Himachal Pradesh High Court
Dola Singh vs Ltd & Anr on 29 July, 2026
2026:HHC:31278
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 58 of 2025
Reserved on: 21.07.2026
.
Date of Decision: 29.07.2026
Dola Singh ...Petitioner
Versus
H.P. State Co-operative Agriculture and Rural Development Bank
of
Ltd & Anr. ...Respondents
_______________________________________
Coram rt
Hon'ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 No
For the Petitioner : Mr N.K. Bhardwaj, Advocate.
For Respondent No.1 : Mr Narender Singh Thakur,
Advocate.
For Respondent No.2/State : Mr Tarun Pathak, Deputy
Advocate General.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 15.01.2025 passed by the learned Sessions Judge, Kullu,
District Kullu, H.P. (learned Appellate Court) vide which the
judgment of conviction and order of sentence dated 01.05.2024
passed by the learned Judicial Magistrate First Class, Banjar, District
Kullu HP (learned Trial Court) were upheld. (The parties shall
1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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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 revision
.
are that the complainant filed a complaint before the learned Trial
Court against the accused for the commission of an offence
punishable under Section 138 of the Negotiable Instruments Act (NI
Act). It was asserted that the complainant is a cooperative society
of
and is engaged in banking activities. The accused availed a loan of
₹10,00,000/- from the complainant and issued a cheque of
rt
₹95,000/- to partly repay the amount borrowed by him. The
complainant presented the cheque at its bank, but it was
dishonoured with the remarks “funds insufficient”. The
complainant sent a legal notice to the accused asking him to pay the
money within 15 days of the receipt of the notice. The notice was
duly served upon the accused, but the accused failed to repay the
loan. Hence, a complaint was filed before the Court for taking action
against the accused.
3. The learned Trial Court found sufficient reasons to
summon the accused. When the accused appeared, a notice of
accusation was put to him for the commission of an offence
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punishable under Section 138 of the NI Act, to which he pleaded not
guilty and claimed trial.
4. The complainant examined Dhale Ram (CW1) to prove its
.
complaint.
5. The accused, in his statement, recorded under Section 313
of the Code of Criminal Procedure (Cr.P.C), denied the complainant’s
of
case in its entirety. He examined himself (DW1) in his defence.
6. The learned Trial Court held that the accused had not
rt
disputed the issuance of the cheque and his signatures. Therefore, a
presumption applied that the cheque was issued for consideration to
discharge the debt/liability. The burden was upon the accused to
rebut the presumption, but he failed to produce any evidence to
rebut the presumption. The cheque was dishonoured with
endorsement “insufficient funds”. The notice was duly served upon
the accused, and he failed to repay the money. 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 2 months and pay a compensation
of ₹1,00,000/-.
7. Being aggrieved by the judgment and order passed by the
learned Trial Court, the accused filed an appeal which was decided by
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the learned Sessions Judge Kullu, District Kullu, HP (learned
Appellate Court). The learned Appellate Court concurred with the
findings recorded by the learned Trial Court that the accused had not
.
disputed the issuance of the cheque, and a presumption applied that
the cheque was issued for consideration to discharge the
debt/liability. The complainant failed to rebut the presumption by
producing any evidence. The plea taken by the accused that the
of
complaint was not filed by the proper officer was not sustainable
because an authority letter issued by the Managing Director in
rt
favour of the complainant of Branch Manager was placed on record.
The Branch Manager is also a Principal Officer and competent to file
the complaint. The cheque was dishonoured with endorsement
“insufficient funds”. The notice was duly served upon the accused,
and the accused failed to repay the money. Hence, all the ingredients
of the commission of an offence punishable under Section 138 of the
NI Act were duly satisfied. Learned Trial Court had imposed an
adequate sentence and no interference was required with the
judgment and order passed by the learned Trial Court. Consequently,
the appeal 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 failed to appreciate the
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material placed before them. The complainant had misused the
security cheque taken at the time of advancing the loan. No authority
letter was placed on record to show that the Branch Manager was
.
authorised to file the complaint. No ledger was placed on record to
prove the exact liability of the accused. Therefore, it was prayed that
the present revision be allowed and the judgments and order passed
by learned Courts below be set aside.
of
9. I have heard Mr N.K. Bharadwaj, learned counsel for the
petitioner/accused, Mr Narinder Singh Thakur, learned counsel for
rt
respondent no. 1 and Mr Tarun Pathak, learned Deputy Advocate
General for the respondent no. 2/State.
10. Mr N.K. Bharadwaj, learned counsel for the
petitioner/accused submitted that learned Courts below failed to
appreciate the material placed before them. The defence taken by the
accused that the cheque was issued as a security which was misused
by the complainant was highly probable from the statement of the
accused. The complainant has not placed the authority of the Branch
Manager to file the complaint, and the complaint was not
maintainable. The notice did not mention the name of the person on
whose behalf the notice was issued, and the notice was defective.
Hence, he prayed that the present revision be allowed and the
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judgments and order passed by learned Courts below be set aside. He
relied upon the judgments in Jaipur Thar Gramin Bank, Branch
Jaisalmer vs. State 2022(1) Civil Court Cases 668 (Rajasthan) and
.
Mansa Central Co-operative Bank Ltd vs. Lachhman Singh 2023(4)
Civil Court Cases 460 (P&H) in support of his submission.
11. Mr Narinder Singh Thakur, learned counsel for the
respondent No.1 submitted that the testimony of Dhale Ram (CW1)
of
that he was authorised to file the complaint was not challenged in
the cross-examination and this plea cannot be taken before this
rt
Court. The accused had not disputed the issuance of the cheque and
learned Courts below had rightly applied presumption to the present
case. All the ingredients of the commission of the offence punishable
under Section 138 of the NI Act were duly satisfied. There is no
infirmity in the judgments and order passed by learned Courts below
and this Court should not re-appreciate the evidence while deciding
the present revision. Hence, he prayed that the present revision be
dismissed. He relied upon the judgment of this Court in Kewal Ram
vs. HP Cooperative Agriculture and Rural Development Bank Ltd.
2026:HHC:10810 in support of his submissions.
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12. Mr Tarun Pathak, learned Deputy Advocate General for
the State submitted that the dispute is between the private persons
and the State has no submissions to make.
.
13. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
14. It was laid down by the Hon’ble Supreme Court in
of
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
rt
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 findingsof conviction arrived at by two courts after a detailed
appreciation of the material and evidence brought on record.
The High Court in a criminal revision against conviction is notsupposed 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 ororder, 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.
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15. This position was reiterated in State of Gujarat v. Dilipsinh
Kishorsinh 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 thepurposes 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 ofof
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
rt
Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC
(Cri) 986], where scope of Section 397 has been considered andsuccinctly 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 inferiorcourt 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 apatent defect or an error of jurisdiction or law. There has
to be a well-founded error, and it may not beappropriate 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 looksinto 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::: Downloaded on – 29/07/2026 20:33:24 :::CIS
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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.”
16. It was held in Kishan Rao v. Shankargouda, (2018) 8 SCC
of
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
rt
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 laiddown 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
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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 Gulabrao Phalke, (2015)
of
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
rt
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.”
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17. 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, upsetconcurrent 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.
of
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
rt
answer to the first question is, therefore, in the negative.”
18. A similar view was taken in Sanjabij Tari v. Kishore S.
Borcar, 2025 SCC OnLine SC 2069, wherein it was observed:
“27. It is well settled that in exercise of revisional jurisdiction,
the High Court does not, in the absence of perversity, upset
concurrent factual findings [See: Bir Singh(supra)]. This Courtis of the view that it is not for the Revisional Court to re-
analyse and re-interpret the evidence on record. As held bythis 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.
28. Consequently, this Court is of the view that in the absence
of perversity, it was not open to the High Court in the present
case, in revisional jurisdiction, to upset the concurrent
findings of the Trial Court and the Sessions Court.
19. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
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20. The ingredients of the 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 chequeof
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
rt
course to the bank, (iii) returning the cheque unpaid by the
drawee bank for want of sufficient funds to the credit of thedrawer 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 returnof 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 amountcovered by the cheque, within 15 days of the receipt of the
notice.”
21. The accused Dola Singh (DW1), stated that he had applied
for a house loan of ₹10,00,000/-. He was asked to produce a cheque
book. He opened the account and handed over the blank cheques to
the Manager. The cheques did not contain any amount or the date.
He had not handed over any cheque after taking the loan. The cheque
(Ext.CW1/B) was blank without any date or without any amount. The
date and the amount were filled by the Manager. He admitted in his
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cross-examination that he had taken a loan of ₹10,00,000/- from
the bank. He also admitted his signature on the cheque (Ext.CW1/B).
He admitted that he had received the notice but had not sent any
.
reply to it. He admitted that he had mortgaged his land to take a
loan.
22. It is apparent from the testimony of this witness that he
has admitted the issuance of the cheque and his signatures on the
of
cheque. It was laid down by the Hon’ble Supreme Court in APS Forex
Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC
rt
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
considering the fact that the accused has admitted theissuance of the cheques and his signature on the cheque and
that the cheque in question was issued for the second timeafter the earlier cheques were dishonoured and that even
according to the accused some amount was due and payable,there is a presumption under Section 139 of the NI Act that
there exists a legally enforceable debt or liability. Of course,
such 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 the
cheques were given by way of security is not believable in the
absence of further evidence to rebut the presumption, and
more particularly, the cheque in question was issued for the
second time after the earlier cheques were dishonoured.
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properly appreciating and considering the presumption in
favour of the complainant that there exists a legally
enforceable debt or liability as per Section 139 of the NI Act. It
appears that both the learned trial court as well as the High
Court have committed an error in shifting the burden upon.
the complainant to prove the debt or liability, without
appreciating the presumption under Section 139 of the NI Act.
As observed above, Section 139 of the Act is an example of a
reverse onus clause and therefore, once the issuance of thecheque has been admitted and even the signature on the
cheque has been admitted, there is always a presumption in
favour of the complainant that there exists legally enforceableof
debt or liability and thereafter, it is for the accused to rebut
such presumption by leading evidence.”
23. This position was reiterated in N. Vijay Kumar v.
rt
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 createsa presumption that the holder of a cheque has received the
cheque in discharge of a debt or liability. Presumptions under
both are rebuttable, meaning they can be rebutted by theaccused by raising a probable defence.”
24. A similar view was taken 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 NI 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 execution of the cheque is admitted, the
presumption under Section 118 of the NI Act that the cheque in
question 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
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mention that observations to the contrary by a two-Judge
Bench in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008)
4 SCC 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 commercial transactions.
17. Needless to mention that the presumption contemplated
under Section 139 of the NI Act is rebuttable. However, theinitial 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].
of
25. Thus, the Court has to start with the presumption that
the cheque was issued in discharge of the liability for consideration,
rt
and the burden is upon the accused to rebut this presumption.
26. The accused admitted that he had taken the loan of
₹10,00,000/- in the year 2017. He has nowhere stated that he had
repaid the loan. The cheque of ₹95,000/- was issued on 07.08.2021,
and in the absence of any proof of the repayment of the loan, the
complainant’s version is acceptable that the accused was liable to
pay an amount of ₹95,000/-. Therefore, learned Courts below had
rightly held that the accused was liable. It was laid down by this
Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that
the accused is liable for the dishonour of the cheque even if the
cheque is issued towards the security. It was observed:
“9. Submission of learned Advocate appearing on behalf of the
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revision petition is rejected as being devoid of any force for the
reasons hereinafter mentioned. As per Section 138 of the
Negotiable Instruments Act, 1881, if any cheque is issued on
account of other liability, then the provisions of Section 138 of
the Negotiable Instruments Act, 1881 would be attracted. The.
court has perused the original cheque, Ext. C-1 dated
30.10.2008, placed on record. There is no recital in the cheque
Ext. C-1 that the cheque was issued as a security cheque. It is
well-settled law that a cheque issued as security would alsocome under the provisions of Section 138 of the Negotiable
Instruments Act, 1881. See 2016 (3) SCC page 1 titled Don
Ayengia v. State of Assam & another. It is well-settled law thatof
where there is a conflict between former law and subsequent
law, then subsequent law always prevails.”
27. It was laid down by the Hon’ble Supreme Court in
Sampelly
rt
Satyanarayana Rao vs. Indian Renewable Energy
Development Agency Limited, 2016(10) SCC 458 that issuing a cheque
toward security will also attract the liability for the commission of
an offence punishable under Section 138 of the NI Act. It was
observed: –
“10. We have given due consideration to the submission
advanced on behalf of the appellant as well as the
observations of this Court in Indus Airways Private Limited
versus Magnum Aviation Private Limited (2014) 12 SCC 53 withreference to the explanation to Section 138 of the Act and the
expression “for the discharge of any debt or other liability”
occurring in Section 138 of the Act. We are of the view that the
question of whether a post-dated cheque is for “discharge of
debt or liability” depends on the nature of the transaction. If
on the date of the cheque, liability or debt exists or the amount
has become legally recoverable, the Section is attracted and not
otherwise.
11. Reference to the facts of the present case clearly shows that
though the word “security” is used in clause 3.1(iii) of the
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agreement, the said expression refers to the cheques being
towards repayment of instalments. The repayment becomes
due under the agreement the moment the loan is advanced,
and the instalment falls due. It is undisputed that the loan was
duly disbursed on 28th February 2002, which was prior to the
.
date of the cheques. Once the loan was disbursed and
instalments had fallen due on the date of the cheque as per the
agreement, the dishonour of such cheques would fall under
Section 138 of the Act. The cheques undoubtedly represent the
outstanding liability.
12. Judgment in Indus Airways (supra) is clearly
distinguishable. As already noted, it was held therein that
of
liability arising out of a claim for breach of contract under
Section 138, which arises on account of dishonour of a cheque
issued, was not by itself at par with a criminal liability
towards discharge of acknowledged and admitted debt under a
rt
loan transaction. Dishonour of a cheque issued for the
discharge of a later liability is clearly covered by the statute in
question. Admittedly, on the date of the cheque, there was a
debt/liability in praesenti in terms of the loan agreement, as
against the case of Indus Airways (supra), where the purchase
order had been cancelled, and a cheque issued towards
advance payment for the purchase order was dishonoured. In
that case, it was found that the cheque had not been issued for
the discharge of liability but as an advance for the purchase
order, which was cancelled. Keeping in mind this fine, but the
real distinction, the said judgment cannot be applied to a case
of the present nature, where the cheque was for repayment of
a loan instalment which had fallen due, though such a deposit
of cheques towards repayment of instalments was also
described as “security” in the loan agreement. In applying the
judgment in Indus Airways (supra), one cannot lose sight of
the difference between a transaction of the purchase order
which is cancelled and that of a loan transaction where the
loan has actually been advanced, and its repayment is due on
the date of the cheque.
13. The crucial question to determine the applicability of
Section 138 of the Act is whether the cheque represents the
discharge of existing enforceable debt or liability, or whether
it represents an advance payment without there being a
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subsisting debt or liability. While approving the views of
different High Courts noted earlier, this is the underlying
principle as can be discerned from the discussion of the said
cases in the judgment of this Court.” (Emphasis supplied)
28. This position was reiterated in Sripati Singh v. State of
.
Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was
held that a cheque issued as security is not waste paper and a
complaint under section 138 of the NI Act can be filed on its
of
dishonour. It was observed:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered a worthless piece of paper
rt
under every circumstance. ‘Security’ in its true sense is the
state of being safe, and the security given for a loan issomething given as a pledge of payment. It is given, deposited
or pledged to make certain the fulfilment of an obligation to
which the parties to the transaction are bound. If in a
transaction, a loan is advanced and the borrower agrees torepay the amount in a specified timeframe and issues a cheque
as security to secure such repayment; if the loan amount is not
repaid in any other form before the due date or if there is noother understanding or agreement between the parties to
defer the payment of the amount, the cheque which is issuedas security would mature for presentation and the drawee of
the cheque would be entitled to present the same. On such apresentation, if the same is dishonoured, the consequences
contemplated under Section 138 and the other provisions of
the NI Act would flow.
18. When a cheque is issued and is treated as ‘security’ towards
repayment of an amount with a time period being stipulated
for repayment, all that it ensures is that such a cheque, which
is issued as ‘security ‘, cannot be presented prior to the loan or
the instalment maturing for repayment towards which such
cheque is issued as security. Further, the borrower would have
the option of repaying the loan amount or such financial
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of the loan due and payable has been discharged within the
agreed period, the cheque issued as security cannot thereafter
be presented. Therefore, the prior discharge of the loan or
there being an altered situation due to which there would be
an understanding between the parties is a sine qua non to not.
present the cheque which was issued as security. These are
only the defences that would be available to the drawer of the
cheque in proceedings initiated under Section 138 of the NI
Act. Therefore, there cannot be a hard and fast rule that acheque, which is issued as security, can never be presented by
the drawee of the cheque. If such is the understanding, a
cheque would also be reduced to an ‘on-demand promissoryof
note’, and in all circumstances, it would only be civil litigation
to recover the amount, which is not the intention of the
statute. When a cheque is issued even though as ‘security’ the
consequence flowing therefrom is also known to the drawer of
rt
the cheque and in the circumstance stated above if the cheque
is presented and dishonoured, the holder of thecheque/drawee would have the option of initiating the civil
proceedings for recovery or the criminal proceedings for
punishment in the fact situation, but in any event, it is not for
the drawer of the cheque to dictate terms with regard to thenature of litigation.”
29. Therefore, the accused cannot escape from the liability by
taking a plea that he had issued the cheque as security.
30. The accused claimed that he had not filled the cheque and
the manager had filled it. This plea will not help the accused. It has
already been found out above that the accused had taken a loan of
₹10,00,000/- from the complainant and he has not led any evidence
to show the return of the amount. Therefore, the plea taken by the
complainant that he had a subsisting liability of ₹95,000/- is
acceptable. Thus, the complainant had sufficient authority to fill the
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amount of ₹95,000/- and present the cheque. It was laid down by
the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine
.
SC 138, that a person is liable for the commission of an offence
punishable under section 138 of the Negotiable Instruments Act even
if some other person fills the cheque. It was observed:
“33. A meaningful reading of the provisions of the Negotiable
of
Instruments Act, including, in particular, Sections 20, 87 and
139, makes it amply clear that a person who signs a cheque
and makes it over to the payee remains liable unless he
rt
adduces evidence to rebut the presumption that the cheque
had been issued for payment of a debt or in discharge of a
liability. It is immaterial that the cheque may have been filledin by any person other than the drawer if the cheque is duly
signed by the drawer. If the cheque is otherwise valid, the
penal provisions of Section 138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a
payee, towards some payment, the payee may fill in the
amount and other particulars. This in itself would notinvalidate the cheque. The onus would still be on the accused
to prove that the cheque was not in discharge of a debt orliability by adducing evidence.
35. It is not the case that the respondent accused him of either
signing the cheque or parting with it under any threat or
coercion. Nor is it the case that the respondent accused that
the unfilled signed cheque had been stolen. The existence of a
fiduciary relationship between the payee of a cheque and its
drawer would not disentitle the payee to the benefit of the
presumption under Section 139 of the Negotiable Instruments
Act, in the absence of evidence of exercise of undue influence
or coercion. The second question is also answered in the
negative.
36. Even a blank cheque leaf, voluntarily signed and handed
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attract presumption under Section 139 of the Negotiable
Instruments Act, in the absence of any cogent evidence to
show that the cheque was not issued in discharge of a debt.”
31. This position was reiterated in Oriental Bank of Commerce
.
v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089, wherein it was
observed:
“12. The submission, which has been urged on behalf of the
appellant, is that even assuming, as the first respondent
submits, that the details in the cheque were not filled in by theof
drawer, this would not make any difference to the liability of
the drawer.
xxxxxx
rt
32. A drawer who signs a cheque and hands it over to the payee
is presumed to be liable unless the drawer adduces evidence to
rebut the presumption that the cheque has been issued
towards payment of a debt or in the discharge of a liability.
The presumption arises under Section 139.
32. Therefore, the cheque is not bad even if it is not filled in
by the drawer.
33. Dhale Ram (CW1) specifically stated in his proof affidavit
(Ext.CW1/A) that he was a Branch Manager conversant with the facts
of the case and duly authorised to file the complaint on behalf of the
bank. He was not cross-examined regarding this fact. No question
was asked of him about his authority to file the complaint before the
Court. Thus, his testimony that he was competent to file the
complaint had remained unrebutted. It was laid down by the Hon’ble
Supreme Court in State of Uttar Pradesh Versus Nahar Singh, 1998 (3)
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SCC 561 that where the testimony of a witness is not challenged in
the cross-examination, the same cannot be challenged during the
arguments. This position was reiterated in Arvind Singh v. State of
.
Maharashtra, (2021) 11 SCC 1: (2022) 1 SCC (Cri) 208: 2020 SCC OnLine
SC 4, and it was held at page 34:
“58. A witness is required to be cross-examined in a criminal
trial to test his veracity; to discover who he is and what his
position in life is, or to shake his credit, by injuring hisof
character, although the answer to such questions may directly
or indirectly incriminate him or may directly or indirectly
expose him to a penalty or forfeiture (Section 146 of the
rt
Evidence Act). A witness is required to be cross-examined to
bring forth inconsistencies and discrepancies, and to provethe untruthfulness of the witness. A-1 set up a case of his
arrest on 1-9-2014 from 18:50 hrs; therefore, it was required
for him to cross-examine the truthfulness of the prosecution
witnesses with regard to that particular aspect. The argumentthat the accused was shown to be arrested around 19:00 hrs is
an incorrect reading of the arrest form (Ex. 17). In Column 8, it
has been specifically mentioned that the accused was takeninto custody on 2-9-2014 at 14:30 hrs at Wanjri Layout, Police
Station, Kalamna. The time, i.e. 17, 10 hrs, mentioned inColumn 2, appears to be when A-1 was brought to the Police
Station, Lakadganj. As per the IO, A-1 was called for
interrogation as the suspicion was on an employee of DrChandak since the kidnapper was wearing a red colour t-shirt
which was given by Dr Chandak to his employees. A-1
travelled from the stage of suspect to an accused only on 2-9-
2014. Since no cross-examination was conducted on any of
the prosecution witnesses about the place and manner of the
arrest, the argument that the accused was arrested on 1-9-
2014 at 18:50 hrs is not tenable.
59. The House of Lords, in a judgment reported as Browne v.
Dunn (1893) 6 R 67 (HL), considered the principles of
appreciation of evidence. Lord Chancellor Herschell held that
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intended to suggest that a witness is not speaking the truth on
a particular point, to direct his attention to the fact by some
questions put in cross-examination showing that imputation
is intended to be made, and not to take his evidence and pass
it by as a matter altogether unchallenged. It was held as.
under:
“Now, my Lords, I cannot help saying that it seems to me
to be absolutely essential to the proper conduct of a cause,
where it is intended to suggest that a witness is notspeaking the truth on a particular point, to direct his
attention to the fact by some questions put in cross-
examination showing that that imputation is intended toof
be made, and not to take his evidence and pass it by as a
matter altogether unchallenged, and then, when it is
impossible for him to explain, as perhaps he might have
been able to do if such questions had been put to him, the
rt
circumstances which it is suggested indicate that the story
he tells ought not to be believed, to argue that he is awitness unworthy of credit. My Lords, I have always
understood that if you intend to impeach a witness you are
bound, whilst he is in the box, to give him an opportunity
of making any explanation which is open to him; and, as itseems to me, that is not only a rule of professional practice
in the conduct of a case, but is essential to fair play and fair
dealing with witnesses. Sometimes reflections have beenmade upon excessive cross-examination of witnesses, and
it has been complained of as undue, but it seems to me thatcross-examination of a witness which errs in the direction
of excess may be far more fair to him than to leave himwithout cross-examination, and afterwards, to suggest
that he is not a witness of truth, I mean upon a point on
which it is not otherwise perfectly clear that he has had full
notice beforehand that there is an intention to impeach the
credibility of the story which he is telling.”
60. Lord Halsbury, in a separate but concurring opinion, held as
under:
“My Lords, with regard to the manner in which the
evidence was given in this case, I cannot too heartily
express my concurrence with the Lord Chancellor as to the
mode in which a trial should be conducted. To my mind,::: Downloaded on – 29/07/2026 20:33:24 :::CIS
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nothing would be more absolutely unjust than not to
cross-examine witnesses upon evidence which they have
given, so as to give them notice, and to give them an
opportunity of explanation, and an opportunity very often
to defend their own character, and, not having given them.
such an opportunity, to ask the jury afterwards to
disbelieve what they have said, although not one question
has been directed either to their credit or to the accuracy of
the facts they have deposed to.”
61. This Court, in a judgment reported as State of U.P. v. Nahar Singh,
(1998) 3 SCC 561: 1998 SCC (Cri) 850, quoted from Browne v. Dunn,
(1893) 6 R 67 (HL) to hold that in the absence of cross-examination
of
on the explanation of delay, the evidence of PW 1 remained
unchallenged and ought to have been believed by the High Court.
Section 146 of the Evidence Act confers a valuable right of cross-
examining the witness tendered in evidence by the opposite party.
rt
This Court held as under: (State of U.P. v. Nahar Singh, (1998) 3 SCC
561: 1998 SCC (Cri) 850], SCC pp. 566-67, para 13)
“13. It may be noted here that part of the statement of PW 1
was not cross-examined by the accused. In the absence of
cross-examination on the explanation of the delay, the
evidence of PW 1 remained unchallenged and ought to have
been believed by the High Court. Section 138 of the
Evidence Act confers a valuable right of cross-examining
the witness tendered in evidence by the opposite party. The
scope of that provision is enlarged by Section 146 of the
Evidence Act by allowing a witness to be questioned:
(1) to test his veracity,
(2) to discover who he is and what his position in life is,
or
(3) to shake his credit by injuring his character,
although the answer to such questions might tend
directly or indirectly to incriminate him or might
expose or tend directly or indirectly to expose him to a
penalty or forfeiture.”
62. This Court, in a judgment reported Muddasani Venkata Narsaiah
v. Muddasani Sarojana, (2016) 12 SCC 288: (2017) 1 SCC (Civ) 268, laid
down that the party is obliged to put his case in cross-examination
of witnesses of the opposite party. The rule of putting one’s version
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in cross-examination is one of essential justice and not merely a
technical one. It was held as under: (SCC pp. 294-95, paras 15-16)
“15. Moreover, there was no effective cross-examination
made on the plaintiff’s witnesses with respect to the
factum of execution of the sale deed. PW 1 and PW 2 have
.
not been cross-examined as to the factum of execution of
the sale deed. The cross-examination is a matter of
substance, not of procedure. One is required to put one’s
own version in the cross-examination of the opponent.
The effect of non-cross-examination is that the statement
of the witness has not been disputed. The effect of not
cross-examining the witnesses has been considered by this
of
Court in Bhoju Mandal v.Debnath Bhagat, AIR 1963 SC 1906.
This Court repelled a submission on the ground that the
same was not put either to the witnesses or suggested
before the courts below. A party is required to put his
rt
version to the witness. If no such questions are put, the
Court would presume that the witness account has been
accepted as held in Chuni Lal Dwarka Nath v. Hartford Fire
Insurance Co. Ltd., 1957 SCC OnLine P&H 177: AIR 1958 P&H
440.
16. In Maroti Bansi Teli v. Radhabai, 1943 SCC OnLine MP
128: AIR 1945 Nag 60, it has been laid down that the matters
sworn to by one party in the pleadings not challenged
either in pleadings or cross-examination by another party
must be accepted as fully established. The High Court of
Calcutta in A.E.G. Carapiet v. A.Y. Derderian, 1960 SCC OnLine
Cal 44: AIR 1961 Cal 359 has laid down that the party is
obliged to put his case in the cross-examination of
witnesses of the opposite party. The rule of putting one’s
version in cross-examination is one of essential justice and
not merely a technical one. A Division Bench of the Nagpur
High Court, Kuwarlal Amritlal v. Rekhlal Koduram, 1949 SCC
OnLine MP 35: AIR 1950 Nag 83 has laid down that when
attestation is not specifically challenged, and the witness is
not cross-examined regarding details of attestation, it is
sufficient for him to say that the document was attested. If
the other side wants to challenge that statement, it is their
duty, quite apart from raising it in the pleadings, to cross-
examine the witness along those lines. A Division Bench of
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the Patna High Court in Karnidan Sardav.Sailaja Kanta
Mitra, 1940 SCC OnLine Pat 288: AIR 1940 Pat 683 has laid
down that it cannot be too strongly emphasised that the
system of administration of justice allows of cross-
examination of opposite party’s witnesses for the purpose
.
of testing their evidence, and it must be assumed that
when the witnesses were not tested in that way, their
evidence is to be ordinarily accepted. In the aforesaid
circumstances, the High Court has gravely erred in law in
reversing the findings of the first appellate court as to the
factum of execution of the sale deed in favour of the
plaintiff.”
of
34. Therefore, it was rightly submitted on behalf of the
complainant that this plea could not have been raised before the Ld.
rt
appellate Court, and it is impermissible to raise this plea before this
Court as well. In Jaipur Thar Gramin Bank (supra), the accused had
disputed the authority of the manager to file the complaint, which is
not the case here. Hence, the cited judgment does not apply to the
present case.
35. The accused admitted taking of the loan, and there is no
evidence that the loan was repaid. Therefore, it was duly proved that
the cheque was issued for repayment of the debt taken by the
accused.
36. Dhale Ram (CW1) stated that the cheque was presented
before the bank and it was dishonoured with endorsement
“insufficient funds”. He has filed the copy of the cheque return
memo. (Ext.CW1/E) which shows that the reason for dishonour was
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“funds insufficient”. 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
of
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
rt
dishonour of the cheque, unless and until that fact was
disproved. Section 147 makes the offences punishable under
the Act compoundable.”
37. In the present case, the accused has not stated in his
statement that he had sufficient funds in his account and the cheque
was wrongly dishonoured by the bank. Therefore, learned Courts
below had rightly held that the cheque was dishonoured with an
endorsement “funds insufficient”.
38. Dhale Ram (CW1) stated that the complainant had issued
a notice (Ext.CW1/D) to the accused, asking him to pay the money
within 15 days of the receipt of the notice. He filed the
acknowledgement (Ext.CW1/G). The accused, Dola Singh (DW1),
admitted in his cross-examination that he had received the notice
and the acknowledgement (Ext.CW1/G) is signed by him. Therefore,
the service of notice upon the accused was duly proved.
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39. It was submitted that the name of the persons on whose
behalf the notice was issued was not mentioned in the notice, and
the notice is bad. This submission is only stated to be rejected. It was
.
specifically stated in the notice (Ext.CW1/D) that the notice was
issued on behalf of HP State Co-operative Bank, Agricultural and
Rural Development Bank Ltd., Branch Banjar. The cheque was also
issued in the name of Himachal Pradesh Cooperative Agriculture and
of
Rural Development Bank. The complaint was also filed in the name
of the bank. Therefore, the name of the person on whose behalf the
rt
notice was issued was specifically mentioned, and the judgment of
the Punjab and Haryana High Court in Mansa Central Co-operative
Bank Ltd (supra) does not apply to the present case.
40. The accused has not claimed that he had repaid the
money after the service of the notice.
41. Therefore, it was proved on record that the accused had
issued a cheque in favour of the complainant to repay the debt,
which cheque was dishonoured with an endorsement “insufficient
funds” and the accused failed to repay the money despite the receipt
of valid notice of demand. Therefore, all the ingredients of the
commission of an offence punishable under Section 138 of the NI Act
were duly satisfied, and the learned Trial Court had rightly convicted
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the accused of the commission of an offence punishable under
Section 138 of the NI Act.
42. The learned Trial Court sentenced the accused to undergo
.
simple imprisonment for 2 months and pay a compensation of
₹1,00,000/-. It was laid down by the Hon’ble Supreme Court in Bir
Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019)
2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provision of
of
section 138 is deterrent in nature. It was observed at page 203:
rt
“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 tocallous 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,
a sentence of one year cannot be said to be excessive.
44. The accused had issued a cheque of ₹95,000/- and the
learned Trial Court awarded a compensation of ₹ 1,00,000/- which
means that the learned Trial Court had only awarded a
compensation of ₹5,000/- to the complainant. 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
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SCC OnLine SC 75 that the Courts should uniformly levy a fine up totwice 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 alsocompensatory 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 chequeof
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
rt
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. The complainant was deprived of the interest to which it
would have been entitled, had it advanced the money to other
persons. The complainant had to engage a counsel and to prosecute
the complaint before the learned Trial Court, and it was entitled to
be compensated for it. Considering all these circumstances, the
compensation of ₹5,000/- is inadequate. However, the complainant
failed to file any appeal for enhancement of the sentence and no
interference is required with the amount of compensation awarded
by the learned Trial Court.
46. No other point was urged.
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47. In view of the above, there is no infirmity in the
judgments and order passed by the learned Courts below. Hence, the
present revision fails and 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
of
copy of the judgment.
(Rakesh Kainthla)
rt Judge
29th July, 2026
(Nikita)
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