Himachal Pradesh High Court
Reserved On: 16.12.2025 vs State Of H.P. & Another on 1 January, 2026
2026:HHC:43
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 129 of 2024
Reserved on: 16.12.2025
Date of Decision: 01.01.2026
.
Ravinder Kumar ...Petitioner
Versus
State of H.P. & another ...Respondents
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Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
rt
For the Petitioner : Mr M.A. Khan, Senior Advocate, with
Mr. Azmat Hayat Khan, Advocate.
For the Respondents : Mr Tarun Pathak, Deputy Advocate
General, for respondent No.1.
Mr. Yuyutsu Thakur and Manish
Thakur, Advocates, for respondent
No.2.
Rakesh Kainthla, Judge
The present revision is directed against the judgment dated 18.01.2024, passed by learned Sessions Judge, Hamirpur, H.P. (learned Appellate Court) vide which the judgment of conviction 26.08.2023 and order of sentence dated 31.08.2023 passed by learned Judicial Magistrate First Class, Court No.3, Hamirpur, H.P. (learned Trial Court) were upheld. (Parties shall 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 01/01/2026 20:39:29 :::CIS 22026:HHC:43 hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present .
revision are that the complainant filed a complaint against the accused before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). It was asserted that the of accused agreed to sell the land to the complainant. An agreement dated 17.08.2017 was executed between the parties. The rt complainant paid ₹2,00,000/- out of the total sale consideration of ₹2,50,000/-. The accused undertook to execute the sale deed or return double the amount of the advance received by him in case of failure to do so. The accused failed to execute the sale deed, and he issued a cheque for ₹2,50,000/- in favour of the complainant on 21.10.2020. The complainant presented the cheque to the bank, but it was returned with the endorsement 'account blocked'. The complainant served a legal notice upon the accused asking him to repay the money within 15 days from the date of receipt of the notice. The accused failed to repay the money. Hence, the complaint was filed against the accused for taking action as per the law.
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3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence .
punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined Chandan Bobby (CW-1), Tanuj Rathore (CW-2) and himself (CW-3).
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5. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had agreed with the complainant to rt execute the sale deed. He admitted that the notice was served upon him. He claimed that he had issued a blank security cheque, and a false case was made against him. He examined himself (DW-1) to prove his defence.
6. Learned Trial Court held that the issuance of the cheque was not disputed, and a presumption arose that the cheque was issued for consideration to discharge the debt/liability. The accused admitted that an agreement was executed between the parties. The sale deed was not executed, and the accused was liable to return the advance taken by him. The cheque was dishonoured with an endorsement 'account blocked'. The cheque issued as a security also attracts an offence punishable under Section 138 of ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 4 2026:HHC:43 N.I. Act on its dishonour. The notice was duly served upon the accused, and the accused failed to repay the amount; hence, the accused was convicted of the commission of an offence punishable .
under Section 138 of the N.I. Act and was sentenced to undergo simple imprisonment for six months, pay a fine of ₹4,00,000/-
and undergo further simple imprisonment for one month in default of payment of fine. It was ordered that out of the fine of amount so realized ₹3,90,000/-be disbursed to the complainant as compensation, and ₹10,000/- be disbursed to the State.
7. rt Being aggrieved by the judgment and order passed by the learned Trial Court, the accused filed an appeal, which was decided by the learned Sessions Judge, Hamirpur, H.P. (learned Appellate Court). Learned Appellate Court concurred with the findings recorded by the learned Trial Court that the issuance of the cheque was admitted, and a presumption would be attracted that the cheque was issued for consideration to discharge the debt/liability. The burden would shift upon the accused to rebut the presumption. His evidence was not sufficient to rebut the presumption. The accused admitted that an agreement was executed between the parties to sell the land. The plea taken by the accused that he was a General Power of Attorney holder of Shakti Chand and had issued a security cheque was not sufficient to rebut ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 5 2026:HHC:43 the presumption. The cheque was dishonoured with an endorsement 'account blocked', and the accused failed to repay the amount despite the receipt of a valid notice of demand. All the .
ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied. The learned Trial Court had imposed an adequate sentence, and no interference was required with it; hence, the appeal was dismissed.
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8. Being aggrieved by the judgments and order passed by the learned Courts below, the accused filed the present revision, rt asserting that the learned Courts below erred in appreciating the material placed on record. The complainant has failed to prove the payment of the money to the accused. The cheque was issued as security, and the accused was not liable. Therefore, it was prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside.
9. I have heard Mr M.A Khan, learned Senior Counsel, assisted by Mr Azmat Hayat Khan, learned counsel for the petitioner, Mr Tarun Pathak, learned Deputy Advocate General, for respondent No.1/State and M/s Yuyutsu Thakur and Manish Thakur, learned counsel for respondent No.2/complainant.
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10. Mr M.A. Khan, learned Senior Counsel appearing on behalf of the petitioner/accused, submitted that the accused was acting under a General Power of Attorney of Shakti Chand. The .
accused had disclosed the name of Shakti Chand to the complainant. Section 230 of the Indian Contract Act exempts the agent from personal liability. Hence, the accused could not have been held liable for the cheque issued as an agent. He prayed that of the present revision petition be allowed and the judgments and order passed by the learned Courts below be set aside. He relied rt upon the judgment of this Court in Ravinder Kumar vs. State of H.P. 2025: HHC:28730 in support of his submission.
11. Mr Tarun Pathak, learned Deputy Advocate General, for respondent No.1/State submitted that the present dispute concerns the private parties and he has nothing to submit in the present case.
12. Mr Yuyutsu Thakur, learned counsel for respondent No.2, submitted that the judgment of this Court in Ravinder Kumar (supra) is per incuriam as this Court had failed to take notice of Section 28 of the NI Act, which exempts the agent only on the disclosure in the instrument itself that he was acting on behalf of the principal. The accused has not indicated anything in the ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 7 2026:HHC:43 cheque that he was acting on behalf of Shakti Chand. Mere knowledge of the agency is not sufficient to absolve him from liability. Both the learned Courts below have concurrently held .
that all the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied, and this Court should not interfere with the concurrent findings of fact. Hence, he prayed that the present revision be dismissed. He of has also filed a written synopsis, which has been perused by me.
13. I have given considerable thought to the submissions rt made at the bar and have gone through the records carefully.
14. It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a 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 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 ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 8 2026:HHC:43 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 that is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts .
and evidence of the case to reverse those findings.
15. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC 1294, wherein it was observed at page 695:
of "14. The power and jurisdiction of the Higher Court under Section 397 CrPC, 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 rt regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept in such proceedings.
15.It would be apposite to refer to the judgment of this Court in Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460:
(2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986, where the scope of Section 397 has been considered and succinctly explained as under: (SCC p. 475, paras 12-13) "12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law.
There has to be a well-founded error, and it may not be appropriate for the court to scrutinise the orders, which, upon the face of it, bear a token of careful consideration and appear to be in accordance with 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 ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 9 2026:HHC:43 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.
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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.
of 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 rtjurisdiction unless the case substantially falls within the categories aforestated. Even the framing of the charge is a much-advanced stage in the proceedings under CrPC."
16. 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 at page 169:
"12. This Court has time and again examined the scope of Sections 397/401 CrPC and the grounds for exercising the revisional jurisdiction by the High Court. In 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 to ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 10 2026:HHC:43 satisfy 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 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 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 rtaforesaid standpoint, we have no hesitation in concluding 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 Chavanv. 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 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 ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 11 2026:HHC:43 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."
17. A similar view was taken in Bir Singh v. Mukesh Kumar, of (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:
rt "16. It is well settled that in the exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, 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 & Servicesv.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."
18. This position was reiterated in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed:
"27. It is well settled that in exercise of revisional jurisdiction, the High Court does not, in the absence of perversity, upset concurrent factual findings [See: Bir Singh(supra)]. This Court is of the view that it is not for the Revisional Court to re-analyse and re-interpret the evidence on record. As held by this Court in Southern Sales & ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 12 2026:HHC:43 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.
28. Consequently, this Court is of the view that in the .
absence of perversity, it was not open to the High Court in the present case, in revisional jurisdiction, to upset the concurrent findings of the Trial Court and the Sessions Court.
19. The present revision has to be decided as per the parameters laid down by the Hon'ble Supreme Court.
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20. The accused Ravinder Kumar (DW-1) admitted his rt signature on the cheque (Ext.C1) in his cross-examination. It was laid down by the Hon'ble Supreme Court in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC 724, that when the signature on the cheque is not disputed, a presumption would arise that the cheque was issued in discharge of the legal liability. It was observed: -
"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 a presumption is rebuttable. 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 ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 13 2026:HHC:43 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 and the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI of 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 rt 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."
21. A similar view was taken in N. Vijay Kumar v.
Vishwanath Rao N., 2025 SCC OnLine SC 873, wherein it was held as under:
"6. Section 118 (a) assumes that every negotiable instrument is made or drawn for consideration, while Section 139 creates a presumption that the holder of a cheque has received the cheque in discharge of a debt or liability. Presumptions under both are rebuttable, meaning they can be rebutted by the accused by raising a probable defence."
22. A similar view was taken in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed:
"ONCE EXECUTION OF A CHEQUE IS ADMITTED, PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF THE NI ACT ARISE ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 14 2026:HHC:43
15. In the present case, the cheque in question has admittedly been signed by the Respondent No. 1-Accused. This Court is of the view that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the .
NI Act that the holder of the cheque received the said cheque in discharge of a legally enforceable debt or liability arises against the accused. It is pertinent to mention that observations to the contrary by a two-Judge Bench in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54, have been set aside by a three-Judge Bench in Rangappa (supra).
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16. This Court is further of the view that by creating this presumption, the law reinforces the reliability of cheques as a mode of payment in commercial transactions. rt
17. Needless to mention that the presumption contemplated under Section 139 of the NI Act is a rebuttable presumption. However, the initial onus of proving that the cheque is not in discharge of any debt or other liability is on the accused/drawer of the cheque [See: Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197].
23. Thus, the Court has to start with the presumption that the cheque was issued in discharge of the liability for consideration, and the burden is upon the accused to rebut this presumption.
24. The accused admitted his signature on the agreement (Ext.DW-1/A), which mentions that the accused had received ₹2,00,000/- from the complainant as an advance, and the remaining amount of ₹50,000/- would be received at the time of execution of the sale deed, which would be executed on or before ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 15 2026:HHC:43 30.10.2017, and in case of failure, the accused would return double the amount of the advance to the complainant. Two endorsements are also annexed to the agreement regarding the receipt of .
₹10,000/- and ₹20,000/- on 21.12.2017 and 26.12.2017, respectively. Thus, the version of the complainant that he had advanced ₹2,00,000/- to the accused is duly proved by the statement of the accused and the agreement (Ext.DW-1/A).
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25. The complainant stated that the accused had failed to execute the sale deed as per the terms and conditions of the rt agreement, and he had issued the cheque on 21.10.2020 for ₹2,50,000/-. The accused did not claim in his statement on oath that he was ready and willing to execute the sale deed; rather, he admitted in his cross-examination that he had not served any notice upon the complainant to execute the sale deed. Thus, the complainant's version that the sale deed could not be executed has to be accepted as correct.
26. The complainant was entitled to double the advance amount as per the agreement executed between the parties. The agreement and the endorsements show that ₹2,30,000/-were paid to the accused. Therefore, the cheque of ₹2,50,000/- issued on 21.10.2020, after about three years of the execution of the ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 16 2026:HHC:43 agreement, was as per the terms and conditions of the agreement.
It was laid down in Ripudaman Singh v. Balkrishna, (2019) 4 SCC 767, that an agreement to sell constitutes a legally enforceable .
contract between the parties, and any payment made in pursuance of such agreement is towards the enforceable debt/liability. It was observed: -
"9. We find ourselves unable to accept the finding of the of learned Single Judge of the High Court that the cheques were not issued for creating any liability or debt, but "only" for the payment of balance consideration and that in consequence, there was no legally enforceable debt or rt other liability. Admittedly, the cheques were issued under and in pursuance of the agreement to sell. Though it is well settled that an agreement to sell does not create any interest in immovable property, it nonetheless constitutes a legally enforceable contract between the parties to it. A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purposes of Section
138."
27. Therefore, the payment made by the accused to the complainant under the agreement will attract the provisions of Section 138 of the NI Act.
28. It was submitted that the accused was acting as an agent of Shakti Chand, and he is not personally liable as per Section 230 of the Indian Contract Act. This submission appears to be attractive, but cannot be accepted.
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29. Section 28 of the Negotiable Instruments Act deals with the liability of an agent signing a cheque and provides that if an agent signs his name on the cheque without indicating thereon .
that he had signed as an agent or that he did not intend to incur the personal liability, he would be liable on the instrument except to those who induced him to sign upon the belief that principal only would be held liable. It was laid down by Judicial Committee of of the Privy Council more than 100 years ago in Firm of Sadasuk Janki Das v. Maharaja Sir Kishan Pershad Bahadur, 1918 SCC OnLine rt PC 79 that the name of the person to be charged upon a negotiable document should be clearly stated on the face or on the back of the document and in case of failure to do so, the principal cannot be held liable. It was observed:-
"It is of the utmost importance that the name of a person or firm to be charged upon a negotiable document should be clearly stated on the face or on the back of the document, so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand. In this case the preliminary words mention no more than that Mohan Lal has been directed to execute the hundis, and they do not necessarily imply that he has been clothed with authority to execute them in any other form than that in which they were actually prepared--a form which it has already been shown constituted' nothing more than a personal liability on behalf of Mohan Lal. The statement, to which reference has been made, which appears on p. 99 of Messrs Iyenger and Adiga's book on Negotiable Instruments, that "outside evidence is ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 18 2026:HHC:43 inadmissible on any person as a principal party unless his-- the principal party's--name is in some way disclosed in the instrument itself," is not in itself an adequate statement of the law. It is not sufficient that the principal's name should be "in some way" disclosed; it must be disclosed in such a .
way that on any fair interpretation of the instrument, his name is the real name of the person liable upon the bill. Their Lordships' attention was directed to sections 26, 27 and 28 of the Negotiable Instruments Act of 1881, and the terms of these sections were contrasted with the corresponding provisions of the English Statute. It is unnecessary in this connection to decide whether their of effect is identical. It is sufficient to say that these sections contain nothing inconsistent with the principles already enunciated, and nothing to support the contention, which is contrary to all established rules, that in an action on a bill of rt exchange pr promissory note against a person whose name properly appear as party to the instrument it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal.
30. A Five-Judge Bench of Madras High Court held in Sivagurunatha Pillai v. Padmavathi Ammal, 1940 SCC OnLine Mad 464, that only the instrument has to be looked at while deciding whether the maker was personally liable or some other person was liable on it. It was observed: -
"It is the instrument and the instrument alone that has to be looked at in deciding whether the maker has excluded personal liability in such a case. Therefore, in turning to examine the decisions of this Court in Koneti Naicker v. Gopala Ayyar (1913) I.L.R. 38 Mad. 482 (F.B.), and Satyanarayana v. Mallayya [(1934) I.L.R. 58 Mad. 735 (F.B.), we have this factor well established. Of course, if the authority of the agent is questioned, the authority must be established before the instrument is looked at.::: Downloaded on - 01/01/2026 20:39:29 :::CIS 19
2026:HHC:43 As the Court cannot look beyond what is stated in the instrument in a case like the present one, it is now necessary to decide whether the promissory note in suit should be construed in accordance with the judgment of SUNDARA AYYAR, J. or the judgments of SADASIVA AYYAR, J. and WHITE, C.J. In my opinion, the judgment which should be .
followed is that of SUNDARA AYYAR, J. It is the duty of the Court to read the instrument and judge its effects from the words used, but a promissory note drawn up in a vernacular language cannot always be construed according to the literal translation into English. While I have no knowledge of the Dravidian languages I have seen sufficient of the translations of vernacular documents which have come of before this Court to realise that to give a fair translation words in English have often to be added, and both my learned brothers, SOMAYYA and PATANJALI SASTRI, JJ., inform me that a Tamilian who wished to indicate that he was rt signing on behalf of his principal might aptly use the language found in the promissory note in suit and that a Tamilian would read it as an instrument signed by the maker on behalf of his principal. I do not suggest that a document in Tamil or of any other language spoken in India should not be given the meaning which the words used ordinarily imply, but in deciding the implication, I agree with SUNDARA AYYAR, J., that one must put oneself in the position of the writer so far as the language used is concerned. In this country, when a person is describing who he is, he gives his father's name and says that he is his son. When in a document, such as we have here, the person, after giving his own description, adds that he is the agent of another, it means that he is acting as the other's agent in the matter of the execution of the document. I would sum up the position thus. In Satyanarayana v. Mallayya, I.L.R. 58 Mad. 735 (F.B.). the Court erred in saying that circumstances not disclosed in the instrument could be looked at when deciding whether the maker was personally liable, and that the learned Judges who decided Koneti Naicker v. Gopala Ayyar [(1913) I.L.R. 38 Mad. 482 (F.B.).erred in refusing to follow the line of approach indicated by SUNDARA AYYAR, J. When it is a matter of construing the effect ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 20 2026:HHC:43 of an instrument written in Tamil or in any other Indian language, the observations of SUNDARA AYYAR, J., apply.
31. Madras High Court again held in M. Mahadevan Pillai v.
Vedavalli Ammal, (1994) 79 Comp Cas 851 that knowledge of the .
agency to others does not free the agent from liability, if he does not disclose on the instrument that he had signed as an agent. It was observed:-
7. Before considering the other two contentions of the defendant, it is necessary to refer to the law on the subject.
of The basic principle of the Negotiable Instruments Act is that the parties to the instrument should be held bound by the terms of the instrument. Section 26 of the Act is that every person capable of contracting, according to the law to which rt he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsement, delivery and negotiation of a promissory note, bill of exchange or cheque. Section 27 deals with the case of agency and provides that every person capable of binding himself or of being bound as mentioned in Section 26 may so bind himself or be bound by a duly authorised agent acting in his name. It is made clear in the Section that a general authority to transact business and to receive and discharge debts does not confer upon an agent the power of accepting or endorsing bills of exchange so as to bind his principal. The section also states that an authority to draw bills of exchange does not of itself import an authority to endorse. Thus, it is clear that if a person acts as an agent, he should have the specific authority of his principal to bring about a negotiable instrument. Section 28 of the Act reads that "an agent who signs his name to a promissory note, bill of exchange or cheque without indicating thereon that he signs as agent, or that he does not intend thereby to incur personal responsibility, is liable personally on the instrument, except to those who induced him to sign upon the belief that the principal only would be held liable". It has been held in several cases that knowledge of agency to the ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 21 2026:HHC:43 other party does not free the agent from liability, if he does not disclose on the instrument that he signed as agent. The principle is that unless the maker has clearly affixed his signature to the instrument as agent or on account of or on behalf of a principal whose name is disclosed or, unless though he has signed unconditionally he has unequivocally .
and clearly disclaimed in some portion of the document his own responsibility and mentions the name of the person really liable, he cannot escape liability. Section 29 of the Act deals with legal representatives and makes a legal representative of a deceased person who signs his name to a promissory note, bill of exchange or cheque liable personally thereon unless he expressly limits his liability to of the extent of the assets received by him as such. Section 30 of the Act speaks of the liability of the drawer of a bill of exchange or cheque, in case of dishonour by the drawee or acceptor thereof, to compensate the holder. Section 32 reads rt that in the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand.
xxxxx
9. A Full Bench of three Judges in P. Govinden Nair v. K. Nana Menon, (1914) 27 MLJ 595, held that where the Karnavan of a tarwad signed a promissory note in his own name, though in the body of the note described himself as the Karnavan of the tarwad and the suit is brought on the note and not on the original cause of action, the tarward property in the hands of the defendants could not be made liable. It was held that the Karnavan was personally liable.
xxxx
13. Following the judgments of the Privy Council and the above Full Bench, the Kerala High Court in P.R.S. Pillai v. Manual Sathyanesan, AIR 1965 Kerala 155, held that in a suit on a promissory note containing unconditional undertaking by the defendant to pay the plaintiff on demand in the absence of any indication whatever in the note that the defendant signed the note as the manager of a company or ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 22 2026:HHC:43 that he did not intend thereby to incur personal liability, it is not open to the defendant to raise the plea in the defence repudiating his personal liability on the ground that he had in reality acted for an undisclosed principal namely, the company in executing the promissory note."
32. A similar view was taken by the Rajasthan High Court .
in Ballabh Das vs. Rajesh Chand Gupta and Ors. (31.08.1987 - RAJHC) : MANU/RH/0582/1987 wherein it was observed:
10. In Madangopal v. Narsingndas & Sons MANU/RH/0048/1950, considering Section 28 of the of Negotiable Instruments Act, it has been held that where a person, after signing his name on a negotiable instrument, adds Managing Director or Managing Agent, it is not sufficient to indicate that he is making the Company liable rt and thereby excluding his personal liability. It was held that he must clearly indicate the name of the principal on the instrument itself and state that he is doing it for or on behalf of such principal as agent and not in his personal capacity.
11. In Hiralal v. Ratanlal 1967 RLW 383, the suit was based on the recovery of money on a cheque executed by one of the partners of the firm. The Bank was directed to pay the amount out of the joint account of defendant Nos. 1 and 5.
Considering the circumstances of the case as well as the law applicable, it was held that the partner was not liable for the cheque, signed by another partner alone and not indicating on its face that it was drawn on behalf of the firm. Merely because of the direction to the bank to pay from the firm account would not make it sufficient to bind the other partner. It was further held that where the suit was based on a Negotiable Instrument, then the terms of the Negotiable Instruments Act were to be looked into, and the provisions of the Partnership Act or Contract Act would not be looked into for purposes of determining the liability.
12. In Ghisulal v. Hazi Mohammed 1980 RLW 134, one of the partners took a loan and executed a promissory note, describing himself as "proprietor of firm." It was held that the absence of any other evidence to show that the loan was ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 23 2026:HHC:43 taken for and on behalf of the firm, other partners were not liable. A mere description as proprietor of a firm does not make the firm or its other partners liable.
13. In Kastoor Chand v. Shiv Shankar 1986 RLR 421, the defendant took a loan from the plaintiff. The defendant was a Manager of Co-op. Society, but the loan taken was not on .
behalf of the Society, but was for purchasing sugar for Society. Considering the terms of the document, which said that the money was advanced to the Manager for purposes of purchase of sugar for Upbhokta, and the money to be paid by himself. It was held that there is no ambiguity and the defendant is personally liable for such a loan.
14. In M. Rajagopal and others v. K.M. Imam of MANU/KE/0009/1981: AIR 1981 Ker 36. One of the partners signed the pronote but he did not sign it on behalf of the firm, nor was there any other material to infer that the pronotes were executed for the firm. The other partners rt were not made liable, and it was held that the provisions of the Negotiable Instruments Act would prevail over those of the Partnership Act and the Contract Act.
15. In Thummala Rama Rao and Ors. v. Chodage Venkateshwara Rao and Ors. MANU/AP/0102/1963: AIR 1963 AP 154, a promissory note was executed by a managing partner in his individual capacity, without giving out the intention to bind the firm. It was held that the Firm and Partners other than the executant were not liable on the basis of such a document. It was also observed that even if the amount borrowed had been utilised by the firm, it could not be made liable because the executant did not act in a manner expressing or implying an intention to bind the firm.
33. Orissa High Court also took a similar view in Indian Bank v. B. Patnaik Mines (P.) Ltd., 2002 SCC OnLine Ori 68: AIR 2003 Ori 81, wherein it was observed at page 86:
"16. It is well settled that knowledge of agency to the other party does not free the agent from liability if he does not disclose on the instrument that he signed as agent. The ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 24 2026:HHC:43 principle is that unless the maker has clearly affixed his signature to the instrument as agent or on account of or on behalf of a principal whose name is disclosed or, unless though he has signed unconditionally he has unequivocally and clearly disclosed in some portion of the document his own responsibility, and mentions the name of the person .
really liable, he cannot escape personal liability.
17. A Demand Promissory Note is an effective contract. In view of the fact that the defendant-respondents 2 to 5 signed the Demand Promissory Note and other documents without indicating therein that they signed as Directors, this case squarely comes within the Exception to Section 28 of the Act, and it is to be held that the defendant-
of respondents are liable personally under the instrument.
18. Following the judgment of the Privy Council in the case of National Bank of Upper India Ltd. v. Bansidhar, AIR 1929 PC 297, the facts of which case were almost identical to that of rt the present case, and the Full Bench decision of the Madras High Court in the case of Sivagurunatha Pillai v. Padmavathi Ammal, AIR 1941 Mad 417, the Kerala High Court in the case of P.R.S. Pillai v. Manual Sathyanesan, AIR 1965 Ker 155, held that in a suit on a Promissory Note containing unconditional undertaking by the defendant to pay the plaintiff on demand in the absence of any indication whatever in the note that the defendant signed the note as the Manager of a Company or that he did not intend thereby to incur personal liability, it is not open to the defendant to raise the plea in the defence repudiating his personal liability on the ground that he had in reality acted for an undisclosed principal, namely, the Company in executing the promissory note.
19. The Full Bench of Five Judges in the Madras case, AIR 1941 Mad 417 (supra), observed that the Court cannot look beyond what is stated in the instrument and that it is the duty of the Court to read the instrument and judge its effects from the words used. In the present case, the Demand Promissory Note executed on 11th May, 1960 and the agreement for demand cash-credit on hypothecation of movable properties (Ext. 4) clearly indicate that the defendant-respondents signed the documents in their ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 25 2026:HHC:43 individual capacity. The recitals of Ext. 4 read "B. Patnaik Mines Private Limited and individually by...." Thus, in the light of the touchstone of the legal principles enumerated in the decisions referred to above, we have absolutely no hesitation to hold that defendant-respondents 2 to 5 were also individually liable for the loan along with the Company.
.
34. Therefore, the Courts have consistently held that a person signing a negotiable instrument continues to be liable unless he indicates on the instrument that he had signed it on behalf of the principal.
of
35. In the present case, the cheque (Ext.C1) does not mention on the face or on the obverse that the accused Vijay rt Kumar was signing on behalf of Shakti Chand; therefore, he would be liable under the cheque.
36. Mr M. A. Khan, learned Senior Counsel, for the accused/petitioner, heavily relied upon the judgment of this Court in Ravinder Kumar (supra), to submit that the agent is not liable by virtue of Section 230 of the Indian Contract Act. This judgment had not noticed the provisions of Section 28 of the NI Act and is per incuriam. It was laid down by the Hon'ble Supreme Court in MCD v.
Gurnam Kaur, (1989) 1 SCC 101: 1988 SCC OnLine SC 259 that a decision given in ignorance of the binding precedent or the statutory provision is per incuriam. It was observed at page 110:
"11.... A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 26 2026:HHC:43 rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn.
.
explains the concept of sub silentio at p. 153 in these words:
A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may of be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such rt circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio."
37. Hon'ble Supreme Court held in M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors, (2012) 3 SCC 495, that when a judgment is delivered per incuriam, it loses its binding force and cannot be accepted as a precedent. It was observed: -
28. The principle of per incuriam has been very succinctly formulated by the Court of Appeal in Young v. Bristol Aeroplane Co. Ltd. [1944 KB 718 (CA)]. Lord Greene, Master of Rolls, formulated the principles based on which a decision can be said to have been rendered "per incuriam". The principles are: (KB p. 729) "... Where the court has construed a statute or a rule having the force of a statute, its decision stands on the same footing as any other decision on a question of ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 27 2026:HHC:43 law, but where the court is satisfied that an earlier decision was given in ignorance of the terms of a statute or a rule having the force of a statute, the position is very different. It cannot, in our opinion, be right to say that in such a case the court is entitled to disregard the statutory provision and is bound to .
follow a decision of its own given when that provision was not present in its mind. Cases of this description are examples of decisions given per incuriam."
29. The decision in Young [1944 KB 718 (CA)] was subsequently approved by the House of Lords in Young v. Bristol Aeroplane Co. Ltd. [1946 AC 163 (HL)], AC at p. 169 of the Report. Lord Viscount Simon in the House of Lords of expressed His Lordship's agreement with the views expressed by Lord Greene, the Master of Rolls, in the Court of Appeal on the principle of per incuriam (see the speech of Lord Viscount Simon in Bristol Aeroplane Co. Ltd. case [1946 rt AC 163 (HL)], AC at p. 169 of the Report).
30. Those principles have been followed by the Constitution Bench of this Court in Bengal Immunity Co. Ltd. v. State of Bihar [AIR 1955 SC 661: (1955) 2 SCR 603] (see the discussion in SCR at pp. 622 and 623 of the Report).
31. The same principle has been reiterated by Lord Evershed, Master of Rolls, in Morelle Ld. v. Wakeling [(1955) 2 QB 379 (CA)], QB at p. 406. The principle has been stated as follows:
"... As a general rule, the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or some authority binding on the court concerned; so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong."
32. In State of U.P. v. Synthetics and Chemicals Ltd. [(1991) 4 SCC 139] this Court held (SCC p. 162, para 40) that the doctrine of "per incuriam" in practice means "per ignoratium" and noted that the English courts have ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 28 2026:HHC:43 developed this principle in relaxation of the rule of stare decisis and referred to the decision in Bristol Aeroplane Co. Ltd. [1946 AC 163 (HL)] The learned Judges also made it clear that the same principle has been approved and adopted by this Court while interpreting Article 141 of the Constitution (see Synthetics and Chemicals Ltd. case [(1991) 4 SCC 139], .
SCC para 41).
33. In MCD v. Gurnam Kaur [(1989) 1 SCC 101], a three-judge Bench of this Court explained this principle of per incuriam very elaborately in SCC para 11 at p. 110 of the Report, and in explaining the principle of per incuriam, the learned Judges held:
of "11. ... A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute."
34. In para 12, the learned Judges observed as follows:
rt (Gurnam Kaur case [(1989) 1 SCC 101], SCC p. 111) "12. ... One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a Judge, however eminent, can be treated as an ex-
cathedra statement, having the weight of authority."
35. Following the aforesaid principles, this Court is constrained to hold that the decision in Va Tech [(2011) 13 SCC 261], having been rendered per incuriam, cannot be accepted as a precedent to decide the controversy in this case.
38. It was submitted that the principle of stare decisis demands that the Courts should take a consistent view and the like cases should be treated alike; therefore, once this Court had taken a view in Ravinder Kumar (supra) that an agent is not liable, a different view should not be taken in the present case. This ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 29 2026:HHC:43 submission is only stated to be rejected. Lord Denning said in Ostime (Inspector of Taxes) vs Australian Mutual Provident Society Respondent., [1960] A.C. 459, that the doctrine of precedent does .
not compel a person to follow the wrong path until he falls over the edge of the cliff. It was observed: -
"The doctrine of precedent does not compel your Lordships to follow the wrong path until you fall over the edge of the cliff. As soon as you find that you are going in the wrong direction, you must at least be permitted to strike off in the of right direction, even if you are not allowed to retrace your steps."
39. The Hon'ble Supreme Court held in Shaurabh Kumar rt Tripathi v. Vidhi Rawal, 2025 SCC OnLine SC 1158 that Judges are duty-bound to correct their mistakes in properly constituted proceedings. It was observed:
38. Before we part with this Judgment, we must mention here that one of us (Abhay S. Oka, J) is a party to a Judgment dated 27nd October, 2016 of the Bombay High Court in Writ Petition 2473 of 2016 in which the view taken is that remedy under Section 482 of the CrPC is not available for quashing the proceedings under Section 12(1) of the DV Act, 2005.
This view was found to be incorrect by a full Bench of the same High Court. As judges, we are duty-bound to correct our mistakes in properly constituted proceedings. Even for Judges, the learning process always continues.
40. The U.S. Supreme Court held in McGrath v. Kristensen, 1950 SCC OnLine US SC 95: 340 US 162 (1950), that the precedent does not mean that the Judge cannot correct his mistake when it is brought to his notice. It was observed: -
::: Downloaded on - 01/01/2026 20:39:29 :::CIS 302026:HHC:43 "28. Precedent, however, is not lacking for ways by which a judge may recede from a prior opinion that has proven untenable and perhaps misled others. See Chief Justice Taney, License Cases, 5 How. 504, 12 L.Ed. 256, recanting views he had pressed upon the Court as Attorney General of Maryland in Brown v. State of Maryland, 12 Wheat. 419, 6 L.Ed.
.
678. Baron Bramwell extricated himself from a somewhat similar embarrassment by saying, 'The matter does not appear to me now as it appears to have appeared to me then.' Andrew v. Styrap, 26 L.T.R.(N.S.) 704, 706. And Mr Justice Story, accounting for the contradiction of his own former opinion, quite properly put the matter: 'My own error, however, can furnish no ground for its being adopted of by this Court * * *.' United States v. Gooding, 12 Wheat. 460, 478, 6 L.Ed. 693. Perhaps Dr Johnson really went to the heart of the matter when he explained a blunder in his dictionary--' Ignorance, sir, ignorance.' But an escape less rt self-deprecating was taken by Lord Westbury, who, it is said, rebuffed a barrister's reliance upon an earlier opinion of his Lordship: 'I can only say that I am amazed that a man of my intelligence should have been guilty of giving such an opinion.' If there are other ways of gracefully and good-
naturedly surrendering former views to a better considered position, I invoke them all."
41. Therefore, the Court is bound to correct the error when the error is pointed out to it. The adage to err is human applies to the Judges as well, because they are human and fallible and should be free to acknowledge their mistakes and correct them without being bound by the doctrine of precedent and stare decisis.
42. The accused stated that he had issued a cheque as security, and he was not liable. This submission is not acceptable.
It has been found above that the accused is liable to pay double the advance amount pursuant to the agreement. Thus, he had a ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 31 2026:HHC:43 subsisting liability of ₹4,60,000/- (double of ₹2,30,000/- received by him) and a cheque of ₹2,50,000/-, even if issued as security, would be towards the enforceable debt/liability. It was laid down .
by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that the accused is liable even if the cheque is issued towards the security. It was observed:
"9. Submission of learned Advocate appearing on behalf of of the revisionist that the cheque in question was issued to the complainant as security, and on this ground, the criminal revision petition is rejected as being devoid of any force for the reasons hereinafter mentioned. As per Section 138 of the rt Negotiable Instruments Act 1881, if any cheque is issued on account of other liability, then the provisions of Section 138 of the Negotiable Instruments Act 1881 would be attracted.
The court has perused the original cheque, Ext. C-1 dated 30.10.2008, placed on record. There is no recital in the cheque Ext. C-1, that cheque was issued as a security cheque. It is well-settled law that a cheque issued as security would also come under the provisions of Section 138 of the Negotiable Instruments Act 1881. See 2016 (3) SCC page 1 titled Don Ayengia v. State of Assam & another. It is well-settled law that where there is a conflict between former law and subsequent law, then subsequent law always prevails."
43. It was laid down by the Hon'ble Supreme Court in Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited 2016(10) SCC 458 that issuing a cheque towards security will also attract the liability for the commission of an offence punishable under Section 138 of the NI Act. It was observed: -
::: Downloaded on - 01/01/2026 20:39:29 :::CIS 322026:HHC:43 "10. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways Private Limited versus Magnum Aviation Private Limited (2014) 12 SCC 53 with reference to the explanation to Section 138 of the Act and the expression "for the discharge of any debt or other .
liability" occurring in Section 138 of the Act. We are of the view that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise.
11. Reference to the facts of the present case clearly shows of that though the word "security" is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of instalments. The repayment becomes due under the agreement, the moment the loan is rt advanced, and the instalment falls due. It is undisputed that the loan was duly disbursed on 28th February 2002, which was prior to the date of the cheques. Once the loan was disbursed and instalments had fallen due on the date of the cheque as per the agreement, the dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.
12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of a claim for breach of contract under Section 138, which arises on account of dishonour of a cheque issued, was not by itself at par with a criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of a cheque issued for the discharge of a later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque, there was a debt/liability in praesenti in terms of the loan agreement, as against the case of Indus Airways (supra), where the purchase order had been cancelled, and a cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for the discharge of liability but as an advance for the purchase order, which was cancelled.
::: Downloaded on - 01/01/2026 20:39:29 :::CIS 332026:HHC:43 Keeping in mind this fine, but the real distinction, the said judgment cannot be applied to a case of the present nature, where the cheque was for repayment of a loan instalment which had fallen due, though such a deposit of cheques towards repayment of instalments was also described as "security" in the loan agreement. In applying the judgment .
in Indus Airways (supra), one cannot lose sight of the difference between a transaction of the purchase order which is cancelled and that of a loan transaction where the loan has actually been advanced, and its repayment is due on the date of the cheque.
13. The crucial question to determine the applicability of Section 138 of the Act is whether the cheque represents the of discharge of existing enforceable debt or liability, or whether it represents an advance payment without there being a subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the rt underlying principle as can be discerned from the discussion of the said cases in the judgment of this Court."
(Emphasis supplied)
44. This position was reiterated in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was held that a cheque issued as security is not waste paper and a complaint under Section 138 of the NI Act can be filed on its dishonour. It was observed:
"17. A cheque issued as security pursuant to a financial transaction cannot be considered a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe, and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 34 2026:HHC:43 loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of the amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such a presentation, if the .
same is dishonoured, the consequences contemplated under Section 138 and the other provisions of the NI Act would flow.
18. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such a cheque, which is issued as 'security, cannot be presented of prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form, and in rt that manner, if the amount of the loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be an understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque, which is issued as security, can never be presented by the drawee of the cheque. If such is the understanding, a cheque would also be reduced to an 'on- demand promissory note', and in all circumstances, it would only be civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 35 2026:HHC:43 the cheque to dictate terms with regard to the nature of litigation."
45. Therefore, the accused cannot escape from the liability on the ground that he had issued the cheque as security to the .
complainant.
46. It was submitted that the signatures on the cheque and the body of the cheque are in different inks, which shows that the cheque was not filled by the accused. This submission will not help of the accused. 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:
rt (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138, that a person is liable for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act even if the cheque is filled by some other person. It was observed:
"33. A meaningful reading of the provisions of the Negotiable Instruments Act, including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill in the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 36 2026:HHC:43 accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
35. It is not the case that the respondent accused him of either signing the cheque or parting with it under any threat or coercion. Nor is it the case that the respondent accused .
that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.
of
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 rt show that the cheque was not issued in discharge of a debt."
47. This position was reiterated in Oriental Bank of Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089, wherein it was observed:
"12. The submission, which has been urged on behalf of the appellant, is that even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer.
xxxxxx
32. A drawer who signs a cheque and hands it over to the payee is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued towards payment of a debt or in the discharge of a liability. The presumption arises under Section 139.
48. Therefore, the cheque is not bad even if it is not filled in by the complainant.
::: Downloaded on - 01/01/2026 20:39:29 :::CIS 372026:HHC:43
49. There is no other evidence to rebut the presumption attached to the cheque; hence, the learned Courts below had rightly held that the accused had failed to rebut the presumption .
attached to the cheque.
50. The complainant asserted that the cheque was dishonoured with an endorsement 'account blocked'. Memo of dishonour (Ext. C-2) mentions a reason to dishonour as 'account of blocked'. It was laid down by the Hon'ble Supreme Court in Mandvi Cooperative Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC 83: (2010) 1 rt SCC (Civ) 625: (2010) 2 SCC (Cri) 1: 2010 SCC OnLine SC 155 that the memo issued by the Bank is presumed to be correct and the burden is upon the accused to rebut the presumption. It was observed at page 95:
"24. Section 146, making a major departure from the principles of the Evidence Act, provides that the bank's slip or memo with the official mark showing that the cheque was dishonoured would, by itself, give rise to the presumption of dishonour of the cheque, unless and until that fact was disproved. Section 147 makes the offences punishable under the Act compoundable."
51. In the present case, the accused did not lead any evidence to rebut the presumption attached to the memo of dishonour. Hence, the learned Courts below had rightly held that the cheque was dishonoured with an endorsement 'account blocked'.
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52. It was laid down by the Calcutta High Court in Display Service, Prop. Co-op Pvt. Ltd. v. State of West Bengal, 2013 SCC OnLine Cal 23093, that dishonour of the cheque with an .
endorsement 'account blocked' will attract the liability under Section 138 of the NI Act. It was observed:
"11. Applying the aforesaid rule of interpretation to the present case, I am of the considered view that dishonour of the cheques with the remark "account blocked" would also of fall within the ambit of section 138 of the Negotiable Instruments Act, 1881 when there is no material on record to show that there was sufficient credit in the account at the time of presentation of the cheques in question. That apart, rt there has been a failure and negligence on the part of the payee to pay the cheque amount within the stipulated time in spite of receipt of notice under section 138(b) of the Negotiable Instruments Act, 1881."
53. A similar view was taken by the Madras High Court in Challani Rank Jewellery v. Ashok Kumar Jain, 2024 SCC OnLine Mad 10675, wherein it was observed:
30. Though an account blocked is not specifically mentioned as a reason for dishonour to attract Section 138 of the NI Act, the judicial pronouncements have made it clear that the two contingencies mentioned in Section 138 of the NI Act are genus, and the reasons like account closed, stop payment, signature differs, etc., are species. If the complaint disclosed that the subject cheque was given without sufficient funds or in excess of arrangement, the other reasons that are species to the genus will follow to proceed under Section 138 of the NI Act.
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32. If the above logic and analogy are applied, it is amply clear that in cases of 'account block' or 'account freezed' ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 39 2026:HHC:43 complaint under Section 138of NI Act is maintainable, if the complainant prima facie satisfies that in the account there was no sufficient fund to honour. As the Supreme Court has held, the genus of the crime is any one of the contingencies envisaged under Section 138 of the NI Act. If the complaint discloses that dehors of account block or account freeze and .
even otherwise, the cheque could not be passed due to want of funds in the account, the drawer of the cheque cannot take umbrage under the fact that his account is blocked or freezed. Issuing the cheque without sufficient funds to honour is the genus of the crime.
54. Jammu and Kashmir High Court also took a similar of view in Sheikh Owais Tariq v. Satvir Singh, 2024 SCC OnLine J&K 727 and observed:
rt "13...So far as the present case is concerned, the respondent had nowhere pleaded in his application for dropping of proceedings that he was having sufficient amount in the bank account and that he was not having the knowledge of freezing of account at the time of issuance of cheque, and in absence of any such material before the learned Revisional Court, the Revisional Court could not have put the onus upon the complainant by observing that there was no argument on the part of the respondent therein i.e. the petitioner herein that besides being the account frozen, there were insufficient funds in the account of the respondent/accused to meet his liability. The said observation is contrary to the specific pleadings made by the petitioner before the learned trial court, wherein he had categorically pleaded that the respondent had fraudulently, with the aim of cheating the petitioner, issued the cheque despite the fact that there were no funds lying in his account either at the time of issuance of cheque or on the day the cheque was presented. The cheque was issued on 01.07.2014 and the same was dishonoured on 14.07.2014 and in absence of any finding as to when the account was frozen i.e. whether the account was frozen prior to the issuance of the cheque or after the issuance of the cheque and further as ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 40 2026:HHC:43 to whether the accounts of the respondent was having sufficient amount to honour the cheque at the time of issuance of cheque or not and rightly so because there was no material before the Revisional Court to return any such finding, the petitioner herein could not have been knocked out of the court at the threshold. The learned Revisional .
Court has put the cart before the horse and has returned a finding which could have been returned only after the full- fledged trial. Rather, the onus would be on the respondent to prove that he was not aware of the freezing of the account when the cheque was drawn, the account was frozen due to reasons beyond his control, and the account was having sufficient balance when the cheque was of dishonoured.
c. In "Vikram Singh v. Shyoji Ram, 2022 Legal Eagle(SC) 792, the High Court had quashed the proceedings of the complaint under section 138 of the Act, as the witnesses had rt stated that the accused had not opened the account with the Bank but in the memo it was mentioned that the cheque was dishonoured due to the reason 'Account Frozen'. The Hon'ble Supreme Court of India set aside the order passed by the High Court by observing that the "Account Frozen"
would presuppose the existence of the account, and it was premature to quash the complaint. The Hon'ble Supreme Court of India remanded the matter for a full-fledged trial.
14. In view of the above, this court is of the considered view that the complaint under section 138 of the Act is maintainable even if the cheque is dishonoured due to the reason 'Account frozen'. The judgments mentioned above, cited by the learned counsel for the respondent, are not applicable in the present case.
55. Kerala High Court also took a similar view in George vs Anurag K Haridas 2025:KER:52765
56. Thus, the accused would be liable when the cheque was dishonoured with an endorsement 'account blocked'.
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57. The complainant stated that he had issued a notice (Ext.CW-3/C) to the accused. He produced the receipt (Ext CW-3/D) and track consignment report (Ext.CW-3/E), which .
shows that the letter was delivered to the addressee. The accused also admitted in his statement recorded under Section 313 of Cr.P.C. that the notice was sent to him at his correct address through registered post. Thus, it was duly proved that the accused of had received the notice. He did not claim that he had paid the amount to the complainant after receipt of the notice.
58. rt Thus, it was duly proved that the accused had issued a cheque to discharge the liability, which was dishonoured with an endorsement 'account blocked', and he failed to pay the money despite receipt of a valid notice of demand; hence, all the ingredients of the commission of an offence punishable under Section 138 of the NI Act was duly satisfied, and the learned Trial Court had rightly convicted him of the commission of an offence punishable under Section 138 of the NI Act.
59. Learned Trial Court sentenced the accused to undergo simple imprisonment for six months. It was laid down by the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine ::: Downloaded on - 01/01/2026 20:39:29 :::CIS 42 2026:HHC:43 SC 138 that the penal provisions of Section 138 of the 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."
of
60. Therefore, the sentence of six months is not excessive.
61. The learned Trial Court imposed a fine of ₹4,00,000/-
rt on 31.08.2023. The cheque was issued on 21.10.2020. The complainant lost the interest that it would have gained by investing the money. The complainant incurred legal expenses by prosecuting the complaint before the learned Trial Court and defending the appeal filed before the learned Appellate Court.
Therefore, he was entitled to be compensated for the same. It was laid down by the Hon'ble Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. It was observed at page 291: -
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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]"
of
62. Hence, the compensation cannot be said to be excessive.
63. rt No other point was urged
64. In view of the above, the present revision fails and is dismissed, so also the pending miscellaneous application(s), if any
65. The records of the learned Courts below be returned alongwith a copy of this judgment (Rakesh Kainthla) Judge 01st January, 2026 (ravinder) ::: Downloaded on - 01/01/2026 20:39:29 :::CIS