Hem Raj Sharma Vs Jeet Ram Chaudhary since deceased through his LRs

05.08.2022, passed by learned Additional Sessions Judge, Nalagarh, District Solan, H.P. (learned Appellate Court) vide which the appeal filed by the petitioner (accused before learned

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Trial Court) was dismissed and the judgment of conviction and

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1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

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order of sentence dated 27.01.2020, passed by learned Additional Chief Judicial Magistrate, Nalagarh, District Solan, H.P. (learned Trial Court), were upheld. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)

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2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint against the accused before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short, ‘NI Act’). It was asserted that the accused and the complainant were known to each other. The accused borrowed a sum of ₹5,00,000/- from the complainant. The accused issued a cheque of ₹5,00,000/- to discharge his legal liability. The complainant presented the cheque to his bank, from where it was sent to the bank of the accused; however, the cheque was dishonoured with an endorsement ‘insufficient funds’. The complainant issued a notice to the accused through his counsel asking him to pay the amount; however, the accused failed to pay the amount despite the receipt of a valid notice of demand. Hence, the complaint was filed before the learned Trial Court against the accused for taking action as per the law.

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The learned Trial Court found sufficient reasons to

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summon the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.

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The complainant examined himself (CW1) to prove his

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case.

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The accused, in his statement recorded under Section 313 of the CrPC, admitted that he had issued a cheque of ₹5,00,000/- drawn on the State Bank of India to the complainant.

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He admitted that the cheque was dishonoured with an endorsement ‘funds insufficient’. He denied the rest of the complainant’s case. He stated that the complainant was engaged in the money lending business. He gave the cheque to the accused as security, but the complainant misused the cheque. He remained in custody in an abduction case w.e.f. 30.09.2012 till 30^th May, 2014. He examined Ajay Sood (DW-1), himself (DW-2), Mohinder Singh (DW-3) and Nikka Ram (DW-4).

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Learned Trial Court held that the issuance of a cheque

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was not disputed and there is a presumption that the cheque was

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issued for consideration in discharge of the legal liability. The burden to rebut the presumption is upon the accused. His evidence was not sufficient to rebut the presumption. His plea that he remained in prison will not help him because the cheque was issued on 30.09.2015. The complainant is not required to prove the source of income. Repeated presentation of the cheque does not affect the liability of the accused. The cheque was dishonoured with an endorsement ‘funds insufficient’. The complainant sent a notice to the accused asking him to pay the amount within a period of 15 days from the date of receipt of the notice. The notice was duly served upon the accused, but he failed to pay the amount despite the receipt of a valid notice of demand. Hence, the learned Trial Court convicted the accused for the commission of an offence punishable under Section 138 of the NI Act and sentenced him to undergo simple imprisonment for one year and pay a fine of ₹7,00,000/-, which was ordered to be disbursed to the complainant as compensation.

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Being aggrieved from the judgment and order passed by the learned Trial Court, the accused preferred an appeal, which was decided by the learned Appellate Court. Learned Appellate Court concurred with the findings recorded by the learned Trial

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Court that issuance of cheque was not disputed, and a presumption would arise that the cheque was issued for consideration in discharge of the legal liability. The evidence presented by the accused was not sufficient to rebut the presumption. The statements of defence witnesses were not credible. The complainant is not required to prove the source of funds because of the presumption. The cheque was dishonoured with an endorsement ‘funds insufficient’. The notice was served upon the accused, but he failed to pay the amount despite the receipt of a valid notice of demand. Therefore, the appeal filed by the accused was dismissed, and the judgment and order passed by the learned Trial Court were upheld.

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Being aggrieved by the judgments and order passed by learned Courts below, the accused filed the present petition, asserting that learned Courts below passed the judgments based on surmises and hypotheses. The complainant failed to prove the existence of a lawful consideration. He could not tell the date on which the money was advanced. He stated that the money was advanced in the years 2014 and 2015; however, the accused remained in jail till 21.02.2014. The statement of Mohinder Singh (DW-3) showed that he had handed over the cheque, signed by the

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accused, to the complainant as security for ₹1,00,000/- borrowed by him. This evidence proved that the defence of the accused and the learned Courts below erred in discarding the statement of this witness. The accused did not require any loan, as is apparent from his income tax returns. These were not considered by the learned Courts below. The notice was never served upon the accused, and the essential requirement of Section 138 of the NI Act was not satisfied; therefore, it was prayed that the present appeal be allowed and the judgments and order passed by the learned Courts below be set aside.

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I have heard Mr. Surinder Saklani, learned counsel for the petitioner and Mr. Ajay Sharma, learned Senior Counsel, assisted by Mr. Atharv Sharma, learned counsel for the respondent.

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Mr. Surinder Saklani, learned counsel for the petitioner, submitted that the complainant stated the cheque was issued on 30.09.2015; however, it was presented by him on 29.09.2015, which falsifies his version. The accused did not require any money, as is apparent from his Income Tax returns filed by him. Learned Courts below failed to appreciate these returns. The

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complainant failed to prove the existence of a legally enforceable debt or other liability, and the learned Courts below erred in relying upon the presumption under Section 118(a) and 139 of the Income Tax Act. Therefore, he prayed that the present petition be allowed and the judgments and order passed by the learned Courts below be quashed. He relied upon a judgment of the Hon’ble Supreme Court passed in Sri Dattaraya vs. Sharanappa 2024 INSC 586 in support of his submission.

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Mr. Ajay Sharma, learned Senior Counsel for the respondent/complainant, submitted that the learned Courts below had rightly appreciated the evidence and this Court should not interfere with the concurrent findings of fact recorded by the learned Courts below. The cheque was post-dated and was dishonoured on the ground that it was a post-dated cheque. Hence, the dishonour of the cheque on 29.09.2015 does not make the complainant’s case suspect. Hence, he prayed that the present petition be dismissed.

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

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It was laid down by the Hon’ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh , (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed on page 207: -

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“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.

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This position was reiterated in State of Gujarat v.

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Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294, wherein it was observed:

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“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

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provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460, where the scope of Section 397 has been considered and succinctly explained as under:

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“ 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.

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13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. 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

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categories aforestated. Even framing of charge is a muchadvanced stage in the proceedings under the CrPC.”

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It was held in Kishan Rao v. Shankargouda , (2018) 8 SCC

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165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine SC 651 that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. It was observed on page 169:

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“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)

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“ 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

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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. …”

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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)

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“ 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.”

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14. In the above case, also conviction of the accused was recorded, and the High Court set aside [ Dattatray Gulabrao

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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.

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This position was reiterated in Bir Singh v. Mukesh

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Kumar , (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)

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309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:

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“16. It is well settled that in exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, upset concurrent factual findings. It is not for the Revisional Court to re-analyse and re-interpret the evidence on record.

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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.”

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

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The accused admitted in his statement recorded under Section 313 of Cr.P.C. that he had issued the cheque of ₹5,00,000/drawn on State Bank of India Branch Main Market Bilaspur, H.P. His witness Mohinder Singh (DW-3) stated that he handed a blank cheque of accused to the complainant as a security for a payment

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of ₹1,00,000/-. It was l aid down by this Court in Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C. 398 that where the accused had not disputed his signatures on the cheque, the Court has to presume that it was issued in discharge of legal liability and the burden would shift upon the accused to rebut the presumption. It was observed: -

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“8. Once signatures on the cheque are not disputed, the plea with regard to the cheque having not been issued towards discharge of lawful liability, rightly came to be rejected by learned Courts below. Reliance is placed upon Hiten P. Dalal v. Bartender Nath Bannerji, 2001 (6) SCC 16 , wherein it has been held as under:

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"The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when, upon the material before it, the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......"

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S.139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.

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S imilar is the judgment in Basalingappa vs.

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Mudibasappa 2019 (5) SCC 418 wherein it was held:

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“26. Applying the proposition of law as noted above, in the facts of the present case, it is clear that the signature on the cheque, having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability.”

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This position was reiterated in Kalamani Tex v. P.

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Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2

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SCC (Cri) 555: 2021 SCC OnLine SC 75 wherein it was held at page

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289:

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“14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such an approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law.”

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Similar is the judgment in APS Forex Services (P) Ltd. v.

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Shakti International Fashion Linkers (2020) 12 SCC 724 , wherein it

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was observed: -

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“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.

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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 unpaid on the ground of “ STOP PAYMENT ”. Therefore, the cheque in question was issued for the second time. Therefore, once the accused has admitted the issuance of a cheque which bears his signature, there is a presumption that there exists a legally enforceable debt or liability under Section 139 of the NI Act. However, such a presumption is rebuttable in nature, and the accused is required to lead evidence to rebut such presumption. The accused was required to lead evidence that the entire amount due and payable to the complainant was paid.

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9. Coming back to the facts in the present case and considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature. However, to rebut the presumption, the accused was required to lead evidence that the full amount due and payable to the complainant had been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption, and more particularly, the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists a legally enforceable debt or

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liability as per Section 139 of the NI Act. It appears that both the learned trial court as well as the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evidence.”

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The presumption under Section 139 of the NI Act was

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

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“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:

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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.”

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13. Insofar as the payment of the amount by the appellant in the context of the cheque having been signed by the

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respondent, the presumption for passing of the consideration would arise as provided under Section 118( a ) of the NI Act, which reads as hereunder:

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“ 118. Presumptions as to negotiable instruments . — Until the contrary is proved, the following presumptions shall be made:

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( a ) of consideration : that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.”

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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)

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“ 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 23-101998 (Ker) ] by the High Court. It is not now open to the accused to contend differently on that aspect.”

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15. The learned counsel for the respondent has, however, referred to the decision of this Court

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in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasapp a, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571 ] wherein it is held as hereunder: (SCC pp. 432-33, paras 25-26)

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“ 25 . We having noticed the ratio laid down by this Court in the above cases on Sections 118( a ) and 139, we now summarise the principles enumerated by this Court in the following manner:

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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.

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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.

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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.

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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.

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25.5 . It is not necessary for the accused to come into the witness box to support his defence.

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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

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probable defence was raised by the accused. In the cross-examination of PW 1, when the specific question was put that a cheque was issued in relation to a loan of Rs 25,000 taken by the accused, PW 1 said that he does not remember. PW 1 in his evidence admitted that he retired in 1997, on which date he received a monetary benefit of Rs 8 lakhs, which was encashed by the complainant. It was also brought in evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs 4,50,000 to Balana Gouda towards sale consideration. Payment of Rs 4,50,000 being admitted in the year 2010 and further payment of loan of Rs 50,000 with regard to which Complaint No. 119 of 2012 was filed by the complainant, a copy of which complaint was also filed as Ext. D-2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per own case of the complainant, he made a payment of Rs 18 lakhs. During his cross-examination, when the financial capacity to pay Rs 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts.”

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16. In that light, it is contended that the very materials produced by the appellant and the answers relating to lack of knowledge of property details by PW 1 in his crossexamination 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.

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17. On the position of law, the provisions referred to in Sections 118 and 139 of the NI Act, as also the enunciation of law as made by this Court, need no reiteration as there is no

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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.”

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This position was reiterated in Tedhi Singh v. Narayan

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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:

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“8. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the NI Act provides that the court shall presume that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of “probable defence” has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] , this Court notes that Section 139 of the NI Act is an example of reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184] ). It is also true that this Court has found that the

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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...”

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24. Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022

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SCC OnLine SC 1131, wherein it was observed:

¶130

“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.”

¶131

25. This position was reiterated in Rajesh Jain v. Ajay Singh,

¶132

(2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was

¶133

observed at page 161:

¶134

33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that “unless the contrary is proved, it shall be presumed that the holder

¶135

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¶136

of the cheque received the cheque for the discharge of, whole or part of any debt or liability”. It will be seen that the “ presumed fact ” directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. [The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are hence not repeated—reference to one can be taken as reference to another]

¶137

34. Section 139 of the NI Act, which takes the form of a “ shall presume ” clause, is illustrative of a presumption of law. Because Section 139 requires that the Court “ shall presume ” the fact stated therein, it is obligatory for the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary, as is clear from the use of the phrase “ unless the contrary is proved” .

¶138

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 ]]

¶139

36. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [ Bir Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40] ]. Therefore, the mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.

¶140

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¶141

37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.

¶142

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

¶143

“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’.”

¶144

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 nonexistence 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] ]

¶145

The accused claimed that he had a sufficient amount

¶146

with him. He relied upon the income tax returns (Ext.D-5 to Ext.D-7); however, these are not income tax returns but the

¶147

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¶148

printout of Form 26AS. These forms show that the payments made by IL&FS Engineering and Construction Company to the accused and the tax deducted on this amount. The accused admitted in his cross-examination that he had five vehicles with him, which shows that he incurs running costs on them. Thus, the payment made to the accused has to be adjusted for the cost of running the vehicles, and in the absence of the income tax return showing the income and the expenditure, the payment made to the accused cannot be treated to be net income.

¶149

Nikka Ram (DW-4) brought the statement of account of Hem Raj (Ext.D-9), which does not show that the accused had a sound financial condition. He never had ₹5,00,000/- in his account till 13.06.2014, on which date ₹7,20,000/- were transferred by IL & FS Engineering and Construction Company. This amount was paid to various persons, and he had a balance of ₹39,346/- on 07.07.2014 and ₹781/- on 20.12.2014. His statement of account does not establish his version that he had a sound financial condition and never required an amount of ₹5,00,000/from the complainant.

¶150

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¶151

Mohinder Singh (DW-3) stated that he was serving as a driver with the accused. He demanded money from the accused, but he (the accused) did not have money; hence, he obtained ₹1,00,000/- from the complainant. This testimony falsifies the version of the accused that he had sufficient money and did not require the loan of ₹5,00,000/-. If the accused was unable to pay ₹1,00,000/- to Mohinder Singh, his plea that he did not require ₹5,00,000/- is not acceptable.

¶152

Mohinder Singh (DW-3) stated that he had handed over a blank cheque, signed by the accused, to the complainant because he did not have his cheque. He returned ₹1,30,000/- to the complainant in cash, but the complainant did not return the cheque to him. The complainant told him that the cheque was torn and could not be reused. His testimony is not acceptable. He claimed that the accused did not have money with him, and he had to take the money from the complainant. In such a situation, the accused would not have handed over the blank cheque to him because he knew that he had no money in his account and the cheque would be dishonoured. The accused is a businessperson and would be aware of the consequences of issuing a cheque without funds in the account.

¶153

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¶154

Mohinder Singh (DW3) stated in his cross-examination that Jeet Ram, the complainant, is residing at Barotiwala. He could not say from whom he had learnt that the complainant was giving money on interest. He obtained money at Bilaspur at the Nihali Bus Stand. He handed over the cheque to Jeet Ram at the bus stand. No other person had taken money from Jet Ram on interest. He did not know from whom he came to know that Jeet Ram was available at the Nihali Bus Stand. He denied that he made a false story at the instance of the accused. Learned Appellate Court had rightly pointed out that the testimony of this witness is highly unreliable. He could not give the name of any person from whom he came to know that Jeet Ram was giving money on loan, and he would be available at Bilaspur in Nihali bus stand. It is difficult to believe that this witness would have taken a loan from a person regarding whom it was not known that he gives loans to persons with interest. It cannot be believed that he would have gone to Nihali Bus stand with a blank cheque, the complainant would be present at the bus stand with ₹1,00,000/- with him and the complainant would hand over the money to him without any acquaintance based on a blank signed cheque regarding which it was not known by whom it was issued and whether the account

¶155

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had money in it. Mohinder Singh (DW-3) did not state that he had talked to the complainant and that the complainant had demanded a security cheque from him. He simply stated that he obtained the blank cheque from the accused, went to Nihali Bus Stand, handed over the blank cheque to the complainant and returned with ₹1,00,000/-. He stated that he had returned ₹1,30,000/- to the complainant but has not produced any receipt. He believed the assertion of the complainant that the cheque was torn and would not be misused. It is not even shown that he had told the accused that his cheque was not returned by the complainant to prevent its misuse. All these circumstances make the testimony of this witness highly doubtful, and learned Courts below were justified in discarding such testimony.

¶157

The cheque (Ext. C-1) bears Sl. No. 206988. It was submitted that the cheque bearing Sl. No. 206987 and 206992 were encashed in April 2012 and, March 2014, and it is highly unlikely that the cheque bearing Sl. No. 206988 would be issued on 30.09.2015. This submission is not acceptable. First, there is no principle of law that cheques are to be issued in seriatim. Secondly, the complainant stated that the cheque was dated 30.09.2015, and never stated that the cheque was issued on

¶158

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¶159

30.09.2015. Hence, the submission that the cheque was issued on 30.09.2015 is without any basis. The loan was advanced in the year 2014, and even if it was a security cheque issued at the time of taking out the loan, the same will not help the accused in the absence of any evidence that the money was paid by the accused to the complainant. It was laid down by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456 , that even if the cheque was issued towards the security, the accused will be liable. It was observed:

¶160

“9. Submission of learned Advocate appearing on behalf of the revisionist that the cheque in question was issued to the complainant as security and on this ground, criminal revision petition be accepted is rejected being devoid of any force for the reasons hereinafter mentioned. As per Section 138 of the Negotiable Instruments Act 1881, if any cheque is issued on account of other liability, then the provisions of Section 138 of the Negotiable Instruments Act 1881 would be attracted. The court has perused the original cheque, Ext. C- 1 dated 30.10.2008, placed on record. There is no recital in the cheque Ext. C-1, that cheque was issued as a security cheque. It is well-settled law that a cheque issued as security would also come under the provision of Section 138 of the Negotiable Instruments Act 1881. See 2016 (3) SCC page 1 titled Don Ayengia v. State of Assam & another . It is well-settled law that where there is a conflict between former law and subsequent law, then subsequent law always prevails.”

¶161

It was laid down by the Hon'ble Supreme Court in

¶162

Sampelly Satyanarayana Rao vs. Indian Renewable Energy

¶163

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Development Agency Limited 2016(10) SCC 458 that issuing a cheque toward security will also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. It was observed: -

¶165

“10. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways Private Limited versus Magnum Aviation Private Limited (2014) 12 SCC 53 with reference to the explanation to Section 138 of the Act and the expression “for the discharge of any debt or other liability” occurring in Section 138 of the Act. We are of the view that the question of whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the transaction. If on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise .

¶166

Reference to the facts of the present case clearly shows that though the word “security” is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of instalments. The repayment becomes due under the agreement, the moment the loan is advanced and the instalment falls due. It is undisputed that the loan was duly disbursed on 28th February 2002, which was prior to the date of the cheques. Once the loan was disbursed and instalments have fallen due on the date of the cheque as per the agreement, the dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.

¶167

Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of a claim for breach of contract under Section 138, which arises on account of dishonour of a cheque issued, was not by itself at par with a criminal liability towards discharge of acknowledged and admitted

¶168

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debt under a loan transaction. Dishonour of a cheque issued for discharge of a later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque, there was a debt/liability in praesenti in terms of the loan agreement, as against the case of Indus Airways (supra), where the purchase order had been cancelled and a cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as an advance for the purchase order, which was cancelled. Keeping in mind this fine, but the real distinction, the said judgment cannot be applied to a case of the present nature where the cheque was for repayment of a loan instalment which had fallen due, though such deposit of cheques towards repayment of instalments was also described as “security” in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of the purchase order which is cancelled and that of a loan transaction where the loan has actually been advanced and its repayment is due on the date of the cheque.

¶170

The crucial question to determine the applicability of Section 138 of the Act is whether the cheque represents the discharge of existing enforceable debt or liability, or whether it represents an advance payment without there being a subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the underlying principle as can be discerned from the discussion of the said cases in the judgment of this Court.” (Emphasis supplied)

¶171

This position was reiterated in Sripati Singh v. State of

¶172

Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732 , and it was

¶173

held that a cheque issued as security is not waste paper and a

¶174

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complaint under section 138 of the N.I. Act can be filed on its dishonour. It was observed:

¶176

“17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe, and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of the amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.

¶177

When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form, and in that manner, if the amount of the loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be an understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque

¶178

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in proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque, which is issued as security, can never be presented by the drawee of the cheque. If such is the understanding, a cheque would also be reduced to an 'on-demand promissory note' and in all circumstances, it would only be civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation.”

¶180

34. Thus, no advantage can be derived from the testimony

¶181

of Nikka Ram (DW-4).

¶182

35. The accused tendered his affidavit (Ext. DW-2/A) in evidence. At the outset, it is necessary to notice that the accused

¶183

cannot tender his evidence by way of affidavit as laid down by the Hon’ble Supreme Court in M /S Mandvi Co-Op Bank Ltd vs. Nimesh

¶184

B Thakore 2010 (3) SCC 83 , wherein it was observed: -

¶185

“44. Coming now to the last question with regard to the right of the accused to give his evidence, like the complainant, on affidavit, the High Court has held that, subject to the provisions of sections 315 and 316 of the Code of Criminal Procedure, the accused can also give his evidence on affidavit. The High Court was fully conscious that section 145(1) does not provide for the accused to give his evidence, like the complainant, on the affidavit. But the

¶186

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High Court argued that there was no express bar in law against the accused giving his evidence on affidavit, and more importantly, providing a similar right to the accused would be in furtherance of the legislative intent to make the trial process swifter.

¶188

In paragraph 29 of the judgment, the High Court observed as follows:

¶189

"It is true that section 145(1) confers a right on the complainant to give evidence on affidavit. It does not speak of a similar right being conferred on the accused. The Legislature in their wisdom may not have thought it proper to incorporate the word accused' with the word complainant' in sub-section (1) of section 145 in view of the immunity conferred on the accused from being compelled to be a witness against himself under Article 20(3) of the Constitution of India...."

¶190

Then, in paragraph 31 of the judgment, it observed:

¶191

".... Merely because section 145(1) does not expressly permit the accused to do so, does not mean that the Magistrate cannot allow the accused to give his evidence on affidavit by applying the same analogy unless there is just and reasonable ground to refuse such permission. There is no express bar on the accused to give evidence on affidavit either in the Act or in the Code..... I find no justified reason to refuse permission to the accused to give his evidence on affidavit, subject to the provisions contained in sections 315 and 316 of the Code."

¶192

On this issue, we are afraid that the High Court overreached itself and took a course that amounts to taking over the legislative functions. On a bare reading of section 143, it is clear that the legislature provided for the complainant to give his evidence on the affidavit and did not provide for the accused to similarly do so. But the High Court thought that not mentioning the accused along with the complainant in sub-section (1) of section 145 was

¶193

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merely an omission by the legislature that it could fill up without difficulty. Even though the legislature in their wisdom did not deem it proper to incorporate the word accused' with the word complainant' in section 145(1), it did not mean that the Magistrate could not allow the accused to give his evidence on affidavit by applying the same analogy unless there was a just and reasonable ground to refuse such permission.

¶195

There are two errors apparent in the reasoning of the High Court. First, if the legislature in their wisdom did not think "it proper to incorporate a word accused' with the word complainant' in section 145(1)......", it was not open to the High Court to fill up the self-perceived blank. Secondly, the High Court was in error in drawing an analogy between the evidence of the complainant and the accused in a case of a dishonoured cheque. The case of the complainant in a complaint under section 138 of the Act would be based largely on documentary evidence.

¶196

The accused, on the other hand, in a large number of cases, may not lead any evidence at all and let the prosecution stand or fall on its evidence. In case the defence does lead any evidence, the nature of its evidence may not be necessarily documentary; in all likelihood, the defence would lead other kinds of evidence to rebut the presumption that the issuance of the cheque was not in the discharge of any debt or liability. This is the basic difference between the nature of the complainant's evidence and the evidence of the accused in a case of a dishonoured cheque. It is, therefore, wrong to equate the defence evidence with the complainant's evidence and to extend the same option to the accused as well.

¶197

Coming back to the first error in the High Court's reasoning, in the guise of interpretation, it is not permissible for the court to make additions to the law and to read into it something that is just not there. In Union of India and Anr. vs. Deoki Nandan Aggarwal, 1992 Supp. (1) SCC 323 , this court sounded a note of caution against the court usurping the role of the legislator in the guise of

¶198

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¶199

interpretation. The court observed:

¶200

"14. ...it is not the duty of the court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. The court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature, the court could not go to its aid to correct or make up the deficiency. Courts shall decide what the law is and not what it should be. The court, of course, adopts a construction which will carry out the obvious intention of the legislature, but it could not legislate itself. But to invoke judicial activism to set at nought the legislative judgment is subversive of the constitutional harmony and comity of instrumentalities...."

¶201

In Raghunath Rai Bareja and Anr. vs. Punjab National Bank and Ors., (2007) 2 SCC 230 while observing that it is the task of the elected representatives of the people to legislate and not that of the Judge even if it results in hardship or inconvenience, Supreme Court quoted in affirmation, the observation of Justice Frankfurter of the US Supreme Court which is as follows:

¶202

"41. As stated by Justice Frankfurter of the US Supreme Court (see "Of Law and Men: Papers and Addresses of Felix Frankfurter")

¶203

"Even within their area of choice, the courts are not at large. They are confined by the nature and scope of the judicial function in its particular exercise in the field of interpretation. They are under the constraints imposed by the judicial function in our democratic society. As a matter of verbal recognition certainly, no one

¶204

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will gainsay that the function in construing a statute is to ascertain the meaning of words used by the legislator. To go beyond it is to usurp a power which our democracy has lodged in its elected legislature. The great judges have constantly admonished their brethren of the need for discipline in observing the limitations. A judge must not rewrite a statute, neither to enlarge nor to contract it. Whatever temptations the statesmanship of policymaking might wisely suggest, construction must eschew interpolation and evisceration. He must not read in by way of creation. He must not read out except to avoid patent nonsense or internal contradiction."

¶206

In Duport Steels Ltd. vs. Sirs, [1980] 1 All ER 529, 534 , Lord Scarman expounded the legal position in the following words:

¶207

"But in the field of statute law, the judge must be obedient to the will of Parliament as expressed in its enactments. In this field, Parliament makes and unmakes the law. The judge's duty is to interpret and to apply the law, not to change it to meet the judge's idea of what justice requires. Interpretation does, of course, imply in the interpreter a power of choice where differing constructions are possible. But our law requires the judge to choose the construction, which in his judgment best meets the legislative purpose of the enactment. If the result be unjust but inevitable, the judge may say so and invite Parliament to reconsider its provision. But he must not deny the statute."

¶208

In light of the above we have no hesitation in holding that the High Court was in error in taking the view, that on a request made by the accused the magistrate may allow him to tender his evidence on affidavit and consequently, we set aside the direction as contained in subparagraph (r) of paragraph 45 of the High Court judgment.”

¶209

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¶210

He stated in the affidavit that he had signed a blank cheque and handed it over to his driver, who required an amount of ₹1,00,000/- for the construction of his house. He had taken a loan on interest from the complainant and a blank signed cheque was handed over to the complainant as security demanded by him.

¶211

His testimony is contrary to the statement of Mohinder Singh (DW-3). As per his affidavit, the loan was already taken by the driver and the cheque was handed over as a security, whereas Mohinder Singh (DW-3) stated that the cheque was handed over to the complainant when he advanced the loan. Further he has not provided any explanation why he had not provided the loan to his driver and instead handed over a blank signed cheque to him, after all, his claim is that he had sufficient funds and never required ₹5,00,000/- from the complainant. He further stated that the driver demanded the cheque from the complainant and complainant said that the cheque was torn and he believed the words of the complainant. This part of his statement is not acceptable. He never stated that he knew the complainant therefore; he had no reason to trust the complainant. Learned Courts below had rightly pointed out that he was a businessman and knew the significance of the cheque. He admitted in his cross-

¶212

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¶213

examination that cases of dishonor of chqeue were pending against him, clearly showing that he knew the consequences of the dishonor of the cheque. Therefore, he had no reason to trust the complainant and not to take the blank cheque back from him merely on his assurance that the cheque was torn.

¶214

The accused further stated in his affidavit that he was arrested on 30.09.2012 and was released on bail on 21.02.2014. The complainant stated in his cross-examination that money was paid in the year 2014-15. Hence, the testimony of the accused that he was arrested and released in February 2014 does not make the complainant’s case suspect.

¶215

The complainant admitted in his cross-examination that the accused had issued a cheque dated 30.09.2015. This was a positive suggestion made on behalf of the accused to the complainant, and it shows that the handing over of the cheque to the complainant by the accused was not disputed. It was laid down by the Hon’ble Supreme Court in Balu Sudam Khalde v. State of Maharashtra, (2023) 13 SCC 365: 2023 SCC OnLine SC 355 that the suggestion put to the witness can be taken into consideration

¶216

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¶217

while determining the innocence or guilt of the accused. It was observed at page 382:-

¶218

“34. According to the learned counsel, such suggestions could be a part of the defence strategy to impeach the credibility of the witness. The proof of guilt required of the prosecution does not depend on the satisfaction made to a witness.

¶219

35. In Tarun Bora v. State of Assam [Tarun Bora v. State of Assam, (2002) 7 SCC 39: 2002 SCC (Cri) 1568] , a three-judge Bench of this Court was dealing with an appeal against the order passed by the Designated Court, Guwahati, in TADA Sessions case wherein the appellant was convicted under Section 365IPC read with Sections 3(1) and 3(5) of the Terrorist and Disruptive Activities (Prevention) Act, 1987.

¶220

36. In Tarun Bora case [Tarun Bora v. State of Assam, (2002) 7 SCC 39: 2002 SCC (Cri) 1568] , this Court, while considering the evidence on record, took note of a suggestion which was put to one of the witnesses and considering the reply given by the witness to the suggestion put by the accused, concluded that the presence of the accused was admitted. We quote with profit the following observations made by this Court in paras 15, 16 and 17, respectively, as under : ( Tarun Bora case [Tarun Bora v. State of Assam, (2002) 7 SCC 39: 2002 SCC (Cri) 1568 ], SCC pp. 43-44)

¶221

“ 15 . The witness further stated that during the assault, the assailant accused him of giving information to the army about the United Liberation Front of Assam (ULFA). He further stated that on the third night, he was carried away blindfolded on a bicycle to a different place, and when his eyes were unfolded, he could see his younger brother Kumud Kakati (PW 2) and his wife Smt Prema Kakati (PW 3). The place was Duliapather, which is about 6-7 km away from his Village, Sakrahi. The witness identified the appellant, Tarun Bora, and stated that it is he who took him in an Ambassador car from the residence of Nandeswar Bora on the date of the incident.

¶222

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¶223

16 . In cross-examination, the witness stated as under: ‘Accused Tarun Bora did not blind my eyes, nor did he assault me.’

¶224

17 . This part of the cross-examination is suggestive of the presence of the accused Tarun Bora in the whole episode. This will suggest the presence of the accused, Tarun Bora, as admitted. The only denial is that the accused did not participate in blind-folding the eyes of the witness, nor assaulted him.”

¶225

37. In Rakesh Kumar v. State of Haryana [Rakesh Kumar v. State of Haryana, (1987) 2 SCC 34: 1987 SCC (Cri) 256] , this Court was dealing with an appeal against the judgment of the High Court affirming the order of the Sessions Judge whereby the appellant and three other persons were convicted under Section 302 read with Section 34IPC. While reappreciating the evidence on record, this Court noticed that in the cross-examination of PW 4 Sube Singh, a suggestion was made with regard to the colour of the shirt worn by one of the accused persons at the time of the incident. This Court, taking into consideration the nature of the suggestion put by the defence and the reply, arrived at the conclusion that the presence of the accused, namely, Dharam Vir, was established on the spot at the time of the occurrence. We quote the following observations made by this Court in paras 8 and 9, respectively, as under (SCC p. 36)

¶226

“ 8 . PW 3, Bhagat Singh, stated in his examination-inchief that he had identified the accused at the time of the occurrence. But curiously enough, he was not crossexamined as to how and in what manner he could identify the accused, as pointed out by the learned Sessions Judge. No suggestion was also given to him that the place was dark and that it was not possible to identify the assailants of the deceased.

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9 . In his cross-examination, PW 4 Sube Singh stated that the accused, Dharam Vir, was wearing a shirt of white shirt. It was suggested to him on behalf of the accused

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that Dharam Vir was wearing a cream-coloured shirt of cream colour. In answer to that suggestion, PW 4 said it is not correct that Dharam Vir, the accused, was wearing a shirt of a cream colour and not a white colour at that time.’ The learned Sessions Judge has rightly observed that the above suggestion at least proves the presence of accused Dharam Vir on the spot at the time of occurrence.”

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38. Thus, from the above, it is evident that the suggestion made by the defence counsel to a witness in the crossexamination, if found to be incriminating in nature in any manner, would definitely bind the accused, and the accused cannot get away on the plea that his counsel had no implied authority to make suggestions in the nature of admissions against his client.

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39. Any concession or admission of a fact by a defence counsel would definitely be binding on his client, except the concession on a point of law. As a legal proposition, we cannot agree with the submission canvassed on behalf of the appellants that an answer by a witness to a suggestion made by the defence counsel in the cross-examination does not deserve any value or utility if it incriminates the accused in any manner.”

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It was submitted that the cheque was presented on

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29.09.2015, which is not possible because the cheque was handed

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over on 30.09.2015. This is a misreading of the evidence. The complainant admitted that the accused handed over the cheque dated 30.09.2015, and not that the cheque was handed over on 30.09.2015. Therefore, its presentation on 29.09.2015 will not make the complainant’s case suspect.

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It was submitted that the complainant had not produced any proof of delivery of money; hence, his case is suspect. This submission is not acceptable. It was laid down by Hon’ble Supreme Court of India in Ashok Singh v. State of U.P., 2025 SCC OnLine SC 706, that the complainant is not required to give any detail of the bank account, withdrawal of the money and its delivery to the accused because of the presumption of consideration attached to the cheque. It was observed:

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22. The High Court while allowing the criminal revision has primarily proceeded on the presumption that it was obligatory on the part of the complainant to establish his case on the basis of evidence by giving the details of the bank account as well as the date and time of the withdrawal of the said amount which was given to the accused and also the date and time of the payment made to the accused, including the date and time of receiving of the cheque, which has not been done in the present case. Pausing here, such presumption on the complainant, by the High Court, appears to be erroneous. The onus is not on the complainant at the threshold to prove his capacity/financial wherewithal to make the payment in discharge of which the cheque is alleged to have been issued in his favour. Only if an objection is raised that the complainant was not in a financial position to pay the amount so claimed by him to have been given as a loan to the accused, only then the complainant would have to bring before the Court cogent material to indicate that he had the financial capacity and had actually advanced the amount in question by way of loan. In the case at hand, the appellant had categorically stated in his deposition and reiterated in the crossexamination that he had withdrawn the amount from the

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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 crossexamination, 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:

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‘ 8. From the order impugned, it is clear that though the contention of the petitioners was that the said amounts were given for producing a film and were not by way of return of any loan taken, which may have been a probable defence for the petitioners in the case, but rightly, the High Court has taken the view that evidence had to be adduced on this point which has not been done by the petitioners. Pausing here, the Court would only comment that the reasoning of the High Court, as well as the First Appellate Court and Trial Court, on this issue is sound. Just by taking a counter-stand to raise a probable defence would not shift the onus on the complainant in such a case, for the plea of defence has to be buttressed by evidence, either oral or documentary, which in the present case has not been done. Moreover, even if it is presumed that the complainant had not proved the source of the money given to the petitioners by way of loan by producing statement of accounts and/or Income Tax Returns, the same ipso facto, would not negate such claim for the reason that the cheques having being issued and signed by the petitioners has not been denied, and no evidence has been led to show that the respondent lacked capacity to provide the amount(s) in question. In this regard, we may make profitable reference to the decision in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735 :

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‘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, achieve this result through the crossexamination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether, in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence. ’

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(emphasis supplied)’

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(underlining in original; emphasis supplied by us in bold) 42. Therefore, the case of the complainant cannot be doubted because of the absence of details regarding the delivery of money.

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In Sri Dattaraya (supra) Hon’ble Supreme Court refused to interfere with the judgment of acquittal passed by the learned

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Trial Court based on the findings that the issuance of the cheque was doubtful because of contradictions, complainant had failed to prove the existence of a legally enforceable debt and his financial capacity to advance the loan. In the present case, no such findings have been recorded; therefore, the cited judgment will not assist the accused.

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Therefore, both the learned Courts below have rightly held that the accused had admitted the issuance of the cheque, and a presumption arose, the accused had failed to rebut the presumption. Hence, the plea of the complainant that the cheque was issued in the discharge of legal liability has to be accepted as correct.

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The complainant stated that the cheque was dishonoured with an endorsement ‘insufficient funds’, which is corroborated by the Memo of dishonour (Ext.C-2). Nikka Ram (DW-4) also admitted in his cross-examination that the cheque was dishonoured due to insufficient funds. He is a witness put forth as a witness of truth by the accused. Therefore, it was duly proved on record that the cheque of the accused was dishonoured due to insufficient funds.

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Ajay Sood (DW-1) proved the memo of dishonour (Ext.D-1), stating that the cheque was returned because the instrument was post-dated. This memo is regarding the presentation of the cheque on 29.09.2015, and will not make the complainant’s case suspect.

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The complainant stated that he issued a notice to the accused asking him to pay the amount within 15 days. Notice (Ext.C-3) was issued at the same address at which the accused was summoned. The accused mentioned the same address in his statement recorded under Section 313 of Cr.P.C., notice of accusation and the personal bonds furnished by him. It was sent by means of a registered AD cover and is deemed to have been served. No material was brought on record by the accused to rebut this presumption, and the learned Courts below had rightly held that the notice of demand was duly served upon the accused.

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It was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555 that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of

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failure to do so, he cannot take the advantage of the fact that notice was not received by him. It was observed:

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“It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of the complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act . In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran’s case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.” (Emphasis supplied)

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The accused has not paid any money to the complainant; hence, it was duly proved that the accused had failed to pay the money despite the deemed receipt of the notice of

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demand.

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Therefore, it was duly proved before the learned Trial Court that the cheque was issued in discharge of legal liability, it was dishonoured with an endorsement ‘funds insufficient’ and the accused had failed to pay the amount despite the receipt of a valid notice of demand. Hence, the complainant had proved his case beyond a reasonable doubt, and the learned Trial Court had rightly convicted the accused of the commission of an offence punishable under Section 138 of the NI Act.

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The learned Trial Court sentenced the accused to undergo simple imprisonment for one year. It was laid down by the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provisions of Section 138 is deterrent in nature. It was observed at page 203:

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“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.”

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Keeping in view the deterrent nature of the sentence to be awarded, the sentence of one year’s imprisonment cannot be said to be excessive, and no interference is required with it.

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Learned Trial Court had imposed a fine ₹7,00,000/which was ordered to be paid to the complainant. The cheque was issued on 30.09.2015, and the learned Trial Court imposed the sentence on 27.01.2020, after the lapse of 4 years. The complainant lost interest that he would have gained by depositing the amount in the bank, and he had to pay the litigation expenses for filing the complaint. He was entitled to be compensated for the same. It was laid down by the Hon’ble Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. It was observed at page 291: -

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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

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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 ] ”

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