutory presumption drawn under Section 118 and
Section 139 of NIA. The statute mandates that once the
signature(s) of an accused on the cheque/negotiable
instrument are established, then these “reverse onus”
clauses become operative. In such a situation, the
obligation shifts upon the accused to discharge the
presumption imposed upon him. This point of law has
been crystallised by this Court in Rohitbhai Jivanlal Patel v.
State of Gujarat [Rohitbhai Jivanlal Patel v. State of Gujarat,
(2019) 18 SCC 106, para 18 : (2020) 3 SCC (Civ) 800 : (2020)
3 SCC (Cri) 575] in the following words : (SCC pp. 120-21,
para 18)
“18. In the case at hand, even after purportedly drawing
the presumption under Section 139 of the NI Act, the trial
court proceeded to question the want of evidence on the
part of the complainant as regards the source of funds for
advancing loan to the accused and want of examination of
relevant witnesses who allegedly extended him money for
advancing it to the accused. This approach of the trial
court had been at variance with the principles of
presumption in law. After such presumption, the onus
shifted to the accused and unless the accused had
discharged the onus by bringing on record such facts and
circumstances as to show the preponderance of
probabilities tilting in his favour, any doubt on the
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complainant’s case could not have been raised for want of
evidence regarding the source of funds for advancing loan
to the appellant-accused.”
14. Once the 2nd appellant had admitted his signatures on
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 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..”
22. Similar is the judgment in APS Forex Services (P) Ltd.
v. Shakti International Fashion Linkers (2020) 12 SCC 724, wherein
it was observed: –
7.2. What is emerging from the material on record is that
the issuance of a cheque by the accused and the signature
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
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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 the evidence to
rebut such presumption. The accused was required to lead
evidence that the entire amount due and payable to the
complainant was paid.
9. Coming back to the facts in the present case and
considering the fact that the accused has admitted the
issuance of the cheques and his signature on the cheque
and that the cheque in question was issued for the second
time after the earlier cheques were dishonoured and that
even according to the accused some amount was due and
payable, there is a presumption under Section 139 of the
NI Act that there exists a legally enforceable debt or
liability. Of course, such presumption is rebuttable in
nature. However, to rebut the presumption, the accused
was required to lead the 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 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
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signature on the cheque has been admitted, there is
always a presumption in favour of the complainant that
there exists legally enforceable debt or liability and
thereafter, it is for the accused to rebut such presumption
by leading evidence.
23. Learned Courts below had rightly held that there is a
presumption under Section 139 of the N.I. Act that the cheque
was issued in the discharge of the legal liability. This
presumption was explained by the Hon’ble Supreme Court in
Triyambak S. Hegde v. Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ)
512: 2021 SCC OnLine SC 788 as under at page 747:
“12. From the facts arising in this case and the nature of
the rival contentions, the record would disclose that the
signature on the documents at Exts. P-6 and P-2 are 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 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 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:
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“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 on 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. Mudibasa
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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 in 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 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
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2024:HHC:9995whether any probable defence was raised by the
accused. In 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, copy of which complaint was also
filed as Ext. D-2, there was a burden on the
complainant to prove his financial capacity. In the
years 2010-2011, as per own case of the
complainant, he made a payment of Rs 18 lakhs.
During his cross-examination, when the financial
capacity to pay Rs 6 lakhs to the accused was
questioned, there was no satisfactory reply given by
the complainant. The evidence on record, thus, is a
probable defence on behalf of the accused, which
shifted the burden on the complainant to prove his
financial capacity and other facts.”
16. In that light, it is contended that the very materials
produced by the appellant and the answers relating to
lack of knowledge of property details by PW 1 in his cross-
examination would indicate that the transaction is
doubtful and no evidence is tendered to indicate that the
amount was paid. In such an event, it was not necessary
for the respondent to tender rebuttal evidence but the
case put forth would be sufficient to indicate that the
respondent has successfully rebutted the presumption.
17. On the position of law, the provisions referred to in
Sections 118 and 139 of the NI Act as also the enunciation
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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.”
24. This position was reiterated in Tedhi Singh v. Narayan
Dass Mahant, (2022) 6 SCC 735: (2022) 2 SCC (Cri) 726 : (2022) 3
SCC (Civ) 442: 2022 SCC OnLine SC 302 wherein it was held at
page 739:
“8. It is true that this is a case under Section 138 of the
Negotiable Instruments Act. Section 139 of the NI Act
provides that the court shall presume that the holder of a
cheque received the cheque of the nature referred to in
Section 138 for the discharge, in whole or in part, of 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
21
2024:HHC:9995Act 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…”
25. Similar is the judgment in P. Rasiya v. Abdul Nazer,
2022 SCC OnLine SC 1131 wherein it was observed:
“As per Section 139 of the N.I. Act, it shall be presumed,
unless the contrary is proved, that the holder of a 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 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.”
26. This position was reiterated in Rajesh Jain v. Ajay
Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275 wherein it was
observed at page 161:
22
2024:HHC:9995
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
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
23
2024:HHC:9995
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’.”
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 reasonable doubt.
The accused must meet the standard of “preponderance of
probabilities”, similar to a defendant in a civil proceeding.
24
2024:HHC:9995
[Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11
SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR
2010 SC 1898]]
27. Therefore, the Court has to start with the
presumption that the cheque was issued in discharge of legal
liability and the burden is upon the accused to prove the
contrary.
28. The accused only stated in his statement recorded
under Section 313 of Cr.P.C. that he had issued the cheque as a
security. He did not lead any evidence to establish this fact. It
was held in Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15
SCC 689: 2021 SCC OnLine SC 201 that the accused has to lead
defence evidence to rebut the presumption and mere denial in
his statement under Section 313 of Cr.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 to the accused to
explain the incriminating circumstances appearing in the
prosecution case of the accused. Therefore, there is no
evidence to rebut the presumption that the cheques were
25
2024:HHC:9995issued for consideration.” (Emphasis supplied)”
29. There is nothing in the cross-examination of the
complainant to show that the cheque was not issued in the
discharge of the legal liability. The accused did not lead any
evidence to rebut the presumption. Thus, learned Courts below
had rightly held that the version of the complainant that the
accused had issued the cheque in discharge of the legal liability
was duly proved.
30. The complainant stated that the cheque was issued
with an endorsement ‘Payment stopped by the drawer’. The
memo of dishonour (Ex.CW1/C) reads that the cheque was
dishonoured because the payment was stopped by the drawer.
The memo carries with it a presumption of correctness under
Section 146 of the NI Act and no evidence was produced by the
accused to rebut this presumption. Therefore, the version of the
complainant that the cheque was dishonoured with an
endorsement ‘payment was stopped by the drawer’ has to be
accepted as correct.
31. It was held in Laxmi Dyechem v. State of Gujarat,
(2012) 13 SCC 375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970,
that stopping payment attracts the provisions of Section 138 of
26
2024:HHC:9995
N.I. Act. It was observed at page 388: –
12. In Modi Cements Ltd. [(1998) 3 SCC 249: 1999 SCC (Cri)
252] a similar question had arisen for the consideration of
this Court. The question was whether dishonour of a
cheque on the ground that the drawer had stopped
payment was a dishonour punishable under Section 138 of
the Act. Relying upon two earlier decisions of this Court
in Electronics Trade & Technology Development Corpn.
Ltd. v. Indian Technologists and Engineers (Electronics) (P)
Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] and K.K.
Sidharthan v. T.P. Praveena Chandran [(1996) 6 SCC 369:
1996 SCC (Cri) 1340] , it was contended by the drawer of
the cheque that if the payment was stopped by the
drawer, the dishonour of the cheque could not constitute
an offence under Section 138 of the Act. That contention
was specifically rejected by this Court. Not only that, the
decision in Electronics Trade & Technology Development
Corpn. Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] to the
extent the same held that dishonour of the cheque by the
bank after the drawer had issued a notice to the holder
not to present the same would not constitute an offence,
was overruled. This Court observed: (Modi Cements Ltd.
case [(1998) 3 SCC 249: 1999 SCC (Cri) 252], SCC pp. 257-
58, paras 18 & 20)
“18. The aforesaid propositions in both these reported
judgments, in our considered view, with great respect
are contrary to the spirit and object of Sections 138 and
139 of the Act. If we are to accept this proposition it
will make Section 138 a dead letter, for, by giving
instructions to the bank to stop payment immediately
after issuing a cheque against a debt or liability the
drawer can easily get rid of the penal consequences
notwithstanding the fact that a deemed offence was
committed. Further the following observations in para
6 in Electronics Trade & Technology Development Corpn.
Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] (SCC p. 742)
27
2024:HHC:9995
‘Section 138 intended to prevent dishonesty on the
part of the drawer of negotiable instrument to draw
a cheque without sufficient funds in his account
maintained by him in a bank and induce the payee
or holder in due course to act upon it. Section 138
draws presumption that one commits the offence if he
issues the cheque dishonestly’
in our opinion, do not also lay down the law correctly.
***
20. On a careful reading of Section 138 of the Act, we
are unable to subscribe to the view that Section 138 of
the Act draws presumption of dishonesty against
drawer of the cheque if he without sufficient funds to
his credit in his bank account to honour the cheque
issues the same and, therefore, this amounts to an
offence under Section 138 of the Act. For the reasons
stated hereinabove, we are unable to share the views
expressed by this Court in the above two cases and we
respectfully differ with the same regarding
interpretation of Section 138 of the Act to the limited
extent as indicated above.”
(emphasis in original)
13. We may also at this stage refer to the decisions of this
Court in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P)
Ltd. [(2002) 1 SCC 234: 2002 SCC (Cri) 121] , where too this
Court considering an analogous question held that even
in cases where the dishonour was on account of “stop-
payment” instructions of the drawer, a presumption
regarding the cheque being for consideration would arise
under Section 139 of the Act. The Court observed: (SCC p.
240, para 19)
“19. Just such a contention has been negatived by this
Court in Modi Cements Ltd. v. Kuchil Kumar
Nandi [(1998) 3 SCC 249: 1999 SCC (Cri) 252]. It has
been held that even though the cheque is dishonoured
by reason of ‘stop-payment’ instruction an offence
under Section 138 could still be made out. It is held that
28
2024:HHC:9995
the presumption under Section 139 is attracted in such
a case also. The authority shows that even when the
cheque is dishonoured by reason of ‘stop-payment’
instructions by virtue of Section 139 the court has to
presume that the cheque was received by the holder
for the discharge, in whole or in part, of any debt or
liability. Of course this is a rebuttable presumption.
The accused can thus show that the ‘stop-payment’
instructions were not issued because of insufficiency
or paucity of funds. If the accused shows that in his
account there were sufficient funds to clear the
amount of the cheque at the time of presentation of
the cheque for encashment at the drawer bank and
that the stop-payment notice had been issued because
of other valid causes including that there was no
existing debt or liability at the time of presentation of
cheque for encashment, then offence under Section
138 would not be made out. The important thing is that
the burden of so proving would be on the accused.
Thus, a court cannot quash a complaint on this
ground.”
14. To the same effect is the decision of this Court
in Goaplast (P) Ltd. v. Chico Ursula D’Souza [(2003) 3 SCC
232: 2003 SCC (Cri) 603: 2003 Cri LJ 1723] where this Court
held that “stop-payment instructions” and consequent
dishonour of a post-dated cheque attracts the provision
of Section 138. This Court observed: (SCC pp. 232g-233c)
“Chapter XVII containing Sections 138 to 142 was
introduced in the Act by Act 66 of 1988 with the object
of inculcating faith in the efficacy of banking
operations and giving credibility to negotiable
instruments in business transactions. The said
provisions were intended to discourage people from
not honouring their commitments by way of payment
through cheques. The court should lean in favour of an
interpretation which serves the object of the statute. A
post-dated cheque will lose its credibility and
acceptability if its payment can be stopped routinely. The
29
2024:HHC:9995
purpose of a post-dated cheque is to provide some
accommodation to the drawer of the cheque. Therefore, it
is all the more necessary that the drawer of the cheque
should not be allowed to abuse the accommodation given
to him by a creditor by way of acceptance of a post-dated
cheque.
In view of Section 139, it has to be presumed that a
cheque is issued in the discharge of any debt or other
liability. The presumption can be rebutted by adducing
evidence and the burden of proof is on the person who
wants to rebut the presumption. This presumption
coupled with the object of Chapter XVII of the Act leads to
the conclusion that by countermanding payment of post-
dated cheque, a party should not be allowed to get away
from the penal provision of Section 138 of the Act. A
contrary view would render Section 138 a dead letter and
will provide a handle to persons trying to avoid payment
under legal obligations undertaken by them through
their own acts which in other words can be said to be
taking advantage of one’s own wrong.”
(emphasis supplied)
15. A three-Judge Bench of this Court in Rangappa v. Sri
Mohan [(2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1
SCC (Cri) 184] has approved the above decision and held
that failure of the drawer of the cheque to put up a
probable defence for rebutting the presumption that
arises under Section 139 would justify conviction even
when the appellant drawer may have alleged that the
cheque in question had been lost and was being misused
by the complainant.
16. The above line of decisions leaves no room for holding
that the two contingencies envisaged under Section 138 of
the Act must be interpreted strictly or literally. We find
ourselves in respectful agreement with the decision
in Magma case [(1999) 4 SCC 253: 1999 SCC (Cri) 524] that
the expression “amount of money … is insufficient”
appearing in Section 138 of the Act is a genus and
30
2024:HHC:9995dishonour for reasons such “as account closed”,
“payment stopped”, “referred to the drawer” are only
species of that genus. Just as dishonour of a cheque on the
ground that the account has been closed is a dishonour
falling in the first contingency referred to in Section 138,
so also dishonour on the ground that the “signatures do
not match” or that the “image is not found”, which too
implies that the specimen signatures do not match the
signatures on the cheque would constitute a dishonour
within the meaning of Section 138 of the Act:
xxxxxx
22. We have to bear in mind that the legislature while
incorporating the provisions of Chapter XVII, Sections 138
to 142 inserted in the NI Act [by the Banking, Public
Financial Institutions and Negotiable Instruments Laws
(Amendment) Act, 1988] intends to punish only those
who know fully well that they have no amount in the bank
and yet issue a cheque in discharge of debt or liability
already borrowed/incurred–which amounts to cheating,
and not to punish those who refused to discharge the debt
for bona fide and sustainable reason. It is in this context
that this Hon’ble Court in the matter of M.M.T.C.
Ltd. v. Medchl Chemicals and Pharma (P) Ltd. [(2002) 1 SCC
234 : 2002 SCC (Cri) 121] was pleased to hold that cheque
dishonour on account of drawer’s stop-payment
instruction constitutes an offence under Section 138 of
the NI Act but it is subject to the rebuttable presumption
under Section 139 of the NI Act as the same can be
rebutted by the drawer even at the first instance. It was
held therein that in order to escape liability under Section
139, the accused has to show that dishonour was not due
to insufficiency of funds but there was valid cause,
including absence of any debt or liability for the stop-
payment instruction to the bank. The specific
observations of the Court in this regard may be quoted for
ready reference which are as follows: (SCC p. 240, para 19)
“19. … The authority shows that even when the cheque
is dishonoured by reason of stop-payment
31
2024:HHC:9995
instructions by virtue of Section 139 the court has to
presume that the cheque was received by the holder
for the discharge, in whole or in part, of any debt or
liability. Of course this is a rebuttable presumption.
The accused can thus show that the ‘stop-payment’
instructions were not issued because of insufficiency
or paucity of funds. If the accused shows that in his
account there were sufficient funds to clear the
amount of the cheque at the time of presentation of
the cheque for encashment at the drawer bank and
that the stop-payment notice had been issued because
of other valid causes including that there was no
existing debt or liability at the time of presentation of
cheque for encashment, then offence under Section
138 would not be made out. The important thing is that
the burden of so proving would be on the accused.
Thus a court cannot quash a complaint on this
ground.”
Therefore, complaint filed in such a case although might
not be quashed at the threshold before trial, heavy onus
lies on the court issuing summons in such cases as the
trial is summary in nature.
23. In Goaplast (P) Ltd. v. Chico Ursula D’Souza [(2003) 3
SCC 232 : 2003 SCC (Cri) 603 : 2003 Cri LJ 1723] also this
Court had held that ordinarily the stop-payment
instruction is issued to the bank by the account-holder
when there is no sufficient amount in the account. But, it
was also observed therein that the reasons for stopping
the payment can be manifold which cannot be
overlooked. Hence, in view of Section 139, it has to be
presumed that a cheque is issued in discharge of any debt
or other liability. But the presumption can be rebutted by
adducing evidence and the burden of proof is on the
person who wants to rebut the presumption. However,
this presumption coupled with the object of Chapter XVII
of the Act leads to the conclusion that by countermanding
payment of post-dated cheque, a party should not be
allowed to get away from the penal provision of Section
32
2024:HHC:9995
138 of the Act. Therefore, in order to hold that the stop-
payment instruction to the bank would not constitute an
offence, it is essential that there must have been
sufficient funds in the accounts in the first place on the
date of signing of the cheque, the date of presentation of
the cheque, the date on which stop-payment instructions
were issued to the bank. Hence, in Goaplast [(2003) 3 SCC
232 : 2003 SCC (Cri) 603 : 2003 Cri LJ 1723] matter, when
the Magistrate had disallowed the application in a case of
“stop payment” to the bank without hearing the matter
merely on the ground that there was no dispute about the
dishonour of the cheque issued by the accused, since the
signature was admitted and therefore held that no
purpose would be served in examining the Bank Manager
since the dishonour was not in issue, this Court held that
examination of the Bank Manager would have enabled the
Court to know on what date stop-payment order was sent
by the drawer to the bank clearly leading to the obvious
inference that stop payment although by itself would be
an offence, the same is subject to rebuttal provided there
were sufficient funds in the account of the drawer of the
cheque.
xxxx
28. What is wished to be emphasised is that matters
arising out of “stop-payment” instruction to the bank
although would constitute an offence under Section 138 of
the NI Act since this is no longer res integra, the same is
an offence subject to the provision of Section 139 of the
Act and hence, where the accused fails to discharge his
burden of rebuttal by proving that the cheque could be
held to be a cheque only for discharge of a lawful debt, the
offence would be made out. Therefore, the cases arising
out of stop-payment situation where the drawer of
cheques has sufficient funds in his account and yet stops
payment for bona fide reasons, the same cannot be put on
a par with other variety of cases where the cheque has
bounced on account of insufficiency of funds or where it
exceeds the amount arranged to be paid from that
33
2024:HHC:9995
account, since Section 138 cannot be applied in isolation
ignoring Section 139 which envisages a right of rebuttal
before an offence could be made out under Section 138 of
the Act as the legislature already incorporates the
expression “unless the contrary is proved” which means
that the presumption of law shall stand and unless it is
rebutted or disproved, the holder of a cheque shall be
presumed to have received the cheque of the nature
referred to in Section 138 of the NI Act, for the discharge
of a debt or other liability. Hence, unless the contrary is
proved, the presumption shall be made that the holder of
a negotiable instrument is holder in due course.”
32. Therefore, the submission that the endorsement of
‘payment stopped by the drawer’ will not attract the provisions
of Section 138 of the NI Act cannot be accepted.
33. The accused did not dispute the receipt of the notice.
He stated in his statement recorded under Section 313 of Cr.P.C.
that he had replied to the notice. Thus, the receipt of the notice
is also proved.
34. Thus, it was duly proved that the cheque was issued
in discharge of the legal liability and it was dishonoured due to
insufficient funds and the accused failed to make the payment
despite the receipt of a valid notice of demand; hence, the
complainant had succeeded in proving his its case beyond the
reasonable doubt and the learned Trial Court had rightly
34
2024:HHC:9995
convicted him of the commission of offence punishable under
Section 138 of the NI Act.
35. The learned Trial Court had sentenced the accused to
undergo rigorous imprisonment for three months. The
legislature had introduced the offence of dishonour of cheques
to instil confidence in the public about the transactions carried
with the cheque. 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 138of the NI Act is a 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..”
36. Section 138 of the NI Act provides that the accused
can be punished for imprisonment for a term which may extend
to two years or with a fine which may extend to twice the
amount of the cheque or with both. It does not provide for
35
2024:HHC:9995
rigorous imprisonment and the learned Trial Court erred in
imposing rigorous imprisonment. Hence, the sentence imposed
by the learned Trial Court is to be modified and rigorous
imprisonment is to be substituted by simple imprisonment.
37. Learned Trial Court awarded the compensation of
₹65,000/- which was the cheque amount. The accused could
have been sentenced to pay double the cheque amount. It was
laid down by the Hon’ble Supreme Court in Kalamani Tex v. P.
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2
SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should
uniformly levy a fine up to twice the cheque amount along with
simple interest at the rate of 9% per annum. It was observed at
page 291: –
19. As regards the claim of compensation raised on behalf
of the respondent, we are conscious of the settled
principles that the object of Chapter XVII of NIA is not
only punitive but also compensatory and restitutive. The
provisions of NIA envision a single window for criminal
liability for the dishonour of a cheque as well as civil
liability for the realisation of the cheque amount. It is also
well settled that there needs to be a consistent approach
towards awarding compensation and unless there exist
special circumstances, the courts should uniformly levy
fines up to twice the cheque amount along with simple
interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260,
para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]”
36
2024:HHC:9995
38. However, the complainant has not filed any appeal
for enhancement of the sentence and therefore, the amount
cannot be enhanced in view of the proviso to Section 386(b) of
Cr.P.C.
39. It was submitted that the learned Trial Court erred in
imposing the sentence of imprisonment in case of default in the
payment of compensation. This submission cannot be accepted.
It was laid down by the Hon’ble Supreme Court in K.A. Abbas v.
Sabu Joseph, (2010) 6 SCC 230: (2010) 3 SCC (Civ) 744: (2010) 3 SCC
(Cri) 127: 2010 SCC OnLine SC 612 that the Courts can impose
sentence of imprisonment in default of payment of
compensation. It was observed at page 237:
“20. Moving over to the question, whether a default
sentence can be imposed on default of payment of
compensation, this Court in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127] and in Balraj v. State of U.P. [(1994) 4 SCC 29: 1994
SCC (Cri) 823: AIR 1995 SC 1935], has held that it was open
to all the courts in India to impose a sentence on default
of payment of compensation under sub-section (3) of
Section 357. In Hari Singh v. Sukhbir Singh [(1988) 4 SCC
551: 1988 SCC (Cri) 984: AIR 1988 SC 2127], this Court has
noticed certain factors which required to be taken into
consideration while passing an order under the section:
(SCC p. 558, para 11)
“11. The payment by way of compensation must,
however, be reasonable. What is reasonable, may
37
2024:HHC:9995depend upon the facts and circumstances of each case.
The quantum of compensation may be determined by
taking into account the nature of the crime, the
justness of claim by the victim and the ability of the
accused to pay. If there is more than one accused, they
may be asked to pay on equal terms unless their
capacity to pay varies considerably. The payment may
also vary depending upon the acts of each accused. A
reasonable period for payment of compensation, if
necessary, by instalments, may also be given. The
court may enforce the order by imposing sentence in
default.”
21. This position also finds support in R. v. Oliver John
Huish [(1985) 7 Cri App R (S) 272]. The Lord Justice Croom
Johnson speaking for the Bench has observed:
“When compensation orders may possibly be made the
most careful examination is required. Documents
should be obtained and evidence either on affidavit or
orally should be given. The proceedings should, if
necessary, be adjourned, in order to arrive at the true
state of the defendant’s affairs.
Very often a compensation order is made and a very
light sentence of imprisonment is imposed, because
the court recognizes that if the defendant is to have an
opportunity of paying the compensation he must be
enabled to earn the money with which to do so. The
result is therefore an extremely light sentence of
imprisonment. If the compensation order turns out to
be virtually worthless, the defendant has got off with a
very light sentence of imprisonment as well as no
order of compensation. In other words, generally
speaking, he has got off with everything.”
22. The law laid down in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127] was reiterated by this Court in Suganthi Suresh
Kumar v. Jagdeeshan [(2002) 2 SCC 420: 2002 SCC (Cri)
344]. The Court observed: (SCC pp. 424-25, paras 5 & 10)
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“5. In the said decision this Court reminded all
concerned that it is well to remember the emphasis
laid on the need for making liberal use of Section
357(3) of the Code. This was observed by reference to a
decision of this Court in Hari Singh v. Sukhbir
Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127]. In the said decision this Court held as follows:
(SCC p. 558, para 11)
’11. … The quantum of compensation may be
determined by taking into account the nature of the
crime, the justness of claim by the victim and the
ability of the accused to pay. If there is more than
one accused, they may be asked to pay on equal
terms unless their capacity to pay varies
considerably. The payment may also vary
depending upon the acts of each accused. A
reasonable period for payment of compensation, if
necessary, by instalments, may also be given. The
court may enforce the order by imposing sentence in
default.’
(emphasis in original)
***
10. That apart, Section 431 of the Code has only
prescribed that any money (other than fine) payable by
virtue of an order made under the Code shall be
recoverable ‘as if it were a fine’. Two modes of
recovery of the fine have been indicated in Section
421(1) of the Code. The proviso to the sub-section says
that if the sentence directs that in default of payment
of the fine, the offender shall be imprisoned, and if
such offender has undergone the whole of such
imprisonment in default, no court shall issue such
warrant for the levy of the amount.”
The Court further held: (Jagdeeshan case [(2002) 2 SCC
420: 2002 SCC (Cri) 344], SCC p. 425, para 11)
“11. When this Court pronounced in Hari
Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri)
39
2024:HHC:9995
984: AIR 1988 SC 2127] that a court may enforce an
order to pay compensation ‘by imposing a sentence in
default’ it is open to all courts in India to follow the
said course. The said legal position would continue to
hold good until it is overruled by a larger Bench of this
Court. Hence learned Single Judge of the High Court of
Kerala has committed an impropriety by expressing
that the said legal direction of this Court should not be
followed by the subordinate courts in Kerala. We
express our disapproval of the course adopted by the
said Judge in Rajendran v. Jose [(2001) 3 KLT 431]. It is
unfortunate that when the Sessions Judge has correctly
done a course in accordance with the discipline the
Single Judge of the High Court has incorrectly reversed
it.”
23. In order to set at rest the divergent opinion expressed
in Ahammedkutty case [(2009) 6 SCC 660 : (2009) 3 SCC
(Cri) 302], this Court in Vijayan v. Sadanandan K. [(2009) 6
SCC 652 : (2009) 3 SCC (Cri) 296], after noticing the
provision of Sections 421 and 431 CrPC, which dealt with
mode of recovery of fine and Section 64 IPC, which
empowered the courts to provide for a sentence of
imprisonment on default of payment of fine, the Court
stated: (Vijayan case [(2009) 6 SCC 652 : (2009) 3 SCC (Cri)
296], SCC p. 658, para 24)
“24. We have carefully considered the submissions
made on behalf of the respective parties. Since a
decision on the question raised in this petition is still
in a nebulous state, there appear to be two views as to
whether a default sentence of imprisonment can be
imposed in cases where compensation is awarded to
the complainant under Section 357(3) CrPC. As pointed
out by Mr Basant in Dilip S. Dahanukar case [(2007) 6
SCC 528 : (2007) 3 SCC (Cri) 209], the distinction
between a fine and compensation as understood under
Section 357(1)(b) and Section 357(3) CrPC had been
explained, but the question as to whether a default
sentence clause could be made in respect of
40
2024:HHC:9995
compensation payable under Section 357(3) CrPC,
which is central to the decision in this case, had not
been considered.”
The Court further held: (Vijayan case [(2009) 6 SCC 652 :
(2009) 3 SCC (Cri) 296], SCC p. 659, paras 31-32)
“31. The provisions of Sections 357(3) and 431 CrPC,
when read with Section 64 IPC, empower the court,
while making an order for payment of compensation,
to also include a default sentence in case of non-
payment of the same.
32. The observations made by this Court in Hari Singh
case [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC
2127] are as important today as they were when they
were made and if, as submitted by Dr. Pillay, recourse
can only be had to Section 421 CrPC for enforcing the
same, the very object of sub-section (3) of Section 357
would be frustrated and the relief contemplated
therein would be rendered somewhat illusory.”
24. In Shantilal v. State of M.P. [(2007) 11 SCC 243 : (2008) 1
SCC (Cri) 1], it is stated, that, the sentence of
imprisonment for default in payment of a fine or
compensation is different from a normal sentence of
imprisonment. The Court also delved into the factors to be
taken into consideration while passing an order under
Section 357(3) CrPC. This Court stated: (SCC pp. 255-56,
para 31)
“31. … The term of imprisonment in default of payment
of a fine is not a sentence. It is a penalty which a person
incurs on account of non-payment of a fine. The
sentence is something which an offender must
undergo unless it is set aside or remitted in part or in
whole either in appeal or in revision or other
appropriate judicial proceedings or ‘otherwise’. A term
of imprisonment ordered in default of payment of a
fine stands on a different footing. A person is required
to undergo imprisonment either because he is unable
to pay the amount of fine or refuses to pay such
41
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amount. He, therefore, can always avoid to undergo
imprisonment in default of payment of fine by paying
such amount. It is, therefore, not only the power but
the duty of the court to keep in view the nature of the
offence, circumstances under which it was committed,
the position of the offender and other relevant
considerations before ordering the offender to suffer
imprisonment in default of payment of a fine.”
(emphasis in original)
25. In Kuldip Kaur v. Surinder Singh [(1989) 1 SCC 405: 1989
SCC (Cri) 171: AIR 1989 SC 232] in the context of Section 125
CrPC observed that sentencing a person to jail is
sometimes a mode of enforcement. In this regard, the
Court stated: (SCC p. 409, para 6)
“6. A distinction has to be drawn between a mode of
enforcing recovery on the one hand and effecting
actual recovery of the amount of monthly allowance
which has fallen in arrears on the other. Sentencing a
person to jail is a ‘mode of enforcement’. It is not a
‘mode of satisfaction’ of the liability. The liability can be
satisfied only by making actual payment of the arrears.
The whole purpose of sending to jail is to oblige a
person liable to pay the monthly allowance who
refuses to comply with the order without sufficient
cause, to obey the order and to make the payment. The
purpose of sending him to jail is not to wipe out the
liability which he has refused to discharge. Be it also
realised that a person ordered to pay a monthly
allowance can be sent to jail only if he fails to pay the
monthly allowance ‘without sufficient cause’ to
comply with the order. It would indeed be strange to
hold that a person who ‘without reasonable cause’
refuses to comply with the order of the court to
maintain his neglected wife or child would be absolved
of his liability merely because he prefers to go to jail. A
sentence of jail is no substitute for the recovery of the
amount of monthly allowance which has fallen in
arrears.”
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26. From the above line of cases, it becomes very clear,
that, a sentence of imprisonment can be granted for
default in payment of compensation awarded under
Section 357(3) CrPC. The whole purpose of the provision is
to accommodate the interests of the victims in the
criminal justice system. Sometimes the situation becomes
such that there is no purpose served by keeping a person
behind bars. Instead directing the accused to pay an
amount of compensation to the victim or affected party
can ensure delivery of total justice. Therefore, this grant
of compensation is sometimes in lieu of sending a person
behind bars or in addition to a very light sentence of
imprisonment. Hence on default of payment of this
compensation, there must be a just recourse. Not
imposing a sentence of imprisonment would mean
allowing the accused to get away without paying the
compensation and imposing another fine would be
impractical as it would mean imposing a fine upon
another fine and therefore would not ensure proper
enforcement of the order of compensation. While passing
an order under Section 357(3), it is imperative for the
courts to look at the ability and the capacity of the accused
to pay the same amount as has been laid down by the
cases above, otherwise, the very purpose of granting an
order of compensation would stand defeated.
40. This position was reiterated in R. Mohan v. A.K. Vijaya
Kumar, (2012) 8 SCC 721: (2012) 4 SCC (Civ) 585: (2012) 3 SCC (Cri)
1013: 2012 SCC OnLine SC 486 wherein it was observed at page
729:
29. The idea behind directing the accused to pay
compensation to the complainant is to give him
immediate relief so as to alleviate his grievance. In terms
of Section 357(3), compensation is awarded for the loss or
injury suffered by the person due to the act of the accused
for which he is sentenced. If merely an order directing
43
2024:HHC:9995compensation is passed, it would be totally ineffective. It
could be an order without any deterrence or apprehension
of immediate adverse consequences in case of its non-
observance. The whole purpose of giving relief to the
complainant under Section 357(3) of the Code would be
frustrated if he is driven to take recourse to Section 421 of
the Code. Order under Section 357(3) must have the
potentiality to secure its observance. Deterrence can only
be infused into the order by providing for a default
sentence. If Section 421 of the Code puts compensation
ordered to be paid by the court on a par with the fine so far
as the mode of recovery is concerned, then there is no
reason why the court cannot impose a sentence in default
of payment of compensation as it can be done in case of
default in payment of fine under Section 64 IPC. It is
obvious that in view of this, in Vijayan [(2009) 6 SCC 652:
(2009) 3 SCC (Cri) 296], this Court stated that the
abovementioned provisions enabled the court to impose a
sentence in default of payment of compensation and
rejected the submission that the recourse can only be had
to Section 421 of the Code for enforcing the order of
compensation. Pertinently, it was made clear that
observations made by this Court in Hari Singh [(1988) 4
SCC 551: 1988 SCC (Cri) 984] are as important today as they
were when they were made. The conclusion, therefore, is
that the order to pay compensation may be enforced by
awarding a sentence in default.
30. In view of the above, we find no illegality in the order
passed by the learned Magistrate and confirmed by the
Sessions Court in awarding a sentence in default of
payment of compensation. The High Court was in error in
setting aside the sentence imposed in default of payment
of compensation.
41. Thus, there is no infirmity in the order passed by the
learned Trial Court imposing a sentence of imprisonment in case
of default in the payment of compensation.
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42. No other point was urged.
43. Therefore, the judgments and order passed by
learned Courts below are partly sustainable.
44. In view of the above, the present revision is partly
allowed and the sentence of rigorous imprisonment imposed by
the learned Trial Court is ordered to be substituted by simple
imprisonment. The rest of the judgments and order passed by
learned Courts below are upheld.
45. The pending applications, if any, are also disposed of.
46. Registry is directed to transmit the records of the
case forthwith.
(Rakesh Kainthla)
Judge
27th September, 2024
(Chander)