2026:HHC:14

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. Appeal No. 4176 of 2013

Reserved on: 01.12.2025

Date of Decision: 01.01.2026

Gian Chand Singal ...Appellant

Versus

Puneet Gautam ...Respondent

Coram

Hon’ble Mr Justice Rakesh Kainthla, Judge.

Whether approved for reporting?

1

No

For the Appellant : Mr Bhupender Gupta, Sr. Advocate,

with Mr Janesh Gupta, Advocate.

For the Respondent : Mr Pranshul Sharma, Advocate.

Rakesh Kainthla, Judge

The present appeal is directed against the judgment

dated 31.12.2012, passed by learned Judicial Magistrate First Class,

Solan, District Solan, H.P. (learned Trial Court) vide which the

respondent (accused before the learned trial court) was acquitted

of the commission of an offence punishable under Section 138 of

the Negotiable Instruments Act (NI Act). (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 appeal

are that the complainant filed a complaint against the accused

before the learned Trial Court for the commission of an offence

punishable under Section 138 of the NI Act. It was asserted that the

accused was dealing in the business of the sale and supply of

surgical and other items. He used to borrow money from the

complainant to augment his business. He assured the complainant

that he would set up an industry at Baddi in partnership with the

complainant. The complainant later on found that the accused was

facing financial difficulties, hence, he requested the accused to

return the borrowed amount. The accused issued a cheque of

₹6,50,000/- drawn at HDFC Bank Ltd on 07.05.2010 to discharge

his liability. The complainant presented the cheque to his bank,

but it was returned with the endorsement ‘funds insufficient’. The

complainant issued a legal notice to the accused asking him to

repay the amount. The notice was served upon the accused on

18.05.2010. The accused failed to repay the amount and sent a

reply to the notice on 04.06.2010 denying the contents of the

notice and claiming that blank signed cheques were taken by the

complainant as security. This plea was false as no blank signed

cheque was obtained by the complainant from the accused. Hence,

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it was prayed that an action be taken against the accused as per

the law.

3. The learned Trial Court found sufficient reasons to

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

accusation was put to him for the commission of an offence

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

not guilty and claimed to be tried.

4. The complainant examined himself (CW1), Bhupender

Kumar (CW2) and Ankush Sandhu (CW3) to prove his complaint.

5. The accused, in his statement recorded under Section

313 of Cr. P.C. admitted that he had received a notice and sent its

reply. He claimed that the cheque was forged by the accused. He

stated that he wanted to lead the defence evidence, but

subsequently his learned counsel made a statement on his behalf

that no evidence was to be led.

6. Learned Trial Court held that the complainant had

failed to prove that the cheque was issued to discharge the

debt/legal liability. The complainant asserted that the accused had

borrowed money from him from time to time. He had not specified

the amount advanced by him, the date, the month or the year of

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the transactions. He stated in the cross-examination that the

accused had borrowed ₹15-16 lakhs from him, but the cheque was

issued for ₹6,50,000/-. The cheque contains a presumption, but

the presumption is rebuttable, and the cross-examination of the

complainant was sufficient to rebut the presumption. Therefore,

the complaint was dismissed.

7. Being aggrieved by the judgment passed by the learned

Trial Court, the complainant filed the present appeal, asserting

that the learned Trial Court failed to appreciate the significance of

the presumption. The onus of proof was wrongly put upon the

complainant to establish the existence of the debt. The defence

taken by the accused in the cross-examination and the statement

recorded under Section 313 of Cr.P.C. was not established.

Therefore, it was prayed that the present appeal be allowed and

the judgment passed by the learned Trial Court be set aside.

8. I have heard Mr Bhupender Gupta, learned Sr.

Advocate, assisted by Mr Janesh Gupta, learned counsel, for the

appellant/complainant and Mr Pranshul Sharma, learned counsel,

for the respondent/accused.

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9. Mr Bhupender Gupta, learned Senior Counsel for the

appellant/complainant, submitted that the learned Trial Court

erred in shifting the burden of proof to the complainant. The

cheque carried with it a presumption. It was issued for

consideration to discharge the debt/liability. The burden was upon

the accused to rebut the presumption and not upon the

complainant to establish the existence of the debt/liability. The

learned Trial Court failed to appreciate the significance of the

presumption. He prayed that the present appeal be allowed and the

judgment passed by the learned Trial Court be set aside. He relied

upon the judgment of this Court in Lazi Ram Thakur versus.

Kamlender Rattan, 2024:HHC:10405, Ashwani Kumar versus. Rakesh

Kumar, 2024:HHC:9979, Kanwar Negi versus. Rajesh Kumar,

2024:HHC:9138 and Ashok Kumar vs. Daulat Ram, 2024 (Supp) SLC

2855, in support of his submission.

10. Mr Pranshul Sharma, learned counsel for the

respondent/accused, submitted that the cross-examination of the

complainant demonstrated that the complainant had no financial

capacity to advance the loan. The plea taken by him that he had

advanced the money to the accused was not supported by any

document. Learned Trial Court had taken a reasonable view while

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acquitting the accused, and no interference is required with it

while deciding the appeal against acquittal; hence, he prayed that

the present appeal be dismissed.

11. I have given considerable thought to the submissions

made at the bar and have gone through the records carefully.

12. The present appeal has been filed against a judgment of

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

Surendra Singh v. State of Uttarakhand, (2025) 5 SCC 433: 2025 SCC

OnLine SC 176 that the Court can interfere with a judgment of

acquittal if it is patently perverse, is based on misreading of

evidence, omission to consider the material evidence and no

reasonable person could have recorded the acquittal based on the

evidence led before the learned Trial Court. It was observed at page

438:

“24. It could thus be seen that it is a settled legal position that

the interference with the finding of acquittal recorded by the

learned trial Judge would be warranted by the High Court only

if the judgment of acquittal suffers from patent perversity;

that the same is based on a misreading/omission to consider

material evidence on record; and that no two reasonable views

are possible and only the view consistent with the guilt of the

accused is possible from the evidence available on record.”

13. This position was reiterated in State of M.P. v. Ramveer

Singh, 2025 SCC OnLine SC 1743, wherein it was observed:

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“21. We may note that the present appeal is one against

acquittal. Law is well-settled by a plethora of judgments of

this Court that, in an appeal against acquittal, unless the

finding of acquittal is perverse on the face of the record and

the only possible view based on the evidence is consistent

with the guilt of the accused, only in such an event, should

the appellate Court interfere with a judgment of acquittal.

Where two views are possible, i.e., one consistent with the

acquittal and the other holding the accused guilty, the

appellate Court should refuse to interfere with the

judgment of acquittal. Reference in this regard may be made

to the judgments of this Court in the cases of Babu

Sahebagouda Rudragoudarv. State of Karnataka (2024) 8 SCC

149; H.D. Sundara v. State of Karnataka (2023) 9 SCC 581, and

Rajesh Prasad v. State of Bihar (2022) 3 SCC 471.”

14. While dealing with the appeal against the acquittal in a

complaint filed for the commission of an offence punishable

under Section 138 of the NI Act the Hon’ble Supreme Court held in

Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 18 SCC 106 that the

normal rules with same rigour cannot be applied to the cases

under Negotiable Instruments Act because there is a presumption

that the holder had received the cheque for discharge of legal

liability. The Appellate Court is entitled to look into the evidence

to determine whether the accused has discharged the burden or

not. It was observed:-

12. According to the learned counsel for the appellant-

accused, the impugned judgment is contrary to the

principles laid down by this Court in Arulvelu [Arulvelum v.

State, (2009) 10 SCC 206 : (2010) 1 SCC (Cri) 288] because the

High Court has set aside the judgment of the trial court

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without pointing out any perversity therein. The said case

of Arulvelu [Arulvelum v. State, (2009) 10 SCC 206 : (2010) 1

SCC (Cri) 288] related to the offences under Sections 304-B

and 498-A IPC. Therein, on the scope of the powers of the

appellate court in an appeal against acquittal, this Court

observed as follows : (SCC p. 221, para 36)

“36. Careful scrutiny of all these judgments leads to

the definite conclusion that the appellate court should be

very slow in setting aside a judgment of acquittal,

particularly in a case where two views are possible. The

trial court judgment cannot be set aside because the

appellate court's view is more probable. The appellate

court would not be justified in setting aside the trial

court judgment unless it arrives at a clear finding on

marshalling the entire evidence on record that the

judgment of the trial court is either perverse or wholly

unsustainable in law.”

The principles aforesaid are not of much debate. In other

words, ordinarily, the appellate court will not be upsetting

the judgment of acquittal, if the view taken by the trial court

is one of the possible views of the matter and unless the

appellate court arrives at a clear finding that the judgment

of the trial court is perverse i.e. not supported by evidence

on record or contrary to what is regarded as normal or

reasonable; or is wholly unsustainable in law. Such general

restrictions are essential to remind the appellate court that

an accused is presumed to be innocent unless proven guilty

beyond a reasonable doubt, and a judgment of acquittal

further strengthens such presumption in favour of the

accused. However, such restrictions need to be visualised in

the context of the particular matter before the appellate

court and the nature of the inquiry therein. The same rule

with the same rigour cannot be applied in a matter relating

to the offence under Section 138 of the NI Act, particularly

where a presumption is drawn that the holder has received

the cheque for the discharge, wholly or in part, of any debt

or liability. Of course, the accused is entitled to bring on

record the relevant material to rebut such presumption and

to show that preponderance of probabilities are in favour of

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his defence but while examining if the accused has brought

about a probable defence so as to rebut the presumption,

the appellate court is certainly entitled to examine the

evidence on record in order to find if preponderance indeed

leans in favour of the accused.

13. For determination of the point as to whether the High

Court was justified in reversing the judgment and orders of

the trial court and convicting the appellant for the offence

under Section 138 of the NI Act, the basic questions to be

addressed are twofold: as to whether the complainant

Respondent 2 had established the ingredients of Sections

118 and 139 of the NI Act, so as to justify drawing of the

presumption envisaged therein; and if so, as to whether the

appellant-accused had been able to displace such

presumption and to establish a probable defence whereby,

the onus would again shift to the complainant?

15. The present appeal has to be decided as per the

parameters laid down by the Hon’ble Supreme Court.

16. The ingredients of the offence punishable under

Section 138 of the NI Act were explained by the Hon’ble Supreme

Court in Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, 2025

SCC OnLine SC 2019 as under:-

“5.1.1. In K.R. Indira v. Dr. G. Adinarayana(2003) 8 SCC 300,

this Court enlisted the components, aspects and the acts,

the concatenation of which would make the offence under

Section 138 of the Act complete, to be these (i) drawing of

the 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 to

the credit of the drawer or any arrangement with the banker

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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

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.”

17. The accused stated in his statement recorded under

Section 313 of the CrPC that the cheque was forged by the

complainant. However, he had sent a reply (Ex. CW-1/J) to the

notice in which he claimed that he had taken a loan of ₹4 lakhs

from the complainant and issued four blank signed cheques to the

complainant. This was the earliest version and has to be preferred

to the version in the Court. Thus, the issuance of the cheque and

the signature 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

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,

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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 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 reverse onus clause and therefore, once the issuance of

the cheque has been admitted and even the signature on the

cheque has been admitted, there is always a presumption in

favour of the complainant that there exists legally

enforceable debt or liability and thereafter, it is for the

accused to rebut such presumption by leading evidence.”

18. A similar view was taken in N. Vijay Kumar v.

Vishwanath Rao N., 2025 SCC OnLine SC 873, wherein it was held as

under:

“6. Section 118 (a) assumes that every negotiable

instrument is made or drawn for consideration, while

Section 139 creates a presumption that the holder of a

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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19. A similar view was taken in Sanjabij Tari v. Kishore S.

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

“ONCE EXECUTION OF A CHEQUE IS ADMITTED,

PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF THE NI ACT

ARISE

15. In the present case, the cheque in question has

admittedly been signed by the Respondent No. 1-Accused.

This Court is of the view that once the execution of the

cheque is admitted, the presumption under Section 118 of

the NI Act that the cheque in question was drawn for

consideration and the presumption under Section 139 of the

NI Act that the holder of the cheque received the said cheque

in discharge of a legally enforceable 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 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 a rebuttable presumption.

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].

20. 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.

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21. The accused stated in the reply (Ex. CW-1/J) that he had

borrowed ₹4 lakhs from the complainant, which he had returned.

Bhupinder Kumar (CW-2) proved the complainant’s statement of

the account (Ex. CW-2/A), which mentions the payment of ₹ 1 lakh

on 08.02.2008, ₹ 1 lakh on 12.03.2008, ₹ 15,000/- on 26.03.2008,

₹70,000/- on 31.05.2008, ₹1 lakh on 10.06.2008, ₹1 lakh on

28.07.2008, ₹50,000/- on 30.10.2008, ₹1.5 lakh on 15.11.2008,

₹50,000/- on 13.03.2009, ₹ 85,000/- on 30.04.2009, and ₹1 lakh

on 11.05.2009 to Puneet. Thus, a total amount of ₹9,20,000/- was

paid to the accused by the complainant.

22. The accused did not claim in his statement recorded

under Section 313 of CrPC that he had borrowed ₹ 4 lakhs from the

complainant, which were repaid by him. He only claimed that he

had not issued the cheque and the cheque was forged, which plea

is contrary to the reply sent by him. His statement of account

(Ext.CW-3/A) does not show that he had ₹ 4 lakh in his account.

He did not examine any witnesses to prove this plea. The

complainant denied in his cross-examination that the accused had

borrowed ₹4 lakh from him and had returned it. A denied

suggestion does not amount to any proof and was not sufficient to

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prove the return of the money. Thus, there was no evidence to

prove that the accused had repaid the borrowed money.

23. The accused claimed in the reply (Ext.CW-1/J) to the

notice that the cheques were issued as security. This plea will not

help the accused. The complainant’s statement of account proves

that the accused had borrowed ₹ 9,20,000/- from the

complainant. Thus, the accused was liable to pay ₹ 6.5 lakh to the

complainant, and the complainant had sufficient authority to

present the cheque to the bank even if it was issued as a security. It

was laid down by this Court in Hamid Mohammad Versus Jaimal

Dass 2016 (1) HLJ 456, that even if the cheque is issued towards the

security, the accused is liable. 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 for

the reasons hereinafter mentioned. As per Section 138 of the

Negotiable Instruments Act 1881, if any cheque is issued on

account of other liability, then the provisions of Section 138

of the Negotiable Instruments Act 1881 would be attracted.

The court has perused the original cheque, Ext. C-1 dated

30.10.2008, placed on record. There is no recital in the

cheque Ext. C-1, that 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

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former law and subsequent law, then subsequent law

always prevails.”

24. 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

towards security will also attract the liability for the commission

of an offence punishable under Section 138 of the NI Act. It was

observed: -

“10. We have given due consideration to the submission

advanced on behalf of the appellant as well as the

observations of this Court in Indus Airways Private Limited

versus Magnum Aviation Private Limited (2014) 12 SCC 53

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 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 distinguish-

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able. As already noted, it was held therein that liability aris-

ing 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 dis-

charge of acknowledged and admitted debt under a loan

transaction. Dishonour of a cheque issued for the discharge

of a later liability is clearly covered by the statute in ques-

tion. 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 pur-

chase order had been cancelled, and a cheque issued to -

wards advance payment for the purchase order was dishon-

oured. In that case, it was found that the cheque had not

been issued for the discharge of liability but as an advance

for the purchase order, which was cancelled. Keeping in

mind this fine, but the real distinction, the said judgment

cannot be applied to a case of the present nature, where the

cheque was for repayment of a loan instalment which had

fallen due, though such a deposit of cheques towards repay-

ment of instalments was also described as “security” in the

loan agreement. In applying the judgment in Indus Airways

(supra), one cannot lose sight of the difference between a

transaction of the purchase order which is cancelled and

that of a loan transaction where the loan has actually been

advanced, and its repayment is due on the date of the

cheque.

13. The crucial question to determine the applicability of

Section 138 of the Act is whether the cheque represents the

discharge of existing enforceable debt or liability, or

whether it represents an advance payment without there

being a subsisting debt or liability. While approving the

views of different High Courts noted earlier, this is the un-

derlying principle as can be discerned from the discussion

of the said cases in the judgment of this Court.” (Emphasis

supplied)

25. This position was reiterated in Sripati Singh v. State of

Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was

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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

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 between the parties is a sine qua non to not

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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 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.”

26. Therefore, the accused cannot escape from the liability

on the ground that he had issued the cheque as security to the

complainant.

27. It was submitted that the signatures on the cheque and

the body of the cheque are in different inks, which shows that the

cheque was filled in by the complainant. This submission will not

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

Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40:

(2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138, that a person is

liable for the commission of an offence punishable under Section

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138 of the Negotiable Instruments Act even if the cheque is filled by

some other person. 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 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.

34. 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.

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 cogent evidence to

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

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28. This position was reiterated in Oriental Bank of

Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089,

wherein it was observed:

“12. The submission, which has been urged on behalf of the

appellant, is that even assuming, as the first respondent

submits, that the details in the cheque were not filled in by

the drawer, this would not make any difference to the

liability of the drawer.

xxxxxx

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.

29. Therefore, the cheque is not bad even if it is not filled in

by the complainant.

30. The complainant admitted in his cross-examination

that he had no relationship or friendship with the accused. It was

submitted that this admission makes the complainant’s case

highly suspect, as no person would advance money to a stranger.

This submission will not help the accused because the accused did

not dispute the borrowing of money from the complainant in the

reply to the notice or the cross-examination of the complainant.

31. It was submitted that the particulars of the

advancement of the loan were not given, and the complainant’s

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version is suspect. This submission overlooks the statement of

account proved on record. Hence, failure to mention the details of

the money advanced will not be fatal to the complainant’s case.

32. Thus, the finding of the learned Trial Court holding

that the complainant had failed to prove the advancement of

money and the existence of the debt cannot be sustained.

33. Ankush Sandhu (CW-3) proved that the cheque was

dishonoured for want of funds in the account of the accused. He

proved the dishonour memo (Ext. CW-1/D). He was not cross-

examined at all, which means that his testimony was accepted by

the accused. Hence, it was duly proved that the cheque was

dishonoured with an endorsement, “insufficient funds”.

34. The accused admitted the receipt of the notice. He sent

a reply to the notice claiming that he had repaid the borrowed

money, which is not proven on record. He did not pay any money

to the complainant after the receipt of the notice. Hence, it was

duly proved on record that the accused had failed to repay the

money despite the receipt of the notice.

35. Thus, it was duly proved on record that the accused had

issued a cheque to discharge debt/liability, which was dishonoured

22

2026:HHC:14

with an endorsement, “insufficient funds, and the accused failed

to repay the amount despite the receipt of a valid notice of

demand. Hence, all the ingredients of the commission of an

offence punishable under Section 138 of the NI Act were satisfied.

36. Learned Trial Court had not noticed the reply to the

notice, and the complainant’s statement of account. Learned Trial

Court wrongly proceeded to shift the burden upon the

complainant to prove the existence of liability. This was

impermissible because of the presumption attached to the cheque.

It was laid down in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148:

2023 SCC OnLine SC 1275 that when the court failed to consider the

presumption under Section 139 of the Negotiable Instruments Act,

its judgment could be interfered with. It was observed at page 166:

54. As rightly contended by the appellant, there is a

fundamental flaw in the way both the courts below have

proceeded to appreciate the evidence on record. Once the

presumption under Section 139 was given effect to, the

courts ought to have proceeded on the premise that the

cheque was, indeed, issued in discharge of a debt/liability.

The entire focus would then necessarily have to shift to the

case set up by the accused, since the activation of the

presumption has the effect of shifting the evidential burden

on the accused. The nature of inquiry would then be to see

whether the accused has discharged his onus of rebutting

the presumption. If he fails to do so, the court can

straightaway proceed to convict him, subject to the

satisfaction of the other ingredients of Section 138. If the

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court finds that the evidential burden placed on the accused

has been discharged, the complainant would be expected to

prove the said fact independently, without taking the aid of

the presumption. The court would then take an overall view

based on the evidence on record and decide accordingly.

55. At the stage when the courts concluded that the

signature had been admitted, the court ought to have

inquired into either of the two questions (depending on the

method in which the accused has chosen to rebut the

presumption): Has the accused led any defence evidence to

prove and conclusively establish that there existed no

debt/liability at the time of issuance of cheque? In the

absence of rebuttal evidence being led, the inquiry would

entail: Has the accused proved the non-existence of

debt/liability by a preponderance of probabilities by

referring to the “particular circumstances of the case”?

56. The perversity in the approach of the trial court is

noticeable from the way it proceeded to frame a question at

trial. According to the trial court, the question to be decided

was “whether a legally valid and enforceable debt existed qua

the complainant and the cheque in question (Ext. CW I/A) was

issued in discharge of said liability/debt”. When the initial

framing of the question itself being erroneous, one cannot

expect the outcome to be right. The onus, instead of being

fixed on the accused, has been fixed on the complainant. A

lack of proper understanding of the nature of the

presumption in Section 139 and its effect has resulted in an

erroneous order being passed.

57. Einstein had famously said:

“If I had an hour to solve a problem, I'd spend 55

minutes thinking about the problem and 5 minutes

thinking about solutions.”

Exaggerated as it may sound, he is believed to have

suggested that the quality of the solution one generates is

directly proportionate to one's ability to identify the

problem. A well-defined problem often contains its own

solution within it.

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58. Drawing from Einstein's quote, if the issue had been

properly framed after careful thought and application of

judicial mind, and the onus correctly fixed, perhaps, the

outcome at trial would have been very different, and this

litigation might not have travelled all the way up to this

Court.”

37. Thus, the judgment passed by the learned Trial Court,

acquitting the accused, cannot be sustained and is set aside. The

accused is convicted of the commission of an offence punishable

under Section 138 of the NI Act. Let him be produced on 27

th

February, 2026, for hearing him on the quantum of sentence.

(Rakesh Kainthla)

Judge

1

st

January, 2026

(Nikita)