Khushinder Singh vs Ambal Khan on 27 July, 2026

Himachal Pradesh High Court

Khushinder Singh vs Ambal Khan on 27 July, 2026

                                                                          2026:HHC:30732




           IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

                                           Cr. Revision No. 554 of 2024
                                           Reserved on: 16.07.2026




                                                                       .

                                           Date of Decision: 27.07.2026


    Khushinder Singh                                                      ... Petitioner





                                            Versus




                                             of
    Ambal Khan                                                    .... Respondent
    Coram
                     rt
    Hon'ble Mr Justice Rakesh Kainthla, Judge.

    Whether approved for reporting?1 No.

    For the petitioner                        Ms. K.S.Chandel, Advocate.


    For the Respondent                       Mr Dinesh Bhanot, Advocate.

    Rakesh Kainthla, Judge

The present revision is directed against the

judgment dated 01.04.2024, passed by the learned Additional

Sessions Judge, Nalagarh, District Solan, H.P. (learned

Appellate Court ) vide which the judgment of conviction dated

02.05.2022 and order of sentence dated 07.05.2022, passed by

the learned Additional Chief Judicial Magistrate, Nalagarh,

1
. Whether reporters of the local papers may be allowed to see the judgment? Yes

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District Solan, H.P. (learned Trial Court) were upheld. (The

parties shall hereinafter be referred to in the same manner as they

.

were arrayed before the learned Trial Court for convenience.)

2. Briefly stated, the facts giving rise to the present

revision are that the complainant filed a complaint before the

learned trial Court against the accused for the commission of

of
an offence punishable under Section 138 of the Negotiable

Instruments Act (NI Act). It was asserted that the accused had
rt
a friendly relationship with the complainant. The accused

borrowed ₹ 1,40,000/- for his personal requirement from the

complainant on 15.07.2016. He promised to repay the amount

within two months. The complainant demanded the money,

and the accused issued a cheque of ₹ 1,40,000/- in favour of

the complainant to repay the money. The complainant

presented the cheque at his bank, but it was dishonoured with

an endorsement ‘account closed’. The complainant sent a legal

notice to the accused by registered post. The notice was duly

served upon the accused, but the accused failed to repay the

money. Hence, the complaint was filed against the accused for

taking action as per the law.

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3. Learned trial Court found sufficient reasons to

summon the accused. When the accused appeared, a notice of

.

accusation was put to him for the commission of an offence

punishable under Section 138 of the NI Act, to which he

pleaded not guilty and claimed to be tried.

4. The complainant examined himself (CW-1) to

of
prove his complaint.

5. The accused, in his statement recorded under
rt
Section 313 of the Code of Criminal Procedure (CrPC), admitted

that he had a cordial relationship with the complainant and

that he had borrowed ₹ 1,40,000/- from the complainant on

15.07.2016. He claimed that he had issued a blank signed

cheque at the time of taking the loan as security. He admitted

that the cheque was presented to the bank, and it was

dishonoured with an endorsement ‘account closed’. He

admitted that the complainant had issued a notice to him,

which was duly served upon him. He stated that he had repaid

the money to the complainant in the year 2016, but the

complainant presented the cheque for payment and misused it.

He examined Naresh Kumar (DW-1) in his defence.

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6. Learned trial Court held that the accused had not

disputed the issuance of the cheque and taking of the loan. A

.

presumption under Section 118(a) and 139 of the NI Act would

be attracted to the present case that the cheque was issued for

consideration to discharge the debt/liability. The plea taken by

the accused that he had repaid the money was not established

of
on record. The accused admitted that the cheque was

dishonoured with the endorsement ‘account closed’ and the
rt
legal notice was served upon him. All the ingredients of the

commission of an offence 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 3 months and pay a

compensation of ₹ 1,70,000/- to the complainant.

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,

Nalagarh, District Solan, H.P. (learned Appellate Court). The

Appellate Court concurred with the findings recorded by the

learned Trial Court that the accused had admitted the issuance

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of the cheque, and a presumption would be attracted to the

present case that the cheque was issued for consideration in

.

discharge of debt/liability. The accused had also admitted the

taking of the loan, and the plea taken by him that he had

repaid the money was not proved on record. The agreement

produced by the accused pertained to some other transaction

of
of ₹3,00,000/- and not to the transaction of ₹ 1,40,000/-.

Even if the cheque was issued as a security, the complainant
rt
had sufficient authority to fill the amount and present it. The

cheque was dishonoured with an endorsement ‘account

closed’. The notice was duly served upon the accused, and the

accused had failed to repay the money. The sentence imposed

by the learned Trial Court was adequate. No interference was

required with the judgment and order passed by the learned

trial Court. Hence, 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 material on record. It was duly proved that the

Cheque was issued as a security. The accused had mortgaged

his land with a building for ₹3,20,000/- in favour of the

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complainant. He had issued two security cheques in favour of

the complainant, and the complainant had misused those

.

cheques. The complainant admitted the execution of the

agreement and that the cheques were handed over as per the

agreement, which made the defence version probable. There

was a discrepancy between the notice and the complaint. The

of
learned courts below erred in convicting and sentencing the

accused. Therefore, it was prayed that the present revision be
rt
allowed and the judgments and order passed by the learned

Courts below be set aside

9. I have heard Mr. K.S.Chandel, learned counsel for

the petitioner and Mr Dinesh Bhanot, learned counsel for the

respondent.

10. Mr. K.S.Chandel, learned counsel for the

petitioner/accused, submitted that the notice issued by the

complainant mentioned that the amount was to be repaid

within one year, whereas the complaint mentioned that the

amount was to be repaid within two months. This made the

complainant’s version highly doubtful. The accused had

mortgaged his land and the building in favour of the

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complainant and had issued two cheques as security. The

complainant misused those cheques and filled in the amount.

.

The execution of the agreement was duly proved by the

statement of Naresh Kumar (DW1). The cheque return memo

did not have the seal of the bank, no official of the bank was

examined, and there was nothing to show that the dishonour

of
of the cheque was because of ‘account closed’. Learned Trial

Court had imposed an excessive sentence. Therefore, it was
rt
prayed that the present revision be allowed and the judgments

and order passed by the learned Courts below be set aside. He

relied upon the judgment of this Court in Govind Ram vs. State

of H.P. & another 2025:HHC:33346 and the judgment of Delhi

High Court in Sri Sai Sapthagiri Sponge Pvt. Ltd. vs. The State

(GNCT of Delhi) & another 2025:DHC:9362 in support of his

submission.

11. Mr Dinesh Bhanot, learned counsel for the

respondent/complainant, submitted that the accused had not

disputed the taking of the loan and the issuance of the cheque.

The Learned Courts below had rightly applied the presumption

under Section 118(a)and Section 139 of the N I Act. The accused

failed to rebut the presumption. All the ingredients of the

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commission of an offence punishable under Section 138 were

duly satisfied. There is no infirmity in the judgments and order

.

passed by learned Courts below. Hence, he prayed that the

present revision be dismissed.

12. I have given considerable thought to the

submissions made at the bar and have gone through the

of
records carefully.

13. It was laid down by the Hon’ble Supreme Court in
rt
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204:

(2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a revisional

court is not an appellate court and it can only rectify the patent

defect, errors of jurisdiction or the law. It was observed at page

207: –

“10. Before adverting to the merits of the contentions,

at the outset, it is apt to mention that there are
concurrent findings of conviction arrived at by two
courts after a detailed appreciation of the material and

evidence brought on record. The High Court in criminal
revision against conviction is not supposed to exercise
the jurisdiction like the appellate court, and the scope
of interference in revision is extremely narrow. Section
397 of the Criminal Procedure Code (in short “CrPC“)
vests jurisdiction to satisfy itself or himself as to the
correctness, legality or propriety of any finding,
sentence or order, recorded or passed, and as to the
regularity of any proceedings of such inferior court. The

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object of the provision is to set right a patent defect or
an error of jurisdiction or law. There has to be a well-
founded error that is to be determined on the merits of
individual cases. It is also well settled that while

.

considering the same, the Revisional Court does not

dwell at length upon the facts and evidence of the case
to reverse those findings.

14. This position was reiterated in State of Gujarat v.

Dilipsinh Kishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC

of
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
rt
power to call for and examine records of an inferior
court, is for the purposes of satisfying itself as to the

legality and regularities of any proceeding or order
made in a case. The object of this provision is to set
right a patent defect or an error of jurisdiction or law or
the perversity which has crept in such proceedings.

15. It would be apposite to refer to the judgment of this
Court in Amit Kapoor v. Ramesh Chander, (2012) 9 SCC
460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986, where

the scope of Section 397 has been considered and
succinctly explained as under: (SCC p. 475, paras 12-13)

“12. Section 397 of the Code vests the court with
the power to call for and examine the records of an
inferior court for the purposes of satisfying itself

as to the legality and regularity of any proceedings
or order made in a case. The object of this
provision is to set right a patent defect or an error
of jurisdiction or law. There has to be a well-
founded error, and it may not be appropriate for
the court to scrutinise the orders, which, upon the
face of it, bear a token of careful consideration and
appear to be in accordance with law. If one looks
into the various judgments of this Court, it

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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

of
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
rt order. The Court has to keep in mind that the
exercise of revisional jurisdiction itself should not
lead to injustice ex facie. Where the Court is

dealing with the question as to whether the charge
has been framed properly and in accordance with
law in a given case, it may be reluctant to interfere
in the exercise of its revisional jurisdiction unless

the case substantially falls within the categories
aforestated. Even the framing of the charge is a
much-advanced stage in the proceedings under

CrPC.”

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

SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC

OnLine SC 651 that it is impermissible for the High Court to re-

appreciate 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

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Kerala v. Puttumana Illath Jathavedan Namboodiri,
(1999) 2 SCC 452: 1999 SCC (Cri) 275], while considering
the scope of the revisional jurisdiction of the High
Court, this Court has laid down the following: (SCC pp.

.

454-55, para 5)

5. … In its revisional jurisdiction, the High Court
can call for and examine the record of any
proceedings to satisfy itself as to the correctness,

legality or propriety of any finding, sentence or
order. In other words, the jurisdiction is one of
supervisory jurisdiction exercised by the High

of
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
rt 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
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

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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

of
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
rt equated with that of an appeal. Unless the finding of
the court, whose decision is sought to be revised, is
shown to be perverse or untenable in law or is

grossly erroneous or glaringly unreasonable or
where the decision is based on no material or where
the material facts are wholly ignored or where the
judicial discretion is exercised arbitrarily or

capriciously, the courts may not interfere with the
decision in exercise of their revisional jurisdiction.”

16. This position was reiterated in Bir Singh v. Mukesh

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

(Civ) 309: 2019 SCC OnLine SC 13, wherein it was observed at

page 205:

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

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17. As held by this Court in Southern Sales & Services v.
Sauermilch Design and Handels GmbH, (2008) 14 SCC 457,
it is a well-established principle of law that the
Revisional Court will not interfere even if a wrong order

.

is passed by a court having jurisdiction, in the absence

of a jurisdictional error. The answer to the first question
is, therefore, in the negative.”

17. A similar view was taken in Sanjabij Tari v. Kishore

S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed:

of
“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 Court is of the view that it is not for
rt
the Revisional Court to re-analyse and re-interpret the
evidence on record. 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.

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.

18. The present revision has to be decided as per the

parameters laid down by the Hon’ble Supreme Court.

19 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: –

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“5.1.1. In K.R. Indira v. Dr. G. Adinarayana (2003) 8 SCC
300, this Court enlisted the components, aspects and
the acts, the concatenation of which would make the
offence under Section 138 of the Act complete, to be

.

these (i) drawing of the cheque by a person on an

account maintained by him with a banker, for payment
to another person from out of that account for
discharge in whole/in part of any debt or liability, (ii)

presentation of the cheque by the payee or the holder in
due course to the bank, (iii) returning the cheque
unpaid by the drawee bank for want of sufficient funds

of
to the credit of the drawer or any arrangement with the
banker to pay the sum covered by the cheque, (iv)
giving notice in writing to the drawer of the cheque
within 15 days of the receipt of information by the
rt
payee from the bank regarding the return of the cheque
as unpaid, demanding payment of the cheque amount,
and (v) failure of the drawer to make payment to the

payee or the holder in due course of the cheque, of the
amount covered by the cheque, within 15 days of the
receipt of the notice.”

20. The complainant reiterated the contents of his

complaint in his proof affidavit (Ext.CW-1/A). He stated in his

cross-examination that he had advanced ₹3,20,000/- to the

accused on 10.05.2016 and ₹1,20,000/- on 15.07.2016. The

accused had handed over two signed cheques to him. The

accused had filled in the date 05.07.2018 himself. He admitted

that an agreement was executed with the accused. He also

admitted that the accused had mortgaged his school with him.

He admitted that the cheques were handed over to him on

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10.05.2016, and he had presented the cheques on 04.09.2018.

He had paid the money to the accused in cash. Some money

.

was lying with him, and some was taken by him as a loan. He

admitted that the accused was to repay the money within a

period of one year.

21. The statement of the complainant is duly

of
corroborated by the statement of the accused recorded under

Section 313 CrPC, in which the accused admitted taking the
rt
loan, issuance of the cheque, dishonour of the cheque and the

receipt of the notice. It was laid down by the Hon’ble Supreme

Court in State of Maharashtra v. Sukhdev Singh, (1992) 3 SCC

700: 1992 SCC (Cri) 705: 1992 SCC OnLine SC 421 that the Courts

can rely upon the statement of the accused recorded under

section 313 of the Cr.P.C. It was observed at page 742:

“51. That brings us to the question of whether such a
statement recorded under Section 313 of the Code can
constitute the sole basis for conviction. Since no oath is

administered to the accused, the statements made by
the accused will not be evidence stricto sensu. That is
why sub-section (3) says that the accused shall not
render himself liable to punishment if he gives false
answers. Then comes sub-section (4), which reads:

“313. (4) The answers given by the accused may be
taken into consideration in such inquiry or trial,
and put in evidence for or against him in any other

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inquiry into, or trial for, any other offence which
such answers may tend to show he has
committed.”

Thus, the answers given by the accused in response to

.

his examination under Section 313 can be taken into

consideration in such an inquiry or trial. This much is
clear on a plain reading of the above sub-section.
Therefore, though not strictly evidence, sub-section (4)

permits that it may be taken into consideration in the
said inquiry or trial. See State of Maharashtra v. R.B.
Chowdhari (1967) 3 SCR 708: AIR 1968 SC 110: 1968 Cri LJ

of

95. This Court, in the case of Hate Singh Bhagat Singh v.
State of M.B. 1951 SCC 1060: 1953 Cri LJ 1933: AIR 1953 SC
468, held that an answer given by an accused under
Section 313 examination can be used for proving his
rt
guilt as much as the evidence given by a prosecution
witness. In Narain Singh v. State of Punjab (1963) 3 SCR

678: (1964) 1 Cri LJ 730, this Court held that if the
accused confesses to the commission of the offence
with which he is charged, the Court may, relying upon
that confession, proceed to convict him. To state the

exact language in which the three-Judge bench
answered the question, it would be advantageous to
reproduce the relevant observations at pages 684-685:

“Under Section 342 of the Code of Criminal
Procedure by the first sub-section, insofar as it is

material, the Court may at any stage of the
enquiry or trial and after the witnesses for the
prosecution have been examined and before the

accused is called upon for his defence shall put
questions to the accused person for the purpose
of enabling him to explain any circumstance
appearing in the evidence against him.
Examination under Section 342 is primarily to be
directed to those matters on which evidence has
been led for the prosecution to ascertain from the
accused his version or explanation, if any, of the
incident which forms the subject-matter of the

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charge and his defence. By sub-section (3), the
answers given by the accused may ‘be taken into
consideration’ at the enquiry or the trial. If the
accused person in his examination under Section 342

.

confesses to the commission of the offence charged

against him the court may, relying upon that
confession, proceed to convict him, but if he does
not confess and in explaining circumstance

appearing in the evidence against him sets up his
own version and seeks to explain his conduct
pleading that he has committed no offence, the

of
statement of the accused can only be taken into
consideration in its entirety.” (emphasis
supplied)
Sub-section (1) of Section 313 corresponds to sub-
rt
section (1) of Section 342 of the old Code, except that it
now stands bifurcated in two parts with the proviso

added thereto clarifying that in summons cases where
the presence of the accused is dispensed with, his
examination under clause (b) may also be dispensed
with. Sub-section (2) of Section 313 reproduces the old

sub-section (4), asd the present sub-section (3)
corresponds to the old sub-section (2) except for the
change necessitated on account of the abolition of the

jury system. The present sub-section (4) with which we
are concerned is a verbatim reproduction of the old

sub-section (3). Therefore, the aforestated
observations apply with equal force.”

22. It was laid down by the Hon’ble Supreme Court in

Mohan Singh v. Prem Singh, (2002) 10 SCC 236: 2003 SCC (Cri)

1514: 2002 SCC OnLine SC 933, that the statement made by the

accused under Section 313 Cr.P.C. can be used to lend credence

to the evidence led by the prosecution, but such statement

cannot form the sole basis for conviction. It was observed at

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page 244:

27. The statement made in defence by the accused
under Section 313 CrPC can certainly be taken aid of to

.

lend credence to the evidence led by the prosecution,

but only a part of such statement under Section 313 of
the Code of Criminal Procedure cannot be made the sole
basis of his conviction. The law on the subject is almost

settled that the statement under Section 313 CrPC of the
accused can either be relied on in whole or in part. It
may also be possible to rely on the inculpatory part of

of
his statement if the exculpatory part is found to be false
on the basis of the evidence led by the prosecution. See
Nishi Kant Jha v. State of Bihar (1969) 1 SCC 347: AIR 1969
rtSC 422: (SCC pp. 357-58, para 23)
“23. In this case, the exculpatory part of the
statement in Exhibit 6 is not only inherently

improbable but is contradicted by the other
evidence. According to this statement, the injury
that the appellant received was caused by the
appellant’s attempt to catch hold of the hand of

Lal Mohan Sharma to prevent the attack on the
victim. This was contradicted by the statement of
the accused himself under Section 342 CrPC to the

effect that he had received the injury in a scuffle
with a herdsman. The injury found on his body

when he was examined by the doctor on 13-10-
1961, negatives of both these versions. Neither of
these versions accounts for the profuse bleeding

which led to his washing his clothes and having a
bath in River Patro, the amount of bleeding and
the washing of the bloodstains being so
considerable as to attract the attention of Ram
Kishore Pandey, PW 17 and asking him about the
cause thereof. The bleeding was not a simple one
as his clothes all got stained with blood, as also
his books, his exercise book, his belt and his
shoes. More than that, the knife which was

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discovered on his person was found to have been
stained with blood according to the report of the
Chemical Examiner. According to the post-
mortem report, this knife could have been the

.

cause of the injuries on the victim. In circumstances

like these, there being enough evidence to reject the
exculpatory part of the statement of the appellant in
Exhibit 6, the High Court had acted rightly in

accepting the inculpatory part and piercing the same
with the other evidence to come to the conclusion
that the appellant was the person responsible for the

of
crime.” (emphasis supplied)

23. It was laid down in Ramnaresh v. State of

Chhattisgarh, (2012) 4 SCC 257: (2012) 2 SCC (Cri) 382: 2012 SCC
rt
OnLine SC 213, that the statement of the accused under Section

313 Cr.P.C., in so far as it supports the prosecution’s case, can

be used against him for recording a conviction. It was

observed at page 275: –

“52. It is a settled principle of law that the obligation to

put material evidence to the accused under Section 313
CrPC is upon the court. One of the main objects of

recording a statement under this provision of the CrPC
is to give an opportunity to the accused to explain the
circumstances appearing against him as well as to put

forward his defence, if the accused so desires. But once
he does not avail this opportunity, then consequences
in law must follow. Where the accused takes benefit of
this opportunity, then his statement made under
Section 313 CrPC, insofar as it supports the case of the
prosecution, can be used against him for rendering a
conviction. Even under the latter, he faces the
consequences in law.”

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24. This position was reiterated in Ashok Debbarma v.

State of Tripura, (2014) 4 SCC 747: (2014) 2 SCC (Cri) 417: 2014

.

SCC OnLine SC 199, and it was held that the statement of the

accused recorded under Section 313 of the Cr.P.C. can be used

to lend corroboration to the statements of prosecution

witnesses. It was held at page 761: –

of

24. We are of the view that, under Section 313
statement, if the accused admits that, from the
evidence of various witnesses, four persons sustained
severe bullet injuries by the firing by the accused and
rt
his associates, that admission of guilt in Section 313
statement cannot be brushed aside. This Court in State

of Maharashtra v. Sukhdev Singh [(1992) 3 SCC 700: 1992
SCC (Cri) 705 held that since no oath is administered to
the accused, the statement made by the accused under
Section 313 CrPC will not be evidence stricto sensu and

the accused, of course, shall not render himself liable
to punishment merely on the basis of answers given
while he was being examined under Section 313 CrPC.

But, sub-section (4) says that the answers given by the
accused in response to his examination under Section

313 CrPC can be taken into consideration in such an
inquiry or trial. This Court in Hate Singh Bhagat Singh
v. State of Madhya Bharat, 1951 SCC 1060: AIR 1953 SC

468: 1953 Cri LJ 1933 held that the answers given by the
accused under Section 313 examination can be used for
proving his guilt as much as the evidence given by the
prosecution witness. In Narain Singh v. State of Punjab
(1964) 1 Cri LJ 730: (1963) 3 SCR 678, this Court held that
when the accused confesses to the commission of the
offence with which he is charged, the court may rely
upon the confession and proceed to convict him.

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25. This Court in Mohan Singh v. Prem Singh (2002) 10
SCC 236: 2003 SCC (Cri) 1514 held that: (SCC p. 244, para

27)
“27. The statement made in defence by the

.

accused under Section 313 CrPC can certainly

be taken aid of to lend credence to the evidence
led by the prosecution, but only a part of such
statement under Section 313 CrPC cannot be

made the sole basis of his conviction.”
In this connection, reference may also be made to the
judgments of this Court in Devender Kumar Singla v.

of
Baldev Krishan Singla (2005) 9 SCC 15: 2005 SCC (Cri)
1185 and Bishnu Prasad Sinha v. State of Assam (2007) 11
SCC 467: (2008) 1 SCC (Cri) 766. The abovementioned
decisions would indicate that the statement of the
rt
accused under Section 313 CrPC for the admission of his
guilt or confession as such cannot be made the sole

basis for finding the accused guilty, the reason being he
is not making the statement on oath, but all the same
the confession or admission of guilt can be taken as a
piece of evidence since the same lends credence to the

evidence led by the prosecution.

26. We may, however, indicate that the answers given
by the accused while examining him under Section 313,

fully corroborate the evidence of PW 10 and PW 13 and
hence the offences levelled against the appellant stand

proved, and the trial court and the High Court have
rightly found him guilty for the offences under Sections
326, 436 and 302 read with Section 34 IPC.”

25. Therefore, learned courts below had rightly relied

upon the statement of the accused recorded under Section 313

of the CrPC to lend corroboration to the complainant’s version.

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26. The accused admitted the issuance of the cheque.

The Learned Courts below had rightly held that a presumption

.

would be attracted to the present case that the cheque was

issued for consideration to discharge the debt/liability. It was

laid down by the Hon’ble Supreme Court in APS Forex Services

(P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC

of
724, that when the issuance of a cheque and signature on the

cheque are not disputed, a presumption would arise that the
rt
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 the

issuance of the cheques and his signature on the cheque
and that the cheque in question was issued for the
second time after the earlier cheques were dishonoured
and that even according to the accused some amount

was due and payable, there is a presumption under
Section 139 of the NI Act that there exists a legally

enforceable debt or liability. Of course, such 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.
Therefore, both the courts below have materially erred

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in not properly appreciating and considering the
presumption in favour of the complainant that there
exists a legally enforceable debt or liability as per
Section 139 of the NI Act. It appears that both the

.

learned trial court as well as the High Court have

committed an error in shifting the burden upon the
complainant to prove the debt or liability, without
appreciating the presumption under Section 139 of the

NI Act. As observed above, Section 139 of the Act is an
example of a reverse onus clause and therefore, once
the issuance of the cheque has been admitted and even

of
the signature on the cheque has been admitted, there is
always a presumption in favour of the complainant that
there exists legally enforceable debt or liability and
thereafter, it is for the accused to rebut such
rt
presumption by leading evidence.”

27. This position was reiterated 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
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.”

28. 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-

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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 debt or liability arises
against 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) 4
SCC 54, have been set aside by a three-Judge Bench in

of
Rangappa (supra).

16. This Court is further of the view that by creating this
presumption, the law reinforces the reliability of
rtcheques 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, 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].

29. Thus, the Court has to start with the presumption

that the cheque was issued in discharge of the liability for

consideration, and the burden is upon the accused to rebut this

presumption.

30. The complainant admitted in his cross-

examination that the accused had handed over two cheques to

him. He also admitted that he had entered into an agreement

with the accused. The agreement mentions that the

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complainant would have the right to present the cheques

bearing Sl. Nos. 69985 and 69987 in case of failure of

.

repayment.

31. It was submitted that the admission of the

complainant and the recital of the agreement show that the

cheqeus were issued as security. The Learned Court below

of
erred in holding that the cheques were issued for

consideration to discharge the debt/liability. This submission
rt
will not help the accused. The accused admitted to taking a

loan of ₹1,40,000/- in his statement recorded under Section

313 of the CrPC. Thus, the accused had a subsisting liability to

pay the money. There is no evidence that the accused had

repaid the money.

32. Naresh Kumar (DW-1) stated about the taking of

money and the issuance of the cheque by the accused. He has

nowhere stated that the money was repaid by the accused to

the complainant. The accused claimed in his statement

recorded under Section 313 CrPC that he had repaid the money,

but he failed to present any evidence in support of this plea. He

did not even appear before the Court to say that he had

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returned the money, and the cheque was presented without

any consideration. 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 to rebut the presumption. It was observed

of
at page 700:

“20. That apart, when the complainant exhibited all
these documents in support of his complaints and
rt
recorded the statement of three witnesses in support
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 the
presumption that the cheques were issued for

consideration.” (Emphasis supplied)”

33. Therefore, learned Courts below had rightly

rejected the plea taken by the accused that he had repaid the

money to the complainant.

34. Once it is found that the accused had failed to prove

the repayment of money, the accused was liable to pay

₹1,40,000/- to the complainant as per his admitted liability.

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Hence, the cheque would be valid even if it were issued blank

and with signatures. It was laid down by this Court in Hamid

.

Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that even if the

cheque was issued towards the security, the accused will be

liable. It was observed:

“9. Submission of learned Advocate appearing on
behalf of the revisionist that the cheque in question was

of
issued to the complainant as security, and on this
ground, the criminal revision petition is rejected as
being devoid of any force for the reasons hereinafter
rt
mentioned. As per Section 138 of the Negotiable
Instruments Act 1881, if any cheque is issued on account
of other liability, then the provisions of Section 138 of

the Negotiable Instruments Act 1881 would be attracted.
The court has perused the original cheque, Ext. C-1
dated 30.10.2008, placed on record. There is no recital
in the cheque Ext. C-1, that cheque was issued as a

security cheque. It is well-settled law that a cheque
issued as security would also come under the 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 that where there

is a conflict between former law and subsequent law,
then subsequent law always prevails.”

35. It was laid down by the Hon’ble Supreme Court in

Sampelly 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

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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 with reference to the explanation to Section
138 of the Act and the expression “for the discharge of
any debt or other liability” occurring in Section 138 of

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
rt
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 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 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 loan
transaction. Dishonour of a cheque issued for the

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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

of
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
rt
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 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)

36 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

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and a complaint under section 138 of the NI Act can be filed on

its dishonour. It was observed:

.

“17. A cheque issued as security pursuant to a financial

transaction cannot be considered a worthless piece of
paper under every circumstance. ‘Security’ in its true
sense is the state of being safe, and the security given

for a loan is something given as a pledge of payment. It
is given, deposited or pledged to make certain the
fulfilment of an obligation to which the parties to the

of
transaction are bound. If in a transaction, a loan is
advanced and the borrower agrees to repay the amount
in a specified timeframe and issues a cheque as security
to secure such repayment; if the loan amount is not
rt
repaid in any other form before the due date or if there
is no other understanding or agreement between the

parties to defer the payment of the amount, the cheque
which is issued as security would mature for
presentation and the drawee of the cheque would be
entitled to present the same. On such a presentation, 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
liability in any other form, and in that manner, if the
amount of the loan due and payable has been
discharged within the agreed period, the cheque issued
as security cannot thereafter be presented. Therefore,
the prior discharge of the loan or there being an altered
situation due to which there would be an understanding

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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

.

N.I. Act. Therefore, there cannot be a hard and fast rule

that a cheque, which is issued as security, can never be
presented by the drawee of the cheque. If such is the
understanding, a cheque would also be reduced to an

‘on-demand promissory note’, and in all
circumstances, it would only be civil litigation to
recover the amount, which is not the intention of the

of
statute. When a cheque is issued even though as
‘security’ the consequence flowing therefrom is also
known to the drawer of the cheque and in the
circumstance stated above if the cheque is presented
rt
and dishonoured, the holder of the cheque/drawee
would have the option of initiating the civil proceedings
for recovery or the criminal proceedings for

punishment in the fact situation, but in any event, it is
not for the drawer of the cheque to dictate terms with
regard to the nature of litigation.”

37. It was submitted that the amount in the cheque was

filled by the complainant, and the cheque was bad. This

submission cannot be accepted. It has already been found out

above that the accused was liable to pay ₹ 1,40,000/- to the

complainant. Therefore, the complainant had sufficient

authority to fill the amount of ₹1,40,000/- in 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

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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 Instruments Act, including, in particular,

Sections 20, 87 and 139, makes it amply clear that a
person who signs a cheque and makes it over to the
payee remains liable unless he adduces evidence to

of
rebut the presumption that the cheque had been issued
for payment of a debt or in discharge of a liability. It is
immaterial that the cheque may have been filled in by
any person other than the drawer if the cheque is duly
rt
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 not
invalidate the cheque. The onus would still be on the

accused to prove that the cheque was not in discharge
of a debt or liability by adducing evidence.

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 over by the accused, which is towards some
payment, would attract presumption under Section 139
of the Negotiable Instruments Act, in the absence of any

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cogent evidence to show that the cheque was not issued
in discharge of a debt.”

38 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

of
not filled in by the 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.

39. Therefore, the cheque is not bad even if it is not

filled in by the drawer.

40. It was submitted that the amount was paid in cash,

which is a violation of Section 269SS of the Income Tax Act;

the complaint is not maintainable because of the violation.

This submission will not help the accused. It was laid down by

this Court in Surinder Singh vs. State of H.P. 2018(1) D.C.R. 45

that contravention of Section 269 SS of the Income Tax Act

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will give rise to a penalty, but will not invalidate the

transaction. It was observed: –

.

5. The relevant portion of Section 269 SS of the IT Act

reads thus: –

“(a) the amount of such loan or deposit or the
aggregate amount of such loan and deposit’ or

(b) on the date of taking or accepting such loan or
deposit, any loan or deposit taken or accepted

of
earlier by such person from the depositor is
remaining unpaid (whether repayment has fallen
due or not), the amount or the aggregate amount
remaining unpaid; or
rt (c) The amount or the aggregate amount referred
to in clause (a) together with the amount or the

aggregate amount referred to in clause (b), is
(twenty) thousand rupees or more. Provided……”

6. Section 271D provides for a penalty for failure to
comply with the aforesaid provisions, which reads thus:

“271D. Penalty for failure to comply with the
provisions of Section 269-SS – (1) If a person takes
or accepts any loan or deposit in contravention of

the provisions of Section 269-SS, he shall be liable
to pay, by way of penalty, a sum equal to the

amount of the loan or deposit so taken or accepted.
(2) Any penalty impossible under sub-section (1)
shall be imposed by the Joint Commissioner.”

7. A collective reading of both the aforesaid Sections
would go to show that even though contravention of
Section 269-SS of the IT Act would be visited with a
strict penalty on the person taking the loan or deposit.
However, Section 271D does not in any manner suggest
or even provide that such a transaction would be null
and void. The payer of money in cash, in violation of

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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
has given some false entries in his accounts, he
shall not escape by giving false entries in his

of
accounts, or by giving a false explanation for the
same. During search and seizures, unaccounted
money is unearthed, and the taxpayer would
usually give the explanation that he had borrowed
rt or received deposits from his relatives or friends,
and it is easy for the so-called lender also to

manipulate his records later to suit the plea of the
taxpayer. The main objection of Section 269-SS
was to curb this menace.”

9. In light of the aforesaid observations, it cannot but be

said that Section 269-SS only provides for the mode of
accepting payment or repayment in certain cases so as
to counteract evasion of tax. However, Section 269-SS

does not declare all transactions of loans by cash in
excess of ₹20,000/- as invalid, illegal or null and void,

as the main object of introducing the provision was to
curb and unearth black money.

41. A similar view was taken by the Hon’ble Supreme

Court in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC

2069, wherein it was observed:

“19. Recently, the Kerala High Court in P.C. Hari v. Shine
Varghese, 2025 SCC OnLine Ker 5535 has taken the view
that a debt created by a cash transaction above

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₹20,000/- (Rupees Twenty Thousand) in violation of
the provisions of Section 269SS of the Income Tax Act,
1961 (for short ‘IT Act, 1961‘) is not a ‘legally
enforceable debt’ unless there is a valid explanation for

.

the same, meaning thereby that the presumption under

Section 139 of the Act will not be attracted in cash
transactions above ₹ 20,000/- (Rupees Twenty
Thousand).

20. However, this Court is of the view that any breach of
Section 269SS of the IT Act, 1961, is subject to a penalty
only under Section 271D of the IT Act, 1961. Further,

of
neither Section 269SS nor 271D of the IT Act, 1961 states
that any transaction in breach thereof will be illegal,
invalid or statutorily void. Therefore, any violation of
Section 269SS would not render the transaction
rt
unenforceable under Section 138 of the NI Act or rebut
the presumptions under Sections 118 and 139 of the NI

Act because such a person, assuming him/her to be the
payee/holder in due course, is liable to be visited by a
penalty only as prescribed. Consequently, the view that
any transaction above Rs. 20,000/- (Rupees Twenty

Thousand) is illegal and void and therefore does not fall
within the definition of ‘legally enforceable debt’
cannot be countenanced. Accordingly, the conclusion of

law in P.C. Hari (supra) is set aside.”

42. This position was reiterated in Shine Varghese

Koipurathu v State of Kerala, Crl. A. No. 5385 of 2025 decided on

8th December 2025.

43. The complainant had issued a notice (Ext.C-3) in

which it was mentioned that the amount was to be returned

within one year. The complainant mentioned in the complaint

that the amount was to be returned within two months. It was

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submitted that there is a discrepancy in the period in which

the amount was to be returned, which made the complainant’s

.

case highly doubtful. This submission cannot be accepted. The

cheque in the present case was presented in the year 2018 after

the lapse of one year from the date of advancing the loan.

Further, the agreement produced by the accused also mentions

of
that the property was mortgaged for 1 year, and the money

would be repaid within one year. Thus, as per the accused, the
rt
period of repayment was one year and the recital in the

complaint that the money was to be paid within two months

will not make the complainant’s case doubtful.

44. It was submitted that the accused had mortgaged

his land in favour of the complainant vide agreement (Mark-

D1). Mortgaging of the land would not assist the accused.

There is no evidence that this mortgage was foreclosed or that

any suit was filed based on the mortgage, and the complainant

is benefiting doubly by presenting the cheque and enforcing

his rights under the mortgage. Thus, the complainant’s

version cannot be discarded because the accused had

mortgaged his land in the complainant’s favour.

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45. There is no other evidence on record to rebut the

presumption attached to the cheque, and the learned Courts

.

below had rightly held that the accused had failed to rebut the

presumption attached to the cheque.

46. The complainant stated that the cheque was

dishonoured with an endorsement ‘account closed’. He filed

of
the cheque returning memo (Ext.C2). It was admitted that this

memo is not signed by any person and it does not bear the seal
rt
of the bank. Therefore, no presumption can be drawn under

Section 146 of the NI Act. Reliance was placed upon Govind

Ram (supra) in support of this submission. This submission

will not help the accused because he admitted that the cheque

was dishonoured with an endorsement, ‘account closed’.

Therefore, even if the presumption is not applied to the memo,

the admission of the accused still proves that the cheque was

dishonoured with an endorsement ‘account closed’, and the

learned Court had rightly held that the cheque was

dishonoured with an endorsement ‘account closed’.

47. It was laid down by the Hon’ble Supreme Court in

NEPC Micon Ltd. v. Magma Leasing Ltd., (1999) 4 SCC 253: 1999

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SCC (Cri) 524: 1999 SCC OnLine SC 508, that when a cheque is

dishonoured due to the account being closed, it will attract the

.

provision of Section 138 of N.I. Act. It was observed at page

258:

7. Further, the offence will be complete only when the
conditions in provisos (a), (b) and (c) are complied
with. Hence, the question is, in a case where a cheque is

of
returned by the bank unpaid on the ground that the
“account is closed”, would it mean that the cheque is
returned as unpaid on the ground that “the amount of
money standing to the credit of that account is
rt
insufficient to honour the cheque”? In our view, the
answer would obviously be in the affirmative because
the cheque is dishonoured as the amount of money

standing to the credit of “that account” was “nil” at the
relevant time, apart from it being closed. Closure of the
account would be an eventuality after the entire amount
in the account is withdrawn. It means that there was no

amount in the credit of “that account” on the relevant
date when the cheque was presented for honouring the
same. The expression “the amount of money standing

to the credit of that account is insufficient to honour
the cheque” is a genus of which the expression “that

account being closed” is a species. After issuing the
cheque drawn on an account maintained, a person, if he
closes “that account”, apart from the fact that it may

amount to another offence, it would certainly be an
offence under Section 138, as there were insufficient or
no funds to honour the cheque in “that account”.

Further, the cheque is to be drawn by a person for
payment of any amount of money due to him “on an
account maintained by him” with a banker and only on
“that account” the cheque should be drawn. This would
be clear by reading the section along with provisos (a),

(b) and (c).

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********

15. In view of the aforesaid discussion, we are of the
opinion that even though Section 138 is a penal statute,
it is the duty of the court to interpret it consistently

.

with the legislative intent and purpose so as to suppress

the mischief and advance the remedy. As stated above,
Section 138 of the Act has created a contractual breach
as an offence, and the legislative purpose is to promote

the efficacy of banking and ensure that in commercial
or contractual transactions, cheques are not
dishonoured, and credibility in transacting business

of
through cheques is maintained. The above
interpretation would be in accordance with the
principle of interpretation quoted above “brush away
the cobweb varnish, and shew the transactions in their
rt
true light” (Wilmot, C.J.) or (by Maxwell) “to carry out
effectively the breach of the statute, it must be so

construed as to defeat all attempts to do, or avoid
doing, in an indirect or circuitous manner that which it
has prohibited”. Hence, when the cheque is returned by
a bank with an endorsement “account closed”, it would

amount to returning the cheque unpaid because “the
amount of money standing to the credit of that account
is insufficient to honour the cheque” as envisaged in

Section 138 of the Act.

48. This Court also took the same view in Bal Krishan

Sharma v. Tek Ram, 2006 SCC OnLine HP 105: 2006 Cri LJ 1993

and observed:

“9. The provisions contained in this chapter are
primarily designed to provide an additional criminal
remedy, over and above the civil remedies available to
the payee or holder in due course of a cheque. This
chapter protects the interests of a payee or holder in
due course of a dishonoured cheque. The object of the
chapter is to enhance the acceptability of the cheque in

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the settlement of financial liabilities by making the
drawer liable for penalties. It is noticed that for
establishing the requirements of Section 138, there is
no burden on the part of the complainant to prove

.

before a Court the entire details of the transactions

resulting in the issuance of the cheque. As observed by
the Apex Court in Kusum Ingots and Alloys Limited v.
Pennar Peterson Securities Ltd., II (2000) SLT 375: I

(2000) CCR 260 (SC): I (2000) BC 300: (2000) 2 SCC 745,
the object of bringing Section 138 on statute is to
inculcate faith in the efficacy of banking operations and

of
credibility in transacting business on negotiable
instruments. Looking at the object of incorporating
Chapter VIII in the Act, the expression “on account
maintained by him” used in Section 138 of the Act, as
rt
noticed above, cannot be interpreted to give it an
artificial or unrealistic meaning. What the provision
says is that the cheque must be drawn on the account

that the accused maintained with the Bank. The status
of the account, when the cheque was drawn, whether it
was live or dead, is irrelevant. What the provision says is
that the accused must have an account that is

maintained or has been maintained with the Bank. The
Legislature has not used the present continuous tense.

The expression used is “on an account maintained by

him” and not “maintained by him”. The cheque, in my
view, should have a reference to an account of the

accused, irrespective of the fact whether such an
account was live or dead on the date of issuance of the
cheque. The interpretation of the expression “on an

account maintained by him” as given by the learned
Trial Magistrate and contended by the learned Counsel
for the accused is artificial and beyond the legislative
intent. While interpreting the provision, the legislative
purpose and goal have to be kept in mind. We cannot
lose sight of the fact that in this era, financial
transactions are not dependent on cash and therefore
financial transactions by other modes, including
“cheques”, have to be attached to credibility.

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10. The following observations of the Supreme Court in
NEPC Micon Ltd. v. Magma Leasing Ltd., II (2006) BC 316
(SC): IV (1999) SLT 254: III (1999) CCR 4 (SC) : (1999) 4
SCC 253, are apposite:

.

“10. This Court in the case of Kanwar Singh v. Delhi

Admn. While construing Section 418(i) of the Delhi
Municipal Corporation Act, 1959, observed–

‘It is the duty of the Court in construing a statute
to give effect to the intention of the legislature. If,
therefore, giving a literal meaning to a word used
by the draftsman, particularly in a penal statute,

of
would defeat the object of the Legislature, which
is to suppress mischief, the Court can depart from
the dictionary meaning or even the popular
meaning of the word and instead give it a
rt meaning which will advance the remedy and
suppress the mischief.

11. Further, while interpreting the statutory
provision rule dealing with penalty under the Drugs
and Cosmetics Act, 1940 and the rules in the case of
Swantraj v. State of Maharashtra, this Court held that

every legislation is a social document and judicial
construction seeks to decipher the statutory
mission, language permitting, taking the one from

the rule in Heydon’s case of suppressing the evil and
advancing the remedy. The Court held that what

must tilt the balance is the purpose of the statute, its
potential frustration and judicial avoidance of the
mischief by a construction whereby the means of

licensing meet the ends of ensuring pure and potent
remedies for the people. The Court observed that
this liberty with language is sanctified by great
Judges and textbooks. Maxwell instructs us in these
words–

“There is no doubt that the office of the Judge is
to make such construction as will suppress the
mischief, and advance the remedy, and suppress

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all evasions for the continuance of the mischief.
To carry out effectively the object of a statute, it
must be so construed as to defeat all attempts to
do, or avoid doing, in an indirect or circuitous

.

manner that which it has prohibited or enjoined:

‘quando aliquid prohibetur, prohibetur et omne pe
quod devenitur ad illud.’

11. This manner of construction has two aspects. One is

that the Courts, mindful of the mischief rule, will not be
averse to narrowing the language of a statute so as to
allow persons within its purview to escape its net. The

of
other is that the statute may be applied to the substance
rather than the mere form of transactions, thus
defeating any shifts and contrivances which parties
may have devised in the hope of thereby falling outside
rt
the Act. When the Courts find an attempt at
concealment, they will, in the words of Wilmot, C.J.,

‘brush away the cobweb varnish, and show the
transactions in their true light’.”

12. Their Lordships proceeded to observe:

“15. In view of the aforesaid discussion, we are of

the opinion that even though Section 138 is a
penal statute, it is the duty of the Court to
interpret it consistently with the legislative

intent and purpose so as to suppress the mischief
and advance the remedy. As stated above, Section

138 of the Act has created a contractual breach as
an offence, and the legislative purpose is to
promote the efficacy of banking and ensure that

in commercial or contractual transactions,
cheques are not dishonoured, and credibility in
transacting business through cheques is
maintained. The above interpretation would be in
accordance with the principle of interpretation
quoted above “brush away the cobweb varnish,
and show the transactions in their true light”

(Wilmot C.J.) or (by Maxwell) “to carry out
effectively the breach of the statute, it must be so

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construed as to defeat all attempts to do, or avoid
doing, in an indirect or circuitous manner that
which it has prohibited” Hence when the cheque
is returned by a Bank with an endorsement

.

“account closed”. It would amount to returning

the cheque unpaid because “the amount of
money standing to the credit of that account is
insufficient to honour the cheque” as envisaged

in Section 138 of the Act.

13. If the interpretation as contended by the learned
Counsel for the accused and the Trial Court is to be

of
accepted, then a person who receives the cheque will
have to ensure that the account is alive. If he does not,
he runs the risk of losing his money and the denial of
benefits under Section 138 of the Act. This certainly
rt
cannot be the legislative intent. Any account holder
with the intent to defeat the provisions of Section 138 of

the Act may retain a cheque leaf after closing his
account with the Bank to defraud any honest payee.
Should such a dishonest account holder be permitted to
escape the proceedings under Section 138 of the Act?

14. Learned Counsel for the accused would contend that
the observations in NEPC Micon Limited were that if a
cheque is dishonoured on the ground that the account is

closed then it would come within the sweep of Section
138 of the Act but if the cheque is issued on a closed

account, then such an act of a dishonest person would
not fall within the mischief of Section 138 of the Act. It
is true that the NEPC case does not specifically deal with

the cheques issued on accounts closed prior to the date
of issuance of the cheque. Nevertheless, this case does
not indicate that such cases are intended to be taken out
of the sweep of Section 138 of the Act. In my opinion,
the expression “on an account maintained by him”

necessarily includes an account which was maintained
by him, i.e., the account which has been closed, as also
the account which is still maintained by him.

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15. The Supreme Court in N.A. Issac v. Jeemon P.
Abraham, III (2006) BC 422 (SC): VI (2004) SLT 154: IV
(2004) CCR 124 (SC): 2005 (1) Civil Court Cases 690 (SC),
interpreted Section 138 of the Act and observed that

.

contention that this provision will not be applicable

when the cheque is issued from an already closed
account cannot be upheld as such an interpretation
would defeat the object of insertion of the provision in

the Act. Their Lordships observed: “Section 138 does
not call for such a narrow construction”. Their
Lordships approved that the expression used in Section

of
138 of the Act includes the cheques issued on a closed
account.

16. For the reasons recorded above, the findings
recorded by the Trial Magistrate holding that Section
rt
138 of the Act is not applicable to a cheque drawn on a
closed account, cannot be upheld.”

49. The complainant asserted that he had issued a

notice to the accused, asking him to repay the money within 15

days of the date of the receipt of the notice. He produced the

copy of the notice (Ext.C-3), Postal receipt (Ext.C-4) and

acknowledged (Ext.C-5), which shows that the notice was duly

served upon the accused. The accused admitted in his

statement recorded under Section 313 CrPC that he had

received the notice from the complainant. Thus, the receipt of

the notice was not in dispute.

50. The accused had not asserted that the money was

repaid by him; therefore, all the ingredients of the commission

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of an offence punishable under Section 138 of the NI Act are

duly satisfied.

.

51. The Learned Trial Court sentenced the accused to

undergo simple imprisonment for three months and pay a

compensation of ₹ 1,70,000/- to the complainant. It was laid

down by the Hon’ble Supreme Court in Bir Singh v. Mukesh

of
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
rt
section 138 is deterrent in nature. It was observed at page 203:

“6. The object of Section 138 of the Negotiable
Instruments Act is to infuse credibility into negotiable
instruments, including cheques, and to encourage and
promote the use of negotiable instruments, including

cheques, in financial transactions. The penal provision
of Section 138 of the Negotiable Instruments Act is
intended to be a deterrent to callous issuance of

negotiable instruments such as cheques without
serious intention to honour the promise implicit in the

issuance of the same.”

52. Therefore, the sentence of three months cannot be

said to be excessive, considering that a deterrent sentence is to

be imposed.

53. The learned trial Court had directed the accused to

pay a compensation of ₹ 1,70,000/-. The cheque was issued for

₹ 1,40,000/-, which means that only an amount of ₹30,000/-

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was awarded as compensation. 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
is not only punitive but also compensatory and
rt
restitutive. The provisions of NIA envision a single
window for criminal liability for the dishonour of a

cheque as well as civil liability for the realisation of the
cheque amount. It is also well settled that there needs
to be a consistent approach towards awarding
compensation, and unless there exist special

circumstances, the courts should uniformly levy fines
up to twice the cheque amount along with simple
interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260,

para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]”

54. The cheque was issued on 04.02.2018, and the

compensation was awarded on 07.05.2022, nearly four years

after the issuance of the cheque. The complainant lost money

that he would have gained by investing it. He had to visit the

Court and engage counsel to prosecute the complaint filed by

him. Therefore, he was entitled to compensation for the loss of

interest and the prosecution of the complaint. An amount of

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₹30,000/- towards the loss of interest for about 4 years cannot

be said to be excessive, requiring any interference from this

.

Court.

55. In Sri Sai Sapthagiri Spone Pvt. Ltd. (supra), the Delhi

High Court was dealing with a quashing petition and discussed

the parameters of the complaint at the threshold, which is not

of
relevant in the present case.

56. rt No other point was urged.

57. In view of the above, the present revision fails, and

it is dismissed. Pending miscellaneous application(s), if any,

are also sands disposed of.

58. A copy of the judgment, along with records of the

learned Courts below, be sent back forthwith.

(Rakesh Kainthla)
Judge
27th July, 2026

(ravinder)

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