Case Law Details
Bodh Raj Vs Veer Sen (Himachal Pradesh High Court)
Cheque Bounce Conviction Upheld Because Accused Failed To Rebut Statutory Presumption Under NI Act; Stop Payment Instruction Does Not Defeat Cheque Bounce Case Because Section 138 Still Applies; Revision Petition Dismissed Because Concurrent Findings Of Fact Showed No Perversity Or Legal Error; Complainant Need Not Independently Prove Loan Because Presumption Of Consideration Operates Under NI Act; Defence Of Third-Party Misuse Rejected Because Evidence On Issuance Of Cheque Was Inconsistent; Compensation Equal To Cheque Amount Upheld Because It Could Not Be Treated As Excessive.
In this case, the accused challenged the judgments of the Trial Court and the Appellate Court, both of which had convicted him under Section 138 of the Negotiable Instruments Act (NI Act) for dishonour of a cheque amounting to ₹2,26,000.
The complainant alleged that the accused had borrowed ₹2,26,000 and issued a cheque towards repayment of the liability. When the cheque was presented for encashment, it was returned unpaid with the endorsement “payment stopped by the drawer.” A legal demand notice was issued and received by the accused, but no payment was made thereafter. Consequently, a complaint under Section 138 of the NI Act was filed.
The Trial Court held that a cheque carries a statutory presumption that it was issued for consideration and towards discharge of a legally enforceable debt or liability. Since the accused failed to rebut the presumption, he was convicted and sentenced to three months’ rigorous imprisonment, directed to pay a fine of ₹2,26,000, and, in default, undergo further simple imprisonment. The fine amount was ordered to be released to the complainant as compensation. The Appellate Court upheld the conviction and sentence.
Before the High Court, the accused argued that he had neither issued the cheque to the complainant nor received any notice. He contended that the cheque had been taken by another person and that the complainant had failed to establish the existence of any debt or liability. It was also argued that since the complainant claimed to have advanced the amount in cash, there was no documentary proof of payment.
The High Court first examined the scope of revisional jurisdiction and reiterated that a revisional court is not expected to act as an appellate court. Interference is justified only where there is a patent defect, jurisdictional error, perversity, gross illegality, or a finding based on no evidence. Reappreciation of evidence merely because another view is possible is impermissible. Since both lower courts had concurrently appreciated the evidence and returned findings of fact, the scope of interference was extremely limited.
On merits, the Court found that the complainant had consistently stated that the accused had borrowed ₹2,26,000 and issued the cheque in repayment of the amount. During cross-examination, the complainant denied the suggestion that the cheque had been handed over to another person. The Court held that a denied suggestion does not constitute evidence.
The defence evidence was found to be contradictory. The accused claimed that another person had forcibly taken the cheque from him, whereas his own witness stated that the cheque had been voluntarily handed over as a security cheque in connection with a loan transaction. The Court observed that these versions were inconsistent and unreliable. Further, while the accused denied his signature on the cheque, his witness’s version implied that a signed security cheque had been handed over. Due to these contradictions, the Court held that the defence failed to create a credible or probable case.
The High Court held that the courts below were justified in accepting the complainant’s version and in invoking the presumptions under Sections 118(a) and 139 of the NI Act. Once the issuance of the cheque was established, the law presumed that it was issued for consideration and towards discharge of a debt or liability unless the accused rebutted the presumption through a probable defence. The Court found that the accused had failed to discharge this burden.
The Court also rejected the argument that the complainant was required to produce independent proof of advancing the loan amount. It observed that once the statutory presumptions under Sections 118(a) and 139 were attracted, the complainant was not required to separately prove the consideration unless the accused successfully rebutted the presumption. The Court emphasized that proceedings under Section 138 of the NI Act are not to be treated as ordinary civil recovery proceedings requiring proof of every aspect of the antecedent transaction.
The accused further argued that the alleged loan had been advanced in cash and therefore violated Section 269SS of the Income Tax Act. Rejecting this contention, the Court held that contravention of Section 269SS may attract a statutory penalty under Section 271D of the Income Tax Act, but such violation does not render the transaction void, illegal, or unenforceable. Consequently, a cash transaction exceeding the prescribed threshold does not by itself negate the existence of a legally enforceable debt or rebut the presumptions available under the NI Act.
Regarding dishonour of the cheque, the Court noted that the bank memo clearly recorded the reason as “payment stopped by the drawer.” Under the NI Act, the bank’s memo carries a presumption of correctness unless rebutted. No evidence was produced by the accused to challenge the memo. The Court further observed that dishonour due to stop-payment instructions is covered by Section 138 of the NI Act and cannot be used by a drawer to avoid penal consequences.
The Court also found that service of the legal notice was established. The accused admitted receiving the notice and claimed to have sent a reply, but no such reply was produced on record. He also did not claim to have made payment after receipt of the notice. Therefore, the statutory requirement relating to demand notice stood satisfied.
After examining the evidence and the legal position, the High Court concluded that all ingredients of the offence under Section 138 of the NI Act had been duly established. The accused had issued the cheque towards repayment of a debt, the cheque was dishonoured due to stop-payment instructions, a legal notice was served, and payment was not made despite receipt of the notice. The statutory presumptions remained unrebutted.
On the question of sentence, the Court observed that Section 138 serves a deterrent purpose by promoting the credibility of cheques and negotiable instruments. The sentence imposed by the Trial Court could not be considered excessive. The compensation awarded was only equivalent to the cheque amount of ₹2,26,000 and did not include any additional amount towards interest or litigation expenses. Therefore, there was no ground for interference with the compensation awarded.
Accordingly, the High Court dismissed the revision petition and upheld the conviction and sentence imposed by the courts below.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
The present revision is directed against the judgment dated 28.02.2023 passed by the learned Additional Sessions Judge, Sundernagar, District Mandi (learned Appellate Court) vide which the judgment of conviction dated 01.06.2022 and order of sentence dated 13.07.2022 passed by the learned Judicial Magistrate First Class, Court No.2, Sundernagar, District Mandi (learned Trial Court) were upheld. (The parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience).
2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court 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 had issued a cheque of ₹2,26,000/- to the complainant for lawful consideration. The complainant presented the cheque to his bank for collection. However, the bank returned the cheque with an endorsement “payment stopped by the drawer”. The complainant issued a legal notice asking the accused to pay the amount. This notice was received by the accused on 03.10.2018. The accused failed to pay the amount despite the receipt of the notice. Hence, a complaint was filed before the Court for taking action against the accused as per the law.
3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW1) to prove his complaint.
5. The accused, in his statement recorded under Section 313 of the Code of Criminal Procedure (Cr.P.C), denied the complainant’s case in its entirety. He stated that he had not issued any cheque to the complainant, and he had not received any notice from the complainant. He had dealings with some other person and had no concern with the complainant. He examined himself (DW1) and Gulab Singh (DW2).
6. The learned Trial Court held that a cheque carries with it a presumption that it was issued for consideration to discharge the debt/liability. The burden was upon the accused to rebut the presumption. The evidence of the accused was not sufficient to rebut the presumption. The cheque was dishonoured with an endorsement “payment stopped by the drawer”. The notice was duly served upon the accused, but he failed to pay the due amount. Hence, the learned Trial Court convicted the accused of the commission of an offence punishable under Section 138 of the NI Act and sentenced him to undergo rigorous imprisonment for three months, pay a fine of ₹2,26,000/- and in default of payment of fine to undergo further simple imprisonment for one month. The amount of fine was ordered to be released to the complainant as compensation.
7. Being aggrieved by the judgment and order passed by the learned Trial Court, the accused filed an appeal, which was decided by the learned Additional Sessions Judge, Sundernagar, District Mandi (learned Appellate Court). The Appellate Court concurred with the findings recorded by the learned Trial Court that a cheque carried with it a presumption of consideration and that it was issued to discharge the debt/liability. The evidence led by the accused was not sufficient to rebut the presumption. The cheque was dishonoured with an endorsement “payment stopped by the drawer”. The notice was duly served upon the accused, but he failed to pay the amount. Learned Trial Court had rightly convicted the accused. The sentence imposed by the learned Trial Court was also adequate, and no interference was required with the sentence. Consequently, the appeal preferred by the accused was dismissed.
8. Being aggrieved by the judgments and order passed by the learned Courts below, the accused has filed the present revision asserting that the learned Courts below erred in appreciating the material on record. The learned Courts below were swayed by the presumptions contained in Sections 118(a) and 139 of the NI Act. The complainant had failed to prove the documents on record. Hence, it was prayed that the present revision be allowed and the judgment and order passed by the learned Courts below be set aside.
9. I have heard Ms Shikha Rajta, learned Legal Aid Counsel for the petitioner/accused and Mr Parveen Chauhan, learned counsel for the respondent/complainant.
10. Ms Shikha Rajta, learned Legal Aid Counsel for the petitioner/accused, submitted that the learned Courts below erred in appreciating the material on record. The accused had denied his signature on the cheque, and the presumption under Sections 118(a) and 139 of the NI Act would not be triggered in the present case. The burden was upon the complainant to show that the accused had issued the cheque for consideration to discharge the debt/liability. He has not produced any evidence of this fact. Therefore, she prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside.
11. Mr Parveen Chauhan, learned counsel for the respondent/complaint submitted that the version of the complainant that the accused had handed over the cheque to him for consideration to discharge a debt/liability was duly proved on record, and the defence taken by the accused that he had handed over the cheque to Surender Kumar was not proved. All the ingredients of commission of an offence punishable under Section 138 of the NI Act were duly satisfied. This court should not interfere with the concurrent finding of fact while exercising revisional jurisdiction. Hence, he prayed that the present revision be dismissed. He relied upon the judgments of Hon’ble Supreme Court in K. Subramani vs. K. Damodara Naidu (2015) 1 SCC 99, Basalingappa vs. Mudibasappa (2019) 5 SCC 418, Chinnammal vs. L.R. Eknath, 2022 SCC Online SC 2164 and Rangappa vs. Sri Mohan (2010) 11 SCC 441 in support of his submission.
12. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
13. It was laid down by the Hon’ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed at page 207-
“10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like the appellate court, and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short “CrPC”) vests jurisdiction to satisfy itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error that is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.
14. This position was reiterated in State of Gujarat v. DilipsinhKishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC 1294, wherein it was observed at page 695:
“14. The power and jurisdiction of the Higher Court under Section 397 CrPC, which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept in such proceedings.
15. It would be apposite to refer to the judgment of this Court in Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986], where scope of Section 397 has been considered and succinctly explained as under: (SCC p. 475, paras 12-13)
“12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error, and it may not be appropriate for the court to scrutinise the orders, which, upon the face of it, bear a token of careful consideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored, or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits.
13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even the framing of the charge is a much-advanced stage in the proceedings under CrPC.”
15. It was held in Kishan Rao v. Shankargouda, (2018) 8 SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine SC 651, that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. It was observed at page 169:
“12. This Court has time and again examined the scope of Sections 397/401 CrPC and the grounds for exercising the revisional jurisdiction by the High Court. In State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452: 1999 SCC (Cri) 275], while considering the scope of the revisional jurisdiction of the High Court, this Court has laid down the following: (SCC pp. 454-55, para 5)
5. … In its revisional jurisdiction, the High Court can call for and examine the record of any proceedings to satisfy itself as to the correctness, legality or propriety of any finding, sentence or order. In other words, the jurisdiction is one of supervisory jurisdiction exercised by the High Court for correcting a miscarriage of justice. But the said revisional power cannot be equated with the power of an appellate court, nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise amount to a gross miscarriage of justice. On scrutinising the impugned judgment of the High Court from the aforesaid standpoint, we have no hesitation in concluding that the High Court exceeded its jurisdiction in interfering with the conviction of the respondent by reappreciating the oral evidence. …”
13. Another judgment which has also been referred to and relied on by the High Court is the judgment of this Court in SanjaysinhRamrao Chavan v. Dattatray Gulabrao Phalke, (2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court held that the High Court, in the exercise of revisional jurisdiction, shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The following has been laid down in para 14: (SCC p. 135)
“14. … Unless the order passed by the Magistrate is perverse or the view taken by the court is wholly unreasonable or there is non-consideration of any relevant material or there is palpable misreading of records, the Revisional Court is not justified in setting aside the order, merely because another view is possible. The Revisional Court is not meant to act as an appellate court. The whole purpose of the revisional jurisdiction is to preserve the power in the court to do justice in accordance with the principles of criminal jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, the courts may not interfere with the decision in exercise of their revisional jurisdiction.”
16. This position was reiterated in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:
“16. It is well settled that in the exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, upset concurrent factual findings. It is not for the Revisional Court to re-analyse and re-interpret the evidence on record.
17. As held by this Court in Southern Sales & Services v. Sauermilch Design and Handels GmbH, (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.”
17. The present revision has to be decided as per the parameters laid down by the Hon’ble Supreme Court
18. The ingredients of an offence punishable under Section 138 of the NI Act were explained by the Hon’ble Supreme Court in Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, 2025 SCC OnLine SC 2019 as under: –
5.1.1. In K.R. Indira v. Dr. G. Adinarayana (2003) 8 SCC 300, this Court enlisted the components, aspects and the acts, the concatenation of which would make the offence under Section 138 of the Act complete, to be these (i) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/in part of any debt or liability, (ii) presentation of the cheque by the payee or the holder in due course to the bank, (iii) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (iv) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, and (v) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
19. The complainant stated that accused had taken ₹2,26,000/- from him and had issued a cheque (Ext.CW1/A) to return the amount. He stated in his cross-examination that he had known the accused for 8-10 years. He denied that the accused had not handed over the cheque (Ext.CW1/A) to him, but to Surinder Kumar. He had paid the money to the accused in cash, and he used to file the Income Tax Return.
20. The complainant denied the suggestion made to him in the cross-examination that the accused had handed over the cheque to Surinder Kumar and not to him. A denied suggestion does not amount to any proof, and no advantage can be derived from this denied suggestion.
21. The accused Bodh Raj stated that he had not taken any money from the complainant. Surender Kumar had forcibly obtained cheques from him and handed them over to the complainant. He stated in his cross-examination that the cheque (Ext.CW1/A) was issued by him, but it does not contain his signature. He denied that the complainant had helped him and he was making a false statement.
22. Gulab Singh (DW2) stated that he knew the accused Bodh Raj and Surinder Kumar. The accused had demanded money from him (Gulab Singh), and he had introduced him to Surinder Kumar. Bodh Raj handed over the security cheque to Surinder Kumar. He stated in his cross-examination that he knew Bodh Raj because he is a resident of the same Panchayat.
23. The statements of these witnesses are highly contradictory, while the accused claimed that Surinder Kumar had obtained cheques from him forcibly, his witness, Gulab Singh, stated that the accused had handed over the cheques to Surender Kumar as security for the money advanced by Surender Kumar. Therefore, the evidence regarding the handing over of the cheque is highly discrepant, and no reliance can be placed upon such evidence.
24. The accused denied his signature on the cheque, whereas his witness stated that the security cheque was handed over, which means that, according to the witness, Gulab Singh, the cheque was duly signed. Therefore, the version of the accused and his witness regarding the signatures on the cheque was also conflicting, and no reliance could have been placed upon it.
25. Thus, in these circumstances, the learned Courts below were justified in accepting the complainant’s testimony that the accused had handed over the cheque to him to repay the money taken by him. They were justified in holding that the presumption under Sections 118(a) and 139 of the NI Act would apply to the present case.
26. These presumptions were explained by the Hon’ble Supreme Court in Triyambak S. Hegde Versus Sripad 2022 (1) SCC 742 as under:
11. 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 Exhibits P-6 and P-2 is not disputed. Exhibit 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 N.I. Act reads as hereunder:-
“139. Presumption in favour of 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.”
12. 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 the passing of the consideration would arise as provided under Section 118(a) of N.I. Act which reads as hereunder: –
“118. Presumptions as to negotiable instruments –
Until the contrary is proved, the following presumptions shall be made: –
(a) of consideration – that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.”
13. 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 Bhaskaran vs. Sankaran Vaidhyan Balan & Anr., 1999 (7) SCC 510, wherein it is held as hereunder:
“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 on 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 by the High Court. It is not now open to the accused to contend differently on that aspect.”
14. The learned counsel for the respondent has, however, referred to the decision of this Court in Basalingappa vs. Mudibasappa, 2019 (5) SCC 418, wherein it is held as hereunder: –
“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:
25.1. Once the execution of the cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is rebuttable, and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of the preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him, or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come into the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come into the witness box to support his defence.
26. Applying the 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. The question to be looked into is as to whether any probable defence was raised by the accused. In the cross-examination of PW1, when the specific question was put that the cheque was issued in relation to a loan of ₹25,000 taken by the accused, PW1 said that he does not remember. PW1, in his evidence, admitted that he retired in 1997, on which date he received a monetary benefit of ₹8 lakhs, which was encashed by the complainant. It was also brought to the evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of ₹4,50,000 to Balana Gouda towards sale consideration. Payment of ₹4,50,000 being admitted in the year 2010, and a further payment of a loan of ₹ 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 the own case of the complainant, he made a payment of ₹18 lakhs. During his cross-examination, when the financial capacity to pay ₹ 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.”
15. In that light, it is contended that the very materials produced by the appellant and the answers relating to the lack of knowledge of property details by PW-1 in his cross-examination would indicate that the transaction is doubtful, and no evidence is tendered to indicate that the amount was paid. In such an event, it was not necessary for the respondent to tender rebuttal evidence, but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption.
16. On the position of law, the provisions referred to in Sections 118 and 139 of N.I. Act as the enunciation of law as made by this Court needs no reiteration, as there is no ambiguity whatsoever. In, Basalingappa vs. Mudibasappa (supra) 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 the amount involved. However, the legal position relating to the presumption arising under Sections 118 and 139 of N.I. Act on a signature being admitted has been reiterated. Hence, whether there is a rebuttal or not would depend on the facts and circumstances of each case.
27. This position was reiterated in Tedhi Singh vs. Narayan Dass Mahant 2022 (6) SCC 735, wherein it was held:
7. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. 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 (supra), this Court notes that Section 139 of the N.I. Act is an example of the reverse onus [see (2010) 11 SCC 441]. 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.
28. Similar is the judgment in P Rasiya vs. Abdul Nazeer, 2022 (3) Crimes 343, wherein it was observed:
“As per Section 139 of the N.I. Act, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque are not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption, and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary.”
29. This position was reiterated in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was observed at page 161:
33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that “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]
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 on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary, as is clear from the use of the phrase “unless the contrary is proved”.
35. The Court will necessarily presume that the cheque had been issued towards the discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that the cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel & Drum Mfg. Co. Amin Chand Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, (1999) 3 SCC 35] ]
36. Recently, this Court has gone to the extent of holding that a presumption takes effect even in a situation where the accused contends that a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197 : (2019) 2 SCC (Civ) 309 : (2019) 2 SCC (Cri) 40] ]. Therefore, the mere admission of the drawer’s signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for the discharge of debt, the presumptive device under Section 139 of the Act helps shift the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law] on Evidence states as follows:
“The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge’s requirement of some evidence), the presumption ‘disappears as a rule of law and the case is in the Jury’s hands free from any rule’.”
39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the 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] ]
40. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words “until the contrary is proved” occurring in Section 139 do not mean that the accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa v. Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571: AIR 2019 SC 1983]; see also Kumar Exports v. Sharma Carpets [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 : (2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823] ]
41. In other words, the accused is left with two options. The first option—of proving that the debt/liability does not exist—is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused’s case may be even fifty-one to forty-nine and arising out of the entire circumstances of the case, which includes: the complainant’s version in the original complaint, the case in the legal/demand notice, complainant’s case at the trial, as also the plea of the accused in the reply notice, his Section 313CrPC statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was “no debt/liability”. [Kumar Exports v. Sharma Carpets [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 : (2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823] ]
30. It was submitted that the complainant had paid the amount in cash, which is a violation of Section 269 SS of the Income Tax Act. This submission will not help the accused. It was laid down by this Court in Surinder Singh vs. State of H.P. 2018(1) D.C.R. 45 that contravention of Section 269 SS of the Income Tax Act will give rise to a penalty, but will not invalidate the transaction. It was observed: –
5. The relevant portion of Section 269 SS of the IT Act reads thus: –
“(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit’ or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) The amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is (twenty) thousand rupees or more. Provided… “
6. Section 271D provides for a penalty for failure to comply with the aforesaid provisions, which reads thus:
“271D. Penalty for failure to comply with the provisions of Section 269-SS – (1) If a person takes or accepts any loan or deposit in contravention of the provisions of Section 269-SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.
(2) Any penalty impossible under sub-section (1) shall be imposed by the Joint Commissioner.”
7. A collective reading of both the aforesaid Sections would go to show that even though contravention of Section 269-SS of the IT Act would be visited with a strict penalty on the person taking the loan or deposit. However, Section 271D does not in any manner suggest or even provide that such a transaction would be null and void. The payer of money in cash, in violation of Section 269 SS of the IT Act, can always have the money recovered.
8. The object of introducing Section 269 of the IT Act has been succinctly set out by the Hon’ble Supreme Court in Director of Inspection Investigation vs. A.B. Shanthi (2002) 6 SCC 259, wherein it was observed as under: –
“8. The object of introducing Section 269-SS is to ensure that a taxpayer is not allowed to give a false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false entries in his accounts, or by giving a false explanation for the same. During search and seizures, unaccounted money is unearthed, and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends, and it is easy for the so-called lender also to manipulate his records later to suit the plea of the taxpayer. The main objection of Section 269-SS was to curb this menace.”
9. In light of the aforesaid observations, it cannot but be said that Section 269-SS only provides for the mode of accepting payment or repayment in certain cases so as to counteract evasion of tax. However, Section 269-SS does not declare all transactions of loans by cash in excess of ₹20,000/- as invalid, illegal or null and void, as the main object of introducing the provision was to curb and unearth black money.
31. A similar view was taken by the Hon’ble Supreme Court in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed:
“19. Recently, the Kerala High Court in P.C. Hari v. Shine Varghese, 2025 SCC OnLine Ker 5535 has taken the view that a debt created by a cash transaction above ₹20,000/-(Rupees Twenty Thousand) in violation of the provisions of Section 269SS of the Income Tax Act, 1961 (for short ‘IT Act, 1961’) is not a ‘legally enforceable debt’ unless there is a valid explanation for the same, meaning thereby that the presumption under Section 139 of the Act will not be attracted in cash transactions above ₹ 20,000/-(Rupees Twenty Thousand).
20. However, this Court is of the view that any breach of Section 269SS of the IT Act, 1961, is subject to a penalty only under Section 271D of the IT Act, 1961. Further, neither Section 269SS nor 271D of the IT Act, 1961 states that any transaction in breach thereof will be illegal, invalid or statutorily void. Therefore, any violation of Section 269SS would not render the transaction unenforceable under Section 138 of the NI Act or rebut the presumptions under Sections 118 and 139 of the NI Act because such a person, assuming him/her to be the payee/holder in due course, is liable to be visited by a penalty only as prescribed. Consequently, the view that any transaction above Rs. 20,000/- (Rupees Twenty Thousand) is illegal and void and therefore does not fall within the definition of ‘legally enforceable debt’ cannot be countenanced. Accordingly, the conclusion of law in P.C. Hari (supra) is set aside.”
32. This position was reiterated in Shine Varghese Koipurathu v State of Kerala, Crl. A. No. 5385 of 2025 decided on 8th December 2025.
33. It was submitted that the complaint has not produced any proof of the payment of the cheque amount to the accused. This submission will also not help the accused. Once the presumption under Sections 118(a) and 139 of the NI Act is attracted, there is a presumption that the cheque was issued for consideration, and the complainant is not required to prove the existence of the consideration. It was laid down by the Hon’ble Supreme Court in Uttam Ram v. Devinder Singh Hudan, (2019) 10 SCC 287: 2019 SCC OnLine SC 1361, that a presumption under Section 139 of the NI Act would obviate the requirement to prove the existence of consideration. It was observed:
“20. The trial court and the High Court proceeded as if the appellant was to prove a debt before the civil court, wherein the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due, and the dishonour of a cheque carries a statutory presumption of consideration. The holder of the cheque in due course is required to prove that the cheque was issued by the accused and that when the same was presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.”
34. This position was reiterated in Ashok Singh v. State of U.P., 2025 SCC OnLine SC 706, wherein it was observed:
“22. The High Court while allowing the criminal revision has primarily proceeded on the presumption that it was obligatory on the part of the complainant to establish his case on the basis of evidence by giving the details of the bank account as well as the date and time of the withdrawal of the said amount which was given to the accused and also the date and time of the payment made to the accused, including the date and time of receiving of the cheque, which has not been done in the present case. Pausing here, such presumption on the complainant, by the High Court, appears to be erroneous. The onus is not on the complainant at the threshold to prove his capacity/financial wherewithal to make the payment in discharge of which the cheque is alleged to have been issued in his favour. Only if an objection is raised that the complainant was not in a financial position to pay the amount so claimed by him to have been given as a loan to the accused, only then would the complainant 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 a loan. In the case at hand, the appellant had categorically stated in his deposition and reiterated in the cross-examination that he had withdrawn the amount from the bank in Faizabad (Typed Copy of his deposition in the paperbook wrongly mentions this as ‘Firozabad’). The Court ought not to have summarily rejected such a stand, more so when respondent no. 2 did not make any serious attempt to dispel/negate such a stand/statement of the appellant. Thus, on the one hand, the statement made before the Court, both in examination-in-chief and cross-examination, by the appellant with regard to withdrawing the money from the bank for giving it to the accused has been disbelieved, whereas the argument on behalf of the accused that he had not received any payment of any loan amount has been accepted. In our decision in S. S. Production v. Tr. Pavithran Prasanth, 2024 INSC 1059, we opined:
‘8. From the order impugned, it is clear that though the contention of the petitioners was that the said amounts were given for producing a film and were not by way of return of any loan taken, which may have been a probable defence for the petitioners in the case, but rightly, the High Court has taken the view that evidence had to be adduced on this point which has not been done by the petitioners. Pausing here, the Court would only comment that the reasoning of the High Court, as well as the First Appellate Court and Trial Court, on this issue is sound. Just by taking a counter-stand to raise a probable defence would not shift the onus on the complainant in such a case, for the plea of defence has to be buttressed by evidence, either oral or documentary, which in the present case has not been done. Moreover, even if it is presumed that the complainant had not proved the source of the money given to the petitioners by way of loan by producing statement of accounts and/or Income Tax Returns, the same ipso facto, would not negate such claim for the reason that the cheques having being issued and signed by the petitioners has not been denied, and no evidence has been led to show that the respondent lacked capacity to provide the amount(s) in question. In this regard, we may make profitable reference to the decision in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735:
‘10. The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act, the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act are 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 cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether, in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.’(emphasis supplied)’ (underlining in original; emphasis supplied by us in bold).
35. A similar view was taken in Sanjay Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed:
“21. This Court also takes judicial notice of the fact that some District Courts and some High Courts are not giving effect to the presumptions incorporated in Sections 118 and 139 of the NI Act and are treating the proceedings under the NI Act as another civil recovery proceedings and are directing the complainant to prove the antecedent debt or liability. This Court is of the view that such an approach is not only prolonging the trial but is also contrary to the mandate of Parliament, namely, that the drawer and the bank must honour the cheque; otherwise, trust in cheques would be irreparably damaged.”
36. Therefore, the complainant’s version cannot be discarded because he has not produced any proof of payment of the amount to the accused.
37. In the present case, the accused claimed that Surender Kumar had forcibly taken a cheque from him which version is not credible as noticed above. Therefore, learned Courts below had rightly held that the accused had failed to rebut the presumption attached to the cheque.
38. The complainant asserted that the cheque was dishonoured with an endorsement “payment stopped by the drawer”. This is duly corroborated by the memo (Ext.PW1/B), wherein the reason for dishonour was mentioned as the “payment stopped by the drawer”. It was laid down by the Hon’ble Supreme Court in Mandvi Cooperative Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1: 2010 SCC OnLine SC 155 that the memo issued by the Bank is presumed to be correct, and the burden is upon the accused to rebut the presumption. It was observed at page 95:
24. Section 146, making a major departure from the principles of the Evidence Act, provides that the bank’s slip or memo with the official mark showing that the cheque was dishonoured would, by itself, give rise to the presumption of dishonour of the cheque, unless and until that fact was disproved. Section 147 makes the offences punishable under the Act compoundable.
39. In the present case, no evidence was produced to rebut the presumption, and the learned Courts below had rightly held that the cheque was dishonoured because of the endorsement “payment stopped by the drawer”. It was laid down by the Hon’ble Supreme Court in Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970 that the dishonour of a cheque on the ground that the drawer stopped the payment will attract the provisions of Section 138 of the NI Act. It was observed at page 388:
12. In Modi Cements Ltd. [(1998) 3 SCC 249: 1999 SCC (Cri) 252], a similar question had arisen for the consideration of this Court. The question was whether dishonour of a cheque on the ground that the drawer had stopped payment was a dishonour punishable under Section 138 of the Act. Relying upon two earlier decisions of this Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists and Engineers (Electronics) (P) Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] and K.K. Sidharthan v. T.P. Praveena Chandran [(1996) 6 SCC 369: 1996 SCC (Cri) 1340], it was contended by the drawer of the cheque that if the payment was stopped by the drawer, the dishonour of the cheque could not constitute an offence under Section 138 of the Act. That contention was specifically rejected by this Court. Not only that, the decision in Electronics Trade & Technology Development Corpn. Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] to the extent that the same held that dishonour of the cheque by the bank after the drawer had issued a notice to the holder not to present the same would not constitute an offence, was overruled. This Court observed: (Modi Cements Ltd. case [(1998) 3 SCC 249: 1999 SCC (Cri) 252], SCC pp. 257-58, paras 18 & 20)
“18. The aforesaid propositions in both these reported judgments, in our considered view, with great respect, are contrary to the spirit and object of Sections 138 and 139 of the Act. If we are to accept this proposition, it will make Section 138 a dead letter, for, by giving instructions to the bank to stop payment immediately after issuing a cheque against a debt or liability, the drawer can easily get rid of the penal consequences, notwithstanding the fact that a deemed offence was committed. Further, the following observations in para 6 in Electronics Trade & Technology Development Corpn. Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] (SCC p. 742)
Section 138 is intended to prevent dishonesty on the part of the drawer of a negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induce the payee or holder in due course to act upon it. Section 138 draws the presumption that one commits the offence if one issues the cheque dishonestly.
In our opinion, do not also lay down the law correctly.
***
20. On a careful reading of Section 138 of the Act, we are unable to subscribe to the view that Section 138 of the Act draws a presumption of dishonesty against the drawer of the cheque if he, without sufficient funds to his credit in his bank account, to honour the cheque issues the same and, therefore, this amounts to an offence under Section 138 of the Act. For the reasons stated hereinabove, we are unable to share the views expressed by this Court in the above two cases, and we respectfully differ with the same regarding the interpretation of Section 138 of the Act to the limited extent as indicated above.” (emphasis in original)
13. We may also, at this stage, refer to the decisions of this Court in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. [(2002) 1 SCC 234: 2002 SCC (Cri) 121], where to this Court considering an analogous question held that even in cases where the dishonour was on account of “stop-payment” instructions of the drawer, a presumption regarding the cheque being for consideration would arise under Section 139 of the Act. The Court observed: (SCC p. 240, para 19)
“19. Just such a contention has been negatived by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi [(1998) 3 SCC 249: 1999 SCC (Cri) 252]. It has been held that even though the cheque is dishonoured by reason of a ‘stop-payment’ instruction, an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is also attracted in such a case. The authority shows that even when the cheque is dishonoured by reason of ‘stop-payment’ instructions by virtue of Section 139, the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course, this is a rebuttable presumption. The accused can thus show that the ‘stop-payment’ instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid reasons, including that there was no existing debt or liability at the time of presentation of a cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus, a court cannot quash a complaint on this ground.”
14. To the same effect is the decision of this Court in Goaplast (P) Ltd. v. Chico Ursula D’Souza [(2003) 3 SCC 232: 2003 SCC (Cri) 603: 2003 Cri LJ 1723] where this Court held that “stop-payment instructions” and consequent dishonour of a post-dated cheque attract the provision of Section 138. This Court observed: (SCC pp. 232g-233c)
“Chapter XVII, containing Sections 138 to 142, was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. The said provisions were intended to discourage people from not honouring their commitments by way of payment through cheques. The court should lean in favour of an interpretation that serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque.
In view of Section 139, it has to be presumed that a cheque is issued in the discharge of any debt or other liability. The presumption can be rebutted by adducing evidence, and the burden of proof is on the person who wants to rebut the presumption. This presumption, coupled with the object of Chapter XVII of the Act, leads to the conclusion that by countermanding payment of a post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts, which, in other words, can be said to be taking advantage of one’s own wrong.” (emphasis supplied)
40. The accused admitted in his statement on oath that he had received the notice. He further claimed that he had issued a reply, but has not produced any reply on record. Therefore, the receipt of notice is not in dispute. He did not claim that he had paid money to the complainant after the receipt of the notice.
41. Thus, it was duly proved on record that the accused had issued a cheque in favour of the complainant to repay the loan taken by him, the cheque was dishonoured with an endorsement “payment stopped by the drawer,” and the accused had failed to pay the amount despite the receipt of the notice of demand. Hence, all the ingredients of commission of an offence punishable under Section 138 of the NI Act were duly satisfied, and the learned Trial Court had rightly convicted the accused of the commission of an offence punishable under Section 138 of the NI Act.
42. The learned Trial Court had sentenced the accused to undergo rigorous imprisonment for three months. It was laid down by the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provision of section 138 is deterrent in nature. It was observed at page 203:
“6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments, including cheques, and to encourage and promote the use of negotiable instruments, including cheques, in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same.”
43. Keeping in view the deterrent nature of the punishment, the sentence of one year cannot be said to be excessive.
44. Learned Trial Court awarded a compensation of ₹2,26,000/- to the complainant. The cheque was issued for ₹2,26,000/-. Thus, only the cheque amount was awarded as compensation, and no compensation was awarded to the complainant. The complainant lost the interest that he would have gained by investing the amount. He had to engage a counsel to prosecute the complaint filed by him. Therefore, he was entitled to be compensated for his loss. 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: –
19. As regards the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for the dishonour of a cheque as well as civil liability for the realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation, and unless there exist special circumstances, the courts should uniformly levy fines up to twice the cheque amount along with simple interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]”
45. Thus, the amount of compensation, being the cheque amount, cannot be said to be excessive, requiring interference from the Court.
46. No other point was urged.
47. In view of the above, the present revision fails, and it is dismissed.
48. The present revision stands disposed of, and so are the pending miscellaneous application(s), if any.
49. The record of the learned Courts below be returned with a copy of the judgment.
Notes:
1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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