Himachal Pradesh High Court
Lazi Ram Thakur vs Kamlender Rattan (Since Deceased … on 29 October, 2024
( 2024:HHC:10405 )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 257 of 2018
Reserved on: 18.10.2024
Date of Decision: 29.10.2024.
[
Lazi Ram Thakur ...Petitioner
Versus
Kamlender Rattan (since deceased through Lrs) …Respondents
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No
For the Petitioner : Mr. Mohan Sharma, Advocate.
For the Respondents : Mr. Naresh K. Sharma, Advocate,
for respondents No.1(a) to 1(d)
Mr. Ajit Sharma, Deputy Advocate
General, for respondent
No.2/State.
Rakesh Kainthla, Judge
The petitioner has filed the present revision petition
against the judgment dated 29.03.2018 passed by learned
Additional Sessions Judge, Ghumarwin, District Bilaspur, H.P.
(Camp at Bilaspur) (learned Appellate Court) vide which the
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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judgment and order dated 15.09.2015 passed by learned Judicial
Magistrate First Class, Court No.2, Ghumarwin, District
Bilaspur, H.P. (learned Trial Court) were upheld. (The 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 against the
accused for the commission of an offence punishable under
Section 138 of the Negotiable Instruments Act (hereinafter
referred to as NI Act). It was asserted that the complainant is a
permanent resident of Ghumarwin and is running a business of
daily needs items as a wholesaler. He has a Branch Office at
Parwanoo, District Solan, H.P. The accused is running a shop and
was known to the complainant. The accused approached the
complainant to purchase various daily need articles. He
purchased various items in July, August and September. He paid
some amount to the complainant and issued a cheque of
₹1,57,711/- for discharging his remaining liability. The
complainant presented the cheque before his bank and the
cheque was returned with the memo “Exceeds arrangement”.
The complainant issued a notice to the accused asking him to
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pay the amount within 15 days from the date of the receipt of the
notice. The notice was duly served upon the accused but he failed
to pay the amount. Hence, the complaint was filed before the
learned Trial Court.
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, a notice of
accusation was put to him for the commission of an offence
punishable under Section 138 of the NI Act, to which the accused
pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW-1) to prove
his case.
5. The accused in his statement recorded under Section
313 of Cr.P.C. stated that the complainant does not have any
office at Ghumarwin. He only has an office at Parwanoo. He
admitted that he was running a shop in the name of Pooja
Enterprises. He admitted that he used to buy the articles from
the complainant. He stated that he used to make advance
payments and the wrong bills were issued by the complainant.
He had not taken the articles mentioned in the bill from the
accused. He paid the whole amount to the complainant. The
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cheque was handed over to the complainant at the time of the
commencement of the business as a security. He did not receive
any notice and no payment is to be made by him. He examined
Sudhir Ranjan (DW-1).
6. Learned Trial Court held that the accused has not
disputed his signatures on the cheque. There is a presumption of
consideration attached to the cheque. The evidence of the
accused was insufficient to rebut the presumption. Minor
differences in the statement of the complainant and the bills are
not sufficient to discard the complainant’s case. The defence
evidence did not establish that the money was paid to the
complainant as the proof of disbursement of the money was not
brought on record. The notice was dishonoured with an
endorsement “Exceeds arrangement”. The notice was served
upon the accused but he failed to pay the amount. Hence, the
accused was convicted of 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 pay a
compensation of ₹ 2,00,000/- to the complainant.
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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, Ghumarwin,
District Bilaspur (learned Appellate Court). Learned Appellate
Court concurred with the findings recorded by the learned Trial
Court that the cheque carried with it a presumption of
consideration. The accused failed to rebut the presumption by
leading satisfactory evidence. His plea that he had issued the
cheque as security was not proved on record. The statement of
Sudhir Ranjan (DW-1) did not prove the payment of money to
the complainant. Hence, he prayed that the revision be
dismissed.
8. Being aggrieved from the judgments and the order
passed by learned Courts below, the accused has filed the
present revision asserting that learned Courts below failed to
properly appreciate the material placed before them. The
learned Courts below discarded the evidence regarding the
payment made by the complainant to the accused which showed
that the accused had made the payment to the complainant and
nothing was due towards him. The plea of the accused that he
had issued a blank cheque as security was highly probable and
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this was wrongly discarded by learned Courts below. Therefore,
it was prayed that the present revision be allowed and the
judgments and order passed by learned Courts below be set
aside.
9. I have heard Mr. Mohan Sharma, learned counsel for
the petitioner/accused and Mr. Naresh K. Sharma, learned
counsel for legal heirs of the complainant and Mr Ajit Sharma,
learned Deputy Advocate General, for respondents No.2/State.
10. Mr Mohan Sharma, learned counsel for the
petitioner/accused submitted that the learned Courts below
erred in appreciating the material placed before them. The
complainant asserted in his complaint that he had presented the
cheque with his bank at Chandigarh and the bank of the accused
is located at Shimla. The Courts at Ghumarwin had no
jurisdiction to hear and entertain the present complaint.
Learned Trial Court erred in entertaining the complaint and
convicting the accused. Learned First Appellate Court had also
not appreciated this aspect. The statement of Sudhir Ranjan
(DW-1) proved that the money was paid to the complainant by
the accused through a demand draft. Therefore, his plea that he
7
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had paid the money to the complainant and nothing was due to
the complainant was duly established. The statement of Sudhir
Ranjan was not properly appreciated by learned Courts below.
Therefore, he prayed that the present revision be allowed and
the judgments and order passed by learned Courts below be set
aside.
11. Mr. Naresh Kumar Sharma, learned counsel for the
legal heirs of the complainant supported the judgments and
order passed by the learned Courts below and submitted that no
interference is required with them. He submitted that the
statement of Sudhir Ranjan was rightly discarded because he
admitted that he could not depose about the encashment of the
demand draft in the absence of the record. The accused had not
stepped into the witness box to establish the plea taken by him
that the cheque was issued as a security. Hence, he prayed that
the present revision be dismissed. He relied upon the judgments
of this Court in Banshi Ram versus H.P. Co-operative Bank Ltd. Cr.
Revision No. 118 of 2019 decided on 12.01.2024 in support of his
submission.
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12. Mr. Ajit Sharma, learned Deputy Advocate General for
respondent No.2/State adopted the submissions of Mr. Naresh
Kumar Sharma and submitted that no interference is required
with the judgments and order passed by learned Courts below.
13. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
14. 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 court and it can only rectify the patent
defect, errors of jurisdiction or the law. It was observed on page
207: –
“10. Before adverting to the merits of the contentions, at
the outset, it is apt to mention that there are concurrent
findings of conviction arrived at by two courts after a
detailed appreciation of the material and evidence
brought on record. The High Court in criminal revision
against conviction is not supposed to exercise the
jurisdiction like 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
9
( 2024:HHC:10405 )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.
15. 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
refer 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
10
( 2024:HHC:10405 )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.”
16. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
17. It was submitted on behalf of the accused that the
learned Trial Court did not have the jurisdiction as the cheque
was presented at Chandigarh before the bank of the complainant
and it was drawn at Shimla. Therefore, the Courts at Shimla or
Chandigarh will have jurisdiction. This submission will not help
the accused. Section 462 of Cr.P.C. reads that no finding sentence
or order of any criminal Court shall be set aside merely on the
ground that the enquiry trial or further proceedings took place
in a wrong Sessions Division, District, sub-Division or other
11
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local area unless it appears that such error has occasioned a
failure of justice. It was laid down by the Hon’ble Supreme Court
in State of Karnataka v. Kuppuswamy Gownder, (1987) 2 SCC 74:
1987 SCC (Cri) 280 that the judgment passed by a competent
court cannot be set aside on the ground of lack of territorial
jurisdiction. When the plea of lack of territorial jurisdiction is
not taken before the learned Trial Court or the Appellate Court,
such a plea cannot be taken before the High Court. It was
observed at page 79:
“14. The High Court, however, observed that provisions
of Section 465 CrPC cannot be made use of to regularise
this trial. No reasons have been stated for this conclusion.
Section 465 CrPC reads as under:
“Finding or sentence when reversible by reason of
error, omission or irregularity.–(1) Subject to the
provisions hereinbefore contained, no finding,
sentence or order passed by a court of competent
jurisdiction shall be reversed or altered by a court of
appeal, confirmation or revision on account of any
error, omission or irregularity in the complaint,
summons, warrant, proclamation, order, judgment or
other proceedings before or during the trial or in any
inquiry or other proceedings under this Code, or any
error, or irregularity in any sanction for the
prosecution, unless in the opinion of that court, a
failure of justice has in fact been occasioned thereby.
(2) In determining whether any error, omission or
irregularity in any proceeding under this Code, or any
error, or irregularity in any sanction for the
prosecution has occasioned a failure of justice, the
12
( 2024:HHC:10405 )court shall have regard to the fact whether the
objection could and should have been raised at an
earlier stage in the proceedings.”
It is provided that a finding or sentence passed by a court
of competent jurisdiction could not be set aside merely on
the ground of irregularity if no prejudice is caused to the
accused. It is not disputed that this question was neither
raised by the accused at the trial nor any prejudice was
pleaded either at the trial or at the appellate stage and
therefore in the absence of any prejudice such a technical
objection will not affect the order or sentence passed by
the competent court. Apart from Section 465, Section 462
provides for remedy in cases of trial in wrong places.
Section 462 reads as under:
“462. Proceedings in wrong place.–No finding,
sentence or order of any Criminal Court shall be set
aside merely on the ground that the inquiry, trial or
other proceedings in the course of which it was arrived
at or passed, took place in a wrong Sessions Division,
district, sub-division or other local area, unless it
appears that such error has in fact occasioned a failure
of justice.”
This provision even saves a decision if the trial has taken
place in a wrong Sessions Division or sub-division or a
district or other local area and such an error could only be
of some consequence if it results in failure of justice,
otherwise no finding or sentence could be set aside only
on the basis of such an error.
15. It is therefore clear that even if the trial before the III
Additional City Civil and Sessions Judge would have in a
Division other than the Bangalore Metropolitan Area for
which III Additional City Civil and Sessions Judge is also
notified to be a Sessions Judge still the trial could not
have been quashed in view of Section 462. This goes a
long way to show that even if a trial takes place in a wrong
place where the court has no territorial jurisdiction to try
the case still unless failure of justice is pleaded and
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proved, the trial cannot be quashed. In this view of the
matter therefore reading Section 462 alongwith Section
465 clearly goes to show that the scheme of the Code of
Criminal Procedure is that where there is no inherent lack
of jurisdiction merely either on the ground of lack of
territorial jurisdiction or on the ground of any irregularity
of procedure an order or sentence awarded by a
competent court could not be set aside unless a prejudice
is pleaded and proved which will mean failure of justice.
But in the absence of such a plea merely on such technical
grounds, the order or sentence passed by a competent
court could not be quashed.
16. It is not disputed that the plea of prejudice or failure of
justice is neither pleaded nor proved. Not only that, even
the judgment of the High Court does not indicate any
possibility of prejudice or failure of justice. Learned
counsel appearing for the respondent also did not suggest
any possibility of prejudice or failure of justice. Under
these circumstances therefore the view taken by the High
Court does not appear to be correct in view of the
language of Section 462 read with Section 465. The
judgment of the High Court is therefore set aside. The
direction of remand made by the High Court is also
quashed. It is unfortunate that these matters pertaining
to incidents of 1980 should not have been disposed of till
today and that the matter should have remained pending
on such technical grounds for all these years. We
therefore direct that the appeals be remitted back to the
High Court so that they are heard and disposed of on
merits as expeditiously as possible.”
18. In the present case, no failure of justice was shown
by the accused. Therefore, the plea that proceedings were
conducted before the wrong criminal Court is not sufficient to
invalidate the proceedings.
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19. It was submitted that the cheque was issued in the
name of Himalayan Agencies, whereas the complaint was filed
by Kamlender Rattan and not by Himalaya Agencies; hence, the
complaint is not properly instituted. This submission is not
acceptable. It was laid down by the Hon’ble Supreme Court in
Shankar Finance & Investments v. State of A.P., (2008) 8 SCC 536:
(2008) 3 SCC (Cri) 558: 2008 SCC OnLine SC 997, that there is no
distinction in law between a proprietary concern and individual
trading under a trading name. It was observed at page 540: –
10. As contrasted from a company incorporated under the
Companies Act, 1956 which is a legal entity distinct from
its shareholders, a proprietary concern is not a legal
entity distinct from its proprietor. A proprietary concern
is nothing but an individual trading under a trade name.
In civil law where an individual carries on business in a
name or style other than his name, he cannot sue in the
trading name but must sue in his name, though others
can sue him in the trading name. Therefore, if the
appellant in this case had to file a civil suit, the proper
description of the plaintiff should be “Atmakuri Sankara
Rao carrying on business under the name and style of M/s
Shankar Finance & Investments, a sole proprietary
concern”. But we are not dealing with a civil suit. We are
dealing with a criminal complaint to which the special
requirements of Section 142 of the Act apply. Section 142
requires that the complainant should be the payee. The
payee is M/s Shankar Finance & Investments. Therefore,
in a criminal complaint relating to an offence under
Section 138 of the Act, it is permissible to lodge the
complaint in the name of the proprietary concern itself.
15
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11. The next question is where a proprietary concern
carries on business through an attorney holder, and
whether the attorney holder can lodge the complaint. The
attorney holder is the agent of the grantor. When the
grantor authorises the attorney holder to initiate legal
proceedings and the attorney holder accordingly initiates
legal proceedings, he does so as the agent of the grantor
and the initiation is by the grantor represented by his
attorney holder, and not by the attorney holder in his
personal capacity. Therefore where the payee is a
proprietary concern, the complaint can be filed: (i) by the
proprietor of the proprietary concern, describing himself
as the sole proprietor of the “payee”; (ii) the proprietary
concern, describing itself as a sole proprietary concern,
represented by its sole proprietor; and (iii) the proprietor
or the proprietary concern represented by the attorney
holder under a power of attorney executed by the sole
proprietor. It follows that in this case the complaint could
have been validly filed by describing the complainant in
any one of the following four methods:
“Atmakuri Shankara Rao, sole proprietor of M/s
Shankar Finance & Investments”
or
“M/s Shankar Finance & Investments, a sole
proprietary concern represented by its proprietor
Atmakuri Shankara Rao”
or
“Atmakuri Shankara Rao, sole proprietor of M/s
Shankar Finance & Investments, represented by his
attorney holder Thamada Satyanarayana”
or
“M/s Shankar Finance & Investments, a proprietary
concern of Atmakuri Shankara Rao, represented by
his attorney holder Thamada Satyanarayana”.
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What would have been improper is for the attorney holder
Thamada Satyanarayana to file the complaint in his own
name as if he was the complainant.”
20. A similar view was taken in Nexus Health & Beauty
Care (P) Ltd. v. National Electrical Office, 2012 SCC OnLine HP 5383
wherein it was observed: –
“26. The complaint is not happily worded, no doubt, in
the memo of parties the complainant has referred to
complainant ‘M/s National Electrical Office’ but in para 2
it has been pleaded that complainant is providing services
of Industrial Electrical fitting under the name and style of
‘National Electrical’. Again, in the memo of parties,
Subhash Bharwal has been referred to as proprietor but in
para 1 of the complaint, the complainant has described
itself as a firm. In evidence by way of affidavit Ex.CW-1/A,
it has been stated that the complainant is providing
services of Industrial Electrical fitting under the name
and style of ‘National Electrical’. Subhash Pharwal is its
sole proprietor. The cheque Ex.C-1 has been issued in the
name of ‘National Electricals’. The complaint is loosely
drafted. But in the complaint, the complainant has
described itself as ‘National Electrical’ in the body of the
complaint.
27. On the face of the complaint and affidavit Ex. CW-1/A,
prima facie it cannot be said that the complainant is a
firm namely M/s National Electrical Office. The
complainant in the body of the complaint has described
the complainant as ‘National Electrical’ a sole
proprietorship concern of Subhash Bharwal. It will be too
technical to throw out the complaint due to loose
drafting. At this stage, if the pleadings of the petition are
seen the petition is also not less loosely drafted. It starts
with the sentence ‘complainant issued a cheque for Rs.
2.00 lacs’. The complainant did not issue a cheque of Rs.
2,00,000/-. The cheque was allegedly issued by the
17
( 2024:HHC:10405 )accused petitioners. Not only in the opening para of the
petition but in other places also the petitioners have used
loose expressions. In para 3 of the petition before
grounds, it has been pleaded that the “complainant
aggrieved and dissatisfied with the order summoning the
accused and taking cognizance of the case by Judicial
Magistrate, files this petition”. The substance of the
complaint or petition is to be seen and it should not be
thrown out merely on technicalities of loose drafting. It
emerges from the complaint that the complainant is the
‘National Electrical’ sole proprietorship concern of
Subhash Bharwal. In view of Milind Shripad
Chandurkar (supra), it cannot be said that the complaint
is not maintainable.”
21. In the present case the complaint was filed by
Kamlender Rattan as proprietor of Himalayan Agencies,
therefore, the complaint was properly instituted and the same is
not defective.
22. The accused did not dispute the complainant was
running a business of wholesale in the name and style of
Himalayan Agencies. He replied to question No. 2 that the
complainant does not have any office at Ghumarwin and he has
the office at Parwanoo. Thus, the fact that the complainant is a
proprietor of a Himalayan Agency was never in dispute and the
complainant was entitled to file the complaint.
23. The accused admitted in his statement recorded
under Section 313 of Cr.P.C. that he had issued the cheque. He
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claimed that he had issued a blank cheque as security at the time
of entering into transactions with the complainant. The
complainant denied in his cross-examination that the cheque
was issued as a security; rather he stated that the accused issued
a cheque to discharge the liability to pay ₹ 1,57,711/-. A denied
suggestion does not amount to any proof and will not assist the
accused. Therefore, the learned Courts below had rightly held
that the plea of the accused that the cheque was issued towards
the security was not established.
24. In any case, 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 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 Negotiable Instruments Act 1881 if any
cheque is issued on account of other liability then
provisions of Section 138 of 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 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
19
( 2024:HHC:10405 )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.”
25. 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 whether a post-dated cheque is for
“discharge of debt or liability” depends on the nature of
the transaction. If on the date of the cheque, liability or
debt exists or the amount has become legally recoverable,
the section is attracted and not otherwise.
10. Reference to the facts of the present case clearly
shows that though the word “security” is used in Clause
3.1(iii) of the agreement, the said expression refers to the
cheques being towards repayment of instalments. The
repayment becomes due under the agreement, the
moment the loan is advanced and the instalment falls
due. It is undisputed that the loan was duly disbursed on
28-2-2002 which was prior to the date of the cheques.
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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
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 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
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 loan
instalment which had fallen due though such deposit of
cheques towards repayment of instalments was also
described as “security” in the loan agreement. In
applying the judgment in Indus Airways [Indus Airways (P)
Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014)
5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845], one cannot lose
sight of the difference between a transaction of purchase
order which is cancelled and that of a loan transaction
where loan has actually been advanced and its repayment
is due on the date of the cheque.
21
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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 advance payment without there
being 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
discussion of the said cases in the judgment of this
Court.”
26. 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 a waste paper and
complaint under section 138 of the N.I. Act can be filed on its
dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece of
paper under every circumstance. ‘Security’ in its true
sense is the state of being safe and the security given for a
loan is something given as a pledge of payment. It is
given, deposited or pledged to make certain the fulfilment
of an obligation to which the parties to the transaction
are bound. If in a transaction, a loan is advanced and the
borrower agrees to repay the amount in a specified
timeframe and issues a cheque as security to secure such
repayment; if the loan amount is not repaid in any other
form before the due date or if there is no other
understanding or agreement between the parties to defer
the payment of the amount, the cheque which is issued as
security would mature for presentation and the drawee of
the cheque would be entitled to present the same. On such
presentation, if the same is dishonoured, the
consequences contemplated under Section 138 and the
other provisions of N.I. Act would flow.
22
( 2024:HHC:10405 )
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 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 not for the drawer of the
cheque to dictate terms with regard to the nature of
litigation.”
27. The accused admitted in his statement recorded
under Section 313 of Cr. P.C. that he had issued the cheque. He
admitted that he had a business transaction with the
23
( 2024:HHC:10405 )
complainant. Learned Courts below had rightly held that once
the signatures on the cheque were not disputed, the
presumption under Sections 118 and 139 of the NI Act would
arise. 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 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
24
( 2024:HHC:10405 )
section 138 for the discharge, in whole or in part, of
any debt or other liability.
28. 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.”
29. 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
25
( 2024:HHC:10405 )
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
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..”
30. 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
26
( 2024:HHC:10405 )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 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
27
( 2024:HHC:10405 )
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
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.
31. 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:
28
( 2024:HHC:10405 )
“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:
“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 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
29
( 2024:HHC:10405 )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 in the witness box in support of his defence,
Section 139 imposed an evidentiary burden and not
a persuasive burden.
30
( 2024:HHC:10405 )
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
whether 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-
31
( 2024:HHC:10405 )
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.”
32. 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
32
( 2024:HHC:10405 )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…”
33. 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
33
( 2024:HHC:10405 )Complainant/holder of the cheque, in that case, it is for
the accused to prove the contrary.”
34. 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
complainant proves that the cheque was issued/executed
34
( 2024:HHC:10405 )in his favour by the drawer. The circumstances set out
above form the fact(s) which bring about the activation of
the presumptive clause. [Bharat Barrel & Drum Mfg.
Co. v. Amin Chand Payrelal [Bharat Barrel & Drum Mfg.
Co. v. Amin Chand Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of holding
that presumption takes effect even in a situation where
the accused contends that a blank cheque leaf was
voluntarily signed and handed over by him to the
complainant. [Bir Singh v. Mukesh Kumar [Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC
(Civ) 309: (2019) 2 SCC (Cri) 40] ]. Therefore, the mere
admission of the drawer’s signature, without admitting
the execution of the entire contents in the cheque, is now
sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden to
prove that the instrument, say a cheque, was issued by
the accused for discharge of debt, the presumptive device
under Section 139 of the Act helps shifting the burden on
the accused. The effect of the presumption, in that sense,
is to transfer the evidential burden on the accused of
proving that the cheque was not received by the Bank
towards the discharge of any liability. Until this evidential
burden is discharged by the accused, the presumed fact
will have to be taken to be true, without expecting the
complainant to do anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of
Evidence: The Hidden Origins of Modern Law] on Evidence states
as follows:
“The peculiar effect of the presumption of law is
merely to invoke a rule of law compelling the Jury
to reach the conclusion in the absence of evidence
to the contrary from the opponent but if the
opponent does offer evidence to the contrary
(sufficient to satisfy the Judge’s requirement of
some evidence), the presumption ‘disappears as a
35
( 2024:HHC:10405 )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.
[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]]
35. 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.
36. 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 provide any evidence to establish this fact.
Sudhir Ranjan (DW1) has not stated anything about the cheque
being a security. 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:
36
( 2024:HHC:10405 )
“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
issued for consideration.” (Emphasis supplied)”
37. The complainant admitted in his cross-examination
that the cheque was signed in ball pen and was filled in different
ink. It was submitted that this is sufficient to invalidate the
cheque. This submission is not acceptable. It was laid down by
the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019)
4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC
OnLine SC 138, that a person is liable for the commission of an
offence punishable under Section 138 of the NI Act even if the
cheque is filled by some other person. It was observed:
“33. A meaningful reading of the provisions of the
Negotiable Instruments Act including, in particular,
Sections 20, 87 and 139, makes it amply clear that a
person who signs a cheque and makes it over to the payee
remains liable unless he adduces evidence to rebut the
presumption that the cheque had been issued for
payment of a debt or in discharge of a liability. It is
immaterial that the cheque may have been filled in by any
37
( 2024:HHC:10405 )person other than the drawer if the cheque is duly signed
by the drawer. If the cheque is otherwise valid, the penal
provisions of Section 138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a
payee, towards some payment, the payee may fill up the
amount and other particulars. This in itself would not
invalidate the cheque. The onus would still be on the
accused to prove that the cheque was not in discharge of a
debt or liability by adducing evidence.
35. It is not the case of the respondent accused that he
either signed the cheque or parted with it under any
threat or coercion. Nor is it the case of the respondent
accused that the unfilled signed cheque had been stolen.
The existence of a fiduciary relationship between the
payee of a cheque and its drawer, would not disentitle the
payee to the benefit of the presumption under Section 139
of the Negotiable Instruments Act, in the absence of
evidence of exercise of undue influence or coercion. The
second question is also answered in the negative.
36. Even a blank cheque leaf, voluntarily signed and
handed over by the accused, which is towards some
payment, would attract presumption under Section 139 of
the Negotiable Instruments Act, in the absence of any
cogent evidence to show that the cheque was not issued in
discharge of a debt.”
38. This position was reiterated in Oriental Bank of
Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089
wherein it was observed:
“12. The submission which has been urged on behalf of
the appellant is that even assuming, as the first
respondent submits, that the details in the cheque were
not filled in by the drawer, this would not make any
difference to the liability of the drawer.
xxxxxx
38
( 2024:HHC:10405 )
16. A drawer who signs a cheque and hands it over to the
payee, is presumed to be liable unless the drawer adduces
evidence to rebut the presumption that the cheque has
been issued towards payment of a debt or in the discharge
of a liability. The presumption arises under Section 139″
39. Therefore, the cheque is not bad even if it is not filled
by the drawer.
40. The complainant produced the bills (Ext.C-4 and
Ext.C-5) for the amount of ₹72,012/- and ₹36,009/-
respectively. These bills corroborate the version of the
complainant that the accused had taken the articles mentioned
in the bills from him. The accused stated that the bills were false
and the articles were not taken. This plea is not acceptable in the
absence of any evidence and the learned Courts below had
rightly relied upon the bills.
41. Kamlender Rattan (CW-1) stated in his cross-
examination that he had mentioned the amount of the bill as
₹38,009/- in the complaint but the bill (Ext.C-4) was issued for
₹ 36,009/-. He stated that he had mentioned the amount of bill
No. 306 as ₹ 72,002/- in the complaint but the bill (Ext. C-5) was
issued for ₹72,012/-. It was submitted that these discrepancies
in the bill amount and the complaint will make the
complainant’s case suspect. This submission is not acceptable.
39
( 2024:HHC:10405 )
Learned Appellate Court had rightly pointed out that this is a
typographical error which is not sufficient to discard the case of
the complainant.
42. In Uttam Ram v. Devinder Singh Hudan, (2019) 10 SCC
287: (2020) 1 SCC (Cri) 154: (2020) 1 SCC (Civ) 126: 2019 SCC
OnLine SC 1361, the complaint’s case was doubted because of
discrepancy in the number of apple boxes. The Hon’ble Supreme
Court held that there is a presumption of consideration and the
complainant is not required to prove the consideration.
Therefore, any discrepancy will not be fatal. It was observed at
page 293:
“19. A negotiable instrument including a cheque carries a
presumption of consideration in terms of Section 118(a)
and under Section 139 of the Act. Sections 118(a) and 139
read as under:
“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;
***
139. Presumption in favour of holder. –It shall be
presumed, unless the contrary is proved, that the
40
( 2024:HHC:10405 )
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.”
20. The trial court and the High Court proceeded as if, the
appellant is to prove a debt before civil court wherein, the
plaintiff is required to prove his claim on the basis of
evidence to be laid in support of his claim for the recovery
of the amount due. A dishonour of a cheque carries a
statutory presumption of consideration. The holder of the
cheque in due course is required to prove that the cheque
was issued by the accused and that when the same
presented, it was not honoured. Since there is a statutory
presumption of consideration, the burden is on the
accused to rebut the presumption that the cheque was
issued not for any debt or other liability.
21. There is the mandate of presumption of consideration
in terms of the provisions of the Act. The onus shifts to
the accused on proof of issuance of cheque to rebut the
presumption that the cheque was issued not for discharge
of any debt or liability in terms of Section 138 of the Act
which reads as under:
“138. Dishonour of cheque for insufficiency, etc. of funds
in the account.–Where any cheque drawn by a person
on an account maintained by him with a banker for
payment of any amount of money to another person
from out of that account for the discharge, in whole or
in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to
have committed an offence and shall, …”
22. In Kumar Exports [Kumar Exports v. Sharma Carpets,
(2009) 2 SCC 513: (2009) 1 SCC (Civ) 629: (2009) 1 SCC (Cri)
823], it was held that mere denial of the existence of debt
will not serve any purpose but the accused may adduce
41
( 2024:HHC:10405 )
evidence to rebut the presumption. This Court held as
under: (SCC pp. 520-21, para 20)
“20. The accused in a trial under Section 138 of the Act
has two options. He can either show that consideration
and debt did not exist or that under the particular
circumstances of the case, the non-existence of
consideration and debt is so probable that a prudent
man ought to suppose that no consideration and debt
existed. To rebut the statutory presumptions an
accused is not expected to prove his defence beyond
reasonable doubt as is expected of the complainant in a
criminal trial. The accused may adduce direct evidence
to prove that the note in question was not supported by
consideration and that there was no debt or liability to
be discharged by him. However, the court need not
insist in every case that the accused should disprove
the non-existence of consideration and debt by leading
direct evidence because the existence of negative
evidence is neither possible nor contemplated. At the
same time, it is clear that bare denial of the passing of the
consideration and existence of debt, apparently would not
serve the purpose of the accused. Something which is
probable has to be brought on record for getting the
burden of proof shifted to the complainant. To disprove
the presumptions, the accused should bring on record such
facts and circumstances, upon consideration of which, the
court may either believe that the consideration and debt
did not exist or their non-existence was so probable that a
prudent man would under the circumstances of the case,
act upon the plea that they did not exist. Apart from
adducing direct evidence to prove that the note in
question was not supported by consideration or that he
had not incurred any debt or liability, the accused may
also rely upon circumstantial evidence and if the
circumstances so relied upon are compelling, the
burden may likewise shift again on to the complainant.
The accused may also rely upon presumptions of fact,
for instance, those mentioned in Section 114 of the
42
( 2024:HHC:10405 )
Evidence Act to rebut the presumptions arising under
Sections 118 and 139 of the Act.”
(emphasis supplied)
23. In the judgment Kishan Rao v. Shankargouda [Kishan
Rao v. Shankargouda, (2018) 8 SCC 165 : (2018) 4 SCC (Civ)
37 : (2018) 3 SCC (Cri) 544], this Court referring to Kumar
Exports [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513
: (2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823]
and Rangappa [Rangappa v. Sri Mohan, (2010) 11 SCC 441 :
(2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] returned the
following findings : (Kishan Rao case [Kishan
Rao v. Shankargouda, (2018) 8 SCC 165 : (2018) 4 SCC (Civ)
37 : (2018) 3 SCC (Cri) 544], SCC pp. 173-74, para 22)
“22. Another judgment which needs to be looked into
is Rangappa v. Sri Mohan [Rangappa v. Sri Mohan,
(2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC
(Cri) 184]. A three-judge Bench of this Court had
occasion to examine the presumption under Section
139 of the 1881 Act. This Court in the aforesaid case has
held that in the event the accused is able to raise a
probable defence which creates doubt with regard to
the existence of a debt or liability, the presumption
may fail. The following was laid down in paras 26 and
27: (SCC pp. 453-54)
’26. In light of these extracts, we are in agreement
with the respondent claimant that the presumption
mandated by Section 139 of the Act does indeed
include the existence of a legally enforceable debt or
liability. To that extent, the impugned observations
in Krishna Janardhan Bhat [Krishna Janardhan
Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54: (2008)
2 SCC (Cri) 166] may not be correct. However, this
does not in any way cast doubt on the correctness of
the decision in that case since it was based on the
specific facts and circumstances therein. As noted
in the citations, this is of course in the nature of a
rebuttable presumption and it is open to the
43
( 2024:HHC:10405 )accused to raise a defence wherein the existence of
a legally enforceable debt or liability can be
contested. However, there can be no doubt that
there is an initial presumption which favours the
complainant.
27. Section 139 of the Act is an example of a reverse
onus clause that has been included in furtherance of
the legislative objective of improving the credibility
of negotiable instruments. While Section 138 of the
Act specifies a strong criminal remedy in relation to
the dishonour of cheques, the rebuttable
presumption under Section 139 is a device to
prevent undue delay in the course of litigation.
However, it must be remembered that the offence
made punishable by Section 138 can be better
described as a regulatory offence since the
bouncing of a cheque is largely in the nature of a
civil wrong whose impact is usually confined to the
private parties involved in commercial transactions.
In such a scenario, the test of proportionality
should guide the construction and interpretation of
reverse onus clauses and the defendant-accused
cannot be expected to discharge an unduly high
standard of proof.'”
24. In the judgment Bir Singh v. Mukesh Kumar [Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC
(Civ) 309 : (2019) 2 SCC (Cri) 40], this Court held that
presumption under Section 139 of the Act is a
presumption of law. The Court held as under: (SCC pp. 206
& 208-09, paras 20, 33 & 36)
“20. Section 139 introduces an exception to the general
rule as to the burden of proof and shifts the onus on
the accused. The presumption under Section 139 of the
Negotiable Instruments Act is a presumption of law, as
distinguished from a presumption of facts.
Presumptions are rules of evidence and do not conflict
with the presumption of innocence, which requires the
prosecution to prove the case against the accused
44
( 2024:HHC:10405 )
beyond reasonable doubt. The obligation on the
prosecution may be discharged with the help of
presumptions of law and presumptions of fact unless
the accused adduces evidence showing the reasonable
possibility of the non-existence of the presumed fact
as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath
Banerjee, (2001) 6 SCC 16: 2001 SCC (Cri) 960].
***
33. A meaningful reading of the provisions of the
Negotiable Instruments Act including, in particular,
Sections 20, 87 and 139, makes it amply clear that a
person who signs a cheque and makes it over to the
payee remains liable unless he adduces evidence to
rebut the presumption that the cheque had been issued
for payment of a debt or in discharge of a liability. It is
immaterial that the cheque may have been filled in by
any person other than the drawer if the cheque is duly
signed by the drawer. If the cheque is otherwise valid,
the penal provisions of Section 138 would be attracted.
***
36. Even a blank cheque leaf, voluntarily signed and
handed over by the accused, which is towards some
payment, would attract presumption under Section 139
of the Negotiable Instruments Act, in the absence of
any cogent evidence to show that the cheque was not
issued in discharge of a debt.”
25. In other judgment Rohitbhai Jivanlal Patel v. State of
Gujarat [Rohitbhai Jivanlal Patel v. State of Gujarat, (2019)
18 SCC 106: 2019 SCC OnLine SC 389: AIR 2019 SC 1876] this
Court held as under: (SCC paras 15, 17 and 22)
“15. So far the question of the existence of basic
ingredients for drawing of presumption under
Sections 118 and 139 of the NI Act is concerned,
apparent it is that the appellant-accused could not
deny his signature on the cheques in question that
had been drawn in favour of the complainant on a
bank account maintained by the accused for a sum
45
( 2024:HHC:10405 )
of Rs 3 lakhs each. The said cheques were presented
to the bank concerned within the period of their
validity and were returned unpaid for the reason of
either the balance being insufficient or the account
being closed. All the basic ingredients of Section 138
as also of Sections 118 and 139 are apparent on the
face of the record. The trial court had also
consciously taken note of these facts and had drawn
the requisite presumption. Therefore, it is required
to be presumed that the cheques in question were
drawn for consideration and the holder of the
cheques i.e. the complainant received the same in
discharge of an existing debt. The onus, therefore,
shifts on the appellant-accused to establish a
probable defence so as to rebut such a presumption.
***
17. On the aspects relating to a preponderance of
probabilities, the accused has to bring on record such
facts and such circumstances which may lead the Court
to conclude either that the consideration did not exist
or that its non-existence was so probable that a
prudent man would, under the circumstances of the
case, act upon the plea that the consideration did not
exist. This Court has, time and again, emphasised that
though there may not be sufficient negative evidence
which could be brought on record by the accused to
discharge his burden, yet mere denial would not fulfil
the requirements of rebuttal as envisaged under
Sections 118 and 139 of the NI Act….
***
22. The result of the discussion in the foregoing
paragraphs is that the major considerations on which
the trial court chose to proceed clearly show its
fundamental error of approach where, even after
drawing the presumption, it had proceeded as if the
complainant was to prove his case beyond a reasonable
doubt. Such being the fundamental flaw on the part of
46
( 2024:HHC:10405 )
the trial court, the High Court [Shashi Mohan
Goyanka v. State of Gujarat, 2018 SCC OnLine Guj 3674]
cannot be said to have acted illegally or having
exceeded its jurisdiction in reversing the judgment of
acquittal. As noticed hereinabove, in the present
matter, the High Court has conscientiously and
carefully taken into consideration the views of the trial
court and after examining the evidence on the record
as a whole, found that the findings of the trial court are
vitiated by perversity. Hence, interference by the High
Court was inevitable; rather had to be made for a just
and proper decision of the matter.”
43. Thus, the minor discrepancies in the amount of the
bill are not sufficient to discard the version of the complainant.
44. The accused stated in his statement recorded under
Section 313 of Cr.P.C. that he had paid the amount to the
complainant. Sudhir Ranjan (DW-1) proved a demand draft of
₹ 80,000/- & ₹ 50,000/- issued in the name of Himalayan
Agency. He admitted in his cross-examination that he had no
record regarding the encashment of the demand draft. He
volunteered to say that the branch issuing demand draft is
different and the branch paying the amount is different. He also
admitted that a person getting the demand draft issued can get it
cancelled. His testimony shows that even though demand drafts
were issued, there is no evidence that the amount was paid.
47
( 2024:HHC:10405 )
45. Reliance was placed upon his testimony where he
volunteered to say that the demand drafts were encashed.
However, this part of the statement will not help the accused
because he admitted in the subsequent line that he had no record
regarding the encashment of the demand draft. Thus, his
testimony does not prove the payment of the money by the
accused to the complainant.
46. No other evidence was led to show that the cheque
was not issued in the discharge of the legal liability. Thus, the
learned Courts below had rightly held that the accused had failed
to rebut the presumption of consideration attached to the
cheque.
47. The complainant stated that the cheque was
dishonoured with an endorsement “Exceeds arrangement”. This
version is corroborated by the cheque returning memo (Ext. C-3)
wherein the reason for dishonour was mentioned as “Exceeds
Arrangement”. There is a presumption under Section 146 of the
NI Act regarding the correctness of the memo of dishonour and
no evidence was led to rebut this presumption. Hence, the
learned Courts below had rightly held that the cheque was
48
( 2024:HHC:10405 )
dishonoured with an endorsement of Exceeds Arrangement
which would attract the provisions of Section 138 of the NI Act.
48. The complainant stated that he sent the legal notice
to the accused asking him to pay the amount within 15 days of
the receipt of the notice. A perusal of the notice (Ext. C-6) shows
that it was issued at the same address on which the accused was
served. The accused has also given the same address in his
statement under Section 313 of Cr.P.C. before the learned Trial
Court. Therefore, the notice was sent to the correct address and
is deemed to have been served in view of Section 27 of the
General Clauses Act. No evidence was led to rebut this
presumption. Thus, learned Courts below had rightly held that
the notice was deemed to be served upon the accused.
49. In any case, it was laid down in C.C. Allavi Haji vs. Pala
Pelly Mohd. 2007(6) SCC 555 that the person who claims that he
had not received the notice has to pay the amount within 15 days
from the date of the receipt of the summons from the Court and
in case of failure to do so, he cannot take the advantage of the
fact that notice was not received by him. It was observed:
“It is also to be borne in mind that the requirement of
giving of notice is a clear departure from the rule of
49
( 2024:HHC:10405 )Criminal Law, where there is no stipulation of giving of a
notice before filing a complaint. Any drawer who claims
that he did not receive the notice sent by post, can, within 15
days of receipt of summons from the court in respect of the
complaint under Section 138 of the Act, make payment of the
cheque amount and submit to the Court that he had made
payment within 15 days of receipt of summons (by receiving a
copy of the complaint with the summons) and, therefore, the
complaint is liable to be rejected. A person who does not pay
within 15 days of receipt of the summons from the Court
along with the copy of the complaint under Section 138 of the
Act, cannot obviously contend that there was no proper
service of notice as required under Section 138, by ignoring
statutory presumption to the contrary under Section 27 of the
G.C. Act and Section 114 of the Evidence Act. In our view, any
other interpretation of the proviso would defeat the very
object of the legislation. As observed in Bhaskaran’s case
(supra), if the giving of notice in the context of Clause (b)
of the proviso was the same as the receipt of notice a
trickster cheque drawer would get the premium to avoid
receiving the notice by adopting different strategies and
escape from legal consequences of Section 138 of the Act.”
(Emphasis supplied)
50. The accused has not paid any money to the
complainant; hence, it was duly proved that the accused had
failed to pay the money despite the receipt of the notice.
51. Thus, it was duly proved that the cheque was issued
in discharge of legal liability and it was dishonoured with an
endorsement of Exceeds Arrangement and the accused failed to
pay the amount despite the receipt of a valid notice of demand.
Hence, the complainant had succeeded in proving his case
50
( 2024:HHC:10405 )
beyond reasonable doubt and the learned Trial Court had rightly
convicted him for the commission of an offence punishable
under Section 138 of the NI Act.
52. The learned Trial Court had sentenced the accused to
undergo simple imprisonment for six 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
provisions of Section 138 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.”
53. In view of this, the sentence of six months is not
excessive.
54. Learned Trial Court had imposed a compensation of
51
( 2024:HHC:10405 )
₹2,00,000/-. The cheque was issued for an amount of
₹1,57,711/- on 15.10.2009. The learned Trial Court imposed the
sentence on 15.09.2015 after a lapse of about six years. The
complainant lost interest on the amount and he had to pay the
litigation expenses for filing the complaint. He was entitled to be
compensated for the same. It was laid down by the Hon’ble
Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5
SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC
OnLine SC 75 that the Courts should uniformly levy a fine up to
twice the cheque amount along with simple interest at the rate
of 9% per annum. It was observed at page 291: –
19. As regards the claim of compensation raised on behalf
of the respondent, we are conscious of the settled
principles that the object of Chapter XVII of NIA is not
only punitive but also compensatory and restitutive. The
provisions of NIA envision a single window for criminal
liability for the dishonour of a cheque as well as civil
liability for the realisation of the cheque amount. It is also
well settled that there needs to be a consistent approach
towards awarding compensation and unless there exist
special circumstances, the courts should uniformly levy
fines up to 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]”
55. Therefore, the amount of ₹ 2,00,000/- is not
excessive.
52
( 2024:HHC:10405 )
56. Thus, there is no infirmity in the judgments and
order passed by learned Courts below and no interference is
required with them.
57. Consequently, the present revision fails and the same
is dismissed. Records of the learned Courts below be sent back
forthwith.
(Rakesh Kainthla)
Judge
29th October, 2024
(Nikita)