Himachal Pradesh High Court
Sanjay Kumar vs Narayan Singh on 14 July, 2026
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 356 of 2026
Reserved on: 22.06.2026
.
Date of Decision: 14.07.2026
Sanjay Kumar ....Petitioner
Versus
of
Narayan Singh ....Respondent
Coram
rt
Hon'ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No.
For the petitioner : Mr Naveen K. Bhardwaj,
Advocate.
For the Respondent : Nemo.
Rakesh Kainthla, Judge
The present revision is directed against the
judgment dated 04.06.2026, passed by the learned Additional
Sessions Judge, Kullu, District Kullu, H.P. (learned Appellate
Court) vide which judgment of conviction dated 19.09.2024
1
. Whether reporters of the local papers may be allowed to see the judgment? Yes
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and order of sentence dated 20.09.2024, passed by learned
Judicial Magistrate, First Class, Kullu, District Kullu, 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.)
2. Briefly stated, the facts giving rise to the present
petition are that the complainant filed a complaint against the
of
accused for the commission of an offence punishable under
Section 138 of the Negotiable Instruments Act (N I Act). It was
rt
asserted that the parties were well known to each other. The
accused required money in October 2016 for the construction
of his house. He borrowed ₹ 6,00,000/- from the complainant
and promised to return the money shortly. He issued a cheque
of ₹6,00,000/- drawn on the State Bank of Patiala, branch
Patlikuhal, District Kullu, H.P., to return the money. The
complainant presented the cheque at his bank, but it was
dishonoured with an endorsement ‘funds insufficient’. The
complainant issued a legal notice to the accused asking him to
repay the money within 15 days of its receipt. The legal notice
was duly served upon the accused, but the accused failed to
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repay the money. Hence, the complaint was filed to take
action against the accused.
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 N I Act, to which he
pleaded not guilty and claimed to be tried.
of
4. The complainant examined himself (CW1) to prove
his complaint.
rt
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 claimed that he had
issued a cheque in favour of Sesh Ram, a relative of the
complainant. The complainant misused the cheque issued by
the accused. However, he did not produce any evidence to
prove his defence.
6. Learned Trial Court held that the issuance of the
cheque was not disputed. The plea taken by the accused that
he had issued a cheque in favour of Sesh Ram was denied by
the complainant in his cross-examination. The accused did
not lead any evidence to prove the plea taken by him. Hence,
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he had failed to rebut the presumption attached to the cheque.
The cheque was dishonoured with an endorsement of
insufficient funds. The notice was duly served upon the
.
accused, and an acknowledgement was received bearing the
signatures of the accused. The accused had also admitted in
his statement recorded under Section 313 of the CrPC that he
had received the notice. The accused failed to repay the money
of
to the complainant despite the receipt of the notice of
demand. All the ingredients of the commission of an offence
rt
punishable under Section 138 of the NI Act were duly satisfied.
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 simple imprisonment
for 8 months and pay a compensation of ₹8,50,000/-.
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, Kullu,
District Kullu, H.P. (learned Appellate Court). The Appellate
Court concurred with the findings recorded by the learned
Trial Court that issuance of the cheque was not disputed, and
a presumption arose that the cheque was issued for
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consideration to discharge the debt/liability. The plea taken
by the accused that he had issued the cheque in favour of Sesh
Ram was not proved by any material on record. The cheque
.
was dishonoured with an endorsement ‘insufficient funds’,
the notice was duly served upon the accused, and the accused
failed to repay the money despite the receipt of a valid notice
of demand. There was no infirmity in the judgment and order
of
passed by the learned Trial Court. Hence, the appeal was
dismissed. rt
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 plea taken by the
accused that the cheque was issued in favour of Sesh Ram and
the complainant had misused it was highly probable. The
complaint was barred by limitation, and the service of notice
was not proved. Therefore, it was prayed that the present
revision be allowed and the judgments and order passed by
the learned Courts below be set aside
9. Mr Naveen K. Bhardwaj, learned counsel for the
petitioner/accused, submitted that the learned Courts below
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erred in appreciating the material on record. The plea taken by
the accused that the cheque was issued to Sesh Ram and the
complainant had misused it was highly probable. The notice
.
was not served upon the accused, and the findings recorded by
the learned Courts below to this effect are not correct.
Therefore, he prayed that the present revision be allowed and
the judgments and order passed by the learned Courts below
of
be set aside.
10. I have given a considerable thought to the
rt
submissions made at the bar and have gone through the
records. carefully.
11. 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::: Downloaded on – 14/07/2026 20:33:57 :::CIS
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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 themerits 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 theof
case to reverse those findings.
12. This position was reiterated in State of Gujarat v.
Dilipsinh Kishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC
rt
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 inferiorcourt, 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 orthe 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::: Downloaded on – 14/07/2026 20:33:57 :::CIS
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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
of
discretion is exercised arbitrarily or perversely.
These are not exhaustive classes, but are merely
indicative. Each case would have to be
rt 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.”
13. 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
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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], whileconsidering the scope of the revisional jurisdiction of
the High Court, this Court has laid down the following:
(SCC pp. 454-55, para 5)
of
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,
rt legality or propriety of any finding, sentence or
order. In other words, the jurisdiction is one of
supervisory jurisdiction exercised by the HighCourt 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 Sanjaysinh Ramrao Chavan v. Dattatray
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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
of
palpable misreading of records, the Revisional
Court is not justified in setting aside the order,
merely because another view is possible. The
rt Revisional Court is not meant to act as an
appellate court. The whole purpose of the
revisional jurisdiction is to preserve the power in
the court to do justice in accordance with the
principles of criminal jurisprudence. The
revisional power of the court under Sections 397
to 401 CrPC is not to be equated with that of an
appeal. Unless the finding of the court, whose
decision is sought to be revised, is shown to be
perverse or untenable in law or is grossly
erroneous or glaringly unreasonable or where
the decision is based on no material or where the
material facts are wholly ignored or where the
judicial discretion is exercised arbitrarily or
capriciously, the courts may not interfere with
the decision in exercise of their revisional
jurisdiction.”
14. 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:
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“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
of
question is, therefore, in the negative.”
15. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
rt
16. The accused asserted that he had issued a cheque
in favour of Sesh Ram, which was misused by the
complainant. Thus, the issues of the cheque and the
signatures were not disputed. It was laid down by the Hon’ble
Supreme Court in APS Forex Services (P) Ltd. v. Shakti
International Fashion Linkers (2020) 12 SCC 724, that when the
issuance of a cheque and signature on the cheque are not
disputed, a presumption would arise that the cheque was
issued in discharge of the legal liability. It was observed: –
“9. Coming back to the facts in the present case and
because the accused has admitted the issuance of the
cheques and his signature on the cheque and that the
cheque in question was issued for the second time after
the earlier cheques were dishonoured and that even::: Downloaded on – 14/07/2026 20:33:57 :::CIS
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according to the accused some amount was due and
payable, there is a presumption under Section 139 of
the NI Act that there exists a legally enforceable debt or
liability. Of course, such a presumption is rebuttable.
However, to rebut the presumption, the accused was.
required to lead evidence that the full amount due and
payable to the complainant had been paid. In the
present case, no such evidence has been led by the
accused. The story put forward by the accused that thecheques were given by way of security is not believable
in the absence of further evidence to rebut the
presumption, and more particularly, the cheque inof
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
rt
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 wellas 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, Section139 of the Act is an example of a reverse onus clause
and therefore, once the issuance of the cheque has been
admitted and even the signature on the cheque hasbeen admitted, there is always a presumption in favour
of the complainant that there exists legally enforceabledebt or liability and thereafter, it is for the accused to
rebut such presumption by leading evidence.”
17. A similar view was taken in N. Vijay Kumar v.
Vishwanath Rao N., 2025 SCC OnLine SC 873, wherein it was
held as under:
“6. Section 118 (a) assumes that every negotiable
instrument is made or drawn for consideration, while
Section 139 creates a presumption that the holder of a::: Downloaded on – 14/07/2026 20:33:57 :::CIS
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cheque has received the cheque in discharge of a debt
or liability. Presumptions under both are rebuttable,
meaning they can be rebutted by the accused by raising
a probable defence.”
18. This position was reiterated in Sanjabij Tari v.
.
Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was
observed:
“ONCE EXECUTION OF A CHEQUE IS ADMITTED,
PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF THE NIof
ACT ARISE
15. In the present case, the cheque in question has
admittedly been signed by the Respondent No. 1-
Accused. This Court is of the view that once the
rt
execution of the cheque is admitted, the presumption
under Section 118 of the NI Act that the cheque inquestion was drawn for consideration and the
presumption under Section 139 of the NI Act that the
holder of the cheque received the said cheque in
discharge of a legally enforceable debt or liability arisesagainst the accused. It is pertinent to mention that
observations to the contrary by a two-Judge Bench in
Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4SCC 54, have been set aside by a three-Judge Bench in
Rangappa (supra).
16. This Court is further of the view that by creating
this presumption, the law reinforces the reliability of
cheques as a mode of payment in commercialtransactions.
17. Needless to mention that the presumption
contemplated under Section 139 of the NI Act is
rebuttable. However, the initial onus of proving that
the cheque is not in discharge of any debt or other
liability is on the accused/drawer of the cheque [See:
Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197].
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19. Therefore, the Court has to start with the
presumption that the cheque was issued for consideration to
discharge the debt/liability.
.
20. The complainant admitted in his cross-
examination that Sesh Ram was his uncle, but he denied that
Sesh Ram had obtained a blank cheque as security from the
accused, and the complainant had misused the cheque. The
of
learned Court below had rightly held that a denied suggestion
does not amount to any proof. Therefore, the cross-
rt
examination of the complainant does not establish the
defence taken by the accused.
21. It was submitted that the complainant had
admitted the relationship between him and Sesh Ram, which
establishes the defence taken by the accused. This submission
cannot be accepted. The relationship between Sesh Ram and
the complainant cannot lead to an inference that the cheque
was issued to Sesh Ram and that Sesh Ram had handed over
the cheque to the complainant.
22. The accused claimed that he had borrowed money
from Sesh Ram, but failed to produce any evidence to
establish this plea. It was suggested to the complainant that
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the accused had repaid the money to Sesh Ram; however, no
proof of the payment was filed. The accused was aware of the
fact that he had handed over a cheque to Sesh Ram, which
.
could be used against him. Therefore, being a prudent person,
he would not have paid the money to Sesh Ram without taking
the receipt or ensuring the proof of payment by depositing the
amount in the account of Sesh Ram. No such material was
of
produced on record, and the plea taken by the accused that the
cheque was issued in favour of Sesh Ram, who had handed it
rt
over to the complainant, is not acceptable.
23. The accused did not examine any witness to prove
the defence taken by him, and relied upon his statement
recorded under Section 313 of the CrPC to prove the plea that
the cheque was issued in the name of Sesh Ram. This was not
sufficient. It was held in Sumeti Vij v. Paramount Tech Fab
Industries, (2022) 15 SCC 689: 2021 SCC OnLine SC 201 that the
accused has to lead defence evidence to rebut the presumption
and mere denial in his statement under Section 313 is not
sufficient. It was observed at page 700:
“20. That apart, when the complainant exhibited all
these documents in support of his complaints and
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thereof, the appellant 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 thepresumption that the cheques were issued for
consideration.” (Emphasis supplied)”
24. Therefore, the statement of the accused recorded
of
under Section 313 of Cr.P.C. was not a legally admissible
statement, and the accused cannot derive any advantage from
rt
it.
25. Therefore, learned Courts below had rightly held
that the accused had failed to rebut the presumption attached
to the cheque.
26. The complainant stated in his cross-examination
that he had given ₹6,00,000/-to the accused, which he had
earned by selling the apples. He admitted that he had not
placed on record any document regarding the sale of apples.
He also admitted that no writing was executed regarding the
borrowing of the money. It was submitted that the
complainant had failed to prove the source of the money or
the payment of money to the accused. This submission will
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not help the accused. 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 onof
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
rt
is required to prove that the cheque was issued by the
accused and that when the same was presented, it wasnot 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.”
27. 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 thedetails 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
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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 aloan. In the case at hand, the appellant had
categorically stated in his deposition and reiterated in
the cross-examination that he had withdrawn theof
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
rt
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 inexamination-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 theaccused 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, weopined:
‘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 ofreturn 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::: Downloaded on – 14/07/2026 20:33:57 :::CIS
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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 evidencehas 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 Tedhiof
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
rt
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 leadevidence 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 casedid not have the capacity and therefore, the case of the
accused is acceptable, which he can do by producingindependent materials, namely, by examining his
witnesses and producing documents. It is also open tohim 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
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that the accused has established a probable
defence.'(emphasis supplied)'(underlining in
original; emphasis supplied by us in bold).
28. 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 inof
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
rt
the view that such an approach is not only prolonging
the trial but is also contrary to the mandate ofParliament, namely, that the drawer and the bank
must honour the cheque; otherwise, trust in cheques
would be irreparably damaged.”
29. Therefore, the complainant’s version cannot be
discarded because he has not produced the document
regarding the sale of the apples or the advancement of the
loan to the accused.
30. The complainant stated in his cross-examination
that he had handed over the money to the accused in the
denomination of ₹500/-. It was submitted that the payment
of the money in cash violates Section 269SS of the Income Tax
Act, and the complaint was not maintainable. This submission
cannot be accepted. It was laid down by this Court in Surinder
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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’ orof
(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
rt 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.
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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
Asstt. 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 hasof
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
rt
taxpayer would usually give the explanation that he
had borrowed or received deposits from his relatives orfriends, 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 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::: Downloaded on – 14/07/2026 20:33:57 :::CIS
232026:HHC:28410
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.
of
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
rt
transaction unenforceable under Section 138 of the NI
Act or rebut the presumptions under Sections 118 and139 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. In the present case, no evidence was produced to
rebut the presumption, and the learned Courts below had
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rightly held that the cheque was dishonoured with an
endorsement ‘insufficient funds.’
34. The complainant stated that the cheque was
.
dishonoured with an endorsement ‘insufficient funds. This
was duly corroborated by the cheque returning memo
(Ext.C-2/CW1), which mentioned the reason for dishonour as
‘insufficient funds’. It was laid down by the Hon’ble Supreme
of
Court in Mandvi Cooperative Bank Ltd. v. Nimesh B. Thakore,
(2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1:
rt
2010 SCC OnLine SC 155 that the memo issued by the Bank ispresumed 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 thecheque was dishonoured would, by itself, give rise to
the presumption of dishonour of the cheque, unlessand until that fact was disproved. Section 147 makes
the offences punishable under the Act compoundable.”
35. In the present case, the accused has not produced
any evidence to rebut the presumption, and the learned Courts
below had rightly held that the cheque was dishonoured with
an endorsement ‘funds insufficient’.
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36. The complainant stated that he had served a notice
upon the accused. This is duly corroborated by the
acknowledgement (Ext. C-6/CW-1). Thus, the service of
.
notice was duly proved upon the accused.
37. In any case, it was laid down in C.C. Allavi Haji vs.
Pala Pelly Mohd. 2007(6) SCC 555, that the person who claims
that he had not received the notice has to pay the amount
of
within 15 days from the date of the receipt of the summons
from the Court and in case of failure to do so, he cannot take
rt
the advantage of the fact that notice was not received by him.
It was observed:
“It is also to be borne in mind that the requirement of
giving notice is a clear departure from the rule of
Criminal Law, where there is no stipulation of giving
notice before filing a complaint. Any drawer who claimsthat he did not receive the notice sent by post, can, within
15 days of receipt of summons from the court in respect ofthe complaint under Section 138 of the Act, make payment
of the cheque amount and submit to the Court that he had
made payment within 15 days of receipt of summons (byreceiving a copy of the complaint with the summons) and,
therefore, the complaint is liable to be rejected. A person
who does not pay within 15 days of receipt of the summons
from the Court, along with the copy of the complaint under
Section 138 of the Act, cannot obviously contend that there
was no proper service of notice as required under Section
138, by ignoring the statutory presumption to the contrary
under Section 27 of the G.C. Act and Section 114 of the
Evidence Act. In our view, any other interpretation of::: Downloaded on – 14/07/2026 20:33:57 :::CIS
262026:HHC:28410
the proviso would defeat the very object of the
legislation. As observed in Bhaskaran’s case (supra), if
the giving of notice in the context of Clause (b) of the
proviso was the same as the receipt of notice, a
trickster cheque drawer would get the premium to.
avoid receiving the notice by adopting different
strategies and escape from the legal consequences of
Section 138 of the Act.” (Emphasis supplied)
38. The accused has not claimed that any money was
paid by him to the complainant after the receipt of the notice.
of
Therefore, it was duly proved that the accused had failed to
pay the money despite the receipt of a valid notice of demand.
39.
rt
Thus, it was duly proved on record that the accused
had issued a cheque to discharge his legal liability, the cheque
was dishonoured with an endorsement ‘insufficient funds’,
and the accused failed to pay the money despite the receipt of
a notice of demand. Hence, all the ingredients of the offence
punishable under Section 138 of the NI Act were duly satisfied,
and the learned Trial Court had rightly convicted the accused
for the commission of the offence punishable under Section
138 of the NI Act.
40. Learned Trial Court sentenced the accused to
undergo simple imprisonment for eight months and pay a fine
in the form of compensation of ₹8,50,000/- to the
complainant. It was laid down by the Hon’ble Supreme Court
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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, includingof
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
rt
serious intention to honour the promise implicit in the
issuance of the same.”
41. Keeping in view the deterrent nature of the
punishment, the sentence of eight months cannot be said to
be excessive.
42. The learned Trial Court awarded the compensation
of ₹8,50,000/- on the cheque amount of ₹6,00,000/-, which
means that the amount of ₹2,50,000 was awarded as
compensation. The cheque was issued on 15.12.2016, and the
sentence was imposed on 20.09.2024 after the lapse of 93
months. The complainant lost money that it would have
gained by lending the money to someone. It had to engage a
counsel to prosecute the complaint filed by him. Therefore, it
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was entitled to be compensated for its 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: –
of
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
rt
is not only punitive but also compensatory and
restitutive. The provisions of NIA envision a singlewindow 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 awardingcompensation, and unless there exist special
circumstances, the courts should uniformly levy fines
up to twice the cheque amount along with simpleinterest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260,
para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]”
43. An amount of ₹6,00,000/- would have earned
₹3,72,000/- as interest for 93 months, and the compensation
of ₹2,50,000/- cannot be said to be excessive, requiring any
interference from the Court.
44. No other point was urged.
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45. In view of the above, the present revision petition
fails, and it is dismissed.
46. The present petition stands disposed of, and so are
.
the pending applications, if any.
(Rakesh Kainthla)
Judge
14th July, 2026.
(ravinder)
of
rt
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