Ram Chand vs Narayan Sharma on 28 August, 2025

[Cites 55, Cited by 0]

Himachal Pradesh High Court

Ram Chand vs Narayan Sharma on 28 August, 2025

1 ( 2025:HHC:29180 ) IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Revision No.423 of 2015 Reserved on: 20.08.2025 .

                                                 Decided on:             28.08.2025


    Ram Chand                                                              ....... Petitioner





                                        Versus

    Narayan Sharma                                                         .... Respondent

    Coram

The Hon'ble Mr. Justice Rakesh Kainthla, Judge.

Whether approved for reporting?1 No For the Petitioner: Mr. Vijay Chaudhary, Advocate.

For the Respondent: Mr. Shakti Bhardwaj, Advocate.

Rakesh Kainthla, Judge The present revision is directed against the judgment dated 02.09.2015 passed by learned Additional Sessions Judge, Kullu, District Kullu, Himachal Pradesh (learned Appellate Court) vide which judgment of conviction and order of sentence dated 25.03.2015 passed by learned Special Judicial Magistrate, Kullu. Distt. Kullu, HP (learned Trial Court) were upheld. (Parties shall hereinafter be referred to in 1 Whether the reporters of the local papers may be allowed to see the Judgment?Yes.

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( 2025:HHC:29180 ) the same manner as they were arrayed before the learned Trial Court for convenience.)

2. Briefly stated, the facts giving rise to the present .

revision are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). It was asserted that the accused and complainant were well known to each other. The accused demanded ₹1,20,000/- from the complainant for promotion of his business. The complainant advanced the money, and the accused promised to repay it within one month. The complainant demanded the money from the accused, and the accused issued a cheque of ₹1,20,000/-in favour of the complainant drawn on UCO Bank, Kullu. The complainant presented the cheque to the bank for realisation; however, the cheque was dishonoured with an endorsement "account closed". The complainant served a notice upon the accused asking him to repay the money. The notice was duly served upon the accused, but the accused failed to repay the money.

Hence, the complaint was filed before the learned Trial Court for taking action against the accused as per the law.

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( 2025:HHC:29180 )

3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, 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 himself (CW1) and Naresh Sehgal (CW2) to prove his case.

5. The accused, in his statement recorded under Section 313 of Cr. P.C., denied that he had borrowed the money from the accused or had issued a cheque to discharge his liability. He admitted that the cheque was dishonoured with an endorsement "account closed". He stated that he had not received any notice, and he had no subsisting liability. He claimed that he had taken a loan of ₹20,000/- from the complainant in the year 2010. He had returned ₹22,000/- to the complainant in the year 2011. The cheque was issued as security, which was misused by the complainant. He examined himself (DW1) and Milan Singh (DW2) to prove his defence.

6. Learned Trial Court held that the issuance of the cheque was not disputed. The accused also admitted his signature on the cheque in his cross-examination. Therefore, a ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 4 ( 2025:HHC:29180 ) presumption would arise that the cheque was issued for consideration in discharge of the liability under Section 118 (a) and 139 of the NI Act. The plea taken by the accused that he had .

taken a loan of ₹20,000/- and had returned it in the year 2011 was not established by the evidence of the accused. Therefore, the accused had failed to rebut the presumption attached to the cheque. The cheque was dishonoured with an endorsement "account closed," which would also attract liability under Section 138 of the NI Act. The complainant sent a notice to the accused, which was returned undelivered and was deemed to be served upon the accused. The accused did not pay any money to the complainant despite the receipt of the notice of demand.

Hence, the accused was convicted for the commission of an offence punishable under Section 138 of the NI Act and was sentenced to undergo simple imprisonment for six months, and pay a compensation of ₹1,50,000/- to the complainant.

7. Being aggrieved by the judgment and order passed by the learned Trial Court, the accused preferred an appeal, which was decided by the learned Additional Sessions Judge, Kullu (learned Appellate Court). Learned Appellate Court concurred with the findings recorded by the learned Trial Court that the accused admitted issuance of the cheque. Therefore, a ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 5 ( 2025:HHC:29180 ) presumption would arise that the cheque was issued for consideration in discharge of the liability. The burden is upon the accused to rebut the presumption. His plea that he had .

taken the loan of ₹20,000/- and returned ₹22,000/- to the complainant was not proved. Naresh Sehgal (CW2) categorically stated that the accused had not returned the cheque book at the time of closing the account. Therefore, the accused was in possession of the cheque book. He issued a cheque drawn on an account which did not exist. The cheque was also dishonoured with an endorsement "account closed," and this fact was not disputed by the accused in his statement recorded under Section 313 of Cr.P.C. The notice was returned unclaimed and is deemed to be served. All the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied. Hence, the learned Trial Court had rightly convicted and sentenced the accused. No interference was required with the judgment and order passed by the learned Trial Court.

Hence, the appeal was dismissed.

8. Being aggrieved by the judgments and order passed by the learned Courts below, the accused has filed the present revision asserting that the learned Courts below failed to properly appreciate the material on record. The complaint did ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 6 ( 2025:HHC:29180 ) not mention the date of the advancement of the loan. Notice was returned with an endorsement 'unclaimed'. Therefore, there was no proper service of the accused. Naresh Sehgal .

(CW2) categorically stated that the account was closed on 18.05.2011, and the cheque books were deposited at the time of closing of the account. This falsifies the complainant's version that the cheque was issued on 25.11.2012. The accused did not possess any cheque book, and he could not have issued any cheque on that day. This corroborated the version of the accused that the cheque was issued by the accused as security, which was misused by the complainant. 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. Vijay Chaudhary, learned counsel for the petitioner and Mr. Shakti Bhardwaj, learned counsel for the respondent.

10. Mr. Vijay Chaudhary, learned counsel for the petitioner, submitted that the learned Courts below did not appreciate the material on record. The accused had taken a loan of ₹20,000/- which was returned by him with interest in the year 2011. The account was closed in the year 2011, and the ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 7 ( 2025:HHC:29180 ) cheque book was deposited at the time of closing the account.

The cheque could not have been issued by the accused in 2012.

This corroborated the version of the accused that the blank .

security cheque was lying with the complainant, which was misused by him. Therefore, he prayed that the present revision be allowed and judgments and order passed by learned Courts below be set aside.

11. Mr. Shakti Bhardwaj, learned counsel for the respondent/complainant, submitted that the accused had failed to rebut the presumption attached to the cheque. His plea that he had taken a loan of ₹20,000/- and had handed over the security cheque to the complainant was not probable. He admitted that cases of dishonour of cheques were pending against him, which shows that he was aware of the consequences of the dishonour of cheques, and he would not have believed the complainant's version that the cheque would be torn by him. The statement of Naresh Kumar Sehgal (CW2) shows that it is a normal practice to deposit the cheque, but this practice could not be followed in the present case, as the accused claimed that he had misplaced the cheque book. The cheque was deliberately issued by the accused on an account closed by him, which attracts the liability under Section 138 of ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 8 ( 2025:HHC:29180 ) the NI Act. The notice was returned with an endorsement 'unclaimed' and is deemed to be served. There is no infirmity in the judgments and order passed by the learned Courts below.

Hence, he prayed that the present revision be dismissed.

12. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.

13. It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204:

(2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional court does not exercise an appellate jurisdiction 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 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-

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( 2025:HHC:29180 ) founded error which is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.

.

14. This position was reiterated in State of Gujarat v.

Dilipsinh Kishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC 1294, wherein it was observed at page 695:

14. The power and jurisdiction of the Higher Court under Section 397CrPC, which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case.

The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept in such proceedings.

15. It would be apposite to refer to the judgment of this Court in Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986], where 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 - 28/08/2025 21:27:49 :::CIS 10 ( 2025:HHC:29180 ) 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 r 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 the framing of a charge is a much-advanced stage in the proceedings under CrPC."

16. This Court in the aforesaid judgment in Amit Kapoor case [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 :

(2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986 ] has also laid down principles to be considered for exercise of jurisdiction under Section 397 particularly in the context of prayer for quashing of charge framed under Section 228CrPC is sought for as under : (Amit Kapoor case [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 : (2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986], SCC pp. 482-83, para 27) "27. Having discussed the scope of jurisdiction under these two provisions, i.e., Section 397 and Section 482 of the Code, and the fine line of jurisdictional distinction, it will now be appropriate for us to enlist the principles with reference to which the courts should exercise ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 11 ( 2025:HHC:29180 ) such jurisdiction. However, it is not only difficult but inherently impossible to state such principles with precision. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the .

principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be. 27.1. Though there are no limits to the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly the charge framed in terms of Section 228 of the Code, should be exercised very sparingly and with circumspection, and that too in the rarest of rare cases.

27.2. The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion, and where the basic ingredients of a criminal offence are not satisfied, then the Court may interfere. 27.3. The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in a conviction or not at the stage of framing of charge or quashing of charge.

*** 27.9. Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 12 ( 2025:HHC:29180 ) determine whether there is sufficient material on the basis of which the case would end in a conviction; the court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an .

abuse of the process of court leading to injustice.

*** 27.13. Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or r records, but is an opinion formed prima facie."

17. The revisional court cannot sit as an appellate court and start appreciating the evidence by finding out inconsistencies in the statements of witnesses, and it is not legally permissible. The High Courts ought to be cognizant of the fact that the trial court was dealing with an application for discharge.

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:

14. The power and jurisdiction of the Higher Court under Section 397CrPC, which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case.

The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept in such proceedings.

15. It would be apposite to refer to the judgment of this Court in Amit Kapoor v. Ramesh Chander [Amit ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 13 ( 2025:HHC:29180 ) Kapoor v. Ramesh Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986], where 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 r 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 14 ( 2025:HHC:29180 ) aforestated. Even framing of a charge is a much-advanced stage in the proceedings under CrPC."

16. This Court in the aforesaid judgment in Amit Kapoor case [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 :

.

(2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986 ] has also laid down principles to be considered for exercise of jurisdiction under Section 397 particularly in the context of prayer for quashing of charge framed under Section 228CrPC is sought for as under : (Amit Kapoor case [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 : (2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986], SCC pp. 482-83, para 27) "27. Having discussed the scope of jurisdiction under these two provisions, i.e. Section 397 and Section 482 of the Code, and the fine line of r jurisdictional distinction, it will now be appropriate for us to enlist the principles with reference to which the courts should exercise such jurisdiction. However, it is not only difficult but inherently impossible to state such principles with precision. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be.

27.1. Though there are no limits to the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly the charge framed in terms of Section 228 of the Code, should be exercised very sparingly and with circumspection and that too in the rarest of rare cases.

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( 2025:HHC:29180 ) 27.2. The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations .

are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion, and where the basic ingredients of a criminal offence are not satisfied, then the Court may interfere. 27.3. The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in a conviction or not at the stage of framing of charge or quashing of charge.

r *** 27.9. Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction; the court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.

17. The revisional court cannot sit as an appellate court and start appreciating the evidence by finding out ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 16 ( 2025:HHC:29180 ) inconsistencies in the statements of witnesses, and it is not legally permissible. The High Courts ought to be cognizant of the fact that the trial court was dealing with an application for discharge.

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:

r to "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 [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 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 17 ( 2025:HHC:29180 ) 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 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 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 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 of 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 18 ( 2025:HHC:29180 ) 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 the conviction of the accused was also 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 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.

17. 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 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 & 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."

18. The present revision has to be decided as per the parameters laid down by the Hon'ble Supreme Court.

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19. The accused admitted, while appearing as DW1, that the cheque (Ex.C1) bears his signature and he had handed over this cheque to the complainant. Therefore, the learned Courts .

below had rightly proceeded on the premise that the issuance of the cheque was not disputed, and the presumption that the cheque was issued in discharge of legal liability would arise. 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 issuance of a cheque and signature on the cheque are not disputed, a presumption would arise that the cheque was issued in discharge of the legal liability. It was observed: -

"7.2. What is emerging from the material on record is that the issuance of a cheque by the accused and the signature of the accused on the said cheque are not disputed by the accused. The accused has also not disputed that there were transactions between the parties. Even as per the statement of the accused, which was recorded at the time of the framing of the charge, he has admitted that some amount was due and payable. However, it was the case on behalf of the accused that the cheque was given by way of security, and the same has been misused by the complainant. However, nothing is on record that in the reply to the statutory notice, it was the case on behalf of the accused that the cheque was given by way of security. Be that as it may, however, it is required to be noted that earlier the accused issued cheques which came to be dishonoured on the ground of "insufficient funds" and thereafter a fresh consolidated cheque of ₹9,55,574 was given which has been returned ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 20 ( 2025:HHC:29180 ) 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 a 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 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 by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption, and more particularly, the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists a legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both the learned trial court as well as the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 21 ( 2025:HHC:29180 ) been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evidence."

20. The presumption under Section 139 of the NI Act was .

explained by the Hon'ble Supreme Court in Triyambak S. Hegde v. Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ) 512: 2021 SCC OnLine SC 788 at page 747:

"12. From the facts arising in this case and the nature of the rival contentions, the record would disclose that the signature on the documents at Exts. P-6 and P-2 are not disputed. Ext. P-2 is the dishonoured cheque based on which the complaint was filed. From the evidence tendered before the JMFC, it is clear that the respondent has not disputed the signature on the cheque. If that be the position, as noted by the courts below, a presumption would arise under Section 139 in favour of the appellant who was the holder of the cheque. Section 139 of the NI Act reads as hereunder:

"139. Presumption in favour of the holder. --It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."

13. Insofar as the payment of the amount by the appellant in the context of the cheque having been signed by the respondent, the presumption for passing of the consideration would arise as provided under Section 118(a) of the NI Act, which reads as hereunder:

"118. Presumptions as to negotiable instruments .

--Until the contrary is proved, the following presumptions shall be made:

(a) of consideration: that every negotiable instrument was made or drawn for ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 22 ( 2025:HHC:29180 ) 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. Mudiba sappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held as hereunder: (SCC pp. 432-33, paras 25-26) "25. We having noticed the ratio laid down by this Court in the above cases on Sections 118( a) and 139, we now summarise the principles ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 23 ( 2025:HHC:29180 ) 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 24 ( 2025:HHC:29180 ) cheque was issued in relation to a loan of Rs 25,000 taken by the accused, PW 1 said that he does not remember. PW 1, in his evidence, admitted that he retired in 1997, on which date he received a monetary benefit of Rs 8 .

lakhs, which was encashed by the complainant. It was also brought in evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs 4,50,000 to Balana Gouda towards sale consideration. Payment of Rs 4,50,000 being admitted in the year 2010, and further payment of the 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 the 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 25 ( 2025:HHC:29180 ) is no ambiguity whatsoever. In Basalingappav. Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571 ] relied on by the learned counsel for the respondent, though on facts the ultimate conclusion therein was against raising presumption, the .

facts and circumstances are entirely different as the transaction between the parties as claimed in the said case is peculiar to the facts of that case where the consideration claimed to have been paid did not find favour with the Court keeping in view the various transactions and extent of amount involved. However, the legal position relating to the presumption arising under Sections 118 and 139 of the NI Act on signature being admitted has been reiterated. Hence, whether there is a rebuttal or not would depend on the facts and circumstances of each case."

21. This position was reiterated in Tedhi Singh v.

Narayan Dass Mahant, (2022) 6 SCC 735: (2022) 2 SCC (Cri) 726: (2022) 3 SCC (Civ) 442: 2022 SCC OnLine SC 302, wherein it was held at page 739.

"8. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the NI Act provides that the court shall presume that the holder of a 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) ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 26 ( 2025:HHC:29180 ) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184] ). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable .

defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist..."

22. Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022 SCC OnLine SC 1131, wherein it was observed:

"As per Section 139 of the N.I. Act, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque are not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary."

23. This position was reiterated in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was observed at page 161:

33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 27 ( 2025:HHC:29180 ) "unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque for the discharge of, whole or part of any debt or liability". It will be seen that the "presumed fact" directly relates to one of the crucial ingredients necessary to sustain a .

conviction under Section 138. [The rules discussed herein below 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 has 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 a 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 28 ( 2025:HHC:29180 ) 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 the discharge of debt, the presumptive .

device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.

38. John Henry Wigmore [John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law] on Evidence states as follows:

"The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule'."

39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond 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]] ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 29 ( 2025:HHC:29180 )

24. Thus, the learned Courts below had rightly held that a presumption would arise in the present case that the cheque was issued for consideration in discharge of the liability.

25. The accused stated that he had taken a loan of ₹20,000/- @10% per annum in the year 2010 and issued a blank cheque to the complainant as security. He returned the amount on 20.06.2011 with an interest of ₹2,000/- in the office of his son. He demanded the cheque from the complainant, and the complainant promised to tear the cheque.

26. Statement of the accused is highly unsatisfactory. He admitted in his cross-examination that two cases of dishonour of cheques were pending against him in Court. This admission shows that he was aware of the consequences of the dishonour of the cheque. He was facing the prosecution in two cases of dishonour of the cheques and would not have believed the complainant's version that the cheque would be torn without seeing the torn cheque or the cheque being torn in his presence.

Thus, his testimony cannot be relied upon.

27. Milan Singh (DW2) stated that the accused returned ₹22,000/- to the complainant on 20.06.2011 in his shop. When the accused demanded the blank cheque, the complainant ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 30 ( 2025:HHC:29180 ) stated that he did not possess the cheque and that he would tear it. He is the son of the accused. He stated that he was not aware of the number of cases of dishonour of cheques pending against .

his father. He was not aware that his father had advanced a cheque of ₹1,20,000/- to the complainant on 25.11.2012. The fact that he has feigned ignorance regarding the pendency of the cases against his father and the issuance of a cheque by his father on 25.11.2012 shows that he is not a reliable witness. He did not remember the material facts of the case, which shows that his memory is not trustworthy, or he is trying to help the accused, and his testimony is not acceptable in either of these situations.

28. Therefore, the evidence of the accused was insufficient to prove the plea taken by him that he had taken a loan of ₹20,000/- and had issued the blank signed security cheque.

29. The complainant stated in his cross-examination that the accused came to his home in the first week of October.

His wife and children were present at the home. No document was prepared regarding the advancement of the loan. He had withdrawn the money from the bank 2-3 days before advancing ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 31 ( 2025:HHC:29180 ) the loan to the accused. He denied that the accused had taken a loan of ₹20,000/- and returned ₹22,000/- to him.

30. It was submitted that the complainant did not .

produce his wife or children to prove the advancement of the loan. The complainant had also not executed any document to prove that any amount was advanced to the accused. Therefore, the complainant's version that the cheque was issued in discharge of liability was not proved. This submission will not help the petitioner. 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 32 ( 2025:HHC:29180 ) accepted, indorsed, negotiated or transferred for consideration;

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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 was 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. An 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.

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 the cheque to rebut the presumption that the cheque was issued not for the 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 33 ( 2025:HHC:29180 ) 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. To rebut the statutory presumptions, an r 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 34 ( 2025:HHC:29180 ) 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 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 35 ( 2025:HHC:29180 ) 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 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 36 ( 2025:HHC:29180 ) 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 the .

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 fact. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the r prosecution to prove the case against the accused beyond a 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].

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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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 37 ( 2025:HHC:29180 ) penal provisions of Section 138 would be attracted.

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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 the 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 r 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 appellant-accused to establish ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 38 ( 2025:HHC:29180 ) a probable defence so as to rebut such a presumption.

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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....

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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;

::: Downloaded on - 28/08/2025 21:27:49 :::CIS 39

( 2025:HHC:29180 ) 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 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."

31. 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 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 40 ( 2025:HHC:29180 ) 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 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 41 ( 2025:HHC:29180 ) 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 presumption and to establish a probable defence whereby, the onus would again shift to the complainant?

32. 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 42 ( 2025:HHC:29180 ) 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 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 43 ( 2025:HHC:29180 ) 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 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, further 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 44 ( 2025:HHC:29180 ) 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)

33. Hence, the complainant's version that he had advanced ₹1,20,000/- to the accused cannot be disputed because the statements of complainant's wife and children were not recorded, or no document was prepared.

34. Heavy reliance was placed upon the statement of Naresh Sehgal (CW2), who stated in his examination in chief that the cheque book is deposited at the time of closing the account. However, Naresh Sehgal (CW2) has also stated in his cross-examination that the accused did not deposit the old cheque book by saying that he had lost the old cheque book. The accused had only deposited a new cheque book. The statement of this witness showed that the old cheque book remained with the accused, and the accused could issue a cheque out of the old cheque book. Thus, the accused cannot derive any benefit from the testimony of this witness.

35. The complainant stated that the cheque was dishonoured with an endorsement "account closed". The ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 45 ( 2025:HHC:29180 ) accused admitted this fact in his statement recorded under Section 313 of Cr.P.C. The memo of dishonour (Ex.C2) shows that the reason for dishonour is "account closed". It was laid .

down by the Hon'ble Supreme Court in NEPC Micon Ltd. v.

Magma Leasing Ltd., (1999) 4 SCC 253: 1999 SCC (Cri) 524:

1999 SCC OnLine SC 508, that when a cheque is dishonoured due to the account being closed, it will attract the provision of Section 138 of N.I. Act. It was observed at page 258:

7. Further, the offence will be complete only when the conditions in provisos (a), (b) and (c) are complied with.

Hence, the question is, in a case where a cheque is re- turned by the bank unpaid on the ground that the "ac- count is closed", would it mean that the cheque is re- turned as unpaid on the ground that "the amount of money standing to the credit of that account is insuffi- cient to honour the cheque"? In our view, the answer would obviously be in the affirmative because the cheque is dishonoured as the amount of money standing to the credit of "that account" was "nil" at the relevant time, apart from it being closed. Closure of the account would be an eventuality after the entire amount in the account is withdrawn. It means that there was no amount in the credit of "that account" on the relevant date when the cheque was presented for honouring the same. The ex- pression "the amount of money standing to the credit of that account is insufficient to honour the cheque" is a genus of which the expression "that account being closed" is a species. After issuing the cheque drawn on an account maintained, a person, if he closes "that account"

apart from the fact that it may amount to another of- fence, it would certainly be an offence under Section 138, as there were insufficient or no funds to honour the cheque in "that account". Further, the cheque is to be ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 46 ( 2025:HHC:29180 ) drawn by a person for payment of any amount of money due to him "on an account maintained by him" with a banker and only on "that account" the cheque should be drawn. This would be clear by reading the section along with provisos (a), (b) and (c).

.

********

15. In view of the aforesaid discussion, we are of the opinion that even though Section 138 is a penal statute, it is the duty of the court to interpret it consistently with the legislative intent and pur- pose so as to suppress the mischief and advance the remedy. As stated above, Section 138 of the Act has created a contractual breach as an offence, and the legislative purpose is to promote the efficacy of banking and of ensuring that in commercial or contractual transactions, cheques are not dishon-

oured and credibility in transacting business through cheques is maintained. The above inter-

pretation would be in accordance with the princi- ple of interpretation quoted above "brush away the cobweb varnish, and shew the transactions in their true light" (Wilmot, C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited". Hence, when the cheque is returned by a bank with an endorsement "account closed", it would amount to returning the cheque unpaid because "the amount of money standing to the credit of that account is insuffi- cient to honour the cheque" as envisaged in Sec- tion 138 of the Act.

36. This Court also took the same view in Bal Krishan Sharma v. Tek Ram, 2006 SCC OnLine HP 105: 2006 Cri LJ 1993 and observed:

"9. The provisions contained in this chapter are primar- ily designed to provide an additional criminal remedy, ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 47 ( 2025:HHC:29180 ) over and above the civil remedies available to the payee or holder in due course of a cheque. This chapter protects the interests of a payee or holder in due course of a dis- honoured cheque. The object of the chapter is to enhance the acceptability of the cheque in the settlement of fi-

.

nancial liabilities by making the drawer liable for penal-

ties. It is noticed that for establishing the requirements of Section 138, there is no burden on the part of the com- plainant to prove before a Court the entire details of the transactions resulting in the issuance of the cheque. As observed by the Apex Court in Kusum Ingots and Alloys Limited v. Pennar Peterson Securities Ltd., II (2000) SLT 375: I (2000) CCR 260 (SC): I (2000) BC 300: (2000) 2 SCC 745, the object of bringing Section 138 on statute is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable in- struments. Looking at the object of incorporating Chap-

ter VIII in the Act, the expression "on account main-

tained by him" used in Section 138 of the Act, as noticed above, cannot be interpreted to give it an artificial or un- realistic meaning. What the provision says is that the cheque must be drawn on the account which the ac- cused maintained with the Bank. The status of the ac- count, when the cheque was drawn, whether it was live or dead, is irrelevant. What the provision says is that the accused must have an account which is main-

tained or has been maintained with the Bank. The Legis- lature has not used the present continuous tense. The ex- pression used is "on an account maintained by him" and not "maintained by him". The cheque, in my view, should have a reference to an account of the accused, ir- respective of the fact whether such an account was live or dead on the date of issuance of the cheque. The interpretation of the expression "on an account maintained by him" as given by the learned Trial Magis- trate and contended by the learned Counsel for the ac- cused is artificial and beyond the legislative intent. While interpreting the provision, the legislative purpose and goal have to be kept in mind. We cannot lose sight of the fact that in this era, financial transactions are not depen- dent on cash and therefore financial transactions by ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 48 ( 2025:HHC:29180 ) other modes, including "cheques", have to be attached to credibility.

10. The following observations of the Supreme Court in NEPC Micon Ltd. v. Magma Leasing Ltd., II (2006) BC 316 (SC): IV (1999) SLT 254: III (1999) CCR 4 (SC) :

.

(1999) 4 SCC 253, are apposite:

"10. This Court in the case of Kanwar Singh v. Delhi Admn. While construing Section 418(i) of the Delhi Municipal Corporation Act, 1959, observed--

'It is the duty of the Court in construing a statute to give effect to the intention of the legislature. If, therefore, giving a literal meaning to a word used by the draftsman, particularly in a penal statute, would defeat the object of the Legislature, which is to r suppress mischief, the Court can depart from the dictionary meaning or even the popular meaning of the word and instead give it a meaning which will advance the remedy and suppress the mischief.

11. Further, while interpreting the statutory provision rule dealing with penalty under the Drugs and Cosmetics Act, 1940 and the rules in the case of Swantraj v. State of Maharashtra, this Court held that every legislation is a social document and judicial construction seeks to de- cipher the statutory mission, language permit- ting, taking the one from the rule in Heydon's case of suppressing the evil and advancing the remedy. The Court held that what must tilt the balance is the purpose of the statute, its poten- tial frustration and judicial avoidance of the mischief by a construction whereby the means of licensing meet the ends of ensuring pure and potent remedies for the people. The Court ob- served that this liberty with language is sancti- fied by great Judges and textbooks. Maxwell in- structs us in these words--

::: Downloaded on - 28/08/2025 21:27:49 :::CIS 49

( 2025:HHC:29180 ) "There is no doubt that the office of the Judge is to make such construction as will suppress the mischief, and advance the rem- edy, and suppress all evasions for the con- tinuance of the mischief. To carry out effec-

.

tively the object of a statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or en-

joined: 'quando aliquid prohibetur, prohi- betur et omne pe quod devenitur ad illud.'

11. This manner of construction has two aspects. One is that the Courts, mindful of the mischief rule, will not be astute to narrow the language of a statute so as to allow persons within its purview to escape its net. The other is that the statute may be applied to the substance rather than the mere form of transactions, thus defeating any shifts and contrivances which parties may have devised in the hope of thereby falling outside the Act. When the Courts find an attempt at concealment, they will, in the words of Wilmot, C.J., 'brush away the cobweb varnish, and show the transactions in their true light'."

12. Their Lordships proceeded to observe:

"15. In view of the aforesaid discussion, we are of the opinion that even though Section 138 is a penal statute, it is the duty of the Court to interpret it consistently with the legislative intent and purpose so as to sup- press the mischief and advance the remedy.

As stated above, Section 138 of the Act has created a contractual breach as an offence, and the legislative purpose is to promote the efficacy of banking and of ensuring that in commercial or contractual transactions, cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of inter- pretation quoted above "brush away the cobweb varnish, and show the transactions ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 50 ( 2025:HHC:29180 ) in their true light" (Wilmot C.J.) or (by Max- well) "to carry out effectively the breach of the statute, it must be so construed as to de-

feat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it .

has prohibited" Hence when the cheque is returned by a Bank with an endorsement "account closed". It would amount to re- turning the cheque unpaid because "the amount of money standing to the credit of that account is insufficient to honour the cheque" as envisaged in Section 138 of the Act."

13. If the interpretation as contended by the learned Counsel for the accused and the Trial Court is to be ac- cepted, then a person who receives the cheque will have to ensure that the account is alive. If he does not, he runs the risk of losing his money and the denial of benefits un- der Section 138 of the Act. This certainly cannot be the legislative intent. Any account holder with the intent to defeat the provisions of Section 138 of the Act may retain a cheque leaf after closing his account with the Bank to defraud any honest payee. Should such a dishonest ac- count holder be permitted to escape the proceedings un- der Section 138 of the Act?

14. Learned Counsel for the accused would contend that the observations in NEPC Micon Limited were that if a cheque is dishonoured on the ground that the account is closed then it would come within the sweep of Section 138 of the Act but if the cheque is issued on a closed ac- count, then such an act of a dishonest person would not fall within the mischief of Section 138 of the Act. It is true that the NEPC case does not specifically deal with the cheques issued on accounts closed prior to the date of is- suance of the cheque. Nevertheless, this case does not in- dicate that such cases are intended to be taken out of the sweep of Section 138 of the Act. In my opinion, the ex- pression "on an account maintained by him" necessarily includes an account which was maintained by him, i.e., ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 51 ( 2025:HHC:29180 ) the account which has been closed, as also the account which is still maintained by him.

15. The Supreme Court in N.A. Issac v. Jeemon P. Abra- ham, III (2006) BC 422 (SC): VI (2004) SLT 154: IV (2004) CCR 124 (SC): 2005 (1) Civil Court Cases 690 (SC) , inter-

preted Section 138 of the Act and observed that con-

tention that this provision will not be applicable when the cheque is issued from an already closed account cannot be upheld as such an interpretation would defeat the object of insertion of the provision in the Act. Their Lordships observed: "Section 138 does not call for such a narrow construction". Their Lordships approved that the expres- sion used in Section 138 of the Act includes the cheques issued on a closed account.

16. For the reasons recorded above, the findings recorded by the Trial Magistrate holding that Section 138 of the Act is not applicable to a cheque drawn on a closed account, cannot be upheld."

37. Thus, the accused would be liable for the commission of an offence punishable under Section 138 of N.I. Act when the cheque was dishonoured with an endorsement "account closed".

38. The complainant stated that he had sent the notice (Ex.C3) to the accused, which was returned with an endorsement 'unclaimed'. This is duly corroborated by the registered letter (Ex.C5), which bears the endorsement of 'unclaimed'. It was laid down by the Hon'ble Supreme Court of India in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555, that when a notice is returned unclaimed, it is deemed to be served. It was observed:

::: Downloaded on - 28/08/2025 21:27:49 :::CIS 52

( 2025:HHC:29180 ) "8. Since in Bhaskaran's case (supra), the notice issued in terms of Clause (b) had been returned unclaimed and not as refused, the Court, posed the question: "Will there be any significant difference between the two so far as the presumption of service is concerned?" It was .

observed that though Section 138 of the Act does not require that the notice should be given only by "post", yet in a case where the sender has dispatched the notice by post with the correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 (for short 'G.C. Act') could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sendee unless he proves that it was not really served and that he was not responsible for such non-service."

39. This position was reiterated in Priyanka Kumari vs. Shailendra Kumar (13.10.2023- SC Order): MANU/ SCOR/ 133284/ 2023, wherein it was observed:

"As it was held by the Hon'ble Supreme Court in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, (1999) 7 Supreme Court Cases 510, that when notice is returned as 'unclaimed', it shall be deemed to be duly served upon the addressee, and it is a proper service of notice. In the case of Ajeet Seeds Limited Vs. K. Gopala Krishnaiah (2014) 12 SCC 685 (2014), the Hon'ble Court, while interpreting Section 27 of the General Clauses Act 1897 and also Section 114 of the Evidence Act 1872, held as under: -

"Section 114 of the Evidence Act, 1872, enables the court to presume that in the common course of natural events, the communication sent by post would have been delivered at the address of the addressee. Further, Section 27 of the General Clauses Act, 1897 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post.

::: Downloaded on - 28/08/2025 21:27:49 :::CIS 53

( 2025:HHC:29180 ) It is not necessary to aver in the complaint that, in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the .

contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business."

40. In the present case, the accused has not proved that he was not responsible for non-service; therefore, the learned Courts below had rightly held that the notice was duly served upon the accused.

41. Therefore, it was duly proved on record that the accused had issued a cheque in discharge of his legal liability, which cheque was dishonoured with an endorsement "account closed" and the accused failed to repay the amount despite the deemed service of notice upon him. Hence, all the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied, and the learned Trial Court had rightly convicted the accused of the commission of an offence punishable under Section 138 of the NI Act.

42. Learned Trial Court sentenced the accused to undergo simple imprisonment of six months. It was laid down by the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 54 ( 2025:HHC:29180 ) (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309:

2019 SCC OnLine SC 138 that the penal provisions of Section 138 is a deterrent in nature. It was observed at page 203:

.

"6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments, including cheques, and to encourage and promote the use of negotiable instruments, including cheques, in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same."

43. Keeping in view the deterrent nature of the sentence to be awarded, the sentence of six months of simple imprisonment cannot be said to be excessive, and no interference is required with it.

44. Learned Trial Court ordered the payment of compensation of ₹1,50,000/- (₹1,20,000/-cheque amount & ₹30,000/- as damages). The cheque was issued on 25.11.2012.

The order was pronounced on 25.03.2015 after the lapse of more than two years. The complainant lost interest on the amount which he would have gained by depositing it in the bank. He had to pay the litigation expenses and 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 ::: Downloaded on - 28/08/2025 21:27:49 :::CIS 55 ( 2025:HHC:29180 ) SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate .

of 9% per annum. It was observed at page 291: -

19. As regards the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for the dishonour of a cheque as well as civil liability for the realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation, and unless there exist special circumstances, the courts should uniformly levy fines up to twice the cheque amount along with simple interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ) 79: (2 012) 1 SCC (Cri) 520]"

45. Therefore, the compensation of ₹30,000/-on the principal amount of ₹1,20,000/- is not excessive, and no inference is required with the compensation awarded by the learned Trial Court.

46. No other point was urged.

47. Thus, the judgments and order passed by learned Courts below are fully sustainable. Hence, the present revision fails and the same is dismissed, so also the pending miscellaneous application(s), if any.

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( 2025:HHC:29180 )

48. A copy of this judgment, alongwith records of the learned Courts below, be sent back forthwith.

(Rakesh Kainthla) .

Judge 28 August 2025.

      (yogesh)





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Ram Chand vs Narayan Sharma on 28 August, 2025