Deepak Chauhan Vs Sanjay Kumar

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. Revision No. 603 of 2024 Reserved on: 03.04.2025 Date of Decision: 02.5.2025.

Deepak Chauhan ...Petitioner Versus Sanjay Kumar ...Respondent Coram Hon’ble Mr Justice Rakesh Kainthla , Judge. Whether approved for reporting?¹ No. For the Petitioner : Mr. Mohd. Aamir, Advocate. For the Respondent : Mr. Lakshay Thakur, Advocate.

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Rakesh Kainthla, Judge

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The present revision is directed against the judgment dated 07.09.2024, passed by learned Additional Sessions Judge-I, Shimla, H.P. (learned Appellate Court), vide which the judgment and order dated 05.04.2024, passed by learned Chief Judicial Magistrate, Shimla, 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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1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

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Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). It was asserted that the accused asked for a loan of ₹ 4 lacs from the complainant for domestic purposes. He promised to pay the amount on or before 25.12.2015. An agreement was executed between the parties regarding the transaction. The complainant asked the accused to return the money, however, the accused issued a cheque of ₹ 4 lacs drawn on the State Bank of India, Branch Deha Tehsil Theog. The complainant presented the cheque before his banker, the UCO Bank Branch at Kamyana. The cheque was dishonoured by the bank of the accused with an endorsement ‘insufficient funds’. The complainant issued a notice to the accused asking him to pay the money within 15 days of the receipt of the notice. The accused received the notice but failed to pay the money. Hence, the complainant filed a complaint before the learned Trial Court to take action against the accused.

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The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, notice of

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accusation was put to him, to which he pleaded not guilty and claimed to be tried.

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The complainant examined himself (CW1) to prove

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his case.

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The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had approached the complainant for seeking financial help. He admitted that an agreement was executed between the parties. He stated that he had taken a loan of ₹ 3,70,000/- and had pledged the gold as security. The complainant had advanced a sum of ₹ 1,70,000/- in cash and had issued a cheque of ₹ 2 lacs. He stated that he had issued the cheque as a security. He admitted that the cheque was dishonoured with an endorsement of insufficient funds, and the complainant had issued a notice to him. He stated that he had sent the reply to the notice of the complainant. He examined Sanjeev Chauhan (DW-1).

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Learned Trial Court held that issuance of the cheque was not in dispute. There is a presumption under Section 118(a) and 139 of the NI Act that the cheque was issued for the consideration and in discharge of the legal liability. The plea taken by the accused that the complainant

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had only advanced ₹ 3,70,000/- was not proved on the balance of probability. The cheque was dishonoured due to insufficient funds, and the notice was served upon the accused. The accused failed to pay the amount despite the receipt of the notice. Hence, the accused was convicted of the commission of an offence punishable under Section 138 of the NI Act and was sentenced to undergo six months' simple imprisonment. The accused was also directed to pay compensation of ₹ 4,50,000/-.

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Being aggrieved from the judgment and order passed by the learned Trial Court, the accused filed an appeal which was decided by the learned Additional Sessions Judge-1, Shimla (learned appellate Court). Learned Appellate Court concurred with the findings recorded by the learned Trial Court that the cheque was issued in discharge of the legal liability. Even if the cheque was issued towards the security, the complainant had sufficient authority to fill the amount and present the cheque before the bank. The accused did not have sufficient funds on the date of presentation of the cheque. The accused failed to pay the money despite the receipt of a valid notice of demand. The learned Trial Court had rightly

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convicted and sentenced the accused. Hence, the appeal was dismissed.

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Being aggrieved by the judgments and order passed by the learned Courts below, the accused has filed the present revision petition, asserting that the judgments and order were passed without appreciation of the facts. The evidence was not considered from its right perspective. Therefore, it was prayed that the present revision petition be allowed and the judgments and order passed by the learned Courts below be set aside.

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I have heard Mr. Mohd Aamir, learned counsel for the petitioner/accused, and Mr. Lakshay Thakur, learned counsel for the respondent/complainant.

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Mr. Mohd. Aamir, learned counsel for the petitioner/accused, submitted that the learned Courts below erred in convicting and sentencing the accused. The plea taken by the accused that the complainant had only advanced a sum of ₹3,70,000/- was highly probable. The complainant had no authority to fill an amount of ₹ 4 lacs in the security cheque issued by the accused, and the learned Courts below erred in holding that the cheque was issued in discharge of the legal liability. The statement of the defence witness was not

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properly appreciated. Therefore, he prayed that the present revision be allowed and the judgments and order passed by learned Courts be set aside.

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Mr. Lakshay Thakur, learned counsel for the respondent/complainant, submitted that the learned Courts below had rightly held that the cheque carried with it a presumption of consideration and it was issued in discharge of the legal liability. This presumption was strengthened by the agreement executed between the parties. The accused did not dispute the execution of the agreement in his statement recorded under Section 313 of Cr.P.C. The accused admitted that the cheque was dishonoured with an endorsement of insufficient funds, and he had not paid any amount to the complainant. Therefore, he was rightly convicted and sentenced by the learned Courts below. 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

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786 that the revisional court is not an appellate jurisdiction 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 wellfounded 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 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

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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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Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much-advanced stage in the proceedings under the CrPC.”

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

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The accused did not dispute in his statement recorded under Section 313 of Cr.P.C. that he had issued the cheque in favour of the complainant. He claimed that the cheque was issued as a security. His witness, Sanjeev Chauhan, also stated in his affidavit (Ex. DW1/A) that the accused had handed over a blank signed cheque and Mangalsutra as security to the complainant. Therefore, the issuance of the cheque is not in dispute. It was laid 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

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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)

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25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75,

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wherein it was held at page 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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19. Similar is the judgment in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12

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SCC 724 , wherein it 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. 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

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dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature. However, to rebut the presumption, the accused was required to lead evidence that the full amount due and payable to the complainant had been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption, and more particularly, the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists a legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both the learned trial court as well as the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without 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 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

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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 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

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consideration on the date which the cheque bears. Section 139 of the Act enjoins the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. The trial court was not persuaded to rely on the interested testimony of DW 1 to rebut the presumption. The said finding was upheld [ Sankaran Vaidhyan Balan v. K. Bhaskaran, Criminal Appeal No. 234 of 1995, order dated 23-10-1998 (Ker) ] by the High Court. It is not now open to the accused to contend differently on that aspect.”

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15. The learned counsel for the respondent has however referred to the decision of this Court in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasappa, (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

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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 probable defence was raised by the accused. In the crossexamination 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,

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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 cross-examination would indicate that the transaction is doubtful, and no evidence is tendered to indicate that the amount was paid. In such an event, it was not necessary for the respondent to tender rebuttal evidence, but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption.

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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 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.

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

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“8. It is true that this is a case under Section 138 of the

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Negotiable Instruments Act. Section 139 of the NI Act provides that the court shall presume that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of “probable defence” has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] , this Court notes that Section 139 of the NI Act is an example of reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184] ). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has 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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Similar is the judgment in P. Rasiya v. Abdul

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Nazer, 2022 SCC OnLine SC 1131, wherein it was observed:

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“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,

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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.”

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This position was reiterated in Rajesh Jain v. Ajay

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Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275,

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wherein it was observed at page 161:

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33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that “unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque for the discharge of, whole or part of any debt or liability”. It will be seen that the “ presumed fact ” directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 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]

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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” .

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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

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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 ]]

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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.

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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.

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

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“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’.”

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39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non-existence of the presumed fact beyond a reasonable doubt. The accused must meet the standard of “ preponderance of probabilities ”, similar to a defendant in a civil proceeding. [ Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR 2010 SC 1898] ]

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The version of the complainant is duly corroborated

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by the Agreement (Ex.CW1/A) in which it was specifically stated that the complainant had advanced an amount of ₹ 4 lacs by way of a cheque of ₹ 2 lacs, and a cash of ₹ 2 lacs as a friendly loan to the accused. The accused admitted in his statement recorded under Section 313 of Cr.PC in reply to question No.4 that he had executed the agreement (Ex. CW1/A). He claimed that an amount of ₹ 3,70,000/- was advanced by the complainant to him. However, in view of the admission regarding the execution of the agreement (Ex. CW1/A), it is difficult to rely upon the statement of the accused that a sum of ₹ 3,70,000/- was advanced to him.

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The accused examined Sanjeev Chauhan, who stated that an amount of ₹ 70,000/- was paid in his presence by the complainant to the accused. This is contrary to the statement of the accused made under Section 313 of Cr. P.C.,

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in which it was stated that a cheque of ₹ 2 lacs was issued and

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₹ 1,70,000/- was given as cash. Thus, the accused never claimed that an amount of ₹ 70,000/- was advanced on one day and ₹ 1 lac was advanced on the other day. Further, it was also not suggested to the complainant in his crossexamination that the amount of ₹ 70,000/- was advanced in the presence of Sanjeev Chauhan, even though it was suggested that ₹ 70,000/- was paid and a blank cheque and mangalsutra were retained. Further, the plea taken by the accused that the cheque and mangalsutra were handed over at the time of advancing of ₹ 70,000/- is not probable. It is difficult to believe that a person would hand over an amount of ₹ 3 Lacs (as per showing of the accused) without any security and will insist upon the security of the cheque and magalsutra at the time of advancing of ₹ 70,000. Therefore, learned Courts below had rightly rejected the statement of Sanjeev Chauhan.

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The accused did not step into the witness box to claim that the accused had advanced only an amount of ₹ 3,70,000/- to him and not an amount of ₹ 4 lacs. He relied upon his statement recorded under Section 313 of Cr. P.C. to establish this fact. It was held in Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15 SCC 689: 2021 SCC

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OnLine SC 201 that the accused has to lead defence

¶121

evidence to rebut the presumption and mere denial in his statement under Section 313 of Cr.P.C is not sufficient to rebut the presumption. It was observed at page 700:

¶122

“20. That apart, when the complainant exhibited all these documents in support of his complaints and recorded the statement of three witnesses in support thereof, the appellant has recorded her statement under Section 313 of the Code but failed to record evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused recorded under Section 313 of the Code is not substantive evidence of defence, but only an opportunity for the accused to explain the incriminating circumstances appearing in the prosecution's case against the accused. Therefore, there is no evidence to rebut the presumption that the cheques were issued for consideration ." (Emphasis supplied).

¶123

Therefore, learned Courts below had rightly

¶124

discarded the version that the complainant had advanced an amount of ₹ 3,70,000/- to the accused.

¶125

The accused claimed that a blank signed security cheque was issued in the complainant’s favour. The accused admitted the execution of the agreement (Ex. CW1/A) in which an amount of ₹ 4 lacs is stated to have been paid by the complainant to the accused, which means that the accused had the liability to pay ₹ 4 lacs to the complainant. The accused nowhere claimed that he had returned any money to

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the complainant before the issuance of the cheque or before its presentation. Therefore, the accused had a liability to pay ₹ 4 lacs to the complainant. It was laid down by this Court in

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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:

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“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.” 29. It was laid down by the Hon'ble Supreme Court in

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Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458:

¶131

(2017) 1 SCC (Cri) 149: (2017) 1 SCC (Civ) 126: 2016 SCC OnLine SC 954 that issuing a cheque toward security will

¶132

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also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. It was observed: -

¶134

“9. 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 [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014) 5 SCC (Civ) 138: (2014) 6 SCC (Cri) 845] with reference to the explanation to Section 138 of the Act and the expression “for 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.

¶135

10. 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 28-2-2002, 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, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.

¶136

11. The judgment in Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] 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 on a par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of a cheque issued for discharge

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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 Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] where the purchase order had been cancelled and 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 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 [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] , one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque. 12. 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 the 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.”

¶139

This position was reiterated in Sripati Singh v.

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State of Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021

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SC 5732 , and it was held that a cheque issued as security is

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not waste paper and a complaint under Section 138 of the N.I. Act can be filed on its dishonour. It was observed:

¶144

“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.

¶145

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

¶146

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

¶148

The accused claimed that he had issued a blank

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signed cheque. The complainant denied this fact in his crossexamination. The statement of Sanjeev Chauhan (DW-1) is not reliable, as noticed above. It was suggested to the complainant in his cross-examination that the cheques were kept as security with Rewa Dass, but he was not examined to establish this fact. Hence, the version that a blank signed cheque was issued as security is not established.

¶150

In any case, 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 a person is liable for the commission of an offence punishable under Section 138 of the

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N.I Act even if the cheque is filled by some other person. It was observed:

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“ 33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.

¶154

34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

¶155

35. It is not the case that the respondent accused him of either signing the cheque or parted with it under any threat or coercion. Nor is it the case that the respondent accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.

¶156

36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

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33. This position was reiterated in Oriental Bank of

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Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine

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SC 1089, wherein it was observed:

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“12. The submission, which has been urged on behalf of the appellant, is that even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer.

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A drawer who signs a cheque and hands it over to the payee is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued towards payment of a debt or in the discharge of a liability. The presumption arises under Section 139.

¶164

Therefore, the learned Courts below had rightly held

¶165

that the accused had failed to rebut the presumption attached to the cheque.

¶166

The complainant stated that the cheque was dishonoured with an endorsement of insufficient funds. The accused did not dispute this fact in his statement recorded under Section 313 of Cr.P.C. The complainant proved the memo of dishonour (Ex.CW1/C), which shows that the cheque was dishonoured with an endorsement of insufficient funds. There is a presumption under Section 146 of the NI Act regarding the correctness of the contents of the memo of dishonour. The accused did not produce any evidence to rebut

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the presumption; rather, he had admitted in his statement recorded 313 of Cr. P.C., that the cheque was dishonoured with an endorsement of insufficient funds. Hence, it is duly proved on record that the cheque was dishonoured due to insufficient funds.

¶169

The complainant stated that he issued a notice (Ex. CW1/D) to the accused asking him to pay the money. The accused stated in his statement recorded under Section 313 of Cr. P.C. that he had replied to the notice, which means that the issuance of the notice and its receipt are not in dispute. Hence, it is duly proved that the complainant had issued a notice to the accused, which was received by him. The accused admitted in his statement recorded under Section 313 of Cr. P.C. that he had not paid any money to the accused. Thus, another ingredient of the commission of an offence punishable under Section 138 of the NI Act, that the accused had failed to pay the money despite the receipt of a valid notice for demand, was also satisfied.

¶170

Therefore, it was duly proved on record that the accused had issued a cheque in favour of the complainant, which was dishonoured with an endorsement of insufficient funds. The accused failed to pay the amount despite the

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receipt of a valid notice of demand. Therefore, the necessary ingredients of Section 138 of the N I Act were duly satisfied, and the accused was rightly convicted by the learned Trial Court, which conviction was rightly affirmed by the learned Appellate Court.

¶173

Learned Trial Court sentenced the accused to undergo simple imprisonment for six months and pay a compensation of ₹ 4,50,000/-. 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:

¶174

“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.”

¶175

Hence, the sentence of imprisonment of six months

¶176

is not excessive.

¶177

The cheque was issued on 26.04.2016, and the learned trial Court imposed the sentence on 5.4.2024 after a

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lapse of 8 years. The complainant had incurred expenses on the litigation, and he also lost interest on the amount advanced by him. It was laid down by the Hon’ble Supreme Court in M/S Kalamani Tex and another Versus P. Balasubramanian JT 2021(2) SC 519 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: -

¶180

“20. 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 the 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 a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. [ R. Vijian v. Baby, (2012) 1 SCC 260 , 20]”

¶181

In the present case, the amount of ₹ 50,000/- was

¶182

awarded as compensation on the principal amount of ₹ 4 lacs, which is hardly sufficient to compensate the complainant for the expenses incurred by him for prosecuting the complaint or the deprivation of the interest on the amount loaned by the complainant. However, no appeal was preferred by the complainant against the order of payment of compensation of

¶183

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₹ 4,50,000/-, and no interference is required with this part of

¶185

the sentence.

¶186