2026:HHC:34

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. Revision No. 261 of 2019

Reserved on: 19.12.2025

Date of Decision: 1.1.2026.

Sandeep Kumar Sharma ...Petitioner

Versus

PNB ...Respondent

Coram

Hon’ble Mr Justice Rakesh Kainthla, Judge.

Whether approved for reporting?

1

No.

For the Petitioner : Mr. Anirudh Sharma, Advocate,

Legal Aid Counsel.

For the Respondent : Mr. Sunil Kumar, Advocate.

Rakesh Kainthla, Judge

The present revision is directed against the judgment

dated 2.5.2019, passed by learned Sessions Judge, Bilaspur, H.P.

(learned Appellate Court), vide which the judgment of

conviction and order of sentence dated 1.12.2018, passed by

learned Judicial Magistrate First Class, Court No. 2, Ghumarwin,

District Bilaspur, HP (learned Trial Court) were upheld (Parties

1

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

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shall 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 before the

learned Trial Court against the accused for the commission of an

offence punishable under Section 138 of the Negotiable

Instruments (NI Act). It was asserted that the complainant is a

body corporate constituted under the Banking Companies

(Acquisition and Transfer of Undertakings) Act. It is engaged in

banking activities through its various branches, and one such

branch is located at Ghumarwin. The accused approached the

complainant bank for a loan of ₹1,50,000/-. He completed

various formalities, and the bank sanctioned a loan of

₹1,50,000/-. The complainant defaulted on the repayment of

the loan. He issued a cheque of ₹30,000/- in partial discharge of

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

but it was dishonoured with the endorsement ‘insufficient

funds’. The complainant served a legal notice upon the accused

asking him to repay the amount within 15 days of the receipt of

the notice. The notice was delivered to the accused on 24.6.2017,

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but he failed to repay the amount. Hence, the complaint was

filed against the accused for taking action as per the law.

3. The learned Trial Court found sufficient reasons to

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

accusation was put to him for the commission of an offence

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

not guilty and claimed to be tried.

4. The complainant examined Sangeeta Gautam (CW1)

to prove its complaint.

5. The accused, in his statement recorded under Section

313 of Cr.P.C., admitted that he had approached the bank for the

loan and the bank sanctioned a loan of ₹1,50,000/-. He admitted

that he had defaulted in the repayment of the loan, and he had

issued a cheque in partial discharge of his liability. He admitted

that the cheque was dishonoured with the endorsement ‘funds

insufficient’ and a notice was served upon him. He stated that a

case was registered against him as he had not deposited the

money in time. He had deposited ₹26,000/- and sought two

months to make the payment. He stated that he wanted to lead

the defence evidence; however, he failed to produce the

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evidence, and the learned Trial Court closed his evidence on

30.10.2018.

6. Learned Trial Court held that the accused admitted

the taking of a loan, issuance of the cheque, its dishonour and

the receipt of the notice. The accused stated that a case was

made against him because he had failed to repay the amount on

time. The accused had failed to rebut the presumption attached

to the cheque. All the ingredients of the commission of an

offence punishable under Section 138 of the NI were duly

satisfied. Hence, the learned Trial Court convicted the accused of

the commission of an offence punishable under Section 138 of

the NI Act and sentenced him to undergo simple imprisonment

for three months and pay a fine of ₹ 60,000/- which was to be

paid as compensation to the complainant.

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, Bilaspur, HP (learned

Appellate Court). The learned Appellate Court concurred with

the findings recorded by the learned Trial Court that the accused

had not disputed the complainant’s case in his statement

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recorded under Section 313 Cr.P.C. The accused claimed that he

had paid ₹26,000/- to the bank, however, there was no evidence

to prove this claim. This fact was also not suggested to the

Manager of the complainant. The mere plea that the cheque was

a security cheque would not help the accused because the

security cheque also attracts the liability under Section 138 of

the NI Act. The learned Trial Court had imposed an adequate

sentence, and no interference was required with the sentence

imposed by the learned Trial Court. Hence, the appeal was

dismissed.

8. Being aggrieved by the judgments and order passed

by the learned Courts below, the accused has filed the present

revision, asserting that the learned Courts below failed to

properly appreciate the material placed before them. The

complainant failed to prove the existence of the liability. The

balance was shown as zero in the loan account (Ex.CW1/F),

which falsifies the complainant’s version that the accused was

liable to pay money to the complainant. The complainant was

required to prove its case beyond a reasonable doubt, but it

failed to do so. Hence, it was prayed that the present revision be

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allowed and the judgment and order passed by the learned

Courts below be set aside.

9. I have heard Mr Anirudh Sharma, learned Legal Aid

Counsel for the petitioner/accused and Mr Sunil Kumar, learned

counsel for the respondent/complainant.

10. Mr Anirudh Sharma, learned Legal Aid Counsel for

the petitioner/accused, submitted that the statement of account

produced by the bank shows a zero balance, which falsifies the

complainant’s version that the cheque was issued in discharge

of the debt/legal liability. Learned Courts below failed to

appreciate this aspect. The complainant failed to prove the

advancement of the loan. Therefore, he prayed that the present

revision be allowed and judgments and order passed by learned

Courts below be set aside.

11. Mr Sunil Kumar, learned counsel for the

respondent/complainant, submitted that the accused had

admitted the taking of the loan, issuance of the cheque, its

dishonour and the receipt of the notice in his statement

recorded under Section 313 of CrPC. Learned Courts below had

rightly relied upon the admission made by the accused. This

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Court should not interfere with the concurrent findings of fact.

Therefore, he prayed that the present petition be dismissed.

12. I have given considerable thought to the submissions

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

13. 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 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.

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14. 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 [Amit Kapoor v.

Ramesh Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687:

(2013) 1 SCC (Cri) 986], where scope of Section 397 has

been considered and succinctly explained as under: (SCC

p. 475, paras 12-13)

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

power to call for and examine the records of an

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 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

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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 that the exercise of revisional jurisdiction itself

should not lead to injustice ex facie. Where the Court is

dealing with the question as to whether the charge has

been framed properly and in accordance with law in a

given case, it may be reluctant to interfere in the exercise

of its revisional jurisdiction unless the case substantially

falls within the categories aforestated. Even the framing

of the charge is a much-advanced stage in the

proceedings under CrPC.”

15. 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 satisfy itself as to the correctness, legality or

propriety of any finding, sentence or order. In other

words, the jurisdiction is one of supervisory

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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 amount to a gross

miscarriage of justice. On scrutinising the

impugned judgment of the High Court from the

aforesaid standpoint, we have no hesitation in

concluding that the High Court exceeded its

jurisdiction in interfering with the conviction of the

respondent by reappreciating the oral 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 Chavan v.

Dattatray Gulabrao Phalke, (2015) 3 SCC 123: (2015) 2

SCC (Cri) 19]. This Court held that the High Court, in

the exercise of revisional jurisdiction, shall not

interfere with the order of the Magistrate unless it

is perverse or wholly unreasonable or there is non-

consideration of any relevant material, the order

cannot be set aside merely on the ground that

another view is possible. The following has been

laid down in para 14: (SCC p. 135)

“14. … Unless the order passed by the

Magistrate is perverse or the view taken by the

court is wholly unreasonable or there is non-

consideration of any relevant material or there

is palpable misreading of records, the

Revisional Court is not justified in setting aside

the order, merely because another view is

possible. The Revisional Court is not meant to

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act as an appellate court. The whole purpose of

the revisional jurisdiction is to preserve the

power in the court to do justice in accordance

with the principles of criminal jurisprudence.

The revisional power of the court under

Sections 397 to 401 CrPC is not to be equated

with that of an appeal. Unless the finding of the

court, whose decision is sought to be revised, is

shown to be perverse or untenable in law or is

grossly erroneous or glaringly unreasonable or

where the decision is based 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.”

16. This position was reiterated in Bir Singh v. Mukesh

Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ)

309: 2019 SCC OnLine SC 13, wherein it was observed at page 205:

“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 & Services v.

Sauermilch Design and Handels GmbH, (2008) 14 SCC 457, it

is a well-established principle of law that the Revisional

Court will not interfere even if a wrong order is passed by

a court having jurisdiction, in the absence of a

jurisdictional error. The answer to the first question is,

therefore, in the negative.”

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

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

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“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

& 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.

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

parameters laid down by the Hon’ble Supreme Court.

19. The accused admitted in his statement recorded

under Section 313 Cr.P.C. that he had taken a loan of ₹1,50,000/-

and issued a cheque in partial discharge of his liability. He

admitted that the cheque was dishonoured because of

insufficient funds, and notice was served upon him. He stated

that the case was registered against him because he had not

made the payment in time. It was laid down by the Hon'ble

Supreme Court in State of Maharashtra v. Sukhdev Singh, (1992) 3

SCC 700: 1992 SCC (Cri) 705: 1992 SCC OnLine SC 421 that the

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Courts can rely upon the statement of the accused recorded

under Section 313 of Cr.P.C. It was observed at page 742:

“51. That brings us to the question of whether such a

statement recorded under Section 313 of the Code can

constitute the sole basis for conviction. Since no oath is

administered to the accused, the statements made by the

accused will not be evidence stricto sensu. That is why

sub-section (3) says that the accused shall not render

himself liable to punishment if he gives false answers.

Then comes sub-section (4), which reads:

“313. (4) The answers given by the accused may be

taken into consideration in such inquiry or trial, and

put in evidence for or against him in any other

inquiry into, or trial for, any other offence which

such answers may tend to show he has committed.”

Thus, the answers given by the accused in response to his

examination under Section 313 can be taken into

consideration in such an inquiry or trial. This much is

clear on a plain reading of the above sub-section.

Therefore, though not strictly evidence, sub-section (4)

permits that it may be taken into consideration in the said

inquiry or trial. See State of Maharashtra v. R.B. Chowdhari

(1967) 3 SCR 708: AIR 1968 SC 110: 1968 Cri LJ 95. This

Court, in the case of Hate Singh Bhagat Singh v. State of

M.B. 1951 SCC 1060: 1953 Cri LJ 1933: AIR 1953 SC 468, held

that an answer given by an accused under Section 313

examination can be used for proving his guilt as much as

the evidence given by a prosecution witness. In Narain

Singh v. State of Punjab (1963) 3 SCR 678: (1964) 1 Cri LJ

730, this Court held that if the accused confesses to the

commission of the offence with which he is charged, the

Court may, relying upon that confession, proceed to

convict him. To state the exact language in which the

three-Judge bench answered the question, it would be

advantageous to reproduce the relevant observations at

pages 684-685:

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“Under Section 342 of the Code of Criminal

Procedure by the first sub-section, insofar as it is

material, the Court may at any stage of the enquiry

or trial and after the witnesses for the prosecution

have been examined and before the accused is

called upon for his defence shall put questions to

the accused person for the purpose of enabling him

to explain any circumstance appearing in the

evidence against him. Examination under Section

342 is primarily to be directed to those matters on

which evidence has been led for the prosecution to

ascertain from the accused his version or

explanation, if any, of the incident which forms the

subject-matter of the charge and his defence. By

sub-section (3), the answers given by the accused

may ‘be taken into consideration’ at the enquiry or

the trial. If the accused person in his examination

under Section 342 confesses to the commission of the

offence charged against him the court may, relying

upon that confession, proceed to convict him, but if he

does not confess and in explaining circumstance

appearing in the evidence against him sets up his

own version and seeks to explain his conduct

pleading that he has committed no offence, the

statement of the accused can only be taken into

consideration in its entirety.” (emphasis supplied)

Sub-section (1) of Section 313 corresponds to sub-section

(1) of Section 342 of the old Code, except that it now

stands bifurcated in two parts with the proviso added

thereto clarifying that in summons cases where the

presence of the accused is dispensed with, his

examination under clause (b) may also be dispensed with.

Sub-section (2) of Section 313 reproduces the old sub-

section (4), asd the present sub-section (3) corresponds

to the old sub-section (2) except for the change

necessitated on account of the abolition of the jury

system. The present sub-section (4) with which we are

concerned is a verbatim reproduction of the old sub-

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section (3). Therefore, the aforestated observations apply

with equal force.”

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

Mohan Singh v. Prem Singh, (2002) 10 SCC 236: 2003 SCC (Cri)

1514: 2002 SCC OnLine SC 933, that the statement made by the

accused under Section 313 Cr.P.C. can be used to lend credence to

the evidence led by the prosecution, but a part of such statement

cannot form the sole basis for conviction. It was observed at

page 244: -

27. The statement made in defence by the accused under

Section 313 CrPC can certainly be taken aid of to lend

credence to the evidence led by the prosecution, but only

a part of such statement under Section 313 of the Code of

Criminal Procedure cannot be made the sole basis of his

conviction. The law on the subject is almost settled that

the statement under Section 313 CrPC of the accused can

either be relied on in whole or in part. It may also be

possible to rely on the inculpatory part of his statement if

the exculpatory part is found to be false on the basis of

the evidence led by the prosecution. See Nishi Kant Jha v.

State of Bihar (1969) 1 SCC 347: AIR 1969 SC 422: (SCC pp.

357-58, para 23)

“23. In this case, the exculpatory part of the

statement in Exhibit 6 is not only inherently

improbable but is contradicted by the other

evidence. According to this statement, the injury

that the appellant received was caused by the

appellant's attempt to catch hold of the hand of Lal

Mohan Sharma to prevent the attack on the victim.

This was contradicted by the statement of the

accused himself under Section 342 CrPC to the effect

that he had received the injury in a scuffle with a

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herdsman. The injury found on his body when he

was examined by the doctor on 13-10-1961,

negatives of both these versions. Neither of these

versions accounts for the profuse bleeding which led

to his washing his clothes and having a bath in River

Patro, the amount of bleeding and the washing of

the bloodstains being so considerable as to attract

the attention of Ram Kishore Pandey, PW 17 and

asking him about the cause thereof. The bleeding

was not a simple one as his clothes all got stained

with blood, as also his books, his exercise book, his

belt and his shoes. More than that, the knife which

was discovered on his person was found to have

been stained with blood according to the report of

the Chemical Examiner. According to the post-

mortem report, this knife could have been the cause

of the injuries on the victim. In circumstances like

these, there being enough evidence to reject the

exculpatory part of the statement of the appellant in

Exhibit 6, the High Court had acted rightly in accepting

the inculpatory part and piercing the same with the

other evidence to come to the conclusion that the

appellant was the person responsible for the crime.”

(emphasis supplied)

21. It was laid down in Ramnaresh v. State of Chhattisgarh,

(2012) 4 SCC 257: (2012) 2 SCC (Cri) 382: 2012 SCC OnLine SC 213,

that the statement of the accused under Section 313 Cr.P.C., in so

far as it supports the case of the prosecution, can be used

against him for rendering a conviction. It was observed at page

275: -

“52. It is a settled principle of law that the obligation to

put material evidence to the accused under Section 313

CrPC is upon the court. One of the main objects of

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recording a statement under this provision of the CrPC is

to give an opportunity to the accused to explain the

circumstances appearing against him as well as to put

forward his defence, if the accused so desires. But once he

does not avail this opportunity, then consequences in law

must follow. Where the accused takes benefit of this

opportunity, then his statement made under Section 313

CrPC, insofar as it supports the case of the prosecution,

can be used against him for rendering a conviction. Even

under the latter, he faces the consequences in law.”

22. This position was reiterated in Ashok Debbarma v.

State of Tripura, (2014) 4 SCC 747: (2014) 2 SCC (Cri) 417: 2014 SCC

OnLine SC 199, and it was held that the statement of the accused

recorded under Section 313 Cr.P.C. can be used to lend

corroboration to the statements of prosecution witnesses. It

was held at page 761: -

24. We are of the view that, under Section 313 statement,

if the accused admits that, from the evidence of various

witnesses, four persons sustained severe bullet injuries

by the firing by the accused and his associates, that

admission of guilt in Section 313 statement cannot be

brushed aside. This Court in State of Maharashtra v.

Sukhdev Singh [(1992) 3 SCC 700: 1992 SCC (Cri) 705 held

that since no oath is administered to the accused, the

statement made by the accused under Section 313 CrPC

will not be evidence stricto sensu and the accused, of

course, shall not render himself liable to punishment

merely on the basis of answers given while he was being

examined under Section 313 CrPC. But, sub-section (4)

says that the answers given by the accused in response to

his examination under Section 313 CrPC can be taken

into consideration in such an inquiry or trial. This Court

in Hate Singh Bhagat Singh v. State of Madhya Bharat, 1951

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SCC 1060: AIR 1953 SC 468: 1953 Cri LJ 1933 held that the

answers given by the accused under Section 313

examination can be used for proving his guilt as much as

the evidence given by the prosecution witness. In Narain

Singh v. State of Punjab (1964) 1 Cri LJ 730: (1963) 3 SCR

678, this Court held that when the accused confesses to

the commission of the offence with which he is charged,

the court may rely upon the confession and proceed to

convict him.

25. This Court in Mohan Singh v. Prem Singh (2002) 10

SCC 236: 2003 SCC (Cri) 1514 held that: (SCC p. 244, para

27)

“27. The statement made in defence by the

accused under Section 313 CrPC can certainly be

taken aid of to lend credence to the evidence led

by the prosecution, but only a part of such

statement under Section 313 CrPC cannot be

made the sole basis of his conviction.”

In this connection, reference may also be made to the

judgments of this Court in Devender Kumar Singla v.

Baldev Krishan Singla (2005) 9 SCC 15: 2005 SCC (Cri) 1185

and Bishnu Prasad Sinha v. State of Assam (2007) 11 SCC

467: (2008) 1 SCC (Cri) 766. The abovementioned decisions

would indicate that the statement of the accused under

Section 313 CrPC for the admission of his guilt or

confession as such cannot be made the sole basis for

finding the accused guilty, the reason being he is not

making the statement on oath, but all the same the

confession or admission of guilt can be taken as a piece of

evidence since the same lends credence to the evidence

led by the prosecution.

26. We may, however, indicate that the answers given by

the accused while examining him under Section 313, fully

corroborate the evidence of PW 10 and PW 13 and hence

the offences levelled against the appellant stand proved

and the trial court and the High Court have rightly found

him guilty for the offences under Sections 326, 436 and

302 read with Section 34 IPC.”

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23. Therefore, the learned Court below had rightly relied

upon the statement of the accused to corroborate the testimony

of Sangeeta Gautam (CW1).

24. It was submitted that the statement of account

(Ex.CW1/F) mentions a zero balance on 6.7.2017, and no amount

was due to the bank as per the statement of account. This

submission cannot be accepted. Sangeeta Gautam (CW1) stated

in her cross-examination that the liability was shown as zero

because the account was declared a non-performing asset. The

amount was transferred from the main account to the NPA

account, and the balance was shown as zero. This is a valid

explanation, and there is nothing to doubt this explanation.

Further, the cheque was issued on 20.6.2017 and an amount of

₹1,74,627/- was due on 31.5.2017. Any subsequent payment,

even if made by the accused, would not wipe out the offence. It

was laid down by the Hon’ble Supreme Court in Rajneesh

Aggarwal v. Amit J. Bhalla, (2001) 1 SCC 631, that any payment

made after the cause of action had arisen would not wipe out the

offence. It was observed: -

7. So far as the question of deposit of the money during the

pendency of these appeals is concerned, we may state that in

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course of hearing the parties wanted to settle the matter in

Court and it is in that connection, to prove the bona fides,

the respondent deposited the amount covered under all the

three cheques in the Court, but the complainant's counsel

insisted that if there is going to be a settlement, then all the

pending cases between the parties should be settled, which

was, however not agreed to by the respondent and,

therefore, the matter could not be settled. So far as the

criminal complaint is concerned, once the offence is

committed, any payment made subsequent thereto will not

absolve the accused of the liability of criminal offence,

though in the matter of awarding of sentence, it may have

some effect on the court trying the offence. But by no stretch

of imagination, a criminal proceeding could be quashed on

account of the deposit of money in the court or that an order

of quashing of a criminal proceeding, which is otherwise

unsustainable in law, could be sustained because of the

deposit of money in this Court. In this view of the matter,

the so-called deposit of money by the respondent in this

Court is of no consequence.

25. Thus, no advantage can be derived from the zero-

balance shown in the statement of account.

26. It was submitted that the cheque was issued as a

security at the time of taking the loan. This submission is

without any basis because the accused never claimed that he had

issued the cheque as security. Rather, he claimed that he had

issued the cheque in partial discharge of the debt/liability. In

any case, it was laid down by this Court in Hamid Mohammad

Versus Jaimal Dass 2016 (1) HLJ 456, that even if the cheque is

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issued towards the security, the accused is liable. It was

observed:

“9. Submission of learned Advocate appearing on behalf of

the revisionist that the cheque in question was issued to the

complainant as security, and on this ground, the criminal

revision petition is rejected as being devoid of any force for

the reasons hereinafter mentioned. As per Section 138 of the

Negotiable Instruments Act 1881, if any cheque is issued on

account of other liability, then the provisions of Section 138

of the Negotiable Instruments Act 1881 would be attracted.

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

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

cheque Ext. C-1, that cheque was issued as a security cheque.

It is well-settled law that a cheque issued as security would

also come under the provisions of Section 138 of the

Negotiable Instruments Act 1881. See 2016 (3) SCC page 1

titled Don Ayengia v. State of Assam & another. It is well-

settled law that where there is a conflict between former law

and subsequent law, then subsequent law always prevails.”

27. It was laid down by the Hon'ble Supreme Court in

Sampelly Satyanarayana Rao vs. Indian Renewable Energy

Development Agency Limited 2016(10) SCC 458 that issuing a

cheque towards security will also attract the liability for the

commission of an offence punishable under Section 138 of the NI

Act. It was observed: -

“10. We have given due consideration to the submission

advanced on behalf of the appellant as well as the

observations of this Court in Indus Airways Private Limited

versus Magnum Aviation Private Limited (2014) 12 SCC 53

with reference to the explanation to Section 138 of the Act

and the expression “for the discharge of any debt or other

liability” occurring in Section 138 of the Act. We are of the

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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.

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

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difference between a transaction of the purchase order

which is cancelled and that of a loan transaction where the

loan has actually been advanced, and its repayment is due

on the date of the cheque.

13. The crucial question to determine the applicability of

Section 138 of the Act is whether the cheque represents the

discharge of existing enforceable debt or liability, or

whether it represents an advance payment without there

being a subsisting debt or liability. While approving the

views of different High Courts noted earlier, this is the

underlying principle as can be discerned from the discussion

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

supplied)

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

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

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

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

dishonour. It was observed:

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

transaction cannot be considered a worthless piece of paper

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

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

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

deposited or pledged to make certain the fulfilment of an

obligation to which the parties to the transaction are bound.

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

agrees to repay the amount in a specified timeframe and

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

loan amount is not repaid in any other form before the due

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

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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 the cheque to dictate terms

with regard to the nature of litigation.”

29. The accused never disputed his liability to pay the

amount; rather, he sought two months’ time to pay the amount.

Therefore, the existence of liability was not disputed, and the

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complainant was entitled to present the cheque even if it was

issued as security.

30. Sangeeta Gautam (CW1) stated that the cheque was

dishonoured with an endorsement ‘funds insufficient’. The

accused admitted this fact in his statement recorded under

Section 313 Cr.P.C. Therefore, it was proved that the cheque was

dishonoured with an endorsement ‘funds insufficient’.

31. Sangeeta Gautam (CW1) stated that the notice was

issued to the accused asking him to repay the amount of

₹30,000/- within 15 days of the receipt of the notice. This notice

was delivered to the accused. She exhibited the

acknowledgement (Ex.CW1/E), which bears the signatures of

someone. The accused admitted the receipt of the notice.

Therefore, it was proved that the notice was served upon the

accused.

32. The accused did not claim that he had repaid the

amount after the receipt of the notice of demand. He claimed

that he had paid ₹26,000/- to the bank; however, no such entry

was made in the statement of account. He did not examine any

witness to prove the payment of ₹26,000/- to the complainant.

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Thus, learned Courts below had rightly held that the accused had

failed to prove the payment of money despite the receipt of

notice.

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

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

dishonoured with an endorsement, “insufficient funds”, and the

accused failed to repay the amount despite the receipt of a valid

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

of an offence punishable under Section 138 of the NI Act were

satisfied.

34. Learned Trial Court sentenced the accused to

undergo simple imprisonment for three 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 SC 138 that the penal provisions of Section

138 of the NI 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

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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.”

35. Therefore, the sentence of three months is not

excessive.

36. Learned Trial Court imposed a fine of ₹60,000/-. The

cheque was issued on 20.6.2017. The fine was imposed on

1.12.2018 after the lapse of one and a half years. The complainant

lost the interest that it would have gained by lending the money

to various borrowers. It had incurred the legal expenses for

prosecuting the complaint before the learned Trial Court. 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: -

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

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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]”

37. The interest @9% for 18 months is ₹4,050/-. Thus,

the compensation of ₹60,000/- on an amount of ₹30,000/- is

not justified and is ordered to be reduced to ₹40,000/-.

38. No other point was urged.

39. In view of the above, the revision is partly allowed,

and the fine amount is ordered to be reduced to ₹40,000/- from

₹60,000/-. Subject to this modification, the rest of the

judgments and order passed by the learned Courts below are

upheld.

40. A copy of this judgment along with records of the

learned Courts below be transmitted forthwith.

(Rakesh Kainthla)

Judge

1

st

January, 2026

(Chander)