Conviction under Section 138 NI Act for a dishonoured cheque was challenged in revision. The High Court held the defence of a security cheque was an afterthought, signature mismatch does not attract Section 138 liability, notice deemed served, and dismissed the revision upholding conviction and sentence.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Neutral Citation No. ( 2025:HHC:18361 )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 56 of 2024 Reserved on: 30.05.2025 Date of Decision: 17.06.2025
Mahesh Gautam ...Petitioner Versus Rajeev Kohli ...Respondent
Coram
Hon’ble Mr Justice Rakesh Kainthla , Judge. Whether approved for reporting?1 Yes
| For the Petitioner | : Mr. |
N.K. Thakur, Sr. Advocate with |
|---|---|---|
| Mr. | Divya Raj Singh, Advocate. | |
| For the Respondent | : Mr. |
Surinder K. Saklani, Advocate. |
Rakesh Kainthla, Judge
The petitioner (accused before learned Trial Court) has filed the present petition against the judgment dated 28.12.2023 passed by learned Additional Sessions Judge-II, Una, District Una, H.P (learned Appellate Court), vide which the appeal filed by the petitioner was dismissed and the judgment and order dated 30.08.2022 passed by learned Additional Chief Judicial Magistrate
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
P a g e | 2
Court No.1, Una, District Una, (learned Trial Court) convicting and sentencing the petitioner were upheld. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short ‘NI Act’). It was asserted that the complainant is the proprietor of M/s Kohli Traders and deals in cold drinks and other items. The accused No.1 is the proprietor of M/s MVASKT India. He purchased various items of cold drinks from the complainant vide Bill No.51 dated 25.05.2015 for a sum of ₹2,90,440/-. The accused paid ₹27,224/- in cash and issued a cheque of ₹2,63,216/- to discharge the remaining liability. The complainant presented the cheque before his Bank-Bank of Baroda, Una Branch. The cheque was forwarded to the Bank of the accused but it was dishonoured with the remarks ‘funds insufficient’. The complainant issued a legal notice dated 25.08.2015 to the accused requesting him to pay the amount of ₹2,63,216/- within 15 days from the date of the receipt of the legal notice. The accused refused to receive the notice and
P a g e | 3
the same is deemed to be served. The accused failed to pay the amount despite the deemed receipt of the notice; hence, the complaint was filed before the learned Trial Court to take action against the accused as per the law.
3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act to which the accused pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW1), Arun Guleri (CW2), and Dipti (CW3) to prove his case.
5. The accused in his statement recorded under Section 313 of Cr.P.C. admitted that the complainant is the proprietor of M/s Kohli Traders and that he is a proprietor of M/s MVASKT. He denied the rest of the prosecution case. He stated that the cheque was given in lieu of the transfer of the stock of the Company in which the accused was an employee and the Company to which the stock was transferred gave another cheque. The complainant undertook to return the blank cheque of the accused, however, he failed to do so. A legal notice was also served upon the
P a g e | 4
complainant. He examined Lovekesh Patial (DW1) and himself (DW2).
6. Learned Trial Court held that it was duly proved that the cheque was issued by the accused. There is a presumption under the NI Act that the cheque was issued for valid consideration in the discharge of the legal liability. The plea taken by the accused, that the cheque was issued as a security for the transfer of some articles and the payment was made by the transferee, was not proved. The cheque was dishonoured with an endorsement of ‘insufficient funds’ and the accused had refused to receive the notice. Therefore, the accused was convicted of the commission of an offence punishable under Section 138 of the NI Act and was sentenced to undergo simple imprisonment for one year and pay a compensation of ₹4,80,000/- to the complainant.
P a g e | 5
failed to rebut the presumption of consideration. The cheque was dishonoured due to insufficient funds. The plea taken by the accused that signatures were different was also not established. The cheque was not returned due to a mismatch of the signatures on the cheque but due to insufficient funds. Accused failed to pay the amount despite a deemed notice of demand; hence, the appeal was dismissed.
P a g e | 6
and filed a false complaint against the accused, therefore, it was prayed that the present petition be allowed and the judgments and order passed by learned Courts below be set aside.
P a g e | 7
P a g e | 8
not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed on page 207: -
“10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like the appellate court, and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short “CrPC”) vests jurisdiction to satisfy itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error which is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.
Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294, wherein it was observed:
“13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C., which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularity of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh
P a g e | 9
Chandra, (2012) 9 SCC 460, where the scope of Section 397 has been considered and succinctly explained as under:
“ 12 . Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error, and it may not be appropriate for the court to scrutinise the orders, which, upon the face of it, bear a token of careful consideration and appear to be in accordance with the law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes but are merely indicative. Each case would have to be determined on its own merits.
165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine
P a g e | 10
SC 651 that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. It was observed on page 169:
“12. This Court has time and again examined the scope of Sections 397/401 CrPC and the ground for exercising the revisional jurisdiction by the High Court. In State of Kerala v. Puttumana Illath Jathavedan Namboodiri [State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452: 1999 SCC (Cri) 275] , while considering the scope of the revisional jurisdiction of the High Court, this Court has laid down the following: (SCC pp. 454-55, para 5)
“ 5 . … In its revisional jurisdiction, the High Court can call for and examine the record of any proceedings for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order. In other words, the jurisdiction is one of supervisory jurisdiction exercised by the High Court for correcting a miscarriage of justice. But the said revisional power cannot be equated with the power of an appellate court, nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its own conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to a gross miscarriage of justice. On scrutinising the impugned judgment of the High Court from the aforesaid standpoint, we have no hesitation in coming to the conclusion that the High Court exceeded its jurisdiction in interfering with the conviction of the respondent by reappreciating the oral evidence. …”
13. Another judgment which has also been referred to and relied on by the High Court is the judgment of this Court
P a g e | 11
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 in the court to do justice in accordance with the principles of criminal jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, the courts may not interfere with the decision in exercise of their revisional jurisdiction.”
14. In the above case, also conviction of the accused was recorded, and the High Court set aside [ Dattatray Gulabrao Phalke v. Sanjaysinh Ramrao Chavan, 2013 SCC OnLine Bom 1753] the order of conviction by substituting its own view. This Court set aside the High Court's order holding that the High Court exceeded its jurisdiction in substituting its views, and that too without any legal basis.
P a g e | 12
“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 accused claimed in his statement recorded under Section 313 of Cr.P.C. that the cheque was given in lieu of the transfer of the stock to a Company in which the accused was an employee and the Firm, to which the stock was transferred had given another cheque. The name of any Firm was not mentioned in this statement, therefore, the plea taken by the accused regarding the issuance of the cheque on behalf of T.R. Associates was an
P a g e | 13
afterthought and was rightly discarded by the learned Courts below.
P a g e | 14
not returned. He also served a notice to the complainant for not returning the cheque. He has never purchased any article from the complainant.
P a g e | 15
P a g e | 16
issued a notice to wriggle out of his liability. In any case, the notice was in the nature of an admission made by the accused in his favour and is inadmissible in view of Section 21 of the Indian Evidence Act. Therefore, not much advantage can be derived from the notice.
P a g e | 17
regarding the refusal to accept the consignment for Shah Bihari Foods was never stated in the notice as well as an application under Section 145 of the NI Act filed to cross-examine the complainant and the witnesses, which shows that this story was propounded for the first time during the examination of witnesses.
P a g e | 18
was not dishonoured with an endorsement “signatures differ” but with an endorsement ‘funds insufficient’. Even if there is a mismatch of the signatures, it does not take away the liability under Section 138 of the NI Act. It was laid down by the Hon’ble Supreme Court in Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970 , that the dishonour of cheque with an endorsement of signature mismatch attracts the provisions of Section 138 of N.I. Act. It was observed at page 388: -
16. The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in the Magma case [(1999) 4 SCC 253: 1999 SCC (Cri) 524 ] that the expression “amount of money … is insufficient” appearing in Section 138 of the Act is a genus and dishonour for reasons such “as account closed”, “payment stopped”, “referred to the drawer” are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the “signatures do not match” or that the “image is not found”, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act .” (Emphasis supplied)
2013 SCC OnLine Kar 10420: (2013) 2 Kant LJ 569 : (2013) 3 KCCR
P a g e | 19
2223 : (2014) 1 AIR Kant R 405 : (2013) 3 BC 532 : (2014) 5 RCR (Cri) 757 that the dishonour of the cheque due to signature mismatch will attract penal liability under Section 138 of the NI Act. It was observed:
“9. In the facts and circumstances, as rightly contended by the learned Counsel for the appellant, the cheque having been drawn on the account of the respondent, is not in dispute. However, it is the defence set up that there was a business relationship between the appellant and the respondent, and the appellant could have accessed a cheque leaf belonging to the respondent, which is sought to be misused. In this regard, there is no positive evidence put forward by the respondent. In other words, in terms of Section 139, the presumption is in favour of the holder of the cheque of the same having been issued by the account holder in discharge of a legal liability. It is for the person issuing the cheque to prove otherwise. This, the Apex Court has held in the case of Rangappa v. Sri Mohan. [AIR 2010 SC 1898 : (2010) 11 SCC 441 : (2011) 1 SCC (Cri) 184: 2010 Cri. L.J. 2871 (SC)] That, not only is it possible for the accused to establish this by leading positive evidence, but he could also place reliance on the evidence tendered by the complainant himself to discharge that burden. Hence, if it was the contention of the respondent that there were cheque leaves misplaced by him and which were sought to be misused by the appellant, it was for the respondent to have tendered evidence of the approximate date when there was a dissolution of the partnership business between the appellant and the respondent, and the respondent having operated his Bank Account thereafter using other cheque leaves and that the cheque leaves which were left behind upon such dissolution having fallen into disuse over a period of time, sought to be forged and fabricated at a later date by the appellant, was clearly on the respondent. There is no such evidence forthcoming
P a g e | 20
except the self-serving evidence of the respondent. Further, in the event that any such cheque leaves were misused, a duty was cast on the respondent to inform his banker to stop payment, against such cheques which were lost or misplaced. There is no such evidence forthcoming. Nor is it the case of the respondent that the cheques being misplaced, he had reported to the nearest Police Station of such loss. There was no demand made on the appellant to return such cheque leaves left behind. Therefore, the evidence of the respondent was clearly self-serving and it was a burden cast on the respondent to establish the fact that there were cheque leaves which were left behind and it was possible for the appellant to misuse the same. If once it is apparent that the cheque had been issued on the account held by the respondent, the presumption under Section 139 is clearly in favour of the appellant to establish that it was forged by the accused. The burden is clearly on the respondent and it is not for the appellant to establish that the respondent had deliberately changed his signature in order that it would be dishonoured by his Bank. This may indeed have been the intention in changing his signature at the time of issuing of the cheque. As already stated, the burden to establish that it was lost and it has been misused by the appellant, was clearly on the respondent. The Court below has also committed an error in holding that the liability in respect of which the cheque had been issued was required to be proved by the appellant. The proceedings were not in the nature of a suit for recovery of money but for prosecution of an offence punishable under Section 138 of the NI Act. The limited scope of those proceedings is whether there was dishonour of the cheque issued by the accused. That aspect of the matter has been established on the face of it. Therefore, the Court below has clearly committed an error in addressing the case of the complainant and in dismissing the complaint. Consequently, the appeal is allowed. The complainant has established his case beyond all reasonable doubt. The respondent therefore is liable for punishment. Accordingly, he shall pay a fine of Rs. 3,50,000/- in default
P a g e | 21
of which, the respondent shall suffer simple imprisonment for a period of six months. The fine amount shall be paid forthwith, in any event, within a period of 15 days. Out of the fine amount, a sum of Rs. 3,40,000/- shall be paid as compensation to the appellant.”
Banumathi, 2018 SCC OnLine Mad 13802 that the dishonour of a cheque due to signature mismatch attracts the provisions of Section 138 of NI Act. It was observed:
“10… . It is true that the impugned cheque was returned on two grounds, namely, (a) insufficient funds, and (b) the signature of the drawer differs. On receipt of, the statutory notice, dated 31.12.2013, [EX-P3] from the complainant, the accused, has sent a belated reply notice, dated 17.3.2014, [EX-P5], in which also the accused, did not take the plea that her signature has been forged in the cheque. She has taken, a plea that the impugned cheque was issued by her for a different debt. The accused took pains to examine Ganeshamoorthy, Senior Manager of Syndicate Bank, in which the accused has an account, to say that the signature in the cheque differed from the specimen signature with the Bank. This only shows that the accused had deliberately put her signature differently in the impugned cheque with the intention of cheating the complainant. However, a charge of cheating has not been framed against the accused. This conduct of the accused in giving the cheque by affixing her signature differently is relevant under Section 8 of the Indian Evidence Act, 1872. The presumption under. Section 139 of the Negotiable Instruments Act, 1881, comes into force, when once the cheque has been issued by the accused for the debt in question. Of course, this is a rebuttable presumption and the same can be dislodged by the accused by preponderance of probabilities and not by proof beyond reasonable doubt, as held by the Supreme Court in Rangappa v. Sri Mohan, (2010) 2 BC 693 (SC): II (2010) CCR
P a g e | 22
433 (SC) : (2010) 4 SLT 56 : (2010) 2 DLT (Cri) 699 (SC) : (2010) 11 SCC 441 . In this case, the accused has failed to discharge her burden even by a preponderance of probabilities. She was trying to take advantage of the difference in signature in order to wriggle out of the prosecution…..”
P a g e | 23
accused had purchased the articles from the complainant mentioned in the bill and had issued a cheque to discharge his legal liability.
P a g e | 24
dishonoured due to insufficient funds. Her statement is corroborated by the statement of account of the accused, in which, an amount of ₹4819.16/- was shown balance on 02.06.2015. Lovekesh Patial (DW1) also proved that the memo (Ext. DW1/B) was issued by the Bank. Therefore, it was duly proved that the cheque was dishonoured with an endorsement of funds insufficient.
“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
P a g e | 25
been effected on the sendee unless he proves that it was not really served and that he was not responsible for such nonservice.”
“As it was held by the Hon'ble Supreme Court in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, (1999) 7 Supreme Court Cases 51 0, 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. 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."
P a g e | 26
below had rightly held that the notice was duly served upon the accused.
“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.”
P a g e | 27
be awarded, the sentence of one year of simple imprisonment cannot be said to be excessive, and no interference is required with it.
P a g e | 28
realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation, and unless there exist special circumstances, the courts should uniformly levy fines up to twice the cheque amount along with simple interest @ 9% p.a. [ R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520 ] ”
41. Therefore, the amount of ₹1,86,784/- on the principal
amount of ₹2,63,216/- cannot be said to be excessive and no interference is required with the compensation awarded by the learned Trial Court.
forthwith, along with a copy of this judgment.
( Rakesh Kainthla)
Judge
17th June, 2025
3 issues framed by the court
Whether the revisional court could interfere with concurrent findings convicting the accused under Section 138 NI Act.
Whether the accused rebutted the presumption that the cheque was issued in discharge of legal liability.
Whether dishonour on grounds of signature mismatch takes the case outside Section 138 NI Act.
Colour shows how this judgement treated each authority
Malkeet Singh Gill v. State of ChhattisgarhRelied on¶13
(2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 · Who else cites this
State of Gujarat v. Dilipsinh Kishorsinh RaoRelied on¶14
2023 SCC OnLine SC 1294 · Who else cites this
Kishan Rao v. ShankargoudaRelied on¶15
(2018) 8 SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine SC 651 · Who else cites this
Bir Singh v. Mukesh KumarRelied on¶16
(2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 13 · Who else cites this
Laxmi Dyechem v. State of GujaratApplied¶26
(2012) 13 SCC 375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970 · Who else cites this
Peeranbi v. HajimalangRelied on¶27
2013 SCC OnLine Kar 10420: (2013) 2 Kant LJ 569 : (2013) 3 KCCR 2223 : (2014) 1 AIR Kant R 405 : (2013) 3 BC 532 : (2014) 5 RCR (Cri) 757
R. Manimehalai v. BanumathiRelied on¶28
2018 SCC OnLine Mad 13802 · Who else cites this
C.C. Allavi Haji vs. Pala Pelly Mohd.Applied¶34
2007(6) SCC 555 · Who else cites this
Priyanka Kumari vs. Shailendra KumarApplied¶35
MANU/SCOR/133284/2023
Kalamani Tex v. P. BalasubramanianApplied¶40
(2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 · Who else cites this
6 provisions across 3 enactments
Mahesh Gautam
Rajeev Kohli
Rakesh Kainthla
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
