Himachal Pradesh High Court
Dalel Singh Patial vs Sarwans Kaur Chopra on 4 July, 2025
Neutral Citation No. ( 2025:HHC:21187 ) IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Revision No.4135 of 2013 .
Reserved on: 24.06.2025
Date of Decision: 04.07.2025
Dalel Singh Patial ...Petitioner
Versus
Sarwans Kaur Chopra
r ...Respondent
Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 Yes For the Petitioner : Mr. B.P. Sharma, Sr. Advocate, with Mr. Arun Kumar, Advocate.
For the Respondent : Ms. Devyani Sharma, Sr. Advocate, with Mr. Srishti Negi, Advocate.
Rakesh Kainthla, Judge The petitioner has filed the present petition against the judgment dated 05.07.2013 passed by learned Additional Sessions Judge, Ghumarwin, District Bilaspur (learned Appellate Court) vide which the judgment of conviction dated 02.03.2010 and order of sentence dated 03.03.2010 passed by learned Judicial Magistrate, First Class Court No.1 Ghumarwin (learned Trial 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 04/07/2025 21:31:37 :::CISPage |2 Neutral Citation No. ( 2025:HHC:21187 ) 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 petition are that the complainant filed a complaint against the accused before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short, 'NI Act'). It was asserted that the complainant is running a business of a petrol pump in the name and style of M/s Sai Filling Station at VPO Naswal, Tehsil Ghumarwin, District Bilaspur, H.P. The accused is a contractor. He purchased the diesel from the complainant's Petrol pump for his vehicles w.e.f. 07.10.2006 to 29.01.2007. He made the part payments for the diesel purchased by him. An amount of ₹6,16,310/- was calculated as outstanding with interest till 31.01.2007. The accused issued a cheque for ₹6,16,310/- drawn on Punjab National Bank in favour of the complainant to discharge his legal liability. The complainant presented the cheque to the bank, but it was dishonoured with an endorsement 'insufficient funds'. The complainant sent a notice to the accused, asking him to pay the amount within 15 days of the receipt of the notice of ::: Downloaded on - 04/07/2025 21:31:37 :::CIS Page |3 Neutral Citation No. ( 2025:HHC:21187 ) demand. The notice was duly served upon the accused, but the accused failed to pay the amount; hence, the complaint was filed .
to take action against the accused as per the law.
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 punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined herself (CW1), Mansa Ram (CW2), and Rajeev Singh (CW3).
5. The accused in his statement recorded under section 313 of Cr.P.C. admitted that a notice was served upon him. He stated that he had no concern with the case; therefore, he had not sent any reply to the notice. He denied the rest of the complainant's case. He stated that his cheques were misplaced and he had reported this fact to the police. A false case was made against him. The statements of Om Prakash (DW-1) and the accused (DW-2) were recorded in defence.
6. Learned Trial court held that the plea taken by the accused that he had misplaced the signed cheques was not ::: Downloaded on - 04/07/2025 21:31:37 :::CIS Page |4 Neutral Citation No. ( 2025:HHC:21187 ) believable. The accused did not dispute his signatures on the cheque and a presumption under Sections 118 (a) and 139 of the NI .
Act would arise that the cheque was issued in discharge of the legal liability. The accused made a complaint to the police on 12.01.2007 and to the Bank on 15.01.2007, however, there was nothing on record to show that the letter was delivered to the Bank. The statement of account showed that the money in the account of the accused was not sufficient to honour the cheque.
The accused admitted the receipt of the notice. He failed to pay the amount; hence, he was convicted of the commission of an offence punishable under Section 138 of the NI Act and was sentenced to undergo simple imprisonment for 06 months, pay a fine of ₹5,000/-, compensation of ₹7,50,000/- and in default of payment of fine to undergo further simple imprisonment for one month.
7. Being aggrieved by the judgment and order passed by the learned Trial Court, the accused filed an appeal which was decided by the learned Additional Sessions Judge Ghumarwin, District Bilaspur, H.P. (learned Appellate Court). Learned Appellate Court concurred with the findings recorded by the learned Trial Court that the signatures on the cheque were not disputed, and a presumption under Sections 118 (a) and 139 of the ::: Downloaded on - 04/07/2025 21:31:37 :::CIS Page |5 Neutral Citation No. ( 2025:HHC:21187 ) NI Act would arise. The explanation provided by the accused that he had misplaced the signed cheques was not believable. The .
accused received the legal notice but did not send any reply to it.
The cheque was dishonoured with an endorsement 'funds insufficient'. All the ingredients of Section 138 of the NI Act were satisfied. The sentence was adequate, and no interference was required with it.
8. Being aggrieved from the judgments and order passed by the learned Courts below, the accused has filed the present revision, asserting that the learned Courts below erred in appreciating the material on record. The cheque was not issued in discharge of the debt. The accused had lodged an FIR regarding the loss of the cheque. The learned Courts below did not examine the question whether the cheque was filled by the petitioner/accused. The defence that the blank cheque was taken by the complainant was highly probable, and learned Courts below erred in rejecting it. The complainant did not produce any record of the sale of petrol/diesel, and the learned Courts below erred in drawing the presumption; therefore, it was prayed that the present revision be allowed and judgments and order passed by the learned Courts below be set aside.
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9. An application (Cr.MP No. 2590/2023) under Section 142 of the NI Act for compounding the complaint was filed. It was .
asserted that the accused agreed with the complainant's husband to compromise the matter. He executed a gift deed in favour of the complainant's husband. It was agreed that the complainant would withdraw the complaint as compromised; however, the complainant, instead of withdrawing the complaint, is insisting on an early hearing of the matter. The continuation of the proceedings amounts to an abuse of the process of the Court;
therefore, it was prayed that the present petition be allowed and the complaint be disposed of as compromised.
10. The application is opposed by filing a reply making a preliminary submission regarding the lack of maintainability. The contents of the application were denied on merits. It was asserted that no compensation was paid to the complainant either in cash or kind. The parties agreed to settle the matter, and an agreement dated 27.06.2017 was executed between them. The accused agreed to pay a sum of ₹4,50,000/- to the complainant. The accused had no money, so he agreed to sell his share in 10 bighas for a sum of ₹4,50,000/-. The sale deed was to be executed on or before 31.12.2020, and in case of failure, the rebate of ₹3,00,000/- was ::: Downloaded on - 04/07/2025 21:31:37 :::CIS Page |7 Neutral Citation No. ( 2025:HHC:21187 ) not to be granted to him. A post-dated cheque was also given to the complainant, which was dishonoured; hence, the terms and .
conditions of the compromise have not been fulfilled. The gift deed is regarding some other land. The complainant was also made to withdraw the civil suit filed by her for the recovery of the amount of the cheque; therefore, it was prayed that the present application be dismissed.
11. A rejoinder denying the contents of the reply and affirming those of the application was filed.
12. I have heard Mr. B.P. Sharma, learned Senior Counsel, assisted by Mr. Arun Kumar, learned counsel for the petitioner, and Ms. Devyani Sharma, learned Senior Counsel, assisted by Ms. Srishti Negi, learned counsel for the respondent/complainant.
13. Mr. B.P. Sharma, learned Senior Counsel for the petitioner/accused, submitted that the matter has been compromised between the parties. The accused executed a gift deed in favour of the complainant's husband, and the complainant had agreed to withdraw the complaint filed by her. She is not adhering to her promise; therefore, it was prayed that the application for composition be allowed and the complaint be ::: Downloaded on - 04/07/2025 21:31:37 :::CIS Page |8 Neutral Citation No. ( 2025:HHC:21187 ) dismissed as compromised. He submitted in the alternative that the complaint was not maintainable. The cheque was issued on .
28.01.2007 for the amount due on 31.01.2007. This was impermissible because the future liability could not have been calculated by the parties; even otherwise, the cheque has to be issued for existing debt/liability and not for the future liability.
Learned Courts below failed to appreciate this aspect. The version of the accused that a signed cheque was lost by him was highly probable, and learned Courts below erred in rejecting it; therefore, it was prayed that the present revision be allowed and the judgments and order passed by learned Courts below be set aside.
14. Ms. Devyani Sharma, learned Senior Counsel for the respondent/complainant, submitted that no compromise was effected between the parties. The gift deed was executed by the accused in favour of the complainant's husband out of love and affection. A complaint cannot be compounded without the consent of the complainant; therefore, she prayed that the present application be dismissed. She submitted that the learned Courts below had rightly appreciated the evidence on record, and this Court should not interfere with the concurrent finding of fact while exercising the revisional jurisdiction. Learned Courts below ::: Downloaded on - 04/07/2025 21:31:37 :::CIS Page |9 Neutral Citation No. ( 2025:HHC:21187 ) had rightly held that the accused had manipulated the documents to wriggle out of his liability and the plea regarding the loss of the .
cheque was rightly rejected. Otherwise also, this plea is highly improbable because the accused being a contractor will not deal with the cheques so lightly, as to put his signatures on the blank cheque. There is no infirmity in the judgments and order passed by learned courts below; hence, she prayed that the present revision be dismissed. She relied upon A.S. Pharma Pvt. Ltd. vs. Nayati Medical Pvt. Ltd and ors, 2024 SCC Online SC 2539 and Soft Touch Computer vs. State of Maharashtra and ors, 2014 (2) MWN (Cr.) DCC 39 (Bom.) in support of her submission.
15. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
16. 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 at 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 10 Neutral Citation No. ( 2025:HHC:21187 ) on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like the appellate court, and the scope of interference in revision .
is extremely narrow. Section 397 of the Criminal Procedure Code (in short "CrPC") vests jurisdiction to satisfy itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error which is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.
17. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294, wherein it was observed:
"13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C., which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularity of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 11 Neutral Citation No. ( 2025:HHC:21187 ) 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."
18. It was held in Kishan Rao v. Shankargouda, (2018) 8 SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine SC 651 that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. It was observed on page 169:
"12. This Court has time and again examined the scope of Sections 397/401 CrPC and the ground for exercising the ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 12 Neutral Citation No. ( 2025:HHC:21187 ) revisional jurisdiction by the High Court. In State of Kerala v. Puttumana Illath Jathavedan Namboodiri [State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 .
SCC 452: 1999 SCC (Cri) 275], while considering the scope of the revisional jurisdiction of the High Court, this Court has laid down the following: (SCC pp. 454-55, para 5) "5. ... In its revisional jurisdiction, the High Court can call for and examine the record of any proceedings for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order. In other words, the jurisdiction is one of supervisory jurisdiction exercised by the High Court for correcting a miscarriage of justice. But the said revisional power cannot be equated with the power of an appellate court, nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its own conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to a gross miscarriage of justice. On scrutinising the impugned judgment of the High Court from the aforesaid standpoint, we have no hesitation in coming to the conclusion that the High Court exceeded its jurisdiction in interfering with the conviction of the respondent by reappreciating the oral evidence. ..."
13. Another judgment which has also been referred to and relied on by the High Court is the judgment of this Court in Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke [Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke, (2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court held that the High Court, in the exercise of revisional jurisdiction, shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 13 Neutral Citation No. ( 2025:HHC:21187 ) view is possible. The following has been laid down in para 14: (SCC p. 135) "14. ... Unless the order passed by the Magistrate is .
perverse or the view taken by the court is wholly unreasonable or there is non-consideration of any relevant material or there is palpable misreading of records, the Revisional Court is not justified in setting aside the order, merely because another view is possible. The Revisional Court is not meant to act as an appellate court. The whole purpose of the revisional jurisdiction is to preserve the power in the court to do justice in accordance with the principles of criminal jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, the courts may not interfere with the decision in exercise of their revisional jurisdiction."
14. In the above case, also conviction of the accused was recorded, and the High Court set aside [Dattatray Gulabrao Phalke v. Sanjaysinh Ramrao Chavan, 2013 SCC OnLine Bom 1753] the order of conviction by substituting its own view. This Court set aside the High Court's order holding that the High Court exceeded its jurisdiction in substituting its views, and that too without any legal basis.
19. This position was reiterated in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:
"16. It is well settled that in exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 14 Neutral Citation No. ( 2025:HHC:21187 ) upset concurrent factual findings. It is not for the Revisional Court to re-analyse and re-interpret the evidence on record.
17. As held by this Court in Southern Sales & .
Services v. Sauermilch Design and Handels GmbH [Southern Sales & Services v. Sauermilch Design and Handels GmbH, (2008) 14 SCC 457], it is a well-established principle of law that the Revisional Court will not interfere even if a wrong order is passed by a court having jurisdiction, in the absence of a jurisdictional error. The answer to the first question is therefore, in the negative."
20. The present revision has to be decided as per the
21.
r to parameters laid down by the Hon'ble Supreme Court.
Before adverting to the merits of the case, it is necessary to dispose of the application seeking the composition of the offence. This application is opposed by the complainant. It was rightly submitted on behalf of the complainant that the complaint can be compounded only with the consent of the complainant and not otherwise.
22. It was laid down by the Hon'ble Supreme Court in JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255: (2012) 2 SCC (Civ) 82: (2012) 2 SCC (Cri) 125: 2012 SCC OnLine SC 104 that the offence punishable under section 138 of NI Act cannot be compounded without the consent of the complainant. It was observed:
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 15 Neutral Citation No. ( 2025:HHC:21187 ) "82. A perusal of Section 320 makes it clear that the provisions contained in Section 320 and the various sub-
sections are a code by itself relating to the compounding of .
offences. It provides for the various parameters, procedures, and guidelines in the matter of compounding. If this Court upholds the contention of the appellant that as a result of the incorporation of Section 147 in the NI Act, the entire gamut of procedure of Section 320 of the Code is made inapplicable to the compounding of an offence under the NI Act, in that case, the compounding of an offence under the NI Act will be left totally unguided or uncontrolled. Such an interpretation, apart from being an absurd or unreasonable one, will also be contrary to the provisions of Section 4(2) of the Code, which has been discussed above. There is no other statutory procedure for the compounding of an offence under the NI Act. Therefore, Section 147 of the NI Act must be reasonably construed to mean that as a result of the said section the offences under the NI Act are made compoundable, but the main principle of such compounding, namely, the consent of the person aggrieved or the person injured or the complainant cannot be wished away nor can the same be substituted by virtue of Section 147 of the NI Act." (emphasis supplied)
23. This judgment was considered in Raj Reddy Kallem v. State of Haryana (2024) 8 SCC 588, and it was held that where both sides agree to compound the offence, there can be no difficulty in compounding the offence, however, if the complainant does consent to the compromise, the Court cannot compel him to give consent even if he has been adequately compensated. It was observed:-
"21. All the same, in this particular given case, even though the complainant has been duly compensated by the accused, ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 16 Neutral Citation No. ( 2025:HHC:21187 ) the complainant does not agree to the compounding of the offence, the courts cannot compel the complainant to give "consent" for compounding of the matter. It is also true .
that mere repayment of the amount cannot mean that the appellant is absolved from the criminal liabilities under Section 138 of the NI Act."
24. It was held in A.S. Pharma (P) Ltd. v. Nayati Medical (P) Ltd., 2024 SCC OnLine SC 2539, that the Court could not quash the complaint under Section 138 of the NI Act in the exercise of its inherent jurisdiction without the consent of the complainant based on the fact that the complainant has been adequately compensated. It was observed:-
"15. In the contextual situation, it is relevant to refer to a recent decision of this Court in Raj Reddy Kallem v. The State of Haryana [2024 INSC 347]. The said decision would reveal that this Court took note of earlier decisions of this Court in JIK Industries Ltd. case (supra) as also in the decision in Meters and Instruments Private Ltd. v. Kanchan Mehta [(2018) 1 SCC 560] and in un-ambiguous terms held that for compounding the offence under Section 138, N.I. Act, the 'consent' of the complainant is required. In Kanchan Mehta's case (supra), even after referring to the decision in JIK Industries Ltd. Case (supra), this Court held that even in the absence of 'consent', the Court could close criminal proceedings against an accused in a case under Section 138, N.I. Act, if the accused had compensated the complainant. It was held therein thus:--
18.3. Though compounding requires the consent of both parties, even in the absence of such consent, the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can, in its ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 17 Neutral Citation No. ( 2025:HHC:21187 ) discretion, close the proceedings and discharge the accused.
16. But then, it is to be noted that later a five-judge .
Constitution Bench in Expeditious Trial of Cases Under Section 138, N.I. Act, 1881, In re, (2021) 16 SCC 116 held that observation in Kanchan Mehta's decision giving discretion to the trial Court "to close the proceedings and discharge the accused", by reading Section 258, Cr. P.C., which confers the power to stop proceedings in certain cases, is 'not a good law'. In Raj Reddy Kallem's case (supra), after referring to the above positions, this Court further observed that even in Kanchan Mehta's case (supra) nowhere it was never contemplated that 'compounding' could be done without the 'consent' of the parties. It is worthwhile to note at this juncture that in Raj Reddy Kallem's case, this Court drew a nice distinction between 'quashing of a case' and 'compounding an offence'. To drive that point home, this Court referred to the decision in the JIK Industries Ltd. case (supra), where this Court distinguished the quashing of a case from compounding as hereunder:--
"Quashing of a case is different from compounding. In quashing, the Court applies it, but in compounding, it is primarily based on the consent of the injured party. Therefore, the two cannot be equated."
17. It is in the aforesaid circumstances that we hold that the question whether the offence under Section 138 of the NI Act could be compounded by invoking the power under Section 147, N.I. Act, without the consent of the complainant concerned, is no longer res integra. In short, the position is that an offence under Section 138, the NI Act, could be compounded under Section 147 thereof, only with the consent of the complainant concerned. In that view of the matter, the impugned judgment of the High Court, wherein, despite the absence of the consent of the appellant-complainant, compounded the offence under Section 138, N.I. Act, on the ground that the appellant was equitably compensated, could not be sustained.
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18. In the context of the issues involved, another aspect of the matter also requires consideration. The decision in Raj Reddy Kallem's case (supra) also stands on a similar footing .
inasmuch as the complainant therein was duly compensated by the accused, but the complainant did not agree for compounding the offence. After observing that, the Courts could not compel the complainant to give consent for compounding the offence under Section 138, N.I. Act, this Court in Raj Reddy Kallem's case (supra) took note of the peculiar factual situation obtained and invoked the power under Section 142 of the Constitution of India to quash the proceeding pending against the appellant-accused under Section 138, N.I. Act. True that in Raj Reddy Kallem's case, it was despite the non-consent of the complainant- respondent that the proceedings were quashed against the appellant therein, inter alia, taking note of the fact that the accused therein had compensated the complainant and furthermore deposited the additional amount, as has been ordered by this Court. We have no doubt in holding that merely because taking into account such aspects and circumstances, this Court 'quashed' the proceedings by invocation of the power under Article 142 of the Constitution of India, cannot be a reason for 'compounding' an offence under Section 138, N.I. Act, invoking the power under Section 482, Cr. P.C. and the power under Section 147, N.I. Act, in the absence of the consent of the complainant concerned, in view of the decision referred to hereinbefore. In this context, this is to be noted that the fact that this Court quashed the proceedings under Section 138, N.I. Act, invoking the power under Article 142 of the Constitution of India, can be no reason at all for High Courts to pass an order quashing a proceeding under Section 138, N.I. Act, on similar lines as the power under Article 142 of the Constitution of India is available only to the Supreme Court of India. In this context, it is relevant to refer to the three-judge Bench of this Court in State of Punjab v. Surinder Kumar [(1992) 1 SCC 489], this Court in paragraphs 6 to 8 therein held thus: --
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6. A decision is available as a precedent only if it decides a question of law. The respondents are, therefore, not entitled to rely upon an order of this Court which directs a .
temporary employee to be regularised in his service without assigning reasons. It has to be presumed that, for special grounds which must have been available to the temporary employees in those cases, they were entitled to the relief granted. Merely because grounds are not mentioned in a judgment of this Court, it cannot be understood to have been passed without an adequate legal basis therefor. On the question of the requirement to assign reasons for an order, a distinction has to be kept in mind between a court whose judgment is not subject to further appeal and other courts. One of the main reasons for disclosing and discussing the grounds in support of a judgment is to enable a higher court to examine the same in case of a challenge. It is, of course, desirable to assign reasons for every order or judgment, but the requirement is not imperative in the case of this Court. It is, therefore, futile to suggest that if this Court has issued an order which apparently seems to be similar to the impugned order, the High Court can also do so. There is still another reason why the High Court cannot be equated with this Court. The Constitution has, by Article 142, empowered the Supreme Court to make such orders as may be necessary "for doing complete justice in any case or matter pending before it", which authority the High Court does not enjoy. The jurisdiction of the High Court, while dealing with a writ petition, is circumscribed by the limitations discussed and declared by the judicial decisions, and it cannot transgress the limits on the basis of whims or a subjective sense of justice varying from Judge to Judge.
7. It is true that the High Court is entitled to exercise its judicial discretion in deciding writ petitions or civil revision applications but this discretion has to be confined to declining to entertain petitions and refusing to grant relief, asked for by petitioners, on adequate ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 20 Neutral Citation No. ( 2025:HHC:21187 ) considerations; and it does not permit the High Court to grant relief on such a consideration alone.
8. We, therefore, reject the argument addressed on behalf .
of the respondents that the High Court was entitled to pass any order which it thought fit in the interest of justice. Accordingly, we set aside the impugned order and allow the appeal, but in the circumstances without costs.
19. The upshot of the discussion is that the High Court had clearly fallen into error in invoking the power under Section 482, Cr. P.C., as also the power under Section 147, N.I. Act, to compound the offence under Section 138 of the N.I. Act qua the respondent-accused. Hence, the impugned judgment to the extent it compounded the offence under Section 138, N.I. Act invoking the inherent power under Section 482, Cr. P.C. and the power under Section 147, N.I. Act stands quashed and set aside." (Emphasis supplied).
25. Therefore, it is impermissible to quash the complaint as having been compromised without the consent of the complainant.
26. Even otherwise, the accused is relying upon the gift deed (Annexure-A1) executed by him in favour of the complainant's husband on 04.5.2017. It was specifically mentioned in the gift deed that the donee was maintaining and looking after the donor, and the donor executed a gift deed in favour of the donee out of his natural love and affection. Thus, the gift deed was out of natural love and affection because the donee was maintaining the donor; hence, the plea taken by the accused ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 21 Neutral Citation No. ( 2025:HHC:21187 ) that the gift deed was related to the present litigation cannot be accepted.
.
27. It was submitted that the signatures of the accused were obtained on the gift deed, and it was not read over and explained to him. This submission is not acceptable. No steps were taken by the accused to set aside the gift deed on the ground of misrepresentation or fraud. There is an endorsement of the Sub-
Registrar that the gift deed was read over and explained to the donee, who accepted it to be correct. This endorsement carries with it a presumption of correctness under Section 60(3) of the Registration Act, and the burden was upon the accused to rebut the same. Since he has not taken any steps to get the gift deed set aside; hence, his plea that the contents of the gift deed were not read over and explained to him cannot be accepted.
28. The complainant produced an Agreement (Annexure R1) dated 27.06.2017, executed by the parties, in which it was agreed that the Cr. Revision No.4135 of 2013 would be disposed of as per the settlement arrived at between the parties. It was agreed that 10 bighas of land would be sold by the accused to the complainant for a consideration of ₹4,50,000/- on or before ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 22 Neutral Citation No. ( 2025:HHC:21187 ) 31.12.2020, and in case the sale deed was not executed until that day, the rebate of ₹3,00,000/- would be withdrawn. The accused .
had also handed over a cheque to the complainant.
29. This agreement does not mention the execution of the gift deed dated 04.05.2017, executed by the accused in favour of the complainant's husband. Had the matter been settled as per the gift deed, the Agreement would have mentioned this fact specifically. The failure to mention this fact shows that the gift deed was not executed in relation to the present revision;
therefore, it is impermissible to dismiss the complaint as having been compromised between the parties. Consequently, the present application fails, and the same is dismissed.
30. The accused, while appearing as DW-2, stated that he lost a chequebook containing signed cheques bearing Sr. Nos.
716791 to 716800. He reported the matter to the Police Station, Ghumarwin on 12.01.2007. He forwarded a copy of the police report and the application dated 15.01.2007 to the Branch Manager, PNB, Bilaspur. This plea clearly shows that the accused has not disputed his signatures on the cheque. It was laid down by this Court in Naresh Verma vs. Narinder Chauhan 2020(1) ShimLC ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 23 Neutral Citation No. ( 2025:HHC:21187 ) 398 that where the accused had not disputed his signatures on the cheque, the Court has to presume that it was issued in discharge of .
legal liability and the burden would shift upon the accused to rebut the presumption. It was observed: -
"8. Once signatures on the cheque are not disputed, the plea with regard to the cheque having not been issued towards discharge of lawful liability, rightly came to be rejected by learned Courts below. Reliance is placed upon Hiten P. Dalal v. Bartender Nath Bannerji, 2001 (6) SCC 16, wherein it has been held as under:
"The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when, upon the material before it, the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption 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.
31. 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 24 Neutral Citation No. ( 2025:HHC:21187 ) discharge of debt or liability."
32. This position was reiterated in Kalamani Tex v. P. .
Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 wherein it was held at page 289:
"14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such an approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law."
33. 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 25 Neutral Citation No. ( 2025:HHC:21187 ) accused issued cheques which came to be dishonoured on the ground of "insufficient funds" and thereafter a fresh consolidated cheque of ₹9,55,574 was given which has been .
returned unpaid on the ground of " STOP PAYMENT".
Therefore, the cheque in question was issued for the second time. Therefore, once the accused has admitted the issuance of a cheque which bears his signature, there is a presumption that there exists a legally enforceable debt or liability under Section 139 of the NI Act. However, such a presumption is rebuttable in nature, and the accused is required to lead evidence to rebut such presumption. The accused was required to lead evidence that the entire amount due and payable to the complainant was paid.
9. Coming back to the facts in the present case and considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature. However, to rebut the presumption, the accused was required to lead evidence that the full amount due and payable to the complainant had been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption, and more particularly, the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists a legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both the learned trial court as well as the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 26 Neutral Citation No. ( 2025:HHC:21187 ) 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."
34. The presumption under Section 139 of the NI Act was explained by the Hon'ble Supreme Court in Triyambak S. Hegde v.
788 as under at page 747:
r to Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ) 512: 2021 SCC OnLine SC "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 the holder. --It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
13. Insofar as the payment of the amount by the appellant in the context of the cheque having been signed by the respondent, the presumption for passing of the consideration would arise as provided under Section 118(a) of the NI Act, which reads as hereunder:
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 27 Neutral Citation No. ( 2025:HHC:21187 ) "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 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. Mudibasap pa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held as hereunder: (SCC pp. 432-33, paras 25-26) ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 28 Neutral Citation No. ( 2025:HHC:21187 ) "25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this .
Court in the following manner:
25.1. Once the execution of the cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption, and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come into the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come into the witness box to support his defence.
26. Applying the preposition of law as noted above, in the facts of the present case, it is clear that the signature on the cheque, having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In the cross-examination of PW 1, when the specific question was put that a cheque was issued in relation to a loan of Rs 25,000 taken by the accused, PW 1 said ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 29 Neutral Citation No. ( 2025:HHC:21187 ) that he does not remember. PW 1 in his evidence admitted that he retired in 1997, on which date he received a monetary benefit of Rs 8 lakhs, which was .
encashed by the complainant. It was also brought in evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs 4,50,000 to Balana Gouda towards sale consideration. Payment of Rs 4,50,000 being admitted in the year 2010 and further payment of loan of Rs 50,000 with regard to which Complaint No. 119 of 2012 was filed by the complainant, a copy of which complaint was also filed as Ext. D-2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per own case of the complainant, he made a payment of Rs 18 lakhs.
During his cross-examination, when the financial capacity to pay Rs 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts."
16. In that light, it is contended that the very materials produced by the appellant and the answers relating to lack of knowledge of property details by PW 1 in his cross-
examination would indicate that the transaction is doubtful, and no evidence is tendered to indicate that the amount was paid. In such an event, it was not necessary for the respondent to tender rebuttal evidence, but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption.
17. On the position of law, the provisions referred to in Sections 118 and 139 of the NI Act, as also the enunciation of law as made by this Court, need no reiteration as there is no ambiguity whatsoever. In Basalingappav. Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571] relied on by the learned counsel for the respondent, though on facts the ultimate conclusion ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 30 Neutral Citation No. ( 2025:HHC:21187 ) 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."
35. 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 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 31 Neutral Citation No. ( 2025:HHC:21187 ) been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist..."
.
36. 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."
37. 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 32 Neutral Citation No. ( 2025:HHC:21187 )
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 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 33 Neutral Citation No. ( 2025:HHC:21187 ) 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 a reasonable doubt.
The accused must meet the standard of "preponderance of probabilities", similar to a defendant in a civil proceeding. [Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR 2010 SC 1898]]
38. Therefore, the Court has to start with the presumption that the cheque was issued for consideration in discharge of the legal liability, and the burden is upon the accused to rebut the presumption.
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 34 Neutral Citation No. ( 2025:HHC:21187 )
39. The accused claimed that he had lost signed cheques bearing Sr. Nos 716791 to 716800. He made a report to this effect .
on 12.01.2007. The report (Ext. DW1/A) reads that the accused had produced an affidavit asserting that he came to Ghumarwin to make a payment to a customer and lost cheques bearing Sr. Nos.
716791 to 716800 bearing his signatures. Learned Courts below had rightly pointed out that the accused, being a Contractor, is not supposed to deal with the cheques so lightly, as to keep the signed cheque with him. The plea taken by him in the affidavit that he was supposed to make the payment of some money to the contractor at Ghumarwin, and this was the reason that he had kept the signed cheques with him, is not plausible. He was visiting Ghumarwin, and when he was to fill in the amount, he could have put the signatures on the cheques as well. Further, the cheque was dishonoured with an endorsement 'funds insufficient' and not with the endorsement 'payment stopped by the drawer'. The memo of dishonour bears the date 07.02.2007, which was after the intimation given to the police and the Bank. Had any intimation been given to the Bank, the cheque would have been dishonoured with an endorsement 'Payment stopped by the drawer', and not with 'insufficient funds'.
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 35 Neutral Citation No. ( 2025:HHC:21187 )
40. Statement of account (Ext. CW2/A) does not show that the payment of the remaining cheques was not made. Mansa Ram-
.
Manager, PNB (CW2), was not asked regarding the payment of other cheques stated to have been lost by the accused. In the absence of any evidence that the payment of the cheques mentioned in the report made to the police was not made, his plea that he had lost the chequebook containing his signed cheques cannot be accepted.
41. Subsequent conduct of the accused also does not support his version that the cheque was issued without any consideration. He settled the matter with the complainant for ₹4,50,000/-. He claimed that he had gifted the land to the complainant's husband regarding this transaction. He would not have settled the matter with the complainant or her husband if the chequebook had been lost. He has not taken any action against his Bank for dishonouring the cheque with endorsement 'funds insufficient' when he had informed the bank about the loss of the cheque, vide his letter (Ext. D3). Thus, the learned Courts below had rightly doubted the version of the accused that he had lost the cheque book and had intimated the Bank regarding the loss.
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 36 Neutral Citation No. ( 2025:HHC:21187 )
42. It was submitted that the complaint mentions that a cheque dated 28.01.2007 was issued for the transaction up to .
31.01.2007. The cheque has to be issued for existing liability and not for the future liability; hence, the cheque does not fall within the purview of Section 138 of the N.I. Act. This submission is not acceptable. Para 2 of the complaint mentions that interest and balance were calculated up to 31.01.2007, for which the accused issued a cheque for ₹6,10,310/-. A similar statement was made in the affidavit (Ext. CW1/A); hence, the interest liability was calculated till 31.01.2007. Since the future interest can always be calculated, therefore, there can be no infirmity in the calculation of the interest made by the parties.
43. The cheque was presented before the Bank of the accused on 07.02.2007. The liability of ₹6,16,310/- was calculated till 31.01.2007, and the accused had a subsisting liability on the date of the presentation of the cheque; hence, the plea that the accused had no subsisting liability on the date of the presentation of the cheque cannot be accepted.
44. It was submitted that the complainant had failed to produce the bills of sale, and the learned Courts below erred in ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 37 Neutral Citation No. ( 2025:HHC:21187 ) relying upon her version. This submission is only stated to be rejected. It was laid down by Hon'ble Surpeme Court 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,, that the complainant is not supposed to prove the existence of consideration because of the presumption contained in Section 139 of the NI Act. It was observed:
"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 the holder. --It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability."
20. The trial court and the High Court proceeded as if the appellant were to prove a debt before the 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 38 Neutral Citation No. ( 2025:HHC:21187 ) 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 was .
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 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.
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 39 Neutral Citation No. ( 2025:HHC:21187 ) To rebut the statutory presumptions, an accused is not expected to prove his defence beyond a 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 onto the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 40 Neutral Citation No. ( 2025:HHC:21187 ) 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 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 41 Neutral Citation No. ( 2025:HHC:21187 ) 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 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 42 Neutral Citation No. ( 2025:HHC:21187 ) 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 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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 43 Neutral Citation No. ( 2025:HHC:21187 ) 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 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."
"20. The Trial Court and the High Court proceeded as if the appellant were to prove a debt before a civil court, wherein ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 44 Neutral Citation No. ( 2025:HHC:21187 ) 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. 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 was 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."
45. A similar view was taken in Rohitbhai Jivanlal Patel v.
State of Gujarat (2019) 18 SCC 106, and it was held that once a presumption has been drawn, the onus shifts to the accused. It was observed: -
12. According to the the learned counsel for the appellant-
accused, the impugned judgment is contrary to the principles laid down by this Court in Arulvelu [Arulvelum v. State, (2009) 10 SCC 206 : (2010) 1 SCC (Cri) 288] because the High Court has set aside the judgment of the trial court without pointing out any perversity therein. The said case of Arulvelu [Arulvelum v. State, (2009) 10 SCC 206 : (2010) 1 SCC (Cri) 288] related to the offences under Sections 304-B and 498-A IPC. Therein, on the scope of the powers of the appellate court in an appeal against acquittal, this Court observed as follows : (SCC p. 221, para 36) "36. Careful scrutiny of all these judgments leads to the definite conclusion that the appellate court should be very slow in setting aside a judgment of acquittal, particularly in a case where two views are possible. The trial court judgment cannot be set aside because the appellate court's view is more probable. The appellate court would not be justified in setting aside the trial court judgment unless it arrives at a clear finding on marshalling the entire evidence on record that the ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 45 Neutral Citation No. ( 2025:HHC:21187 ) judgment of the trial court is either perverse or wholly unsustainable in law."
The principles aforesaid are not of much debate. In other .
words, ordinarily, the appellate court will not be upsetting the judgment of acquittal, if the view taken by the trial court is one of the possible views of the matter and unless the appellate court arrives at a clear finding that the judgment of the trial court is perverse i.e. not supported by evidence on record or contrary to what is regarded as normal or reasonable; or is wholly unsustainable in law. Such general restrictions are essential to remind the appellate court that an accused is presumed to be innocent unless proved guilty beyond a reasonable doubt, and a judgment of acquittal further strengthens such presumption in favour of the accused. However, such restrictions need to be visualised in the context of the particular matter before the appellate court and the nature of the inquiry therein. The same rule with the same rigour cannot be applied in a matter relating to the offence under Section 138 of the NI Act, particularly where a presumption is drawn that the holder has received the cheque for the discharge, wholly or in part, of any debt or liability. Of course, the accused is entitled to bring on record the relevant material to rebut such presumption and to show that preponderance of probabilities are in favour of his defence but while examining if the accused has brought about a probable defence so as to rebut the presumption, the appellate court is certainly entitled to examine the evidence on record in order to find if preponderance indeed leans in favour of the accused.
13. For determination of the point as to whether the High Court was justified in reversing the judgment and orders of the trial court and convicting the appellant for the offence under Section 138 of the NI Act, the basic questions to be addressed are twofold: as to whether the complainant Respondent 2 had established the ingredients of Sections 118 and 139 of the NI Act, so as to justify drawing of the presumption envisaged therein; and if so, as to whether the appellant-accused had been able to displace such ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 46 Neutral Citation No. ( 2025:HHC:21187 ) presumption and to establish a probable defence whereby, the onus would again shift to the complainant?
46. This position was reiterated in Ashok Singh v. State of .
U.P., 2025 SCC OnLine SC 706, wherein it was observed:
22. The High Court while allowing the criminal revision has primarily proceeded on the presumption that it was obligatory on the part of the complainant to establish his case on the basis of evidence by giving the details of the bank account as well as the date and time of the withdrawal of the said amount which was given to the accused and also the date and time of the payment made to the accused, including the date and time of receiving of the cheque, which has not been done in the present case. Pausing here, such presumption on the complainant, by the High Court, appears to be erroneous. The onus is not on the complainant at the threshold to prove his capacity/financial wherewithal to make the payment in discharge of which the cheque is alleged to have been issued in his favour. Only if an objection is raised that the complainant was not in a financial position to pay the amount so claimed by him to have been given as a loan to the accused, only then the complainant would have to bring before the Court cogent material to indicate that he had the financial capacity and had actually advanced the amount in question by way of loan. In the case at hand, the appellant had categorically stated in his deposition and reiterated in the cross-
examination that he had withdrawn the amount from the bank in Faizabad (Typed Copy of his deposition in the paperbook wrongly mentions this as 'Firozabad'). The Court ought not to have summarily rejected such a stand, more so when respondent no. 2 did not make any serious attempt to dispel/negate such a stand/statement of the appellant. Thus, on the one hand, the statement made before the Court, both in examination-in-chief and cross- examination, by the appellant with regard to withdrawing the money from the bank for giving it to the accused has ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 47 Neutral Citation No. ( 2025:HHC:21187 ) been disbelieved whereas the argument on behalf of the accused that he had not received any payment of any loan amount has been accepted. In our decision in S. S. .
Production v. Tr. Pavithran Prasanth, 2024 INSC 1059, we opined:
'8. From the order impugned, it is clear that though the contention of the petitioners was that the said amounts were given for producing a film and were not by way of return of any loan taken, which may have been a probable defence for the petitioners in the case, but rightly, the High Court has taken the view that evidence had to be adduced on this point which has not been done by the petitioners. Pausing here, the Court would only comment that the reasoning of the High Court, as well as the First Appellate Court and Trial Court, on this issue is sound. Just by taking a counter-stand to raise a probable defence would not shift the onus on the complainant in such a case, for the plea of defence has to be buttressed by evidence, either oral or documentary, which in the present case has not been done. Moreover, even if it is presumed that the complainant had not proved the source of the money given to the petitioners by way of loan by producing statement of accounts and/or Income Tax Returns, the same ipso facto, would not negate such claim for the reason that the cheques having being issued and signed by the petitioners has not been denied, and no evidence has been led to show that the respondent lacked capacity to provide the amount(s) in question. In this regard, we may make profitable reference to the decision in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735:
'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 ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 48 Neutral Citation No. ( 2025:HHC:21187 ) 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.' (emphasis supplied)' (underlining in original; emphasis supplied by us in bold)
47. Therefore, the complainant's version could not be rejected because of the failure to produce the receipts of the sale of the petrol/diesel.
48. There was no other material to rebut the presumption of consideration attached to the cheque, and both the learned Courts below had rightly held that the version of the complainant was proved that the cheque was issued by the accused to the complainant in discharge of the legal liability.
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 49 Neutral Citation No. ( 2025:HHC:21187 )
49. Mansa Ram (CW2) stated that the cheque was dishonoured because the amount was insufficient to honour the .
same. ₹ 1,337/- stood as the balance in the account of the accused.
This is duly corroborated by the Statement of Account (Ext. CW2/A); therefore, it was duly proved on record that the cheque was dishonoured because the accused had insufficient funds in his account 50 The accused admitted in his statement recorded under Section 313 of Cr.P.C. that he had received the notice. He claimed that he was not supposed to pay the money to the complainant;
therefore, no action was taken by him. Thus, the receipt of notice by the accused was duly admitted. There is no evidence that the accused had paid any money to the complainant after the receipt of the notice.
51. Thus, it was duly proved on record that the accused had issued a cheque in favour of the complainant in discharge of his legal liability, which cheque was dishonoured with an endorsement 'funds insufficient', and the accused failed to pay the amount despite the receipt of a valid notice of demand. Therefore, ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 50 Neutral Citation No. ( 2025:HHC:21187 ) he was rightly convicted by the learned Trial Court, and this judgment was rightly affirmed by the learned Appellate Court.
.
52. The learned Trial Court sentenced the accused to undergo simple imprisonment for a period of six months. It was laid down by the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provisions of Section 138 of N.I. Act is deterrent in nature. It was observed at page 203:
"6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments, including cheques, and to encourage and promote the use of negotiable instruments, including cheques, in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same."
53. Keeping in view the deterrent nature of the sentence to be awarded, the sentence of six months imprisonment cannot be said to be excessive, and no interference is required with it.
54. Learned Trial Court ordered the payment of a fine of ₹5,000/- and compensation of ₹7,50,000/-. Section 357 of the Cr.P.C. reads as under: -
357. Order to pay compensation.::: Downloaded on - 04/07/2025 21:31:37 :::CIS
P a g e | 51 Neutral Citation No. ( 2025:HHC:21187 ) (1) When a court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, .
the court may, when passing judgment, order the whole or any part of the fine recovered to be applied-
(a) In defraying the expenses properly incurred in the prosecution,
(b) In the payment to any person of compensation for any loss or injury caused by the offence, when compensation is, in the opinion of the court, recoverable by such person in a Civil Court;
(c) When, any person is convicted of any offence for having caused the death of another person or of having abetted the commission of shelf all offence, in paying in, compensation to the persons who are, under the Fatal Accidents Act, 1855 (13 of 1855) entitled to recover damages from the person sentenced for the loss resulting to them from such death;
(d) When any person is convicted of any offence which includes theft, criminal, misappropriation, criminal breach of trust or cheating, or of having dishonestly received or retained, or of having voluntarily assisted in disposing of stolen property knowing or having reason to believe the same to be stolen in compensating any bona fide purchaser of such property for the loss of the same if such property is restored to the possession of the person entitled thereto.
(2) If the fine is imposed in a case, which is subject to appeal, no such payment shall be made before the period allowed for presenting the appeal his elapsed, or if an appeal be presented, before the decision of the appeal. (3) When a court imposes a sentence, of which fine does not form a part, the court may, when passing judgment order the accused person to pay, by way of compensation such ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 52 Neutral Citation No. ( 2025:HHC:21187 ) amount as may be specified in the order to the person who has suffered any loss or injury reason of the act for which the accused person his been so sentenced.
.
(4) An order under this section may also be made by all Appellate Court or by the High Court or Court of Session when exercising its powers of revision.
(5) At the time of awarding compensation in any subsequent civil suit relating to the same matter, the court shall take into account any sum paid or recovered as compensation under this section.
55. It is apparent from the perusal of the Section that when the Court orders the payment of a fine, the whole or part of the fine can be ordered to be paid as compensation. It was laid down by the Hon'ble Supreme Court in Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd., (2007) 6 SCC 528: 2007 SCC OnLine SC 489, that when the fine is imposed, the compensation has to be awarded from that amount. It was observed at page 538: -
"10. It is, therefore, apparent that if a court imposes a sentence of fine or a sentence or where it forms a part thereof, the court is entitled to direct that whole or any part of the fine recovered, to be applied to in respect of the factors enumerated in Clauses (a), (b), (c) or (d). Section 421 of the Code deals with the mode and manner in which the fine levied is to be recovered. Section 424 deals with the steps required to be taken by the court where the amount of fine has not been paid forthwith. Section 357 deals with two types of cases, namely, (i) where only a sentence has been imposed, and (ii) where a fine also forms part of the sentence. When a fine is imposed simpliciter, Section 421 read with Section 424 would be applicable, but where a fine ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 53 Neutral Citation No. ( 2025:HHC:21187 ) forms part of the sentence, it would not have any application.
xxxxxx .
26. The distinction between sub-sections (1) and (3) of Section 357 is apparent. Sub-section (1) provides for the application of an amount of fine while imposing a sentence of which fine forms a part; whereas sub-section (3) calls for a situation where a court imposes a sentence of which fine does not form a part of the sentence.
xxxxx
44. Magistrates cannot award compensation in addition to a fine. When a fine is imposed, however, the private party has no right to insist that compensation may be awarded to him out of the amount of the fine. The power to award compensation under Section 357(3) is not an ancillary power. It is an additional power. (See Balraj v. State of U.P. [(1994) 4 SCC 29: 1994 SCC (Cri) 823: 1995 Cri LJ 3217] )
56. Therefore, it was impermissible for the learned Trial Court to impose a fine as well as compensation. The learned Trial Court could have imposed a fine and ordered the compensation to be paid out of the fine amount. It was impermissible to separately award the compensation.
57. 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: -
::: Downloaded on - 04/07/2025 21:31:37 :::CISP a g e | 54 Neutral Citation No. ( 2025:HHC:21187 )
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]"
58. Therefore, in view of the binding precedent of the Hon'ble Supreme Court, the complainant is entitled to compensation; hence, the compensation awarded by the learned Trial Court has to be upheld, whereas the fine imposed by the learned Trial Court has to be set aside.
59. The learned Trial Court had ordered the compensation of ₹7,50,000/-. The cheque was issued on 28.01.2007, and sentence was imposed on 03.03.2010 after the expiry of about three years. The complainant lost interest on the amount, which she would have got by depositing in the Bank. She had to pay the litigation expenses and spend time in pursuing the litigation;
hence, the amount of ₹1,33,690/- awarded as compensation on the amount of ₹6,16,310/- is not excessive, and no interference is ::: Downloaded on - 04/07/2025 21:31:37 :::CIS P a g e | 55 Neutral Citation No. ( 2025:HHC:21187 ) required with the compensation imposed by the learned Trial Court as affirmed by the learned Appellate Court.
.
60. No other point was urged.
61. In view of the above, the present appeal is partly allowed. The order of sentence imposing a fine awarded by the learned Trial Court is ordered to be set aside, while the rest of the judgment ordering the sentence of imprisonment and the payment of compensation are upheld.
62. Records of the learned Courts below be sent back forthwith, along with a copy of this judgment.
(Rakesh Kainthla) Judge 4th July, 2025 (Saurav pathania) ::: Downloaded on - 04/07/2025 21:31:37 :::CIS