2026:HHC:17933

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. Appeal No. 4153 of 2013

Reserved on: 02.04.2026

Date of Decision: 18.05.2026

Ramesh Sharma ...Appellant

Versus

Amina Chauhan ...Respondent

Coram

Hon’ble Mr Justice Rakesh Kainthla, Judge.

Whether approved for reporting?

1

No.

For the Appellant : Mr Ashok Kumar Tyagi, Advocate.

For the Respondent : Mr Rajesh Verma, Advocate.

Rakesh Kainthla, Judge

The present appeal is directed against the judgment

dated 18.07.2013, passed by the learned Judicial Magistrate, First

Class, Nahan, District Sirmour, 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 (N I 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 before the

learned Trial Court against the accused for the commission of an

offence punishable under section 138 of the NI Act. It was

asserted that the complainant and the accused had cordial

relations. The complainant advanced an amount of ₹57,000/- to

the accused on his request, and the accused promised to return

the amount within 20 days. She issued a cheque of ₹57,000/- in

the complainant’s favour to discharge her liability. The

complainant presented the cheque before the bank , but it was

dishonoured with an endorsement ‘insufficient funds’. The

complainant told the accused about this fact, and she promised

to return the amount, but she failed to do so. The complainant

served a notice upon the accused asking her to repay the amount

within 15 days of the receipt of the notice. The notice was

returned with the endorsement ‘unclaimed’. Hence, the

complaint was filed before the Court for taking action 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 her for the commission of an offence

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punishable under section 138 of the NI Act, to which she pleaded

not guilty and claimed to be tried.

4. The parties were called upon to produce the evidence,

and the complainant examined himself (CW-1) and Pankaj

Sharma (CW-2).

5. The accused, in her statement recorded under section

313 of the Code of Criminal Procedure (CrPC), admitted that she

had a cordial relationship with the complainant’s family. She

denied the rest of the complainant’s case. She stated that she had

not maintained any account in Punjab National Bank and did not

have any cheque book. She came to know about the present case

after receiving the summons from the C ourt. She had not

received any money from the complainant and is not liable to

repay any amount. She examined Pardeep Sharma (RW-1) in her

defence.

6. The learned Trial Court held that the accused

suggested to the complainant in his cross-examination that she

had lost the cheque and reported the matter to the police, Post

Kala Amb. She failed to establish this defence by examining any

witness or producing any document. She had also not taken any

steps to stop the payment of the cheque. She did not state in her

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statement recorded under Section 313 of the Cr.P.C that she had

lost the cheque which was misused by the complainant .

Therefore, the plea taken by the accused was not probable. The

statement of the defence witness proved that the signatures on

the cheque and the specimen signatures in the bank were

different. This statement rebutted the presumption attached to

the cheque. Hence, the learned Trial Court acquitted the accused.

7. Being aggrieved by the judgment passed by the

learned Trial Court, the complainant has filed the present appeal

asserting that the learned trial Court had failed to properly

appreciate the material on record. It was duly proved on record

that the accused had issued a cheque in the complainant’s favour

to discharge her legal liability. The suggestions given to the

complainant regarding the los s of the cheque were not

corroborated by any evidence, and the learned Trial Court had

rightly rejected the defence of the accused. The cheque was

dishonoured with an endorsement ‘funds insufficient’, and the

Learned Trial Court erred in acquitting the accused because of

the difference in the signatures. Therefore, it was prayed that the

present appeal be allowed and the judgment passed by the

learned trial Court be set aside.

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8. I have heard Mr Ashok Kumar Tyagi, learned counsel

for the appellant/complainant and Mr Rajesh Verma, learned

counsel for the respondent/accused.

9. Mr Ashok Kumar Tyagi, learned counsel for the

appellant/complainant, submitted that the learned Trial Court

erred in acquitting the accused on the ground of a difference in

signatures. The dishonour of the cheque due to signature

mismatch would attract the provisions of 138 of the NI Act, and

the learned Trial Court did not consider this aspect. The

complainant’s evidence proved that the accused had issued a

cheque in favour of the complainant to discharge her legal

liability. All the ingredients of the commission of an offence

punishable under section 138 of the NI Act were duly satisfied.

Therefore, he prayed that the present appeal be allowed and the

judgment passed by the learned Trial Court be set aside.

10. Mr Rajesh Verma , learned counsel for the

respondent/accused, submitted that the signatures on the

cheque differed from the signatures in the bank , which

supported the defence taken by the accused that she had lost her

cheque book, which was misused by the complainant. Learned

Trial Court had taken a reasonable view, and this court should

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not interfere with the reasonable view of the learned Trial Court,

even if another view is possible. 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 SCC OnLine SC 176:

(2025) 5 SCC 433 that the Court can interfere with a judgment of

acquittal if it is patently perverse, is based on

misreading/omission to consider the material evidence and

reached at a conclusion which no reasonable person could have

reached. It was observed at page 440:

“12. 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 P. Somaraju v. State of

A.P., 2025 SCC OnLine SC 2291, wherein it was observed:

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“ 12. To summarise, an Appellate Court undoubtedly has

full power to review and reappreciate evidence in an

appeal against acquittal under Sections 378 and 386 of the

Criminal Procedure Code, 1973. However, due to the

reinforced or ‘double’ presumption of innocence after

acquittal, interference must be limited. If two reasonable

views are possible on the basis of the record, the acquittal

should not be disturbed. Judicial intervention is only

warranted where the Trial Court's view is perverse, based

on misreading or ignoring material evidence, or results in

a manifest miscarriage of justice. Moreover, the Appellate

Court must address the reasons given by the Trial Court

for acquittal before reversing it and assigning its own. A

catena of the recent judgments of this Court has more

firmly entrenched this position, including, inter alia,

Mallappa v. State of Karnataka 2024 INSC 104, Ballu @

Balram @ Balmukund v. The State of Madhya Pradesh 2024

INSC 258, Babu Sahebagouda Rudragoudar v. State of

Karnataka 2024 INSC 320, and Constable 907 Surendra

Singh v. State of Uttarakhand 2025 INSC 114.”

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

consideration to discharge the debt/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: -

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“12…. 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 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?”

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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 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 complainant supported the contents of the

complaint in his statement on oath. He stated in his cross -

examination that he has an orchard at Haripur Khol, which is in

his family’s name. He also has a shop of spare parts at Ranital.

He also filed the Income Tax returns, but had not filed the copies

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of the income tax returns on record. He denied that the accused

had lost the cheque (Ext.C-1), and she has reported the matter to

the Police Post. He denied that the cheque d id not bear the

signatures of the accused, that he had forged the signatures of

the accused, that he had not paid money to the accused or that he

had filed a false complaint before the Court.

18. The cross-examination of the complainant shows

that the accused had taken a defence of the misuse of the lost

cheque. Learned Trial Court had rightly held that this defence

was not established. The complainant denied suggestions made

to him about the loss of the cheque and denied suggestions do

not amount to any proof. The accused claimed in her statement

recorded under Section 313 of the Cr.P.C. that she did not have

any account in Punjab National Bank, and she did not have any

cheque book with her, so the question of issuance of a cheque did

not arise. This plea was falsified by the statement of Pardeep

Sharma (RW-1). He brought the specimen signatures of the

accused to the Court and exhibited a copy (R-1), which clearly

shows that the accused had a bank account with the bank and a

cheque was issued to her.

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19. The complainant stated that he had a cordial

relationship with the family of the accused. The accused admitted

in reply to question No.2 in her statement recorded under Section

313 of Cr.P.C. that she had a cordial relationship with the

complainant’s family. She subsequently stated that she did not

know the complainant, and she knew the complainant by face.

These contradictory statements under Section 313 of the Cr.P.C.

would shake the credibility of the accused.

20. Therefore, the explanation provided by the accused

that she had lost the cheque, or she did not have any account with

the bank or no cheque book was issued to her , was not

established, and the complainant’s version is to be accepted as

correct that the cheque was issued to him by the accused in

discharge of her liability.

21. It was laid down in N. Vijay Kumar v. Vishwanath Rao

N., 2025 SCC OnLine SC 873 , that a cheque carries with it

presumptions that it was issued for consideration to discharge

debt/liability. It was observed:

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

instrument is made or drawn for consideration, wh ile

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,

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meaning they can be rebutted by the accused by raising a

probable defence.”

22. 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.

23. Learned Trial Court heavily relied upon the statement

of Pardeep Sharma and the specimen signatures (Ext. R-1)

produced by him to conclude that the signatures on the cheque

and the specimen signatures differed from each other, which was

sufficient to rebut the presumption attached to the cheque. This

conclusion cannot be sustained. It was laid down by the Hon’ble

Supreme Court in Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC

375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970, that the

dishonour of a cheque with an endorsement of signature

mismatch attracts the provisions of section 138 of N.I. Act. It was

observed at page 388: -

16. The above line of decisions leaves no room for holding

that the two contingencies envisaged under Section 138 of

the Act must be interpreted strictly or literally. We find

ourselves in respectful agreement with the decision in the

Magma case [(1999) 4 SCC 253: 1999 SCC (Cri) 524] that the

expression “amount of money … is insufficient” appearing

in Section 138 of the Act is a genus and dishonour for

reasons such “as account closed”, “payment stop ped”,

“referred to the drawer” are only species of that genus.

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Just as dishonour of a cheque on the ground that the account

has been closed is a dishonour falling in the first contingency

referred to in Section 138, so also dishonour on the ground

that the “signatures do not match” or that the “image is not

found”, which too implies that the specimen signatures do not

match the signatures on the cheque would constitute a

dishonour within the meaning of Section 138 of the Act.”

(Emphasis supplied)

24. Karnataka High Court held in Peeranbi v. Hajimalang,

2013 SCC OnLine Kar 10420: (2013) 2 Kant LJ 569 : (2013) 3 KCCR

2223 : (2014) 1 AIR Kant R 405 : (2013) 3 BC 532 : (2014) 5 RCR (Cri)

757 that the dishonour of the cheque due to signature mismatch

will attract penal liability under Section 138 of the NI Act. It was

observed:

“9. In the facts and circumstances, as rightly contended by

the learned Counsel for the appellant, the cheque, having

been drawn on the account of the respondent, is not in

dispute. However, it is the defence set up that there was a

business relationship between the appellant and the

respondent, and the appellant could have accessed a

cheque leaf belonging to the respondent, which is sought

to be misused. In this regard, there is no positive evidence

put forward by the respondent. In other words, in terms of

Section 139, the presumption is in favour of the holder of

the cheque of the same having been issued by the account

holder in discharge of a legal liability. It is for the person

issuing the cheque to prove otherwise. This, the Apex

Court has held in the case of Rangappa v. Sri Mohan. [AIR

2010 SC 1898 : (2010) 11 SCC 441 : (2011) 1 SCC (Cri) 184: 2010

Cri. L.J. 2871 (SC)] That, not only is it possible for the

accused to establish this by leading positive evidence, but

he could also place reliance on the evidence tendered by

the complainant himself to discharge that burden. Hence,

if it was the contention of the respondent that there were

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cheque leaves misplaced by him and which were sought to

be misused by the appellant, it was for the respondent to

have tendered evidence of the approximate date when

there was a dissolution of the partnership business

between the appellant and the respondent, and the

respondent having operated his Bank Account thereafter

using other cheque leaves and that the cheque leaves

which were left behind upon such dissolution having

fallen into disuse over a period of time, sought to be

forged and fabricated at a later date by the appellant, was

clearly on the respondent. There is no such evidence

forthcoming except the self-serving evidence of the

respondent. Further, in the event that any such cheque

leaves were misused, a duty was cast on the respondent to

inform his banker to stop payment, against such cheques

which were lost or misplaced. There is no such evidence

forthcoming. Nor is it the case of the respondent that the

cheques being misplaced, he had reported to the nearest

Police Station of such loss. There was no demand made on

the appellant to return such cheque leaves left behind.

Therefore, the evidence of the respondent was clearly

self-serving, and it was a burden cast on the respondent to

establish the fact that there were cheque leaves which

were left behind, and it was possible for the appellant to

misuse the same. If once it is apparent that the cheque had

been issued on the account held by the respondent, the

presumption under Section 139 is clearly in favour of the

appellant to establish that it was forged by the accused.

The burden is clearly on the respondent, and it is not for

the appellant to establish that the respondent had

deliberately changed his signature in order that it would

be dishonoured by his Bank. This may indeed have been

the intention in changing his signature at the time of

issuing the cheque. As already stated, the burden to

establish that it was lost and that it has been misused by

the appellant was clearly on the respondent. The Court

below has also committed an error in holding that the

liability in respect of which the cheque had been issued

was required to be proved by the appellant. The

proceedings were not in the nature of a suit for recovery of

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money but for prosecution of an offence punishable under

Section 138 of the NI Act. The limited scope of those

proceedings is whether there was dishonour of the cheque

issued by the accused. That aspect of the matter has been

established on the face of it. Therefore, the Court below

has clearly committed an error in addressing the case of

the complainant and in dismissing the complain t.

Consequently, the appeal is allowed. The complainant has

established his case beyond a reasonable doubt. The

respondent, therefore, is liable for punishment.

Accordingly, he shall pay a fine of Rs. 3,50,000/- in default

of which, the respondent shall su ffer simple

imprisonment for a period of six months. The fine amount

shall be paid forthwith, in any event, within a period of 15

days. Out of the fine amount, a sum of Rs. 3,40,000/- shall

be paid as compensation to the appellant.”

25. Madras High Court also held in R. Manimehalai v.

Banumathi, 2018 SCC OnLine Mad 13802, that the dishonour of a

cheque due to signature mismatch attracts the provision of

Section 138 of the NI Act. It was observed:

“10…. It is true that the impugned cheque was returned on

two grounds, namely, (a) insufficient funds, and (b) the

signature of the drawer differs. On receipt of the statutory

notice, dated 31.12.2013, [EX-P3] from the complainant,

the accused has sent a belated reply notice, dated

17.3.2014, [EX-P5], in which the accused also did not take

the plea that her signature has been forged in the cheque.

She has taken a plea that the impugned cheque was issued

by her for a different debt. The accused took pains to

examine Ganeshamoorthy, Senior Manager of Syndicate

Bank, in which the accused has an account, to say that the

signature in the cheque differed from the specimen

signature with the Bank. This only shows that the accused

had deliberately put her signature differently in the

impugned cheque with the intention of ch eating the

complainant. However, a charge of cheating has not been

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framed against the accused. This conduct of the accused in

giving the cheque by affixing her signature differently is

relevant under Section 8 of the Indian Evidence Act, 1872.

The presumption under. Section 139 of the Negotiable

Instruments Act, 1881, comes into force, when once the

cheque has been issued by the accused for the debt in

question. Of course, this is a rebuttable presumption and

the same can be dislodged by the accused by

preponderance of probabilities and not by proof beyond

reasonable doubt, as held by the Supreme Court

in Rangappa v. Sri Mohan, (2010) 2 BC 693 (SC): II (2010)

CCR 433 (SC) : (2010) 4 SLT 56 : (2010) 2 DLT (Cri) 699 (SC)

: (2010) 11 SCC 441. In this case, the accused has failed to

discharge her burden even by a preponderance of

probabilities. She was trying to take advantage of the

difference in signature in order to wriggle out of the

prosecution…”

26. Therefore, the difference in the signatures will not

result in the acquittal of the accused.

27. It was submitted on behalf of the accused that the

difference in signatures corroborates the plea taken by the

accused that she had lost her cheque book, which was misused by

the complainant by forging her signature. This submission is

only stated to be rejected. It has been held that the plea of the

accused regarding the loss of the cheque is not established, and

the difference in the signatures cannot be used to conclude that

the accused had lost her cheque.

28. The evidence of the accused is not sufficient to rebut

the presumption attached to the cheque. She had taken

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contradictory pleas and had not succeeded in establishing them.

Therefore, the learned Trial Court had erred in holding that the

accused had rebutted the presumption attached to the cheque.

29. The complainant asserted that the cheque was

dishonoured with an endorsement ‘insufficient funds’. This is

corroborated by the memo (Ext.C-2), wherein the reason for the

dishonour of the cheque has been me ntioned as ‘funds

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

Mandvi Cooperative Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC

83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1: 2010 SCC OnLine SC

155 that the memo issued by the Bank is presumed to be correct

and the burden is upon the accused to rebut the presumption. It

was observed at page 95:

24. Section 146, making a major departure from the

principles of the Evidence Act, provides that the bank's

slip or memo with the official mark showing that the

cheque was dishonoured would, by itself, give rise to the

presumption of dishonour of the cheque, unless and until

that fact was disproved. Section 147 makes the offences

punishable under the Act compoundable.

30. In the present case, no evidence was produced to

rebut the presumption, and it is held that the cheque was

dishonoured with an endorsement ‘insufficient funds.’

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31. The complainant stated that he had issued a notice to

the accused, which was returned with the endorsement

‘unclaimed’. This is duly corroborated by the envelope (Ext.C7),

which bears an endorsement of unclaimed. It also bears the

endorsements of not met, and out of station. It was laid down by

the Supreme Court in D. Vinod Shivappa v. Nanda Belliappa, (2006)

6 SCC 456 that where a notice is returned with the endorsement

not met or unclaimed, it is deemed to be served. It was observed

at page 462:

“14. If a notice is issued and served upon the drawer of the

cheque, no controversy arises. Similarly, if the notice is

refused by the addressee, it may be presumed to have been

served. This is also not disputed. This leaves us with the

third situation where the notice could not be served on the

addressee for one or the other reason, such as his non-

availability at the time of delivery, or premises remaining

locked on account of his having gone elsewhere, etc. etc. If

in each such case the law is understood to mean that there

has been no service of notice, it would completely defeat

the very purpose of the Act. It would then be very easy for

an unscrupulous and dishonest drawer of a cheque to

make himself scarce for some time after issuing the

cheque so that the requisite statutory notice can never be

served upon him, and consequently, he can never be

prosecuted. There is good authority to support the

proposition that once the complainant, the payee of the

cheque, issues notice to the drawer of the cheque, the

cause of action to file a complaint arises on the expiry of

the period prescribed for payment by the drawer of the

cheque. If he does not file a complaint within one month of

the date on which the cause of action arises under clause

(c) of the proviso to Section 138 of the Act, his complaint

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gets barred by time. Thus, a person who can dodge the

postman for about a month or two, or a person who can

get a fake endorsement made regarding his non -

availability, can successfully avoid his prosecution

because the payee is bound to issue notice to him within a

period of 30 days from the date of receipt of information

from the bank regarding the return of the cheque as

unpaid. He is, therefore, bound to issue the legal notice,

which may be returned with an endorsement that the

addressee is not available at the given address.

xxxxx

18. This Court noticed the position well settled in law that

the notice refused to be accepted by the drawer can be

presumed to have been served on him. In that case , the

notice was returned as “unclaimed” and not as refused.

The Court posed the question, “Will there be any

significant difference between the two so far as the

presumption of service is concerned?” Their Lordships

referred to Section 27 of the General Clauses Act and

observed that the principle incorporated therein could

profitably be imported in a case where the sender had

dispatched the notice by post with the correct address

written on it. Then it can be deemed to have been served

on the sendee, unless he proves that it was not really

served and that he was not responsible for such non -

service. This Court dismissed the appeal preferred by the

drawer, holding that where the notice is returned by the

addressee as unclaimed, such date of return to the sender

would be the commencing date in reckoning the period of

15 days contemplated in clause (c) of the proviso to Section

138 of the Act. This would be without prejudice to the right

of the drawer of the cheque to show that he had no

knowledge that the notice was brought to his address.

Since the appellant did not attempt to discharge the

burden to rebut the aforesaid presumption, the appeal was

dismissed by this Court. The aforesaid decision is

significant for two reasons. Firstly, it was held that the

principle incorporated in Section 27 of the General Clauses

Act would apply in a case where the sender dispatched the

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notice by post with the correct address written on it, but

that would be without prejudice to the right of the drawer

of the cheque to show that he had no knowledge that the

notice was brought to his address.”

32. It was laid down by the Hon’ble Supreme Court of

India in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555, that

when a notice is returned unclaimed, it is deemed to be served. It

was observed:

“8. Since in Bhaskaran's case (supra), the notice issued in

terms of Clause (b) had been returned unclaimed and not

as refused, the Court, posed the question: "Will there be

any significant difference between the two so far as the

presumption of service is concerned?" It was observed

that though Section 138 of the Act does not require that the

notice should be given only by "post", yet in a case where

the sender has dispatched the notice by post with the

correct address written on it, the principle incorporated in

Section 27 of the General Clauses Act, 1897 (for short 'G.C.

Act') could profitably be imported in such a case. It was

held that in this situation service of notice is deemed to

have been effected on the sendee unless he proves that it

was not really served and that he was not responsible for

such non-service.”

33. This position was reiterated in Priyanka Kumari vs.

Shailendra Kumar (13.10.2023- SC Order): MANU/ SCOR/ 133284/

2023, wherein it was observed:

“As it was held by the Hon'ble Supreme Court in K.

Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, (1999)

7 Supreme Court Cases 510, that when notice is returned as

'unclaimed', it shall be deemed to be duly served upon the

addressee, and it is a proper service of notice. In the case

of Ajeet Seeds Limited Vs. K. Gopala Krishnaiah (2014) 12 SCC

685 (2014), the Hon'ble Court, while interpreting Section

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27 of the General Clauses Act 1897 and also Section 114 of

the Evidence Act 1872, held as under: -

"Section 114 of the Evidence Act, 1872, enables the

court to presume that in the common course of

natural events, the communication sent by post

would have been delivered at the address of the

addressee. Further, Section 27 of the General

Clauses Act, 1897 gives rise to a presumption that

service of notice has been effected when it is sent to

the correct address by registered post. It is not

necessary to aver in the complaint that, despite the

return of the notice unserved, it is deemed to have

been served or that the addressee is deemed to have

knowledge of the notice. Unless and until the

contrary is proved by the addressee, service of

notice is deemed to have been effected at the time at

which the letter would have been delivered in the

ordinary course of business."

34. A similar view was taken in Krishna Swaroop Agarwal

v. Arvind Kumar, 2025 SCC OnLine SC 1458, wherein it was

observed:

“13. Section 27 of the General Clauses Act, 1887,

deals with service by post:

“27. Meaning of Service by post.-Where any

[Central Act] or Regulation made after the

commencement of this Act authorizes or

requires any document to be served by post,

whether the expression “serve” or either of the

expressions “give” or “send” or any other

expression is used, then, unless a different

intention appears, the service shall be deemed

to be effected by properly addressing, pre -

paying and posting by registered post, a letter

containing the docum ent, and, unless the

contrary is proved, to have been effected at the

time at which the letter would be delivered in

the ordinary course of post”.

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14. The concept of deemed service has been discussed

by this Court on various occasions. It shall be useful to

refer to some instances:14.1 In Madan and Co. v. Wazir

Jaivir Chand (1989) 1 SCC 264, which was a case

concerned with the payment of arrears of rent under

the J&K Houses and Shops Rent Control Act, 1966. The

proviso to Section 11, which is titled “Protection of a

Tenant against Eviction”, states that unless the

landlord serves notice upon the rent becoming due,

through the Post Office under a registered cover, no

amount shall be deemed to be in arrears. Regarding

service of notice by post, it was observed that in order

to comply with the proviso, all that is within the

landlord's domain to do is to post a pre -paid

registered letter containing the correct address and

nothing further. It is then presumed to be delivered

under Section 27 of the GC Act. Irrespective of whether

the addressee accepts or rejects, “there is no difficulty,

for the acceptance or refusal can be treated as a service on,

and receipt by the addressee.”

14.2 In the context of Section 138 of the Negotiable

Instruments Act, 1881, it was held that when the payee

dispatches the notice by registered post, the

requirement under Clause (b) of the proviso of Section

138 of the NI Act stands complied with and the cause of

action to file a complaint arises on the expiry of that

period prescribed in Clause (c) thereof. [See: C.C. Alavi

Haji v. Palapetty Mouhammed (2007) 6 SCC 555]

14.3 The findings in C.C. Alavi (supra) were followed in

Vishwabandhu v. Srikrishna (2021) 19 SCC 549. In this case,

the summons issued by the Registered AD post was

received back with endorsement “refusal”. In accordance

with Sub-Rule (5) of Order V Rule 9 of CPC, refusal to

accept delivery of the summons would be deemed to be due

service in accordance with law. To substantiate this view, a

reference was made to the judgment referred to supra.

14.4 A similar position as in C.C. Alavi (supra) stands

adopted by this Court in various judgments of this Court in

Greater Mohali Area Development Authority v. Manju Jain

(2010) 9 SCC 157; Gujarat Electricity Board v. Atmaram

Sungomal Posani (1989) 2 SCC 602; CIT v. V. K. Gururaj (1996)

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7 SCC 275; Poonam Verma v. DDA (2007) 13 SCC 154; Sarav

Investment & Financial Consultancy (P) Ltd. v. Lloyds Register

of Shipping Indian Office Staff Provident Fund (2007) 14 SCC

753; Union of India v. S.P. Singh (2008) 5 SCC 438; Municipal

Corpn., Ludhiana v. Inderjit Singh (2008) 13 SCC 506; and V.N.

Bharat v. DDA (2008) 17 SCC 321.

35. In the present case, the accused has not proved that

she was not responsible for the non-service of the notice;

therefore, it is duly proved that the notice was duly served upon

the accused.

36. In any case, 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 complaint. 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 the summons 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

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under Section 138, by ignoring the statutory presumption to

the contrary under Section 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 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)

37. The accused did not claim that she 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 deemed receipt of the notice.

38. Therefore, it was duly proved before the learned Trial

Court that the accused had issued a cheque to discharge her legal

liability, the cheque was dishonoured with an endorsement

‘insufficient funds’, and the accused failed to pay the money

despite the deemed receipt of a notice of demand. Hence, all the

ingredients of the offence punishable under Section 138 of the NI

Act were duly satisfied. Learned Trial Court had failed to

appreciate the significance of the presumption and the manner of

its rebuttal. 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

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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 activa tion 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 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 the 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

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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.

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.”

43. Therefore, the judgment of the learned Trial Court

cannot be sustained and is liable to be set aside.

44. In view of the above, the present appeal is allowed,

and the accused is convicted of the commission of an offence

punishable under section 138 of the NI Act. She be produced

before the Court for hearing her on the quantum of sentence on

03.06.2026.

( Rakesh Kainthla)

18

th

May 2026 Judge

(ravinder)