2026:HHC:21284

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. Revision No. 214 of 2026

Reserved on: 24.04.2026

Decided on: 03.06.2026.

Vishwanath ...…. Petitioner

Versus

Deep Kumar …. Respondent

Coram

Hon’ble Mr Justice Rakesh Kainthla, Judge.

Whether approved for reporting?

1 No.

For the Petitioner : Mr Paras Ram, Advocate, vice

Mr B.R. Kashyap, Advocate.

For the Respondents : Mr Ajit Sharma, Advocate, for

respondent No.2.

Rakesh Kainthla, Judge

The present revision is directed against the

judgment dated 03.01.2026 passed by the learned Sessions

Judge, Hamirpur, District Hamirpur, H.P. (learned Appellate

Court) vide which judgment of conviction dated 26.05.2025 and

order of sentence dated 28.05.2025 passed by the learned

Judicial Magistrate, First Class, Court No. III, Hamirpur, District

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

1

Whether the reporters of the 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 before the

learned Trial Court against the accused for the commission of

an offence punishable under Section 138 of the Negotiable

Instruments Act, 1881 (in short, 'NI Act'). It was asserted that

the accused had issued a cheque of ₹9,00,000/- in the

complainant’s favour to discharge his legal liability . The

complainant presented the cheque for collection to the bank,

but it was dishonoured with the remarks ‘insufficient funds’.

The complainant issued a notice to the accused, which was duly

served upon him. The accused failed to pay the amount; hence,

the complaint was filed before the court to take 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.

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4. The complainant examined himself (CW-1) to prove

his complaint.

5. The accused, in his statement recorded under

Section 313 of the Code of Criminal Procedure (Cr.P.C.), claimed

that he had borrowed ₹4,50,000/- from the complainant and

issued a blank security cheque, which was misused by the

complainant. He examined Sudesh Kumar (DW1) to prove his

defence.

6. The learned Trial Court held that the accused had

not disputed his signature on the cheque, and the presumption

under Section 118 (a) and Section 139 of the NI Act would be

triggered that the cheque was issued for the consideration to

discharge the debt/liability. The plea taken by the accused that

he had borrowed ₹4,50,000/-which was repaid by him, was not

believable. The accused had failed to rebut the presumption

attached to the cheque. The legal notice was sent to the accused,

and he refused to accept it, which is a deemed service. The

cheque was dishonoured with an endorsement of ‘insufficient

funds’. The accused had failed to repay the amount despite the

deemed service of notice. Hence , the learned Trial Court

convicted the accused of the commission of an offence

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punishable under Section 138 of the NI Act and sentenced him to

undergo simple imprisonment for five months, pay a fine of

₹10,00,000/- and in default of payment of fine to undergo

further simple imprisonment for 40 days.

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, District

Hamirpur, H.P. (learned Appellate). The Appellate Court

concurred with the findings recorded by the learned Trial Court

that the accused had admitted the signatures and the issuance

of the cheque. The plea taken by him that he had borrowed

₹4,50,000 from the complainant and had returned it was not

proved. The statement of S udesh Kumar (DW -1) was not

satisfactory. The cheque was dishonoured with an endorsement

‘insufficient funds’. The accused had refused to accept the

notice, which is a deemed service. He had also not paid any

money to the complainant after the receipt of the summons

from the Court. All the ingredients of the commission of an

offence punishable under Section 138 of the NI Act were duly

satisfied. Learned Trial Court had imposed an adequate

sentence, and no interference was required with the judgment

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and order passed by the learned Trial Court; hence, the appeal

filed by the accused was dismissed.

8. The accused has filed the present revision asserting

that the learned Courts below failed to appreciate that the

amount was given in the year 2022 and the cheque was issued in

the year 2024, which made the defence of the accused probable

that the cheque was issued as a security. The complainant had

not produced the income tax return to show that he had

mentioned the amount in his return. 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 Paras Ram, learned vice counsel

representing the petitioner and Mr Ajit Sharma, learned Deputy

Advocate General, for the respondent No.2/State.

10. Mr Paras Ram, learned vice counsel representing the

petitioner, submitted that the learned Courts below erred in

appreciating the material on record. As per the complainant, the

loan was advanced in 2022, and the cheque was handed over in

the year 2024, which supports the defence taken by the accused

that he had taken the loan from the complainant and issued a

security cheque to the complainant. The statement of Sudesh

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Kumar (DW-1) was rejected without any cogent reasons. The

complainant failed to produce a copy of the income tax return,

and there was nothing on record to show that the complainant

had the financial capacity to advance the money to the accused.

Therefore, it was prayed that the present revision be allowed

and the judgments and order passed by the learned Courts

below be set aside.

11. Mr Ajit Sharma, learned Deputy Advocate General,

for respondent No.2/State submitted that the dispute is between

the private parties and the State has nothing to say in the

matter.

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

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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

which 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.

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

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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 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

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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 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 hesi tation 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

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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 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

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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. The present revision has to be decided as per the

parameters laid down by the Hon’ble Supreme Court.

18. The accused admitted in his statement recorded

under Section 313 of the Cr.P.C. that he had issued the cheque.

However, he claimed that he had issued a blank cheque as

security. Thus, the issuance of the cheque and the signatures on

the cheque are not in dispute. 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

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liability. Of course, such a presumption is rebuttable.

However, to rebut the presumption, the accused was

required to lead evidence that the full amount due and

payable to the complainant had been paid. In the present

case, no such evidence has been led by the accused. The

story put forward by the accused that the cheques were

given by way of security is not believable in the absence

of further evidence to rebut the presumption, and more

particularly, the cheque in question was issued for the

second time after the earlier cheques were dishonoured.

Therefore, both the courts below have materially erred in

not properly appreciating and considering the

presumption in favour of the complainant that there

exists a legally enforceable debt or liability as per Section

139 of the NI Act. It appears that both the learned trial

court 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 a 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.”

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

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

as under:

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

instrument is made or drawn for consideration, while

Section 139 creates a presumption that the holder of a

cheque has received the cheque in discharge of a debt or

liability. Presumptions under both are rebuttable,

meaning they can be rebutted by the accused by raising a

probable defence.”

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20. This position was reiterated in Sanjabij Tari v.

Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was

observed:

“ONCE EXECUTION OF A CHEQUE IS ADMITTED,

PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF THE NI

ACT ARISE

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

admittedly been signed by the Respondent No. 1 -

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

of the cheque is admitted, the presumption under

Section 118 of the NI Act that the cheque in question was

drawn for consideration and the presumption under

Section 139 of the NI Act that the holder of the cheque

received the said cheque in discharge of a legally

enforceable debt or liability arises against the accused. It

is pertinent to mention that observations to the contrary

by a two-Judge Bench in Krishna Janardhan Bhat v.

Dattatraya G. Hegde, (2008) 4 SCC 54, have been set aside

by a three-Judge Bench in Rangappa (supra).

16. This Court is further of the view that by creating this

presumption, the law reinforces the reliability of cheques

as a mode of payment in commercial transactions.

17. Needless to mention that the presumption

contemplated under Section 139 of the NI Act is a

rebuttable presumption. However, the initial onus of

proving that the cheque is not in discharge of any debt or

other liability is on the accused/drawer of the cheque

[See: Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197].

21. Thus, the Court has to start with the presumption

that the cheque was issued in discharge of the liability for

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

presumption.

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22. The complaint stated in his cross-examination that

he works as a Manager in Hamir Hospital and earns ₹23,000/-

as monthly salary. He filed the income tax return, which was

‘nil’ for the year 2023-24.

23. It was submitted that the accused had failed to

establish the financial capacity to advance the loan to the

complainant. This submission will not help the accused. It was

laid down by the Hon’ble Supreme Court in Tedhi Singh v.

Narayan Dass Mahant, (2022) 6 SCC 735: 2022 SCC OnLine SC 302

that the complainant is not required to show his financial

capacity unless it is challenged by sending a reply to the notice.

It was observed at page 740:

“10. The trial court and the first appellate court have

noted that in the case under Section 138 of the NI Act, the

complainant need not show in the first instance that he

had the capacity. The proceeding under Section 138 of the

NI Act is not a civil suit. At the time, when the

complainant gives his evidence, unless a case is set up in

the reply notice to the statutory notice sent, that the

complainant did not have the wherewithal, it cannot be

expected of the complainant to initially lead evidence to

show that he had the financial capacity. To that extent,

the courts in our view were right in holding on those

lines….”

24. In the present case, the accused asserted in the

application filed under Section 145 (2) of the NI Act that he had

no dischargeable debt. He never challenged the financial

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capacity of the complainant, and the complainant was not

required to prove his financial capacity.

25. It was submitted that the complainant had not filed

the income tax return to show that he had mentioned the loan

amount in the income tax return. This submission will not help

the accused. It was laid down by this Court in Surinder Singh vs.

State of H.P. 2018(1) D.C.R. 45 that the failure to mention the loan

in the income tax return will not entitle the accused to acquittal.

It was observed: -

10. It would further be noticed that the learned trial

Magistrate has acquitted the accused on the ground that

the loan has not been shown in the Income Tax Return

furnished by the complainant, and while recording such

finding, has placed reliance upon the judgment of the

Hon'ble Delhi High Court in Vipul Kumar Gupta vs. Vipin

Gupta 2012 (V) AD (CRI) 189 . However, after having

perused the said judgment, it would be noticed that the

amount in the said case was ₹ 9 lacs, and it is in that

background that the Court observed as under: -

"9. I find myself in agreement with the reasoning

given by the learned ACMM that before a person is

convicted for having committed an offence under

Section 138 of the Act, it must be proved beyond a

reasonable doubt that the cheque in question,

which has been made as a basis for prosecuting the

respondent/accused, must have been issued by

him in the discharge of his liability or a legally

recoverable debt. In the facts and circumstances of

this case, there is every reason to doubt the version

given by the appellant that the cheque was issued

in the discharge of a liability or a legally

recoverable debt. The reasons for this are a

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number of factors that have been enumerated by

the learned ACMM also. Some of them are that

non-mentioning by the appellant in his Income

Tax Return or the Books of Accounts, the factum of

the loan having been given by him because by no

measure, an amount of ₹ 9,00,000/- can be said to

be a small amount which a person would not

reflect in his Books of Accounts or the Income Tax

Return, in case the same has been lent to a person.

The appellant, neither in the complaint nor in his

evidence, has mentioned the date, time or year

when the loan was sought or given. The appellant

has presented a cheque, which obviously is written

with two different inks, as the signature appears in

one ink, while the remaining portion, which has

been filled in the cheque, is in a different ink. All

these factors prove the defence of the respondent

to be plausible to the effect that he had issued

these cheques by way of security to the appellant

for getting a loan from the Prime Minister Rojgar

Yojana. The respondent/accused has only to create

doubt in the version of the appellant, while the

appellant has to prove the guilt of the accused

beyond a reasonable doubt, in which, in my

opinion, he has failed miserably. There is no

cogent reason which has been shown by the

appellant which will persuade this Court to grant

leave to appeal against the impugned order, as

there is no infirmity in the impugned order."

26. It was submitted that the cheque was issued in the

year 2024, whereas the loan was advanced in the year 2022. The

fact that no action was taken for two years supports the version

of the accused that he had issued the cheque as security to the

complainant. This submission is not acceptable . A person

getting the loan from the other is not expected to p ay it

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immediately because, had he the means to repay the amount, he

would not have taken the loan in the first instance. Thus, it

cannot be expected in a loan transaction that the amount would

be paid immediately after the loan is taken, and a time lapse is

inevitable. Thus, the mere fact that the accused had issued the

cheque after two years does not falsify the complainant’s case.

27. The accused examined Suresh Kumar (DW-1). He

stated that the accused intended to sell his land to the

complainant, and transferred ₹4,50,000/- to the account of the

accused. The complainant took a blank cheque from the accused

and did not pay any cash to the accused. He stated in his cross-

examination that an agreement to sell was executed between

the complainant and the accused, and he had witnessed the

agreement.

28. The statement made by this witness was contrary to

the defence taken by the accused in his statement r ecorded

under section 313 of the Cr.P.C., wherein the accused had

claimed that the money was borrowed by him from the

complainant and the cheque was issued as security. The accused

nowhere claimed that any sale agreement was executed.

Secondly, the learned Courts below had rightly pointed out that

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the agreement to sell was not produced to corroborate his

version. Thirdly, his statement is inherently suspect. If the

complainant intended to purchase the land from the accused

and had paid ₹4,50,000/-/-, the complainant would have filed a

suit for specific performance. The complainant could never

have contemplated at the time of executing the agreement to

sell that the accused would not sell the land to him. The

complainant would have gained nothing by the blank cheque

when he had intended to purchase the land . Therefore, the

learned Courts below had rightly rejected the testimony of

Sudesh Kumar (DW-1).

29. It was submitted that the complainant had not

produced any record of the withdrawal of the money . This

submission will not help the accused. The accused did not

dispute the receipt of ₹4,50,000/- from the complainant. He

admitted this fact in his statement recorded under section 313 of

the Cr. P.C. and his witness also admitted that the amount of

₹4,50,000/- was transferred to the account of the accused.

Thus, the part of the transaction is not disputed. As far as the

rest is concerned, the cheque carries with it a presumption of

consideration and the complainant is not required to prove the

existence of consideration. It was laid down by the Hon’ble

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Supreme Court in Uttam Ram v. Devinder Singh Hudan, (2019) 10

SCC 287: 2019 SCC OnLine SC 1361, that a presumption under

Section 139 of the NI Act would obviate the requirement to

prove the existence of consideration. It was observed:

“20. Th̨ e trial court and the High Court proceeded as if

the appellant was to prove a debt before the civil court,

wherein the plaintiff is required to prove his claim on the

basis of evidence to be laid in support of his claim for the

recovery of the amount due. An dishonour of a cheque

carries a statutory presumption of consideration. The

holder of the cheque in due course is required to prove

that the cheque was issued by the accused and that when

the same was presented, it was not honoured. Since there

is a statutory presumption of consideration, the burden

is on the accused to rebut the presumption that the

cheque was issued not for any debt or other liability.”

30. This position was reiterated in Ashok Singh v. State of

U.P., 2025 SCC OnLine SC 706, wherein it was observed:

“22. The High Court while allowing the criminal revision

has primarily proceeded on the presumption that it was

obligatory on the part of the complainant to establish his

case on the basis of evidence by giving the details of the

bank account as well as the da te and time of the

withdrawal of the said amount which was given to the

accused and also the date and time of the payment made

to the accused, including the date and time of receiving

of the cheque, which has not been done in the present

case. Pausing here , such presumption on the

complainant, by the High Court, appears to be

erroneous. The onus is not on the complainant at the

threshold to prove his capacity/financial wherewithal to

make the payment in discharge of which the cheque is

alleged to have been issued in his favour. Only if an

objection is raised that the complainant was not in a

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financial position to pay the amount so claimed by him

to have been given as a loan to the accused, only then

would the complainant would have to bring before the

Court cogent material to indicate that he had the

financial capacity and had actually advanced the amount

in question by way of loan. In the case at hand, the

appellant had categorically stated in his deposition and

reiterated in the cross-examination that he ha d

withdrawn the amount from the bank in Faizabad

(Typed Copy of his deposition in the paperbook wrongly

mentions this as ‘Firozabad’). The Court ought not to

have summarily rejected such a stand, more so when

respondent no. 2 did not make any serious attem pt to

dispel/negate such a stand/statement of the appellant.

Thus, on the one hand, the statement made before the

Court, both in examination -in-chief and cross-

examination, by the appellant with regard to

withdrawing the money from the bank for giving it to

the accused has been disbelieved, whereas the argument

on behalf of the accused that he had not received any

payment of any loan amount has been accepted. In our

decision in S. S. Production v. Tr. Pavithran Prasanth, 2024

INSC 1059, we opined:

‘8. From the order impugned, it is clear that though

the contention of the petitioners was that the said

amounts were given for producing a film and were not

by way of return of any loan taken, which may have

been a probable defence for the petitioners in the case,

but rightly, the High Court has taken the view that

evidence had to be adduced on this point which has

not been done by the petitioners. Pausing here, the

Court would only comment that the reasoning of the

High Court, as well as the First Appellate Court and

Trial Court, on this issue is sound. Just by taking a

counter-stand to raise a probable defence would not

shift the onus on the complainant in such a case, for

the plea of defence has to be buttressed by evidence,

either oral or documentary, which in the present case

has not been done. Moreover, even if it is presumed

that the complainant had not proved the source of the

21

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money given to the petitioners by way of loan by

producing statement of accounts and/or Income Tax

Returns, the same ipso facto, would not negate such

claim for the reason that the cheques having being

issued and signed by the petitioners has not been

denied, and no evidence has been led to show that the

respondent lacked capacity to provide the amount(s)

in question. In this regard, we may make profitable

reference to the decision in Tedhi Singh v. Narayan

Dass Mahant, (2022) 6 SCC 735:

‘10. The trial court and the first appellate court

have noted that in the case under Section 138 of

the NI Act, the complainant need not show in the

first instance that he had the capacity. The

proceedings under Section 138 of the NI Act are not

a civil suit. At the time, when the complainant

gives his evidence, unless a case is set up in the

reply notice to the statutory notice sent, that the

complainant did not have the wherewithal, it

cannot be expected of the complainant to initially

lead evidence to show that he had the financial

capacity. To that extent, the courts in our view

were right in holding on those lines. However, the

accused has the right to demonstrate that the

complainant in a particular case did not have the

capacity and therefore, the case of the accused is

acceptable, which he can do by producing

independent materials, namely, by examining his

witnesses and producing documents. It is also

open to him to establish the very same aspect by

pointing to the materials produced by the

complainant himself. He can further, more

importantly, further achieve this result through

the cross-examination of the witnesses of the

complainant. Ultimately, it becomes the duty of

the courts to consider carefully and appreciate the

totality of the evidence and then come to a

conclusion whether, in the given case, the accused

has shown that the case of the complainant is in

peril for the reason that the accu sed has

22

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established a probable defence. ’(emphasis

supplied)’ (underlining in original; emphasis

supplied by us in bold).

31. A similar view was taken in Sanjay Sanjabij Tari v.

Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was

observed: -

“21. This Court also takes judicial notice of the fact that

some District Courts and some High Courts are not

giving effect to the presumptions incorporated in

Sections 118 and 139 of the NI Act and are treating the

proceedings under the NI Act as another civil recovery

proceedings and are directing the complainant to prove

the antecedent debt or liability. This Court is of the view

that such an approach is not only prolonging the trial but

is also contrary to the mandate of Parliament, namely,

that the drawer and the bank must honour the cheque;

otherwise, trust in cheques would be irreparably

damaged.”

32. It was submitted that the complainant claimed to

have advanced ₹4,50,000/- in cash, which is violative of

Section 269SS of the Income Tax Act. Therefore, no action can

be taken upon such an advance. This submission will not help

the accused. It was laid down by this Court in Surinder Singh vs.

State of H.P. 2018(1) D.C.R. 45 that contravention of Section 269

SS of the Income Tax Act will give rise to a penalty, but will not

invalidate the transaction. It was observed: -

5. The relevant portion of Section 269 SS of the IT Act

reads thus: -

23

2026:HHC:21284

"(a) the amount of such loan or deposit or the

aggregate amount of such loan and deposit' or

(b) on the date of taking or accepting such

loan or deposit, any loan or deposit taken or

accepted earlier by such person from the

depositor is remaining unpaid (whether

repayment has fallen due or not), the amount

or the aggregate amount remaining unpaid; or

(c) The amount or the aggregate amount

referred to in clause (a) together with the

amount or the aggregate amount referred to in

clause (b), is (twenty) thousand rupees or

more. Provided......"

6. Section 271D provides for a penalty for failure to

comply with the aforesaid provisions, which reads

thus:

"271D. Penalty for failure to comply with the

provisions of Section 269-SS - (1) If a person

takes or accepts any loan or deposit in

contravention of the provisions of Section

269-SS, he shall be liable to pay, by way of

penalty, a sum equal to the amount of the loan

or deposit so taken or accepted.

(2) Any penalty impossible under sub-section

(1) shall be imposed by the Joint

Commissioner."

7. A collective reading of both the aforesaid Sections

would go to show that even though contravention of

Section 269-SS of the IT Act would be visited with a

strict penalty on the person taking the loan or deposit.

However, Section 271D does not in any manner suggest

or even provide that such a transaction would be null

and void. The payer of money in cash, in violation of

Section 269 SS of the IT Act, can always have the

money recovered.

8. The object of introducing Section 269 of the IT

Act has been succinctly set out by the Hon'ble

Supreme Court in Asstt. Director of Inspection

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2026:HHC:21284

Investigation vs. A.B. Shanthi (2002) 6 SCC 259,

wherein it was observed as under: -

"8. The object of introducing Section 269-SS

is to ensure that a taxpayer is not allowed to

give a false explanation for his unaccounted

money, or if he has given some false entries in

his accounts, he shall not escape by giving

false entries in his accounts, he shall not

escape by giving a false explanation for the

same. During search and seizures,

unaccounted money is unearthed, an d the

taxpayer would usually give the explanation

that he had borrowed or received deposits

from his relatives or friends, and it is easy for

the so-called lender also to manipulate his

records later to suit the plea of the taxpayer.

The main objection of Section 269-SS was to

curb this menace."

9. In light of the aforesaid observations, it cannot but be

said that Section 269-SS only provides for the mode of

accepting payment or repayment in certain cases so as to

counteract evasion of tax. However, Section 269-SS does

not declare all transactions of loans by cash in excess of

₹20,000/- as invalid, illegal or null and void, as the main

object of introducing the provision was to curb and

unearth black money.

33. A similar view was taken by the Hon’ble Supreme

Court in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC

2069, wherein it was observed:

“19. Recently, the Kerala High Court in P.C. Hari v. Shine

Varghese, 2025 SCC OnLine Ker 5535 has taken the view

that a debt created by a cash transaction above

₹20,000/- (Rupees Twenty Thousand) in violation of the

provisions of Section 269SS of the Income Tax Act, 1961

(for short ‘IT Act, 1961’) is not a ‘legally enforceable

debt’ unless there is a valid explanation for the same,

meaning thereby that the presumption under Section 139

25

2026:HHC:21284

of the Act will not be attracted in cash transactions above

₹ 20,000/- (Rupees Twenty Thousand).

20. However, this Court is of the view that any breach of

Section 269SS of the IT Act, 1961, is subject to a penalty

only under Section 271D of the IT Act, 1961. Further,

neither Section 269SS nor 271D of the IT Act, 1961 states

that any transaction in breach thereof will be illegal,

invalid or statutorily void. Therefore, any violation of

Section 269SS would not render the transaction

unenforceable under Section 138 of the NI Act or rebut

the presumptions under Sections 118 and 139 of the NI

Act because such a person, assuming him/her to be the

payee/holder in due course, is liable to be visited by a

penalty only as prescribed. Consequently, the view that

any transaction above Rs. 20,000/ - (Rupees Twenty

Thousand) is illegal and void and therefore does not fall

within the definition of ‘legally enforceable debt’ cannot

be countenanced. Accordingly, the conclusion of law in

P.C. Hari (supra) is set aside.”

34. Hence, the transaction cannot be disputed because

part of it was carried out in cash.

35. Therefore, the learned Courts below had rightly held

that the accused had failed to rebut the presumption attached to

the cheque and the cheque was issued in the complainant’s

favour to discharge the debt/liability.

36. The complainant asserted that the cheque was

dishonoured with remarks ‘insufficient funds’. This is duly

corroborated by the cheque returning memo (Ext.CW-1/C),

wherein the reason for dishono ur was mentioned as

‘insufficient funds’. It was laid down by the Hon’ble Supreme

26

2026:HHC:21284

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.”

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

rebut the presumption, and the learned Courts below had

rightly held that the cheque was dishonoured with an

endorsement ‘insufficient funds.’

38. The complainant asserted that he had issued a

notice, but the accused refused to receive it. This is duly

corroborated by the registered cover (Ext.CW-1/F), which bears

the endorsement ‘refused’. It was suggested to the complainant

that an incorrect endorsement was made in connivance with the

postal staff. The complainant denied such a suggestion. Learned

Appellate Court had rightly pointed out that official acts are

presumed to have been done regularly, and a denied suggestion

is not sufficient to rebut this presumption.

27

2026:HHC:21284

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

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

when a notice is returned with an endorsement ‘refused’, it is

deemed to be served. It was observed:

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

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

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

any significant difference between the two so far as the

presumption of service is concerned?" It was observed

that though Section 138 of the Act does not require that

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

where the sender has dispatched the notice by post with

the correct address written on it, the principl e

incorporated in Section 27 of the General Clauses Act,

1897 (for short 'G.C. Act') could profitably be imported in

such a case. It was held that in this situation service of

notice is deemed to have been effected on the sendee

unless he proves that it was not really served and that he

was not responsible for such non-service.”

40. A similar view was taken in Krishna Swaroop Agarwal

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

observed:

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

with service by post:

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

Act] or Regulation made after the commencement of

this Act authorizes or requires any document to be

served by post, whether the expression “serve” or

either of the expressions “give” or “send” or any

other expression is used, then, unless a different

intention appears, the service shall be deemed to be

effected by properly addressing, pre-paying and

posting by registered post, a letter containing the

28

2026:HHC:21284

document, and, unless the contrary is proved, to have

been effected at the time at which the letter would be

delivered in the ordinary course of post”.

14. The concept of deemed service has been discussed by

this Court on various occasions. It shall be useful to

refer to some instances:

14.1 In Madan and Co. v. Wazir Jaivir Chand

(1989) 1 SCC 264, which was a case concerned

with the payment of arrears of rent under the

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

The proviso to Section 11, which is titled

“Protection of a Tenant against Evi ction”,

states that unless the landlord serves notice

upon the rent becoming due, through the Post

Office under a registered cover, no amount shall

be deemed to be in arrears. Regarding service of

notice by post, it was observed that in order to

comply with the proviso, all that is within the

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

registered letter containing the correct address

and nothing further. It is then presumed to be

delivered under Section 27 of the GC Act.

Irrespective of whether the addressee accepts or

rejects, “there is no difficulty, for the acceptance

or refusal can be treated as a service on, and

receipt by the addressee.”

14.2 In the context of Section138of the

Negotiable Instruments Act, 1881, it was held

that when the payee dispatches the notice by

registered post, the requirement under Clause

(b) of the proviso of Section 138 of the NI Act

stands complied with and the cause of action to

file a complaint arises on the expiry of that

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

Alavi Hajiv. Palapetty Mouhammed (2007) 6 SCC

555]

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

followed in Vishwabandhu v. Srikrishna (2021) 19

SCC 549. In this case, the summons issued by

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the Registered AD post was received back with

endorsement “refusal”. In accordance with

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

accept delivery of the summons would be

deemed to be due service in accordance with

law. To substantiate this view, a reference was

made to the judgment referred to supra.

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

adopted by this Court in various judgments of

this Court in Greater Mohali Area Development

Authority v. Manju Jain (2010) 9 SCC 157; Gujarat

Electricity Board v. Atmaram Sungomal Posani

(1989) 2 SCC 602; CIT v.V. K. Gururaj (1996) 7 SCC

275; Poonam Vermav. DDA (2007) 13 SCC 154;

Sarav Investment & Financial Consultancy (P) Ltd.

v. Lloyds Register of Shipping Indian Office Staff

Provident Fund (2007) 14 SCC 753; Union of India.

S.P. Singh (2008) 5 SCC 438; Municipal Corpn.,

Ludhianav. Inderjit Singh (2008) 13 SCC 506; and

V.N. Bharat v. DDA (2008) 17 SCC 321.

41. Therefore, the learned Courts below had rightly held

that notice was deemed to have been served upon the accused.

42. In any case, it was laid down in C.C. Allavi Haji vs.

Pala Pelly Mohd. 2007(6) SCC 555, that the person who claims

that he had not received the notice has to pay the amount

within 15 days from the date of the receipt of the summons from

the Court and in case of failure to do so, he cannot take the

advantage of the fact that notice was not received by him. It was

observed:

“It is also to be borne in mind that the requirement of

giving notice is a clear departure from the rule of

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Criminal Law, where there is no stipulation of giving

notice before filing a complaint. Any drawer who claims

that he did not receive the notice sent by post, can, within 15

days of receipt of summons from the court in respect of the

complaint under Section 138 of the Act, make payment of the

cheque amount and submit to the Court that he had made

payment within 15 days of receipt of summons (by receiving

a copy of the complaint with the summons) and, therefore,

the complaint is liable to be rejected. A person who does not

pay within 15 days of receipt of the summons from the Court,

along with a copy of the complaint under Section 138 of the

Act, cannot obviously contend that there was no proper

service of notice as required under Section 138, by ignoring

the statutory presumption to the contrary under Section 27 of

the G.C. Act and Section 114 of the Evidence Act. In our view,

any other interpretation of the proviso would defeat the

very object of the legislation. As observed in Bhaskaran’s

case (supra), if the giving of notice in the context of

Clause (b) of the proviso was the same as the receipt of

notice, a trickster cheque drawer would get the premium

to avoid receiving the notice by adopting different

strategies and escape from the legal consequences of

Section 138 of the Act.” (Emphasis supplied).

43. The accused did not claim that he had paid the

money to the complainant after receiving the summons from

the complainant.

44. Therefore, the learned Trial Court had rightly held

that the accused had issued the cheque to discharge his liability,

the cheque was dishonoured with an endorsement ‘insufficient

funds’ and the accused failed to pay the money despite the

deemed receipt of notice of demand. Hence, all the ingredients

of the commission of offences punishable under Section 138 of

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the NI Act were duly satisfied, and the learned Trial Court had

rightly convicted the accused for the commission of an offence

punishable under Section 138 of the NI Act.

45. Learned Trial Court had sentenced the accused to

undergo simple imprisonment for five months and pay a

compensation of ₹10,00,000/- to the complainant, and in

default of payment of fine, to undergo further simple

imprisonment for 40 days. 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 provision of section 138 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.”

46. Keeping in view the deterrent nature of the

punishment, the sentence of five months cannot be said to be

excessive.

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47. In the present case, the cheque was issued on

16.04.2024, and the sentence was imposed on 28

th

May, 2025,

after about one year. 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 towards awarding compensat ion, 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]”

48. In the present case, the complainant lost the interest

that he would have gained by investing the money. He had to

engage a counsel to prosecute the complaint, and compensation

of ₹1,00,000/- on the amount of ₹9,00,000/- is not excessive.

49. Learned Trial Court had imposed the fine and

ordered the payment of the fine as compensation to the

33

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complainant. Therefore, the learned Trial Court was competent

to impose the default sentence.

50. No other point was urged.

51. In view of the above, there is no infirmity in the

judgments passed by the learned Courts below ; hence, the

present revision fails, and it is dismissed, so also the pending

applications, if any.

52. A copy of the judgment, along with records of the

learned Courts below, be sent back forthwith.

(Rakesh Kainthla)

Judge

03

rd

June, 2026.

(ravinder)