1

REPORTABLE

THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.230-231 OF 2019

(@ SLP(CRL ) NOS. 9334-35 OF 2018)

Bir Singh … Appellant

VERSUS

Mukesh Kumar …Respondent

J U D G M E N T

Indira Banerjee, J.

Leave granted.

2.These appeals are against a Judgment and order dated 21-11-

2017 passed by the High Court of Punjab and Haryana at

Chandigarh allowing the Criminal Revisional Application being

Criminal Revision Petition No.849 of 2016 filed by the respondent-

accused, challenging a judgment and order dated 20-2-2016

passed by the Additional Sessions Judge, Palwal in Criminal Appeal

No.13/2015 filed by the respondent-accused, inter alia, affirming a

judgment and order of conviction of the respondent-accused,

2

passed by the Judicial Magistrate, 1

st

Class, Palwal under Section

138 of the Negotiable Instruments Act, 1881.

3.It is the case of the appellant-complainant, that the

respondent-accused issued a cheque being Cheque No.034212

dated 4-3-2012 drawn on Axis Bank, Branch, Palwal in the name of

the appellant towards repayment of a “friendly loan” of Rs.15

lakhs advanced by the appellant-complainant to the respondent-

accused.

4.On 11-4-2012, the appellant-complainant deposited the said

cheque in his bank, but the cheque was returned unpaid with the

endorsement “Insufficient Fund”.

5.The appellant-complainant has alleged that, on the assurance

of the respondent-accused, that there would be sufficient funds in

his bank account to cover the amount of the cheque, the

appellant-complainant again presented the cheque to his bank on

23-5-2012, but it was again returned unpaid with the remark

“Insufficient Fund”.

6.On 15-6-2012, the appellant-complainant issued a legal notice

to the respondent-accused through his lawyer, calling upon the

respondent-accused to pay the cheque amount. The said notice,

sent by registered post, was according to the appellant-

complainant, duly served on the respondent-accused. The

respondent-accused, however, did not reply to the notice. Nor did

he pay the cheque amount to the appellant-complainant.

3

7.The appellant-complainant filed a Criminal Complaint against

the respondent-accused, being Case No.106 of 2012 before the

Judicial Magistrate 1

st

Class, Palwal, under Section 138 of the

Negotiable Instruments Act.

8.Sections 138 and 139 of the Negotiable Instruments Act are

set out herein below for convenience:-

“138 Dishonour of cheque for insufficiency,

etc., of funds in the account. —Where any cheque

drawn by a person on an account maintained by him

with a banker for payment of any amount of money to

another person from out of that account for the

discharge, in whole or in part, of any debt or other

liability, is returned by the bank unpaid, either because

of the amount of money standing to the credit of that

account is insufficient to honour the cheque or that it

exceeds the amount arranged to be paid from that

account by an agreement made with that bank, such

person shall be deemed to have committed an offence

and shall, without prejudice to any other provisions of

this Act, be punished with imprisonment for a term

which may be extended to two years, or with fine which

may extend to twice the amount of the cheque, or with

both:

Provided that nothing contained in this section shall

apply unless—

(a) the cheque has been presented to the bank within a

period of six months from the date on which it is drawn

or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque,

as the case may be, makes a demand for the payment

of the said amount of money by giving a notice in

writing, to the drawer of the cheque,within thirty days of

the receipt of information by him from the bank

regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment

of the said amount of money to the payee or, as the

case may be, to the holder in due course of the cheque,

within fifteen days of the receipt of the said notice.

4

Explanation.— For the purposes of this section, “debt or

other liability” means a legally enforceable debt or

other liability.]

139. Presumption in favour of holder.—It shall be

presumed, unless the contrary is proved, that the

holder of a cheque received the cheque of the nature

referred to in section 138 for the discharge, in whole or

in part, of any debt or other liability.”

9.The object of Section 138 of the Negotiable Instruments Act is

to infuse credibility to 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.

10.Having regard to the object of Section 138 of the Negotiable

Instruments Act, a prosecution based on a second or successive

default in payment of the cheque amount is not impermissible

simply because no statutory notice had been issued after the first

default and no proceeding for prosecution had been initiated. As

held by this Court in MSR Leathers vs. S. Palaniappan & Anr

1

,

there is no real or qualitative difference between a case where

default is committed and prosecution immediately launched and

another where the prosecution is deferred till the cheque presented

again gets dishonoured for the second time or successive times.

1 (2013) 1 SCC 177

5

11.By a judgment and order dated 9-2-2015, the Judicial

Magistrate I Class, Palwal convicted the respondent-accused under

Section 138 of the Negotiable Instruments Act and sentenced him

to undergo simple imprisonment for a period of one year and

further directed him to pay compensation of Rs.15 lakhs to the

appellant-complainant within one month from the date of the said

Judgment and order. Being aggrieved, the respondent-accused filed

a criminal appeal No.13/2015 dated 9-3-2015 in the court of

Additional Sessions Judge, Palwal.

12. By a judgment and order dated 20-2-2016, the Appellate

Court upheld the conviction of the respondent-accused under

Section 138 of the Negotiable Instruments Act and confirmed the

compensation of Rs.15 lakhs directed to be paid to the appellant-

complainant. The sentence of imprisonment was however reduced

to six months from one year.

13.The respondent-accused filed a Criminal Revision Petition

being CRR No.849 of 2016 in the High Court challenging the

Judgment and order of the Appellate Court. The appellant-

complainant also filed a Criminal Revision Petition being CRR

No.2017 of 2016 challenging the reduction of the sentence from

one year to six months.

14.By a common final Judgment and order dated 21-11-2017

which is impugned before us, the High Court has reversed the

concurrent factual findings of the Trial Court and the Appellate

Court and acquitted the respondent of the charge under Section

6

138 of the Negotiable Instruments Act, observing, inter alia, that

there was fiduciary relationship between the appellant-

complainant, an Income Tax practitioner, and the respondent-

accused who was his client.

15.The High Court observed and held:-

“The complainant had fiduciary relationship with

the accused-petitioner. Therefore, heavy burden was

on the complainant to prove that he had advanced

the loan and that blank cheque for the same was

given to him. The complainant is an income tax

practitioner and he knows that whenever loan is

advanced to anybody, receipt has to be obtained and

that such heavy amount is to be advanced only

through a cheque or demand draft or RTGS. The

accused-petitioner was the client of the complainant

and they were having professional relationship. The

accused-petitioner was no so thick and thin with the

complainant. There is no reason why the

complainant, who is an income tax practitioner, will

advance such a heavy loan to his client without any

close relationship and without obtaining any writing

to this effect. There was heavy burden on the

complainant. In such circumstances, the accused-

petitioner is successful in raising reasonable doubts

that the complainant might have misused one of the

blank cheques given to him for payment of income

tax for depositing the same in the Treasury.

In order to support his case, the accused-

petitioner took a risk by stepping himself into the

witness box and offered himself for cross-

examination. He asserted in his cross-examination

that the tax return was deposited in cash and the

complainant used to take cash from him. His version

was also supported by one Praveen Kumar, DW2.

From the abovenoted discussions, it is clear that

the parties were in fiduciary relationship and heavy

burden was on the complainant to prove that he had

advanced a loan of Rs.15,00,000/- to his client

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without obtaining any writing and that he has not

misused any blank cheque of his client. Such loan

was not shown in the income tax return of the

complainant.

For the reasons mentioned above, the case of the

complainant becomes highly doubtful and is not

beyond all reasonable doubts. Therefore, no

presumption under Section 138 of the Negotiable

Instruments Act, 1881 can be raised. Both the courts

below erred in holding the accused-petitioner guilty

for the commission of offence punishable under

Section 138 of the Negotiable Instruments Act, 1881.

In view of the foregoing discussions, CRR No. 849

of 2016 is allowed and CRR No.2017 of 2016 is

dismissed. The accused- petitioner stands acquitted of

the notice of accusation served upon him.”

16.The short question before us is whether the High Court was

right in reversing the concurrent factual findings of the Trial Court

and of the Appellate court in exercise of its revisional jurisdiction.

The questions of law which rise in this appeal are, (i) whether a

revisional Court can, in exercise of its discretionary jurisdiction,

interfere with an order of conviction in the absence of any

jurisdictional error or error of law and (ii) whether the payee of a

cheque is disentitled to the benefit of the presumption under

Section 139 of the Negotiable Instruments Act, of a cheque duly

drawn, having been issued in discharge of a debt or other liability,

only because he is in a fiduciary relationship with the person who

has drawn the cheque.

8

17.The Trial Court, on analysis of the evidence adduced by the

respective parties arrived at the factual finding that the

respondent-accused had duly issued the cheque in question for

Rs.15 lakhs in favour of the appellant-complainant, in discharge of

a debt or liability, the cheque was presented to the bank for

payment within the period of its validity, but the cheque had been

returned unpaid for want of sufficient funds in the account of the

respondent-accused in the bank on which the cheque was drawn.

Statutory Notice of dishonour was duly issued to which there was

no response from the respondent-accused.

18.The Appellate Court affirmed the aforesaid factual findings.

The Trial Court and the Appellate Court arrived at the specific

concurrent factual finding that the cheque had admittedly been

signed by the respondent-accused. The Trial Court and the

Appellate Court rejected the plea of the respondent-accused that

the appellant-complainant had misused a blank signed cheque

made over by the respondent-accused to the appellant-

complainant for deposit of Income Tax, in view of the admission of

the respondent-accused that taxes were paid in cash for which the

appellant-complainant used to take payment from the respondent

in cash.

19.It is well settled that in 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

9

evidence on record.

20.As held by this Court in Southern Sales and Services and

Others vs. Sauermilch Design and Handels GMBH

2

, 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.

21.In passing the impugned judgment and order dated 21-11-

2017, the High Court mis-construed Section 139 of Negotiable

Instruments Act, which mandates that unless the contrary is

proved, it is to be presumed that the holder of a cheque received

the cheque of the nature referred to in Section 138, for the

discharge, in whole or in part, of any debt or other liability.

Needless to mention that the presumption contemplated under

Section 139 of the Negotiable Instruments Act, is a rebuttable

presumption. However, the onus of proving that the cheque was

not in discharge of any debt or other liability is on the accused

drawer of the cheque.

22.In Hiten P. Dalal vs. Bratindranath Banerjee

3

, this Court

held that both Section 138 and 139 require that the Court shall

presume the liability of the drawer of the cheques for the amounts

for which the cheques are drawn. Following the judgment of this

Court in State of Madras vs. Vaidyanatha Iyer

4

, this Court held

2 (2008) 14 SCC 457

3 (2001) 6 SCC 16

4 AIR 1958 SC 61

10

that it was obligatory on the Court to raise this presumption.

23.Section 139 introduces an exception to the general rule as to

the burden of proof and shifts the onus on the accused. The

presumption under Section 139 of the Negotiable Instruments Act

is a presumption of law, as distinguished from presumption of

facts. Presumptions are rules of evidence and do not conflict with

the presumption of innocence, which requires the prosecution to

prove the case against the accused beyond reasonable doubt. The

obligation on the prosecution may be discharged with the help of

presumptions of law and presumptions of fact unless the accused

adduces evidence showing the reasonable possibility of the non-

existence of the presumed fact as held in Hiten P. Dalal (supra).

24.Presumption of innocence is undoubtedly a human right as

contended on behalf of the respondent-accused, relying on the

judgments of this Court in Ranjitsing Brahmajeetsing Sharma

vs. State of Maharashtra and Anr

5

and Rajesh Ranjan Yada

@ Pappu Yadav vs. CBI through its Director

6

. However the

guilt may be established by recourse to presumptions in law and

presumptions in facts, as observed above.

25.In Laxmi Dyechem vs. State of Gujarat & Ors.

7

, this Court

reiterated that in view of Section 139, it has to be presumed that a

cheque was issued in discharge of a debt or other liability but the

5 (2005) 5 SCC 294

6 (2007) 1 SCC 70

7 (2012) 13 SCC 375

11

presumption could be rebutted by adducing evidence. The burden

of proof was however on the person who wanted to rebut the

presumption. This Court held “however, this presumption coupled

with the object of Chapter XVII of the Act leads to the conclusion

that by countermanding payment of a post dated cheque, a party

should not be allowed to get away from the penal provision of

Section 138 of the Act”.

26.In Kumar Exports vs. Sharma Carpets

8

, this Court

reiterated that there is a presumption that every negotiable

instrument duly executed, is for discharge of a debt or liability, but

the presumption is rebuttable by proving the contrary. In the facts

and circumstances of the case it was found that the cheque in

question was towards advance for purchase of carpets, which were

in fact not sold by the payee of the cheque to the drawer, as

proved from the deposition of an official of the Sales Tax

Department, who stated that the payee had admitted that he had

not sold the carpets.

27.In K.N. Beena vs. Muniyappan and Another

9

, this Court

held that in view of the provisions of Section 139 of the

Negotiable Instruments Act read with Section 118 thereof, the

Court had to presume that the cheque had been issued for

discharging a debt or liability. The said presumption was

rebuttable and could be rebutted by the accused by proving the

8 (2009) 2 SCC 513

9(2001) 8 SCC 458

12

contrary. But mere denial or rebuttal by the accused was not

enough. The accused had to prove by cogent evidence that there

was no debt or liability. This Court clearly held that the High

Court had erroneously set aside the conviction, by proceeding on

the basis that denials/averments in the reply of the accused were

sufficient to shift the burden of proof on the complainant to prove

that the cheque had been issued for discharge of a debt or a

liability. This was an entirely erroneous approach. The accused

had to prove in the trial by leading cogent evidence that there

was no debt or liability.

28.In R. Vijayan vs. Baby and Another

10

this Court observed

that the object of Chapter XVII of the Negotiable Instruments Act

is both punitive as also compensatory and restitutive. It provides

a single forum and single proceeding for enforcement of criminal

liability by reason of dishonour of cheque and for enforcement of

the civil liability for realization of the cheque amount, thereby

obviating the need for the creditor to move two different fora for

relief. This Court expressed its anguish that some Magistrates

went by the traditional view, that the criminal proceedings were

for imposing punishment and did not exercise discretion to direct

payment of compensation, causing considerable difficulty to the

complainant, as invariably the limitation for filing civil cases

would expire by the time the criminal case was decided.

10 (2012) 1 SCC 260

13

29.In R. Vijayan vs. Baby and another (supra) this Court

observed that unless there were special circumstances, in all

cases of conviction, the Court should uniformly exercise the power

to levy fine up to twice the cheque amount and keeping in view

the cheque amount and the simple interest thereon at 9% per

annum as the reasonable quantum of loss, direct payment of such

amount as compensation. This Court rightly observed that

uniformity and consistency in deciding similar cases by different

courts not only increases the credibility of the cheque as a

Negotiable Instrument but also the credibility of the Courts of

Justice.

30.The judgment of this Court in Raj Kumar Khurana vs. State

of (NCT of Delhi) & Anr.

11

was rendered in the particular facts of

the case where the drawer of the cheque had reported to the police

and the bank that two unfilled cheques signed by him had been

stolen.

31.The proposition as re-enunciated in John K John vs. Tom

Varghese & Anr.

12

cited on behalf of the respondent-accused that

if two views are possible, this Court, in exercise of its jurisdiction

under Article 136 of the Constitution would ordinarily not interfere

with a judgment of acquittal, is well settled.

32.In the aforesaid case this Court affirmed an acquittal under

Section 138 of the Negotiable Instrument Act, in the

11 (2009) 6 SCC 72

12 (2007) 12 SCC 714

14

peculiar facts and circumstances of the case where several civil

suits between the parties were pending.

33.In Krishna Janardhan Bhat vs. Dattatraya G. Hegde

13

,

cited on behalf of the respondent-accused, this Court reaffirmed

that Section 139 of the Act raises a presumption that a cheque duly

drawn was towards a debt or liability. However, keeping in view

the peculiar facts and circumstances of the case, this Court was of

the opinion that the courts below had approached the case from a

wholly different angle by wrong application of legal principles.

34.It is well settled that a judgment is a precedent for the issue

of law which is raised and decided. It is the ratio decidendi of the

case which operates as a binding precedent. As observed by this

Court in State of Punjab & Ors. vs. Surinder Kumar & Ors.

14

,

what is binding on all courts is what the Supreme Court says under

Article 141 of the Constitution, which is declaration of the law and

not what it does under Article 142 to do complete justice.

35.Furthermore, to quote V. Sudhish Pai from his book

“Constitutional Supremacy - A Revisit”:-

“Judgments and observations in judgments are not

to be read as Euclid’s theorems or as provisions of

statute. Judicial utterances/pronouncements are in

the setting of the facts of a particular case. To

interpret words and provisions of a statute it may

become necessary for judges to embark upon lengthy

discussions, but such discussion is meant to explain

not define, Judges interpret statutes, their words are

13 (2008) 4 SCC 54

14 (1992) 1 SCC 489

15

not to be interpreted as statutes. Thus, precedents

are not to be read as statutes.”

36.The proposition of law which emerges from the judgments

referred to above is that the onus to rebut the presumption under

Section 139 that the cheque has been issued in discharge of a debt

or liability is on the accused and the fact that the cheque might be

post dated does not absolve the drawer of a cheque of the penal

consequences of Section 138 of the Negotiable Instruments Act.

37.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

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 signed by the drawer. If the cheque

is otherwise valid, the penal provisions of Section 138 would be

attracted.

38.If a signed blank cheque is voluntarily presented to a payee,

towards some payment, the payee may fill up 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.

39.It is not the case of the respondent-accused that he either

signed the cheque or parted with it under any threat or coercion.

16

Nor is it the case of 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.

40.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 cogent evidence to show that the cheque

was not issued in discharge of a debt.

41.The fact that the appellant-complainant might have been an

Income Tax practitioner conversant with knowledge of law does not

make any difference to the law relating to the dishonour of a

cheque. The fact that the loan may not have been advanced by a

cheque or demand draft or a receipt might not have been obtained

would make no difference. In this context, it would, perhaps, not

be out of context to note that the fact that the respondent-accused

should have given or signed blank cheque to the appellant-

complainant, as claimed by the respondent-accused, shows that

initially there was mutual trust and faith between them.

42. In the absence of any finding that the cheque in question was

not signed by the respondent-accused or not voluntarily made over

17

to the payee and in the absence of any evidence with regard to the

circumstances in which a blank signed cheque had been given to

the appellant-complainant, it may reasonably be presumed that

the cheque was filled in by the appellant-complainant being the

payee in the presence of the respondent-accused being the

drawer, at his request and/or with his acquiescence. The

subsequent filling in of an unfilled signed cheque is not an

alteration. There was no change in the amount of the cheque, its

date or the name of the payee. The High Court ought not to have

acquitted the respondent-accused of the charge under Section 138

of the Negotiable Instruments Act.

43.In our considered opinion, the High Court patently erred in

holding that the burden was on the appellant-complainant to prove

that he had advanced the loan and the blank signed cheque was

given to him in repayment of the same. The finding of the High

Court that the case of the appellant-complainant became highly

doubtful or not beyond reasonable doubt is patently erroneous for

the reasons discussed above.

44.The appeals are allowed. The judgment and order of the High

Court is set aside. The conviction of the respondent under Section

138 of the Negotiable Instruments Act is confirmed. However, the

respondent-accused is sentenced only to fine, which is enhanced to

Rs.16 lakhs and shall be paid as compensation to the appellant-

complainant. The fine shall be deposited in the Trial Court within

eight weeks from the date, failing which the sentence of

18

imprisonment of one year as imposed by the Trial Court shall

revive. There shall be no order as to costs.

.................................J.

(R. BANUMATHI)

.................................J.

(INDIRA BANERJEE)

FEBRUARY 06, 2019

NEW DELHI