Himachal Pradesh High Court
Naresh Vema vs Pnb & Anr on 10 July, 2026
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2026:HHC:28006
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No. 133 of 2024
Reserved on: 30.06.2026
Date of Decision: 10.07.2026
.
Naresh Vema ...Petitioner
Versus
PNB & Anr. ...Respondents
of
Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge.
For the Petitioner
rt
Whether approved for reporting?1No
: Mr Neel Kamal Sharma,
Advocate.
For the Respondent No.1 : Mr Arvind Sharma, Advocate.
For Respondent No.2/State : Mr Jitender Sharma, Additional
Advocate General.
Rakesh Kainthla, Judge
The present revision is directed against the judgment
dated 29.02.2024 passed by the learned Sessions Judge, District
Mandi (learned Appellate Court) vide which the judgment of
conviction dated 29.12.2022 and order of sentence dated 10.01.2023
passed by the learned Chief Judicial Magistrate, Mandi (learned
Trial Court) were upheld. (The parties shall hereinafter be referred to
in the same manner as they were arrayed before the learned Trial
Court for convenience)
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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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 read with Section 142 of the
Negotiable Instruments Act (NI Act). It was asserted that the
complainant is a bank engaged in banking activities. The accused
of
obtained a vehicle loan of ₹15,00,000/- from the complainant. He
issued a cheque of ₹2,23,000/- to repay the amount. The
rt
complainant presented the cheque to its bank, but it was
dishonoured with an endorsement “exceeds arrangement”. The
complainant served a legal notice upon the accused. The accused
failed to repay the amount despite the receipt of a demand notice.
Hence, a complaint was filed before the learned Trial Court against
the accused for taking action as per the law.
3. Learned Trial Court found sufficient reasons to summon
the accused. When the accused appeared, a notice of accusation
was put to him for the commission of an offence punishable under
Section 138 of the NI Act, to which he pleaded not guilty and
claimed to be tried.
4. The complainant examined Sushil Kumar (CW1) to
prove its complaint.
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5. The accused, in his statement recorded under Section
313 of the Code of Criminal Procedure (Cr.P.C.), admitted that he
had taken a loan of ₹15,00,000/- from the complainant. He
.
admitted his signature on the cheque and claimed that he had
issued a security cheque. He denied that he had received the notice.
He stated that the witnesses had deposed against him falsely, and
of
he is innocent. He did not produce any evidence in his defence.
6. Learned Trial Court held that the issuance of the cheque
rt
and the signatures on the cheque were not disputed. The plea taken
by the accused that he had issued a cheque as security will not help
him because a cheque issued towards the security also attracts
liability under Section 138 of the NI Act. A cheque carries a
presumption that it was issued for consideration to discharge the
debt/liability, and the burden is upon the accused to rebut this
presumption. The accused failed to rebut the presumption. The
cheque was dishonoured with the endorsement “exceeds
arrangement”. The notice was duly served upon the accused. The
accused had failed to repay the money within 15 days of the receipt
of the summons from the Court. 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
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the accused of the commission of an offence punishable under
Section 138 of the NI Act and sentenced him to undergo simple
imprisonment for 6 months, pay a fine of ₹3,00,000/- and in
.
default of payment of fine, to undergo further simple
imprisonment for 2 months.
7. Being aggrieved by the judgment and order passed by
of
the learned Trial Court, the accused filed an appeal, which was
decided by the learned Sessions Judge, Mandi (learned Appellate
rt
Court). The Appellate Court concurred with the findings recorded
by the learned Trial court that the cheque carried with it a
presumption that it was issued for consideration to discharge the
debt/liability. The accused failed to rebut the presumption attached
to the cheque. The plea taken by the accused that the cheque was
issued as security would not help him because a cheque issued
towards the security also attracts the provisions of Section 138 of
the NI Act. The cheque was dishonoured with an endorsement
“exceeds arrangement”, and the notice was duly served upon the
accused. The accused failed to repay the money despite the receipt
of the demand notice. All the ingredients of Section 138 of the NI
Act were duly satisfied, and the learned Trial Court had rightly
convicted the accused of the commission of an offence punishable
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under Section 138 of the NI Act. The sentence imposed by the
learned Trial Court was adequate, which did not require any
interference from the learned Appellate Court. Therefore, the
.
appeal was dismissed.
8. Being aggrieved by the judgments and order passed by
the Learned Courts below. The accused has filed a present revision
of
asserting that the learned courts below erred in appreciating the
material placed before them. No adequate reasons were assigned
rt
for awarding the maximum punishment. The complainant had
obtained blank signed cheques from the accused at the time of
advancing the loan. The accused had regularly paid the instalment,
and nothing was due to the bank. The bank erred in presenting the
cheque. Therefore, it was prayed that the present revision be
allowed and the judgments and order passed by the learned Courts
below be set aside.
9. I have heard Mr Neel Kamal Sharma, learned counsel for
the petitioner/accused, Mr Arvind Sharma, learned counsel for
respondent No.1/complainant and Mr Jitender Sharma, learned
Additional Advocate General for respondent No.2/State.
10. Mr Neel Kamal Sharma, learned counsel for the
petitioner, submitted that the learned Courts below erred in
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appreciating the material on record. The plea taken by the accused
that a blank signed security cheque was taken at the time of
advancing the loan was highly probable, and the learned Courts
.
below erred in rejecting this plea. The accused had repaid the loan,
and there was no liability towards the bank. The bank had seized
the vehicle and sold it, and this amount was not adjusted in the
of
loan account. Therefore, he prayed that the present revision be
allowed and the judgments and order passed by the learned Courts
rt
below be set aside.
11. Mr Arvind Sharma, learned counsel for respondent
No.1/complainant submitted that the accused has admitted the
taking of the loan from the complainant. He claimed that he had
repaid the money, but failed to prove this plea by leading any
evidence. Learned Courts below had rightly held that a cheque
issued as a security would attract the provisions of Section 138 of
the NI Act. This Court should not re-appreciate the evidence in the
exercise of the revisional jurisdiction. Therefore, he prayed that the
present revision be dismissed.
12. Mr Jitender Sharma, learned Additional Advocate
General for respondent No.2/State submitted that the dispute is
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between the private parties and the State has no submissions to
make in the present case.
13. I have given a 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
Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022) 3
of
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
rt
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 detailedappreciation 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 anyproceedings 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
which is to be determined on the merits of individual cases.
It is also well settled that while considering the same, the
Revisional Court does not dwell at length upon the facts and
evidence of the case to reverse those findings.
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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 tocall 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 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
rt
in Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh
Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC(Cri) 986], where scope of Section 397 has been considered
and succinctly explained as under: (SCC p. 475, paras 12-13)
“12. Section 397 of the Code vests the court with the
power to call for and examine the records of an 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 setright a patent defect or an error of jurisdiction or law.
There has to be a well-founded error, and it may not be
appropriate for the court to scrutinise the orders,
which, upon the face of it, bear a token of careful
consideration and appear to be in accordance with law.
If one looks into the various judgments of this Court, it
emerges that the revisional jurisdiction can be invoked
where the decisions under challenge are grossly
erroneous, there is no compliance with the provisions
of law, the finding recorded is based on no evidence,
material evidence is ignored, or judicial discretion is
exercised arbitrarily or perversely. These are not
exhaustive classes, but are merely indicative. Each case
would have to be determined on its own merits.
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13. Another well-accepted norm is that the revisional
jurisdiction of the higher court is a very limited one
and cannot be exercised in a routine manner. One of
the inbuilt restrictions is that it should not be against
an interim or interlocutory order. The Court has to
.
keep in mind that the exercise of revisional jurisdiction
itself should not lead to injustice ex facie. Where the
Court is dealing with the question as to whether the
charge has been framed properly and in accordance
with law in a given case, it may be reluctant to
interfere in the exercise of its revisional jurisdiction
unless the case substantially falls within the categories
of
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
rt
165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine SC
651 that it is impermissible for the High Court to reappreciate the
evidence and come to its conclusions in the absence of any
perversity. It was observed at page 169:
“12. This Court has time and again examined the scope of
Sections 397/401 CrPC and the grounds for exercising therevisional jurisdiction by the High Court. In State of Kerala v.
Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452:
1999 SCC (Cri) 275], while considering the scope of the
revisional jurisdiction of the High Court, this Court has laid
down the following: (SCC pp. 454-55, para 5)
5. … In its revisional jurisdiction, the High Court can
call for and examine the record of any proceedings to
satisfy itself as to the correctness, legality or propriety
of any finding, sentence or order. In other words, the
jurisdiction is one of supervisory jurisdiction exercised
by the High Court for correcting a miscarriage of
justice. But the said revisional power cannot be
equated with the power of an appellate court, nor can it
be treated even as a second appellate jurisdiction.
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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
of
evidence. …”
13. Another judgment which has also been referred to and
relied on by the High Court is the judgment of this Court in
rt
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 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
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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.”
.
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:
of
“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
rt
Court to re-analyse and re-interpret the evidence on record.
17. As held by this Court in Southern Sales & Services v.
Sauermilch Design and Handels GmbH, (2008) 14 SCC 457, it is
a well-established principle of law that the Revisional Court
will not interfere even if a wrong order is passed by a court
having jurisdiction, in the absence of a jurisdictional error.
The answer to the first question is, therefore, in the
negative.”
18. The present revision has to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
19. The ingredients of an offence punishable under Section
138 of the NI Act were explained by the Hon’ble Supreme Court in
Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, 2025 SCC
OnLine SC 2019 as under: –
5.1.1. In K.R. Indira v. Dr. G. Adinarayana (2003) 8 SCC 300, this
Court enlisted the components, aspects and the acts, the
concatenation of which would make the offence under
Section 138 of the Act complete, to be these (i) drawing of the::: Downloaded on – 10/07/2026 20:47:05 :::CIS
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2026:HHC:28006cheque by a person on an account maintained by him with a
banker, for payment to another person from out of that
account for discharge in whole/in part of any debt or
liability, (ii) presentation of the cheque by the payee or the
holder in due course to the bank, (iii) returning the cheque.
unpaid by the drawee bank for want of sufficient funds to the
credit of the drawer or any arrangement with the banker to
pay the sum covered by the cheque, (iv) giving notice in
writing to the drawer of the cheque within 15 days of the
receipt of information by the payee from the bank regarding
the return of the cheque as unpaid demanding payment of
the cheque amount, and (v) failure of the drawer to make
of
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.
rt
20. The accused admitted in his statement recorded under
Section 313 of the Cr.P.C. that he had taken a loan of ₹15,00,000/-
from the complainant. He admitted his signature on the cheque and
claimed that he had issued the cheque as security. Therefore, the
issuance of the cheque and the signatures on the cheque were not
disputed. It was laid down by the Hon’ble Supreme Court in APS
Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020)
12 SCC 724, that when the issuance of a cheque and signature on the
cheque are not disputed, a presumption would arise that the
cheque was issued in discharge of the legal liability. It was
observed: –
“9. Coming back to the facts in the present case and
considering the fact that the accused has admitted the
issuance of the cheques and his signature on the cheque and
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2026:HHC:28006after 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 bythe 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 theof
second time after the earlier cheques were dishonoured.
Therefore, both the courts below have materially erred in not
properly appreciating and considering the presumption in
rt
favour of the complainant that there exists a legally
enforceable debt or liability as per Section 139 of the NI Act.
It appears that both the learned trial court as 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 NIAct. 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 the signature on thecheque has been admitted, there is always a presumption in
favour of the complainant that there exists legallyenforceable debt or liability and thereafter, it is for the
accused to rebut such presumption by leading evidence.”
21. It was laid down 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.”
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22. 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 theof
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
rt
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 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, the
initial onus of proving that the cheque is not in discharge ofany debt or other liability is on the accused/drawer of the
cheque [See: Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197].
23. 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.
24. It was submitted that the cheque was issued as security,
and the accused is not liable for its dishonour. This submission
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cannot be accepted. 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 revisionist that the cheque in question was issued to the
complainant as security, and on this ground, the criminal
revision petition is rejected as being devoid of any force forof
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
rt
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 thecheque 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 theNegotiable 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 lawand subsequent law, then subsequent law always prevails.”
25. 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 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::: Downloaded on – 10/07/2026 20:47:05 :::CIS
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2026:HHC:28006versus 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 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 isattracted 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) ofof
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
rt
the loan was duly disbursed on 28th February 2002, which
was prior to the date of the cheques. Once the loan wasdisbursed 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 underSection 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 issuedfor 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,::: Downloaded on – 10/07/2026 20:47:05 :::CIS
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2026:HHC:28006where 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 onthe date of the cheque.
13. The crucial question to determine the applicability of
Section 138 of the Act is whether the cheque represents theof
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
rt
underlying principle as can be discerned from the discussion
of the said cases in the judgment of this Court.” (Emphasissupplied)
26. 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
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 transaction are bound.
If in a transaction, a loan is advanced and the borrower
agrees to repay the amount in a specified timeframe and
issues a cheque as security to secure such repayment; if the
loan amount is not repaid in any other form before the due
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2026:HHC:28006between 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 beingstipulated 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 repaymentof
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
rt
discharged within the agreed period, the cheque issued as
security cannot thereafter be presented. Therefore, the priordischarge 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 beavailable 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 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 isnot the intention of the statute. When a cheque is issued even
though as ‘security’ the consequence flowing therefrom is
also known to the drawer of the cheque and in the
circumstance stated above if the cheque is presented and
dishonoured, the holder of the cheque/drawee would have
the option of initiating the civil proceedings for recovery or
the criminal proceedings for punishment in the fact
situation, but in any event, it is not for the drawer of the
cheque to dictate terms with regard to the nature of
litigation.”
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27. Therefore, the accused cannot escape from the liability
by taking a plea that he had issued the cheque as security.
28. Sushil Kumar (CW1) admitted in his cross-examination
.
that the bank had seized the vehicle and sold it. However, he did
not know the amount realised by the bank from the sale of the
vehicle. It was submitted that the admission made by this witness
of
shows that the bank had realised the amount by the sale of the
vehicle, and the accused was not liable to pay any money. This
rt
submission cannot be accepted. The accused admitted that he had
taken the loan of ₹15 lakh. He claimed that he had repaid the
amount in the monthly instalments. But there is no proof of this
fact. The cheque was presented for an amount of ₹2,23,000/-,
which is much less than the amount of ₹15,00,000/- taken by the
accused. A vehicle purchased for ₹15,00,000/- would not have
realised ₹15,00,000/- on its sale, and the complainant’s plea that
an amount of ₹2,23,000/- was due from the accused is acceptable.
29. It was submitted that the bank has not produced the
statement of account or any documents showing the disbursal of
the loan. This submission will not help the accused. The accused
admitted in his statement recorded under Section 313 of the Cr.P.C.
that he had taken the loan. Therefore, the disbursal of the loan was
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not in dispute. As far as the production of a statement of account is
concerned, the same is not required because of the presumption
attached to the cheque that it was issued for consideration. It was
.
laid down by the Hon’ble Supreme Court in Uttam Ram v. Devinder
Singh Hudan, (2019) 10 SCC 287: 2019 SCC OnLine SC 1361, that a
presumption under Section 139 of the NI Act would obviate the
of
requirement to prove the existence of consideration. It was
observed:
rt
“20. The trial court and the High Court proceeded as if the
appellant was to prove a debt before the civil court, whereinthe plaintiff is required to prove his claim on the basis of
evidence to be laid in support of his claim for the recovery of
the amount due, and the dishonour of a cheque carries a
statutory presumption of consideration. The holder of thecheque in due course is required to prove that the cheque
was issued by the accused and that when the same was
presented, it was not honoured. Since there is a statutorypresumption of consideration, the burden is on the accused
to rebut the presumption that the cheque was issued not forany debt or other liability.”
30. This position was reiterated in Ashok Singh v. State of
U.P., 2025 SCC OnLine SC 706, wherein it was observed:
“22. The High Court while allowing the criminal revision has
primarily proceeded on the presumption that it was
obligatory on the part of the complainant to establish his
case on the basis of evidence by giving the details of the bank
account as well as the date and time of the withdrawal of the
said amount which was given to the accused and also the
date and time of the payment made to the accused, including
the date and time of receiving of the cheque, which has not::: Downloaded on – 10/07/2026 20:47:05 :::CIS
21
2026:HHC:28006been done in the present case. Pausing here, such
presumption on the complainant, by the High Court, appears
to be erroneous. The onus is not on the complainant at the
threshold to prove his capacity/financial wherewithal to
make the payment in discharge of which the cheque is.
alleged to have been issued in his favour. Only if an objection
is raised that the complainant was not in a financial position
to pay the amount so claimed by him to have been given as aloan to the accused, only then would the complainant have
to bring before the Court cogent material to indicate that he
had the financial capacity and had actually advanced the
amount in question by way of a loan. In the case at hand, theof
appellant had categorically stated in his deposition and
reiterated in the cross-examination that he had withdrawn
the amount from the bank in Faizabad (Typed Copy of his
rt
deposition in the paperbook wrongly mentions this as
‘Firozabad’). The Court ought not to have summarilyrejected such a stand, more so when respondent no. 2 did not
make any serious attempt to dispel/negate such a
stand/statement of the appellant. Thus, on the one hand, the
statement made before the Court, both in examination-in-
chief and cross-examination, by the appellant with regard to
withdrawing the money from the bank for giving it to the
accused has been disbelieved, whereas the argument onbehalf of the accused that he had not received any payment
of any loan amount has been accepted. In our decision in S. S.Production v. Tr. Pavithran Prasanth, 2024 INSC 1059, we
opined:
‘8. From the order impugned, it is clear that though the
contention of the petitioners was that the said amounts were
given for producing a film and were not by way of return of any
loan taken, which may have been a probable defence for the
petitioners in the case, but rightly, the High Court has taken the
view that evidence had to be adduced on this point which has
not been done by the petitioners. Pausing here, the Court would
only comment that the reasoning of the High Court, as well as
the First Appellate Court and Trial Court, on this issue is sound.
Just by taking a counter-stand to raise a probable defence
would not shift the onus on the complainant in such a case, for
the plea of defence has to be buttressed by evidence, either oral::: Downloaded on – 10/07/2026 20:47:05 :::CIS
22
2026:HHC:28006or documentary, which in the present case has not been done.
Moreover, even if it is presumed that the complainant had not
proved the source of the money given to the petitioners by way
of loan by producing statement of accounts and/or Income Tax
Returns, the same ipso facto, would not negate such claim for.
the reason that the cheques having being issued and signed by
the petitioners has not been denied, and no evidence has been
led to show that the respondent lacked capacity to provide theamount(s) in question. In this regard, we may make profitable
reference to the decision in Tedhi Singh v. Narayan Dass
Mahant, (2022) 6 SCC 735:
of
’10. The trial court and the first appellate court have noted
that in the case under Section 138 of the NI Act, the
complainant need not show in the first instance that he had
the capacity. The proceedings under Section 138 of the NI Act
rt
are not a civil suit. At the time, when the complainant gives
his evidence, unless a case is set up in the reply notice to thestatutory notice sent, that the complainant did not have the
wherewithal, it cannot be expected of the complainant to
initially lead evidence to show that he had the financial
capacity. To that extent, the courts in our view were right inholding on those lines. However, the accused has the right to
demonstrate that the complainant in a particular case did
not have the capacity and therefore, the case of the accusedis acceptable, which he can do by producing independent
materials, namely, by examining his witnesses andproducing documents. It is also open to him to establish the
very same aspect by pointing to the materials produced bythe complainant himself. He can further, more importantly,
further achieve this result through the cross-examination of
the witnesses of the complainant. Ultimately, it becomes the
duty of the courts to consider carefully and appreciate the
totality of the evidence and then come to a conclusion
whether, in the given case, the accused has shown that the
case of the complainant is in peril for the reason that the
accused has established a probable defence.'(emphasis
supplied)’ (underlining in original; emphasis supplied by
us in bold).
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31. A similar view was taken in Sanjay Sanjabij Tari v.
Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was
observed:
.
“21. This Court also takes judicial notice of the fact that
some District Courts and some High Courts are not givingeffect to the presumptions incorporated in Sections 118 and
139 of the NI Act and are treating the proceedings under the
NI Act as another civil recovery proceedings and are
directing the complainant to prove the antecedent debt orof
liability. This Court is of the view that such an approach is
not only prolonging the trial but is also contrary to the
mandate of Parliament, namely, that the drawer and the
rt
bank must honour the cheque; otherwise, trust in cheques
would be irreparably damaged.”
32. Therefore, the complainant’s version cannot be doubted
because no statement of account was produced.
33. The accused claimed in his statement recorded under
Section 313 of the Cr.P.C. that he had repaid the money; however, he
had not produced any evidence to prove this fact. He did not file any
receipt for the amount deposited by him in his loan account. He
relied upon his statement recorded under Section 313 of the Cr.P.C.
to establish his version. 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 of Cr.P.C is not
sufficient to rebut the presumption. It was observed at page 700:
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“20. That apart, when the complainant exhibited all these
documents in support of his complaints and recorded the
statement of three witnesses in support thereof, the
appellant 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.”
of
(Emphasis supplied)”
34. Therefore, the learned Courts below had rightly
rt
disbelieved the version of the accused.
35. Sushil Kumar (CW5) stated that the cheque was
dishonoured with an endorsement “exceeds arrangements”. This
statement is duly corroborated by the memo of dishonour
(Ext.CW1/D) in which the reason for dishonour has been mentioned
as “exceeds arrangement”. It was laid down by the Hon’ble
Supreme Court in Mandvi Cooperative Bank Ltd. v. Nimesh B.
Thakore, (2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1:
2010 SCC OnLine SC 155 that the memo issued by the Bank is
presumed to be correct and the burden is upon the accused to rebut
the presumption. It was observed at page 95:
“24. Section 146, making a major departure from the
principles of the Evidence Act, provides that the bank’s slip
or memo with the official mark showing that the cheque was::: Downloaded on – 10/07/2026 20:47:05 :::CIS
25
2026:HHC:28006dishonoured would, by itself, give rise to the presumption of
dishonour of the cheque, unless and until that fact was
disproved. Section 147 makes the offences punishable under
the Act compoundable.”
.
36. In the present case, no evidence was produced to rebut
the presumption, and the learned Courts below had rightly held
that the cheque was dishonoured with an endorsement ‘exceeds
arrangements.’
of
37. Sushil Kumar (CW5) stated that the Bank had served a
notice upon the accused. He denied in his cross-examination that
rt
no notice was served upon the accused. A denied suggestion does
not amount to any proof and cannot be used to discard the
complainant’s version. The Learned Court below had rightly held
that the accused could have deposited the amount within 15 days of
the receipt of the summons from the Court. It was laid down in C.C.
Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555, that the person who
claims that he had not received the notice has to pay the amount
within 15 days from the date of the receipt of the summons from
the Court and in case of failure to do so, he cannot take the
advantage of the fact that notice was not received by him. It was
observed:
“It is also to be borne in mind that the requirement of giving
notice is a clear departure from the rule of Criminal Law,
where there is no stipulation of giving notice before filing a::: Downloaded on – 10/07/2026 20:47:05 :::CIS
26
2026:HHC:28006complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons
from the court in respect of the complaint under Section 138 of
the Act, make payment of the cheque amount and submit to the
Court that he had made payment within 15 days of receipt of.
summons (by receiving a copy of the complaint with the
summons) and, therefore, the complaint is liable to be rejected.
A person who does not pay within 15 days of receipt of thesummons from the Court, along with the copy of the complaint
under Section 138 of the Act, cannot obviously contend that there
was no proper service of notice as required under Section 138, by
ignoring the statutory presumption to the contrary under Sectionof
27 of the G.C. Act and Section 114 of the Evidence Act. In our
view, any other interpretation of the proviso would defeat
the very object of the legislation. As observed in Bhaskaran’s
rt
case (supra), if the giving of notice in the context of Clause
(b) of the proviso was the same as the receipt of notice, a
trickster cheque drawer would get the premium to avoid
receiving the notice by adopting different strategies and
escape from the legal consequences of Section 138 of the
Act.” (Emphasis supplied)
38. The accused did not claim that he had repaid the
amount to the complainant; therefore, it was duly proved on record
that the accused had failed to repay the amount despite the receipt
of the demand notice.
39. Thus, it was duly proved before the learned Trial Court
that the accused had issued a cheque to discharge his legal liability,
the cheque was dishonoured with an endorsement ‘exceeds
arrangement’, and the accused failed to pay the money despite the
receipt of a notice of demand. Hence, all the ingredients of the
offence punishable under Section 138 of the NI Act were duly
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satisfied, and the learned Trial Court had rightly convicted the
accused of the commission of an offence punishable under Section
138 of the NI Act.
.
40. Learned Trial Court had sentenced the accused to
undergo simple imprisonment for 6 months and pay a fine of
₹3,00,000/-. It was submitted that the learned Trial Court had
of
imposed the maximum sentence without providing any
justification for it. This submission cannot be accepted. Section 138
rt
of the NI Act provides the maximum punishment of 2 years, and
the punishment of 6 months imprisonment is not maximum. It was
laid down by the Hon’ble Supreme Court in Bir Singh v. Mukesh
Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)
309: 2019 SCC OnLine SC 138 that the penal provision of section 138
is deterrent in nature. It was observed at page 203:
“6. The object of Section 138 of the Negotiable Instruments
Act is to infuse credibility into negotiable instruments,including cheques, and to encourage and promote the use of
negotiable instruments, including cheques, in financial
transactions. The penal provision of Section 138 of the
Negotiable Instruments Act is intended to be a deterrent to
callous issuance of negotiable instruments such as cheques
without serious intention to honour the promise implicit in
the issuance of the same.”
41. Keeping in view the deterrent nature of the punishment,
the sentence of six months cannot be said to be excessive.
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42. The cheque was issued for ₹2,23,000/- on 12.05.2016,
Learned Trial Court imposed the sentence on 10.01.2023 after the
lapse of about 7 years. 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
of
amount along with simple interest at the rate of 9% per annum. Itwas observed at page 291: –
rt
19. As regards the claim of compensation raised on behalf of
the respondent, we are conscious of the settled principlesthat the object of Chapter XVII of NIA is not only punitive but
also compensatory and restitutive. The provisions of NIA
envision a single window for criminal liability for the
dishonour of a cheque as well as civil liability for therealisation 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]”
43. The complainant had to engage a counsel to prosecute
the complaint. It was deprived of the money that it would have
gained by advancing the loan to another person and was entitled to
be compensated. Learned Trial Court awarded a compensation of
₹3,00,000/-. The cheque was issued for ₹2,23,000/-, which means
an amount of ₹77,000/- was awarded as compensation, which is
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not excessive considering the time elapsed between issuance of the
cheque and the imposition of the sentence.
44. No other point was urged.
.
45. 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.
of
46. The present revision stands disposed of, and so are the
pending miscellaneous application(s), if any.
rt
47. The record of the learned Courts below be returned with
a copy of the judgment.
(Rakesh Kainthla)
Judge
10th July, 2026
(Nikita)
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