2026:HHC:43

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. Revision No. 129 of 2024

Reserved on: 16.12.2025

Date of Decision: 01.01.2026

Ravinder Kumar ...Petitioner

Versus

State of H.P. & another ...Respondents

Coram

Hon’ble Mr Justice Rakesh Kainthla, Judge.

Whether approved for reporting?

1

Yes.

For the Petitioner : Mr M.A. Khan, Senior Advocate, with

Mr. Azmat Hayat Khan, Advocate.

For the Respondents : Mr Tarun Pathak, Deputy Advocate

General, for respondent No.1.

Mr. Yuyutsu Thakur and Manish

Thakur, Advocates, for respondent

No.2.

Rakesh Kainthla, Judge

The present revision is directed against the judgment

dated 18.01.2024, passed by learned Sessions Judge, Hamirpur,

H.P. (learned Appellate Court) vide which the judgment of

conviction 26.08.2023 and order of sentence dated 31.08.2023

passed by learned Judicial Magistrate First Class, Court No.3,

Hamirpur, H.P. (learned Trial Court) were upheld. (Parties shall

1

Whether reporters of Local Papers may be allowed to see the judgment? Yes.

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hereinafter be referred to in the same manner as they were arrayed

before the learned Trial Court for convenience.)

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

revision are that the complainant filed a complaint against the

accused before the learned Trial Court for the commission of an

offence punishable under Section 138 of the

Negotiable Instruments Act (NI Act). It was asserted that the

accused agreed to sell the land to the complainant. An agreement

dated 17.08.2017 was executed between the parties. The

complainant paid ₹2,00,000/- out of the total sale consideration

of ₹2,50,000/-. The accused undertook to execute the sale deed or

return double the amount of the advance received by him in case

of failure to do so. The accused failed to execute the sale deed, and

he issued a cheque for ₹2,50,000/- in favour of the complainant

on 21.10.2020. The complainant presented the cheque to the bank,

but it was returned with the endorsement ‘account blocked’. The

complainant served a legal notice upon the accused asking him to

repay the money within 15 days from the date of receipt of the

notice. The accused failed to repay the money. Hence, the

complaint was filed against the accused for taking action as per

the law.

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3. 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 Chandan Bobby (CW-1),

Tanuj Rathore (CW-2) and himself (CW-3).

5. The accused, in his statement recorded under Section

313 of Cr.P.C., admitted that he had agreed with the complainant to

execute the sale deed. He admitted that the notice was served upon

him. He claimed that he had issued a blank security cheque, and a

false case was made against him. He examined himself (DW-1) to

prove his defence.

6. Learned Trial Court held that the issuance of the cheque

was not disputed, and a presumption arose that the cheque was

issued for consideration to discharge the debt/liability. The

accused admitted that an agreement was executed between the

parties. The sale deed was not executed, and the accused was liable

to return the advance taken by him. The cheque was dishonoured

with an endorsement ‘account blocked’. The cheque issued as a

security also attracts an offence punishable under Section 138 of

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N.I. Act on its dishonour. The notice was duly served upon the

accused, and the accused failed to repay the amount; hence, the

accused was convicted of the commission of an offence punishable

under Section 138 of the N.I. Act and was sentenced to undergo

simple imprisonment for six months, pay a fine of ₹4,00,000/-

and undergo further simple imprisonment for one month in

default of payment of fine. It was ordered that out of the fine

amount so realized ₹3,90,000/-be disbursed to the complainant

as compensation, and ₹10,000/- be disbursed to the State.

7. Being aggrieved by the judgment and order passed by

the learned Trial Court, the accused filed an appeal, which was

decided by the learned Sessions Judge, Hamirpur, H.P. (learned

Appellate Court). Learned Appellate Court concurred with the

findings recorded by the learned Trial Court that the issuance of

the cheque was admitted, and a presumption would be attracted

that the cheque was issued for consideration to discharge the

debt/liability. The burden would shift upon the accused to rebut

the presumption. His evidence was not sufficient to rebut the

presumption. The accuse d admitted that an agreement was

executed between the parties to sell the land. The plea taken by the

accused that he was a General Power of Attorney holder of Shakti

Chand and had issued a security cheque was not sufficient to rebut

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the presumption. The c heque was dishonoured with an

endorsement ‘account blocked’, and the accused failed to repay

the amount despite the receipt of a valid notice of demand. All the

ingredients of the commission of an offence punishable under

Section 138 of the NI Act were duly satisfied. The learned Trial

Court had imposed an adequate sentence, and no interference was

required with it; hence, the appeal was dismissed.

8. Being aggrieved by the judgments and order passed by

the learned Courts below, the accused filed the present revision,

asserting that the learned Courts below erred in appreciating the

material placed on record. The complainant has failed to prove the

payment of the money to the accused. The cheque was issued as

security, and the accused was not liable. Therefore, it was prayed

that the present revision be allowed and the judgments and order

passed by the learned Courts below be set aside.

9. I have heard Mr M.A Khan, lear ned Senior Counsel,

assisted by Mr Azmat Hayat Khan, learned counsel for the

petitioner, Mr Tarun Pathak, learned Deputy Advocate General, for

respondent No.1/State and M/s Yuyutsu Thakur and Manish

Thakur, learned counsel for respondent No.2/complainant.

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10. Mr M.A. Khan, learned Senior Counsel appearing on

behalf of the petitioner/accused, submitted that the accused was

acting under a General Power of Attorney of Shakti Chand. The

accused had disclosed the name of Shakti Chand to the

complainant. Section 230 of the Indian Contract Act exempts the

agent from personal liability. Hence, the accused could not have

been held liable for the cheque issued as an agent. He prayed that

the present revision petition be allowed and the judgments and

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

upon the judgment of this Court in Ravinder Kumar vs. State of H.P.

2025: HHC:28730 in support of his submission.

11. Mr Tarun Pathak, learned Deputy Advocate General, for

respondent No.1/State submitted that the present dispute

concerns the private parties and he has nothing to submit in the

present case.

12. Mr Yuyutsu Thakur, learned counsel for respondent

No.2, submitted that the judgment of this Court in Ravinder Kumar

(supra) is per incuriam as this Court had failed to take notice of

Section 28 of the NI Act, which exempts the agent only on the

disclosure in the instrument itself that he was acting on behalf of

the principal. The accused has not indicated anything in the

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cheque that he was acting on behalf of Shakti Chand . Mere

knowledge of the agency is not sufficient to absolve him from

liability. Both the learned Courts below have concurrently held

that all the ingredients of the commission of an offence

punishable under Section 138 of the NI Act were duly satisfied, and

this Court should not interfere with the concurrent findings of

fact. Hence, he prayed that the present revision be dismissed. He

has also filed a written synopsis, which has been perused by me.

13. I have given considerable thought to the submissions

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

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

Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022)

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

not an appellate court and it can only rectify the patent defect,

errors of jurisdiction or the law. It was observed at page 207: -

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

the outset, it is apt to mention that there are concurrent

findings of conviction arrived at by two courts after a

detailed appreciation of the material and evidence brought

on record. The High Court in criminal revision against

conviction is not supposed to exercise the jurisdiction like

the appellate court, and the scope of interference in revision

is extremely narrow. Section 397 of the Criminal Procedure

Code (in short “CrPC”) vests jurisdiction to satisfy itself or

himself as to the correctness, legality or propriety of any

finding, sentence or order, recorded or passed, and as to the

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regularity of any proceedings of such inferior court. The

object of the provision is to set right a patent defect or an

error of jurisdiction or law. There has to be a well-founded

error that is to be determined on the merits of individual

cases. It is also well settled that while considering the same,

the Revisional Court does not dwell at length upon the facts

and evidence of the case to reverse those findings.

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

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

1294, wherein it was observed at page 695:

“14. The power and jurisdiction of the Higher Court under

Section 397 CrPC, which vests the court with the power to

call for and examine records of an inferior court, is for the

purposes of satisfying itself as to the legality and

regularities of any proceeding or order made in a case. The

object of this provision is to set right a patent defect or an

error of jurisdiction or law or the perversity which has crept

in such proceedings.

15.It would be apposite to refer to the judgment of this

Court in Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460:

(2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986, where the

scope of Section 397 has been considered and succinctly

explained as under: (SCC p. 475, paras 12-13)

“12. Section 397 of the Code vests the court with the

power to call for and examine the records of an

inferior court for the purposes of satisfying itself as to

the legality and regularity of any proceedings or order

made in a case. The object of this provision is to set

right a patent defect or an error of jurisdiction or law.

There has to be a well-founded error, and it may not

be appropriate for the court to scrutinise the orders,

which, upon the face of it, bear a token of careful

consideration and appear to be in accordance with law.

If one looks into the various judgments of this Court, it

emerges that the revisional jurisdiction can be invoked

where the decisions under challenge are grossly

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erroneous, there is no compliance with the provisions

of law, the finding recorded is based on no evidence,

material evidence is ignored, or judicial discretion is

exercised arbitrarily or perversely. These are not

exhaustive classes, but are merely indicative. Each

case would have to be determined on its own merits.

13. Another well-accepted norm is that the revisional

jurisdiction of the higher court is a very limited one

and cannot be exercised in a routine manner. One of

the inbuilt restrictions is that it should not be against

an interim or interlocutory order. The Court has to

keep in mind tha t the exercise of revisional

jurisdiction itself should not lead to injustice ex facie.

Where the Court is dealing with the question as to

whether the charge has been framed properly and in

accordance with law in a given case, it may be

reluctant to interfere in the exercise of its revisional

jurisdiction unless the case substantially falls within

the categories aforestated. Even the framing of the

charge is a much-advanced stage in the proceedings

under CrPC.”

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

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

SC 651 that it is impermissible for the High Court to reappreciate

the evidence and come to its conclusions in the absence of any

perversity. It was observed at page 169:

“12. This Court has time and again examined the scope of

Sections 397/401 CrPC and the grounds for exercising the

revisional jurisdiction by the High Court. In State of Kerala v.

Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452:

1999 SCC (Cri) 275, while considering the scope of the

revisional jurisdiction of the High Court, this Court has laid

down the following: (SCC pp. 454-55, para 5)

5. … In its revisional jurisdiction, the High Court can

call for and examine the record of any proceedings to

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satisfy itself as to the correctness, legality or

propriety of any finding, sentence or order. In other

words, the jurisdiction is one of supervisory

jurisdiction exercised by the High Court for correcting

a miscarriage of justice. But the said revisional power

cannot be equated with the power of an appellate

court, nor can it be treated even as a second appellate

jurisdiction. Ordinarily, therefore, it would not be

appropriate for the High Court to reappreciate the

evidence and come to its conclusion on the same when

the evidence has already been appreciated by the

Magistrate as well as the Sessions Judge in appeal,

unless any glaring feature is brought to the notice of

the High Court which would otherwise tantamount to

a gross miscarriage of justice. On scrutinising the

impugned judgment of the High Court from the

aforesaid standpoint, we have no hesitation in

concluding that the High Court exceeded its

jurisdiction in interfering with the conviction of the

respondent by reappreciating the oral evidence. …”

13. Another judgment which has also been referred to and

relied on by the High Court is the judgment of this Court in

Sanjaysinh Ramrao Chavanv. Dattatray Gulabrao Phalke,

(2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court held that

the High Court, in the exercise of revisional jurisdiction,

shall not interfere with the order of the Magistrate unless it

is perverse or wholly unreasonable or there is non -

consideration of any relevant material, the order cannot be

set aside merely on the ground that another vi ew is

possible. The following has been laid down in para 14: (SCC

p. 135)

“14. … Unless the order passed by the Magistrate is

perverse or the view taken by the court is wholly

unreasonable or there is non -consideration of any

relevant material or there is palpable misreading of

records, the Revisional Court is not justified in setting

aside the order, merely because another view is possible.

The Revisional Court is not meant to act as an appellate

court. The whole purpose of the revisional jurisdiction is

to preserve the power in the court to do justice in

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accordance with the principles of criminal jurisprudence.

The revisional power of the court under Sections 397 to

401 CrPC is not to be equated with that of an appeal.

Unless the finding of the court, whose decision is sought

to be revised, is shown to be perverse or untenable in law

or is grossly erroneous or glaringly unreasonable or

where the decision is based on no material or where the

material facts are wholly ignored or where the judicial

discretion is exercised arbitrarily or capriciously, the

courts may not interfere with the decision in exercise of

their revisional jurisdiction.”

17. A similar view was taken in Bir Singh v. Mukesh Kumar,

(2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019

SCC OnLine SC 13, wherein it was observed at page 205:

“16. It is well settled that in the exercise of revisional

jurisdiction under Section 482 of the Criminal Procedure

Code, the High Court does not, in the absence of perversity,

upset concurrent factual findings. It is not for the Revisional

Court to re-analyse and re-interpret the evidence on record.

17. As held by this Court in Southern Sales &

Servicesv.Sauermilch Design and Handels GmbH, (2008) 14

SCC 457, it is a well-established principle of law that the

Revisional Court will not interfere even if a wrong order is

passed by a court having jurisdiction, in the absence of a

jurisdictional error. The answer to the first question is,

therefore, in the negative.”

18. This position was reiterated in Sanjabij Tari v. Kishore S.

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

“27. It is well settled that in exercise of revisional

jurisdiction, the High Court does not, in the absence of

perversity, upset concurrent factual findings [See: Bir

Singh(supra)]. This Court is of the view that it is not for the

Revisional Court to re-analyse and re-interpret the

evidence on record. As held by this Court in Southern Sales &

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Services v. Sauermilch Design and Handels GMBH, (2008) 14

SCC 457, it is a well-established principle of law that the

Revisional Court will not interfere, even if a wrong order is

passed by a Court having jurisdiction, in the absence of a

jurisdictional error.

28. Consequently, this Court is of the view that in the

absence of perversity, it was not open to the High Court in

the present case, in revisional jurisdiction, to upset the

concurrent findings of the Trial Court and the Sessions

Court.

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

parameters laid down by the Hon’ble Supreme Court.

20. The accused Ravinder Kum ar (DW-1) admitted his

signature on the cheque (Ext.C1) in his cross-examination. 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 signature on the cheque is 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,

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

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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 and 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.”

21. 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.”

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

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

“ONCE EXECUTION OF A CHEQUE IS ADMITTED,

PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF THE NI ACT

ARISE

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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].

23. Thus, the Court has to start with the presumption that

the cheque was issued in discharge of the liability for

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

presumption.

24. The accused admitted his signature on the agreement

(Ext.DW-1/A), which mentions that the accused had received

₹2,00,000/- from the complainant as an advance, and the

remaining amount of ₹50,000/- would be received at the time of

execution of the sale deed, which would be executed on or before

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30.10.2017, and in case of failure, the accused would return double

the amount of the advance to the complainant. Two endorsements

are also annexed to the agreement regarding the receipt of

₹10,000/- and ₹20,000/- on 21.12.2017 and 26.12.2017 ,

respectively. Thus, the version of the complainant that he had

advanced ₹2,00,000/- to the accused is duly proved by the

statement of the accused and the agreement (Ext.DW-1/A).

25. The complainant stated that the accused had failed to

execute the sale deed as per the terms and conditions of the

agreement, and he had issued the cheque on 21.10.2020 for

₹2,50,000/-. The accused did not claim in his statement on oath

that he was ready and willing to execute the sale deed; rather, he

admitted in his cross-examination that he had not served any

notice upon the complainant to execute the sale deed. Thus, the

complainant’s version that the sale deed could not be executed has

to be accepted as correct.

26. The complainant was entitled to double the advance

amount as per the agreement executed between the parties. The

agreement and the endorsements show that ₹2,30,000/-were paid

to the accused. Therefore, the cheque of ₹2,50,000/- issued on

21.10.2020, after about three years of the execution of the

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agreement, was as per the terms and conditions of the agreement.

It was laid down in Ripudaman Singh v. Balkrishna, (2019) 4 SCC

767, that an agreement to sell constitutes a legally enforceable

contract between the parties, and any payment made in pursuance

of such agreement is towards the enforceable debt/liability. It was

observed: -

“9. We find ourselves unable to accept the finding of the

learned Single Judge of the High Court that the cheques

were not issued for creating any liability or debt, but

“only” for the payment of balance consideration and that

in consequence, there was no legally enforceable debt or

other liability. Admittedly, the cheques were issued under

and in pursuance of the agreement to sell. Though it is well

settled that an agreement to sell does not create any

interest in immovable property, it nonetheless constitutes

a legally enforceable contract between the parties to it. A

payment which is made in pursuance of such an agreement

is hence a payment made in pursuance of a duly

enforceable debt or liability for the purposes of Section

138.”

27. Therefore, the payment made by the accused to the

complainant under the agreement will attract the provisions of

Section 138 of the NI Act.

28. It was submitted that the accused was acting as an

agent of Shakti Chand, and he is not personally liable as per

Section 230 of the Indian Contract Act. This submission appears to

be attractive, but cannot be accepted.

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29. Section 28 of the Negotiable Instruments Act deals with

the liability of an agent signing a cheque and provides that if an

agent signs his name on the cheque without indicating thereon

that he had signed as an agent or that he did not intend to incur

the personal liability, he would be liable on the instrument except

to those who induced him to sign upon the belief that principal

only would be held liable. It was laid down by Judicial Committee

of the Privy Council more than 100 years ago in Firm of Sadasuk

Janki Das v. Maharaja Sir Kishan Pershad Bahadur, 1918 SCC OnLine

PC 79 that the name of the person to be charged upon a negotiable

document should be clearly stated on the face or on the back of the

document and in case of failure to do so, the principal cannot be

held liable. It was observed:-

“It is of the utmost importance that the name of a person or

firm to be charged upon a negotiable document should be

clearly stated on the face or on the back of the document, so

that the responsibility is made plain and can be instantly

recognised as the document passes from hand to hand. In

this case the preliminary words mention no more than that

Mohan Lal has been directed to execute the hundis, and they

do not necessarily imply that he has been clothed with

authority to execute them in any other form than that in

which they were actually prepared—a form which it has

already been shown constituted’ nothing more than a

personal liability on behalf of Mohan Lal.

The statement, to which reference has been made, which

appears on p. 99 of Messrs Iyenger and Adiga's book on

Negotiable Instruments, that “outside evidence is

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inadmissible on any person as a principal party unless his—

the principal party's—name is in some way disclosed in the

instrument itself,” is not in itself an adequate statement of

the law. It is not sufficient that the principal's name should

be “in some way” disclosed; it must be disclosed in such a

way that on any fair interpretation of the instrument, his

name is the real name of the person liable upon the bill.

Their Lordships' attention was directed to sections 26, 27

and 28 of the Negotiable Instruments Act of 1881, and the

terms of these sections were contrasted with the

corresponding provisions of the English Statute. It is

unnecessary in this connection to decide whether their

effect is identical. It is sufficient to say that these sections

contain nothing inconsistent with the principles already

enunciated, and nothing to support the contention, which is

contrary to all established rules, that in an action on a bill of

exchange pr promissory note against a person whose name

properly appear as party to the instrument it is open either

by way of claim or defence to show that the signatory was in

reality acting for an undisclosed principal.

30. A Five-Judge Bench of Madras High Court held in

Sivagurunatha Pillai v. Padmavathi Ammal, 1940 SCC OnLine Mad

464, that only the instrument has to be looked at while deciding

whether the maker was personally liable or some other person was

liable on it. It was observed: -

“It is the instrument and the instrument alone that has to

be looked at in deciding whether the maker has excluded

personal liability in such a case. Therefore, in turning to

examine the decisions of this Court in Koneti Naicker v.

Gopala Ayyar (1913) I.L.R. 38 Mad. 482 (F.B.) , and

Satyanarayana v. Mallayya [(1934) I.L.R. 58 Mad. 735 (F.B.),

we have this factor well established. Of course, if the

authority of the agent is questioned, the authority must be

established before the instrument is looked at.

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As the Court cannot look beyond what is stated in the

instrument in a case like the present one , it is now

necessary to decide whether the promissory note in suit

should be construed in accordance with the judgment of

SUNDARA AYYAR, J. or the judgments of SADASIVA AYYAR, J. and

WHITE, C.J. In my opinion, the judgment which should be

followed is that of SUNDARA AYYAR, J. It is the duty of the

Court to read the instrument and judge its effects from the

words used, but a promissory note drawn up in a vernacular

language cannot always be construed according to the

literal translation into English. While I have no knowledge

of the Dravidian languages I have seen sufficient of the

translations of vernacular documents which have come

before this Court to realise that to give a fair translation

words in English have often to be added, and both my

learned brothers, SOMAYYA and PATANJALI SASTRI, JJ., inform

me that a Tamilian who wished to indic ate that he was

signing on behalf of his principal might aptly use the

language found in the promissory note in suit and that a

Tamilian would read it as an instrument signed by the

maker on behalf of his principal. I do not suggest that a

document in Tamil or of any other language spoken in India

should not be given the meaning which the words used

ordinarily imply, but in deciding the implication, I agree

with SUNDARA AYYAR, J., that one must put oneself in the

position of the writer so far as the languag e used is

concerned. In this country, when a person is describing who

he is, he gives his father's name and says that he is his son.

When in a document, such as we have here, the person, after

giving his own description, adds that he is the agent of

another, it means that he is acting as the other's agent in

the matter of the execution of the document.

I would sum up the position thus. In Satyanarayana v.

Mallayya, I.L.R. 58 Mad. 735 (F.B.). the Court erred in saying

that circumstances not disclosed in the instrument could be

looked at when deciding whether the maker was personally

liable, and that the learned Judges who decided Koneti

Naicker v. Gopala Ayyar [(1913) I.L.R. 38 Mad. 482 (F.B.).erred

in refusing to follow the line of approach indicated by

SUNDARA AYYAR, J. When it is a matter of construing the effect

20

2026:HHC:43

of an instrument written in Tamil or in any other Indian

language, the observations of SUNDARA AYYAR, J., apply.

31. Madras High Court again held in M. Mahadevan Pillai v.

Vedavalli Ammal, (1994) 79 Comp Cas 851 that knowledge of the

agency to others does not free the agent from liability, if he does

not disclose on the instrument that he had signed as an agent. It

was observed:-

7. Before considering the other two contentions of the

defendant, it is necessary to refer to the law on the subject.

The basic principle of the Negotiable Instruments Act is that

the parties to the instrument should be held bound by the

terms of the instrument. Section 26 of the Act is that every

person capable of contracting, according to the law to which

he is subject, may bind himself and be bound by the making,

drawing, acceptance, endorsement, delivery and

negotiation of a promissory note, bill of exchange or

cheque. Section 27 deals with the case of agency and

provides that every person capable of binding himself or of

being bound as mentioned in Section 26 may so bind

himself or be bound by a duly authorised agent acting in his

name. It is made clear in the Section that a general authority

to transact business and to receive and discharge debts does

not confer upon an agent the power of accepting or

endorsing bills of exchange so as to bind his principal. The

section also states that an authority to draw bills of

exchange does not of itself import an authority to endorse.

Thus, it is clear that if a person acts as an agent, he should

have the specific authority of his principal to bring about a

negotiable instrument. Section 28 of the Act reads that "an

agent who signs his name to a promissory note, bill of

exchange or cheque without indicating thereon that he

signs as agent, or that he does not intend thereby to incur

personal responsibility, is liable personally on the

instrument, except to those who induced him to sign upon

the belief that the principal only would be held liable". It has

been held in several cases that knowledge of agency to the

21

2026:HHC:43

other party does not free the agent from liability, if he does

not disclose on the instrument that he signed as agent. The

principle is that unless the maker has clearly affixed his

signature to the instrument as agent or on account of or on

behalf of a principal whose name is disclosed or, unless

though he has signed unconditionally he has unequivocally

and clearly disclaimed in some portion of the document his

own responsibility and mentions the name of the person

really liable, he cannot escape liability. Section 29 of the Act

deals with legal representatives and makes a legal

representative of a deceased person who signs his name to a

promissory note, bill of exchange or cheq ue liable

personally thereon unless he expressly limits his liability to

the extent of the assets received by him as such. Section 30

of the Act speaks of the liability of the drawer of a bill of

exchange or cheque, in case of dishonour by the drawee or

acceptor thereof, to compensate the holder. Section 32 reads

that in the absence of a contract to the contrary, the maker

of a promissory note and the acceptor before maturity of a

bill of exchange are bound to pay the amount thereof at

maturity according to the apparent tenor of the note or

acceptance respectively and the acceptor of a bill of

exchange at or after maturity is bound to pay the amount

thereof to the holder on demand.

xxxxx

9. A Full Bench of three Judges in P. Govinden Nair v. K. Nana

Menon, (1914) 27 MLJ 595, held that where the Karnavan of a

tarwad signed a promissory note in his own name, though

in the body of the note described himself as the Karnavan of

the tarwad and the suit is brought on the note and not on

the original cause of action, the tarward property in the

hands of the defendants could not be made liable. It was

held that the Karnavan was personally liable.

xxxx

13. Following the judgments of the Privy Council and the

above Full Bench, the Kerala High Court in P.R.S. Pillai v.

Manual Sathyanesan, AIR 1965 Kerala 155, held that in a suit

on a promissory note containing unconditional undertaking

by the defendant to pay the plaintiff on demand in the

absence of any indication whatever in the note that the

defendant signed the note as the manager of a company or

22

2026:HHC:43

that he did not intend thereby to incur personal liability, it is

not open to the defendant to raise the plea in the defence

repudiating his personal liability on the ground that he had

in reality acted for an undisclosed principal namely, the

company in executing the promissory note.”

32. A similar view was taken by the Rajasthan High Court

in Ballabh Das vs. Rajesh Chand Gupta and Ors. (31.08.1987 - RAJHC)

: MANU/RH/0582/1987 wherein it was observed:

10. In Madangopal v. Nar singndas & Sons

MANU/RH/0048/1950, considering Section 28 of the

Negotiable Instruments Act, it has been held that where a

person, after signing his name on a negotiable instrument,

adds Managing Director or Managing Agent, it is not

sufficient to indicate that he is making the Company liable

and thereby excluding his personal liability. It was held that

he must clearly indicate the name of the principal on the

instrument itself and state that he is doing it for or on

behalf of such principal as agent and not in his personal

capacity.

11. In Hiralal v. Ratanlal 1967 RLW 383, the suit was based on

the recovery of money on a cheque executed by one of the

partners of the firm. The Bank was directed to pay the

amount out of the joint account of defendant Nos. 1 and 5.

Considering the circumstances of the case as well as the law

applicable, it was held that the partner was not liable for the

cheque, signed by another partner alone and not indicating

on its face that it was drawn on behalf of the firm. Merely

because of the direction to the bank to pay from the firm

account would not make it sufficient to bind the other

partner. It was further held that where the suit was based on

a Negotiable Instrument, then the terms of the Negotiable

Instruments Act were to be looked into, and the provisions

of the Partnership Act or Contract Act would not be looked

into for purposes of determining the liability.

12. In Ghisulal v. Hazi Mohammed 1980 RLW 134, one of the

partners took a loan and executed a pro missory note,

describing himself as "proprietor of firm." It was held that

the absence of any other evidence to show that the loan was

23

2026:HHC:43

taken for and on behalf of the firm, other partners were not

liable. A mere description as proprietor of a firm does not

make the firm or its other partners liable.

13. In Kastoor Chand v. Shiv Shankar 1986 RLR 421 , the

defendant took a loan from the plaintiff. The defendant was

a Manager of Co-op. Society, but the loan taken was not on

behalf of the Society, but was for purchasing sugar for

Society. Considering the terms of the document, which said

that the money was advanced to the Manager for purposes

of purchase of sugar for Upbhokta, and the money to be paid

by himself. It was held that there is no ambiguity and the

defendant is personally liable for such a loan.

14. In M. Rajagopal and other s v. K.M. Imam

MANU/KE/0009/1981: AIR 1981 Ker 36. One of the partners

signed the pronote but he did not sign it on behalf of the

firm, nor was there any other material to infer that the

pronotes were executed for the firm. The other partners

were not made liable, and it was held that the provisions of

the Negotiable Instruments Act would prevail over those of

the Partnership Act and the Contract Act.

15. In Thummala Rama Rao and Ors. v. Chodage

Venkateshwara Rao and Ors. MANU/AP/0102/1963: AIR 1963

AP 154, a promissory note was executed by a managing

partner in his individual capacity, without giving out the

intention to bind the firm. It was held that the Firm and

Partners other than the executant were not liable on the

basis of such a document. It was also observed that even if

the amount borrowed had been utilised by the firm, it could

not be made liable because the executant did not act in a

manner expressing or implying an intention to bind the

firm.

33. Orissa High Court also took a similar view in Indian

Bank v. B. Patnaik Mines (P.) Ltd., 2002 SCC OnLine Ori 68: AIR 2003

Ori 81, wherein it was observed at page 86:

“16. It is well settled that knowledge of agency to the other

party does not free the agent from liability if he does not

disclose on the instrument that he signed as agent. The

24

2026:HHC:43

principle is that unless the maker has clearly affixed his

signature to the instrument as agent or on account of or on

behalf of a principal whose name is disclosed or, unless

though he has signed unconditionally he has unequivocally

and clearly disclosed in some portion of the document his

own responsibility, and mentions the name of the person

really liable, he cannot escape personal liability.

17. A Demand Promissory Note is an effective contract. In

view of the fact that the defendant-respondents 2 to 5

signed the Demand Promissory Note and other documents

without indicating therein that they signed as Directors,

this case squarely comes within the Exception to Section 28

of the Act, and it is to be held that the defendant -

respondents are liable personally under the instrument.

18. Following the judgment of the Privy Council in the case

of National Bank of Upper India Ltd. v. Bansidhar, AIR 1929 PC

297, the facts of which case were almost identical to that of

the present case, and the Full Bench decision of the Madras

High Court in the case of Sivagurunatha Pillai v. Padmavathi

Ammal, AIR 1941 Mad 417, the Kerala High Court in the case

of P.R.S. Pillai v. Manual Sathyanesan, AIR 1965 Ker 155, held

that in a suit on a Promissory Note containing

unconditional undertaking by the defendant to pay the

plaintiff on demand in the absence of any indication

whatever in the note that the defendant signed the note as

the Manager of a Company or that he did not intend thereby

to incur personal liability, it is not open to the defendant to

raise the plea in the defence repudiating his personal

liability on the ground that he had in reality acted for an

undisclosed principal, namely, the Company in executing

the promissory note.

19. The Full Bench of Five Judges in the Madras case, AIR

1941 Mad 417 (supra), observed that the Court cannot look

beyond what is stated in the instrument and that it is the

duty of the Court to read the instrument and judge its

effects from the words used. In the present case, the

Demand Promissory Note executed on 11

th

May, 1960 and

the agreement for demand cash-credit on hypothecation of

movable properties (Ext. 4) clearly indicate that the

defendant-respondents signed the documents in their

25

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individual capacity. The recitals of Ext. 4 read “B. Patnaik

Mines Private Limited and individually by….” Thus, in the

light of the touchstone of the legal principles enumerated in

the decisions referred to above, we have absolutely no

hesitation to hold that defendant-respondents 2 to 5 were

also individually liable for the loan along with the Company.

34. Therefore, the Courts have consistently held that a

person signing a negotiable instrument continues to be liable

unless he indicates on the instrument that he had signed it on

behalf of the principal.

35. In the present case, the cheque (Ext.C1) does not

mention on the face or on the obverse that the accused Vijay

Kumar was signing on behalf of Shakti Chand; therefore, he would

be liable under the cheque.

36. Mr M. A. Khan, learned Senior Counsel, for the

accused/petitioner, heavily relied upon the judgment of this Court

in Ravinder Kumar (supra), to submit that the agent is not liable by

virtue of Section 230 of the Indian Contract Act. This judgment had

not noticed the provisions of Section 28 of the NI Act and is per

incuriam. It was laid down by the Hon’ble Supreme Court in MCD v.

Gurnam Kaur, (1989) 1 SCC 101: 1988 SCC OnLine SC 259 that a

decision given in ignorance of the binding precedent or the

statutory provision is per incuriam. It was observed at page 110:

“11.… A decision should be treated as given per incuriam

when it is given in ignorance of the terms of a statute or of a

26

2026:HHC:43

rule having the force of a statute. So far as the order shows,

no argument was addressed to the court on the question

whether or not any direction could properly be made

compelling the Municipal Corporation to construct a stall at

the pitching site of a pavement squatter. Professor P.J.

Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn.

explains the concept of sub silentio at p. 153 in these words:

A decision passes sub silentio, in the technical sense that

has come to be attached to that phrase, when the

particular point of law involved in the decision is not

perceived by the court or present to its mind. The court

may consciously decide in favour of one party because of

point A, which it considers and pronounces upon. It may

be shown, however, that logically the court should not

have decided in favour of the particular party unless it

also decided point B in his favour; but point B was not

argued or considered by the court. In such

circumstances, although point B was logically involved in

the facts and although the case had a specific outcome,

the decision is not an authority on point B. Point B is said

to pass sub silentio.”

37. Hon'ble Supreme Court held in M.P. Rural Road

Development Authority v. L.G. Chaudhary Engineers & Contractors,

(2012) 3 SCC 495, that when a judgment is delivered per incuriam, it

loses its binding force and cannot be accepted as a precedent. It

was observed: -

28. The principle of per incuriam has been very succinctly

formulated by the Court of Appeal in Young v. Bristol

Aeroplane Co. Ltd. [1944 KB 718 (CA)]. Lord Greene, Master of

Rolls, formulated the principles based on which a decision

can be said to have been rendered “ per incuriam”. The

principles are: (KB p. 729)

“… Where the court has construed a statute or a rule

having the force of a statute, its decision stands on the

same footing as any other decision on a question of

27

2026:HHC:43

law, but where the court is satisfied that an earlier

decision was given in ignorance of the terms of a

statute or a rule having the force of a statute, the

position is very different. It cannot, in our opinion, be

right to say that in such a case the court is entitled to

disregard the statutory provision and is bound to

follow a decision of its own given when that provision

was not present in its mind. Cases of this description

are examples of decisions given per incuriam.”

29. The decision in Young [1944 KB 718 (CA)] was

subsequently approved by the House of Lords in Young v.

Bristol Aeroplane Co. Ltd. [1946 AC 163 (HL)], AC at p. 169 of

the Report. Lord Viscount Simon in the House of Lords

expressed His Lordship's agreement with the views

expressed by Lord Greene, the Master of Rolls, in the Court

of Appeal on the principle of per incuriam (see the speech of

Lord Viscount Simon in Bristol Aeroplane Co. Ltd. case [1946

AC 163 (HL)], AC at p. 169 of the Report).

30. Those principles have been followed by the Constitution

Bench of this Court in Bengal Immunity Co. Ltd. v. State of

Bihar [AIR 1955 SC 661: (1955) 2 SCR 603] (see the discussion

in SCR at pp. 622 and 623 of the Report).

31. The same principle has been reiterated by Lord

Evershed, Master of Rolls, in Morelle Ld. v. Wakeling [(1955)

2 QB 379 (CA)], QB at p. 406. The principle has been stated

as follows:

“… As a general rule, the only cases in which

decisions should be held to have been given per

incuriam are those of decisions given in ignorance or

forgetfulness of some inconsistent statutory

provision or some authority binding on the court

concerned; so that in such cases some part of the

decision or some step in the reasoning on which it is

based is found, on that account, to be demonstrably

wrong.”

32. In State of U.P. v. Synthetics and Chemicals Ltd. [(1991) 4

SCC 139] this Court held (SCC p. 162, para 40) that the

doctrine of “per incuriam” in practice means “ per

ignoratium” and noted that the English courts have

28

2026:HHC:43

developed this principle in relaxation of the rule of stare

decisis and referred to the decision in Bristol Aeroplane Co.

Ltd. [1946 AC 163 (HL)] The learned Judges also made it clear

that the same principle has been approved and adopted by

this Court while interpreting Article 141 of the Constitution

(see Synthetics and Chemicals Ltd. case [(1991) 4 SCC 139],

SCC para 41).

33. In MCD v. Gurnam Kaur [(1989) 1 SCC 101], a three-judge

Bench of this Court explained this principle of per incuriam

very elaborately in SCC para 11 at p. 110 of the Report, and in

explaining the principle of per incuriam, the learned Judges

held:

“11. … A decision should be treated as given per

incuriam when it is given in ignorance of the terms of

a statute or of a rule having the force of a statute.”

34. In para 12, the learned Judges observed as follows:

(Gurnam Kaur case [(1989) 1 SCC 101], SCC p. 111)

“12. … One of the chief reasons for the doctrine of

precedent is that a matter that has once been fully

argued and decided should not be allowed to be

reopened. The weight accorded to dicta varies with

the type of dictum. Mere casual expressions carry no

weight at all. Not every passing expression of a

Judge, however eminent, can be treated as an ex-

cathedra statement, having the weight of authority.”

35. Following the aforesaid principles, this Court is

constrained to hold that the decision in Va Tech [(2011) 13

SCC 261], having been rendered per incuriam, cannot be

accepted as a precedent to decide the controversy in this

case.

38. It was submitted that the principle of stare decisis

demands that the Courts should take a consistent view and the like

cases should be treated alike; therefore, once this Court had taken

a view in Ravinder Kumar (supra) that an agent is not liable, a

different view should not be taken in the present case. This

29

2026:HHC:43

submission is only stated to be rejected. Lord Denning said in

Ostime (Inspector of Taxes) vs Australian Mutual Provident Society

Respondent., [1960] A.C. 459, that the doctrine of precedent does

not compel a person to follow the wrong path until he falls over

the edge of the cliff. It was observed: -

“The doctrine of precedent does not compel your Lordships

to follow the wrong path until you fall over the edge of the

cliff. As soon as you find that you are going in the wrong

direction, you must at least be permitted to strike off in the

right direction, even if you are not allowed to retrace your

steps.”

39. The Hon’ble Supreme Court held in Shaurabh Kumar

Tripathi v. Vidhi Rawal, 2025 SCC OnLine SC 1158 that Judges are

duty-bound to correct their mistakes in properly constituted

proceedings. It was observed:

38. Before we part with this Judgment, we must mention

here that one of us (Abhay S. Oka, J) is a party to a Judgment

dated 27

nd

October, 2016 of the Bombay High Court in Writ

Petition 2473 of 2016 in which the view taken is that remedy

under Section 482 of the CrPC is not available for quashing

the proceedings under Section 12(1) of the DV Act, 2005.

This view was found to be incorrect by a full Bench of the

same High Court. As judges, we are duty-bound to correct

our mistakes in properly constituted proceedings. Even for

Judges, the learning process always continues.

40. The U.S. Supreme Court held in McGrath v. Kristensen,

1950 SCC OnLine US SC 95: 340 US 162 (1950), that the precedent

does not mean that the Judge cannot correct his mistake when it is

brought to his notice. It was observed: -

30

2026:HHC:43

“28. Precedent, however, is not lacking for ways by which a

judge may recede from a prior opinion that has proven

untenable and perhaps misled others. See Chief Justice

Taney, License Cases, 5 How. 504, 12 L.Ed. 256, recanting

views he had pressed upon the Court as Attorney General of

Maryland in Brown v. State of Maryland, 12 Wheat. 419, 6 L.Ed.

678. Baron Bramwell extricated himself from a somewhat

similar embarrassment by saying, 'The matter does not

appear to me now as it appears to have appeared to me

then.' Andrew v. Styrap, 26 L.T.R.(N.S.) 704, 706. And Mr

Justice Story, accounting for the contradiction of his own

former opinion, quite properly put the matter: 'My own

error, however, can furnish no ground for its being adopted

by this Court * * *.' United States v. Gooding, 12 Wheat. 460,

478, 6 L.Ed. 693. Perhaps Dr Johnson really went to the heart

of the matter when he explained a blunder in his

dictionary—' Ignorance, sir, ignorance.' But an escape less

self-deprecating was taken by Lord Westbury, who, it is

said, rebuffed a barrister's reliance upon an earlier opinion

of his Lordship: 'I can only say that I am amazed that a man

of my intelligence should have been guilty of giving such an

opinion.' If there are other ways of gracefully and good-

naturedly surrendering former views to a better considered

position, I invoke them all.”

41. Therefore, the Court is bound to correct the error when

the error is pointed out to it. The adage to err is human applies to

the Judges as well, because they are human and fallible and should

be free to acknowledge their mistakes and correct them without

being bound by the doctrine of precedent and stare decisis.

42. The accused stated that he had issued a cheque as

security, and he was not liable. This submission is not acceptable.

It has been found above that the accused is liable to pay double the

advance amount pursuant to the agreement. Thus, he had a

31

2026:HHC:43

subsisting liability of ₹4,60,000/- (double of ₹2,30,000/- received

by him) and a cheque of ₹2,50,000/-, even if issued as security,

would be towards the enforceable debt/liability. It was laid down

by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ

456, that the accused is liable even if the cheque is issued towards

the security. It was observed:

“9. Submission of learned Advocate appearing on behalf of

the revisionist that the cheque in question was issued to the

complainant as security, and on this ground, the criminal

revision petition is rejected as being devoid of any force 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

former law and subsequent law, then subsequent law

always prevails.”

43. 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: -

32

2026:HHC:43

“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

distinguishable. As already noted, it was held therein that

liability arising out of a claim for breach of contract under

Section 138, which arises on account of dishonour of a

cheque issued, was not by itself at par with a criminal

liability towards discharge of acknowledged and admitted

debt under a loan transaction. Dishonour of a cheque issued

for the discharge of a later liability is clearly covered by the

statute in question. Admittedly, on the date of the cheque,

there was a debt/liability in praesenti in terms of the loan

agreement, as against the case of Indus Airways (supra),

where the purchase order had been cancelled, and a cheque

issued towards advance payment for the purchase order was

dishonoured. In that case, it was found that the cheque had

not been issued for the discharge of liability but as an

advance for the purchase order, which was cancelled.

33

2026:HHC:43

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 repayment of instalments was also described as

“security” in the loan agreement. In applying the judgment

in Indus Airways (supra), one cannot lose sight of the

difference between a transaction of the purchase order

which is cancelled and that of a loan transaction where the

loan has actually been advanced, and its repayment is due

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 liabi lity, or

whether it represents an advance payment without there

being a subsisting debt or liability. While approving the

views of different High Courts noted earlier, this is the

underlying principle as can be discerned from the

discussion of the said cases in the judgment of this Court.”

(Emphasis supplied)

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

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

held that a cheque issued as security is not waste paper and a

complaint under Section 138 of the NI Act can be filed on its

dishonour. It was observed:

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

transaction cannot be considered a worthless piece of paper

under every circumstance. 'Security' in its true sense is the

state of being safe, and the security given for a loan is

something given as a pledge of payment. It is given,

deposited or pledged to make certain the fulfilment of an

obligation to which the parties to the transaction are bound.

If in a transaction, a loan is advanced and the borrower

agrees to repay the amount in a specified timeframe and

issues a cheque as security to secure such repayment; if the

34

2026:HHC:43

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

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

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the cheque to dictate terms with regard to the nature of

litigation.”

45. Therefore, the accused cannot escape from the liability

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

complainant.

46. 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 not filled by the accused. 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

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 in the

amount and other particulars. This in itself would not

invalidate the cheque. The onus would still be on the

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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.”

47. 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.

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

by the complainant.

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49. There is no other evidence to rebut the presumption

attached to the cheque; hence, the learned Courts below had

rightly held that the accused had failed to rebut the presumption

attached to the cheque.

50. The complainant asserted that the cheque was

dishonoured with an endorsement ‘account blocked’. Memo of

dishonour (Ext. C-2) mentions a reason to dishonour as ‘account

blocked’. 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.”

51. In the present case, the accused did not lead any

evidence to rebut the presumption attached t o the memo of

dishonour. Hence, the learned Courts below had rightly held that

the cheque was dishono ured with an endorsement ‘account

blocked’.

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52. It was laid down by the Calcutta High Court in Display

Service, Prop. Co-op Pvt. Ltd. v. State of West Bengal, 2013 SCC

OnLine Cal 23093, that dishonour of the cheque with an

endorsement ‘account blocked’ will attract the liability under

Section 138 of the NI Act. It was observed:

“11. Applying the aforesaid rule of interpretation to the

present case, I am of the considered view that dishonour of

the cheques with the remark “account blocked” would also

fall within the ambit of section 138 of the Negotiable

Instruments Act, 1881 when there is no material on record to

show that there was sufficient credit in the account at the

time of presentation of the cheques in question. That apart,

there has been a failure and negligence on the part of the

payee to pay the cheque amount within the stipulated time

in spite of receipt of notice under section 138(b) of the

Negotiable Instruments Act, 1881.”

53. A similar view was taken by the Madras High Court in

Challani Rank Jewellery v. Ashok Kumar Jain, 2024 SCC OnLine Mad

10675, wherein it was observed:

30. Though an account blocked is not specifically mentioned

as a reason for dishonour to attract Section 138 of the NI Act,

the judicial pronouncements have made it clear that the two

contingencies mentioned in Section 138 of the NI Act are

genus, and the reasons like account closed, stop payment,

signature differs, etc., are species. If the complaint disclosed

that the subject cheque was given without sufficient funds

or in excess of arrangement, the other reasons that are

species to the genus will follow to proceed under Section 138

of the NI Act.

Xxx

32. If the above logic and analogy are applied, it is amply

clear that in cases of ‘account block’ or ‘account freezed’

39

2026:HHC:43

complaint under Section 138of NI Act is maintainable, if the

complainant prima facie satisfies that in the account there

was no sufficient fund to honour. As the Supreme Court has

held, the genus of the crime is any one of the contingencies

envisaged under Section 138 of the NI Act. If the complaint

discloses that dehors of account block or account freeze and

even otherwise, the cheque could not be passed due to want

of funds in the account, the drawer of the cheque cannot

take umbrage under the fact that his account is blocked or

freezed. Issuing the cheque without sufficient funds to

honour is the genus of the crime.

54. Jammu and Kashmir High Court also took a similar

view in Sheikh Owais Tariq v. Satvir Singh, 2024 SCC OnLine J&K 727

and observed:

“13…So far as the present case is concerned, the respondent

had nowhere pleaded in his application for dropping of

proceedings that he was having sufficient amoun t in the

bank account and that he was not having the knowledge of

freezing of account at the time of issuance of cheque, and in

absence of any such material before the learned Revisional

Court, the Revisional Court could not have put the onus

upon the complainant by observing that there was no

argument on the part of the respondent therein i.e. the

petitioner herein that besides being the account frozen,

there were insufficient funds in the account of the

respondent/accused to meet his liability. The said

observation is contrary to the specific pleadings made by

the petitioner before the learned trial court, wherein he had

categorically pleaded that the respondent had fraudulently,

with the aim of cheating the petitioner, issued the cheque

despite the fact that there were no funds lying in his

account either at the time of issuance of cheque or on the

day the cheque was presented. The cheque was issued on

01.07.2014 and the same was dishonoured on 14.07.2014 and

in absence of any finding as to when the account was frozen

i.e. whether the account was frozen prior to the issuance of

the cheque or after the issuance of the cheque and further as

40

2026:HHC:43

to whether the accounts of the respondent was having

sufficient amount to honour the cheque at the time of

issuance of cheque or not and rightly so because there was

no material before the Revisional Court to return any such

finding, the petitioner herein could not have been knocked

out of the court at the threshold. The learned Revisional

Court has put the cart before the horse and has returned a

finding which could have been returned only after the full-

fledged trial. Rather, the onus would be on the respondent

to prove that he was not aware of the freezing of the

account when the cheque was drawn, the account was

frozen due to reasons beyond his control, and the account

was having sufficient balance when the cheque was

dishonoured.

c. In “Vikram Singh v. Shyoji Ram, 2022 Legal Eagle(SC) 792,

the High Court had quashed the proceedings of the

complaint under section 138 of the Act, as the witnesses had

stated that the accused had not opened the account with the

Bank but in the memo it was mentioned that the cheque was

dishonoured due to the reason ‘Account Frozen’. The

Hon'ble Supreme Court of India set aside the order passed

by the High Court by observing that the “Account Frozen”

would presuppose the existence of the account, and it was

premature to quash the complaint. The Hon'ble Supreme

Court of India remanded the matter for a full-fledged trial.

14. In view of the above, this court is of the considered view

that the complaint under section 138 of the Act is

maintainable even if the cheque is dishonoured due to the

reason ‘Account frozen’. The judgments mentioned above,

cited by the learned counsel for the respondent, are not

applicable in the present case.

55. Kerala High Court also took a similar view in George vs

Anurag K Haridas 2025:KER:52765

56. Thus, the accused would be liable when the cheque was

dishonoured with an endorsement ‘account blocked’.

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57. The complainant stated that he had issued a notice

(Ext.CW-3/C) to the accused. He produced the receipt

(Ext CW-3/D) and track consignment report (Ext.CW-3/E), which

shows that the letter was delivered to the addressee. The accused

also admitted in his statement recorded under Section 313 of

Cr.P.C. that the notice was sent to him at his correct address

through registered post. Thus, it was duly proved that the accused

had received the notice. He did not claim that he had paid the

amount to the complainant after receipt of the notice.

58. Thus, it was duly proved that the accused had issued a

cheque to discharge the liability, which was dishonoured with an

endorsement ‘account blocked’, and he failed to pay the money

despite 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 was duly satisfied, and the learned Trial

Court had rightly convicted him of the commission of an offence

punishable under Section 138 of the NI Act.

59. Learned Trial Court sentenced the accused to undergo

simple imprisonment for six months. 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

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SC 138 that the penal provisions of Section 138 of the N.I. Act is

deterrent in nature. It was observed at page 203:

“6. The object of Section 138 of the Negotiable Instruments

Act is to infuse credibility into negotiable instruments,

including cheques, and to encourage and promote the use of

negotiable instruments, including cheques, in financial

transactions. The penal provision of Section 138 of the

Negotiable Instruments Act is intended to be a deterrent to

callous issuance of negotiable instruments such as cheques

without serious intention to honour the promise implicit in

the issuance of the same.”

60. Therefore, the sentence of six months is not excessive.

61. The learned Trial Court imposed a fine of ₹4,00,000/-

on 31.08.2023. The cheque was issued on 21.10.2020. The

complainant lost the interest that it would have gained by

investing the money. The complainant incurred legal expenses by

prosecuting the complaint before the learned Trial Court and

defending the appeal filed before the learned Appellate Court.

Therefore, he was entitled to be compensated for the same. It was

laid down by the Hon’ble Supreme Court in Kalamani Tex v. P.

Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2

SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should

uniformly levy a fine up to twice the cheque amount along with

simple interest at the rate of 9% per annum. It was observed at

page 291: -

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19. As regards the claim of compensation raised on behalf of

the respondent, we are conscious of the settled principles

that the object of Chapter XVII of NIA is not only punitive

but also compensatory and restitutive. The provisions of

NIA envision a single window for criminal liability for the

dishonour of a cheque as well as civil liability for the

realisation of the cheque amount. It is also well settled that

there needs to be a consistent approach towards awarding

compensation, and unless there exist special

circumstances, the courts should uniformly levy fines up to

twice the cheque amount along with simple interest @ 9%

p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1

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

62. Hence, the compensation cannot be said to be

excessive.

63. No other point was urged

64. In view of the above, the present revision fails and is

dismissed, so also the pending miscellaneous application(s), if any

65. The records of the learned Courts below be returned

alongwith a copy of this judgment

(Rakesh Kainthla)

Judge

01

st

January, 2026

(ravinder)