2025 (6) TMI 1722 - HC - Indian Laws

Accused fails to rebut statutory presumption in dishonoured cheque case under Section 138 NI Act

Ramesh Hetta Versus Jyoti Badehta

The HP HC dismissed a revision petition challenging conviction under Section 138 of the NI Act. The accused had issued a cheque that was dishonoured due ... Dishonour of Cheque - existence of presumption that the cheque was issued to discharge a legal liability - cheque issued towards the security - sufficient reasons to summon the accused or not - failure to rebut the presumption under Sections 118 (a) and 139 - HELD THAT:- It was laid down by the Hon’ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, [2022 (7) TMI 1455 - SUPREME COURT] that the revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was held in Kishan Rao v. Shankargouda, [2018 (7) TMI 101 - SUPREME COURT] that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. The accused did not dispute the issuance of the cheque in his statement recorded under Section 313 of Cr.P.C. and in the statement on oath. He specifically stated while appearing as DW-1 that the cheque (Ext.C-1) was signed by him. It was laid down by this Court in Naresh Verma vs. Narinder Chauhan [2019 (10) TMI 1578 - HIMACHAL PRADESH HIGH COURT] that where the accused had not disputed his signatures on the cheque, the Court has to presume that it was issued in discharge of legal liability and the burden would shift upon the accused to rebut the presumption. Even if the cheque was a security cheque, it would not absolve the accused of his criminal liability. In the present case, there is no evidence that the complainant did not allow the accused to pluck the apple crop or that the accused had paid the loan taken by him; therefore, the issuance of the security cheque will make the accused liable - the learned Courts below had rightly held the accused had issued the cheque in discharge of his legal liability and he had failed to rebut the presumption under Sections 118 (a) and 139 of the NI Act. 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’ - The complainant stated that she had issued a notice to the accused. This notice was sent through RAD cover. The acknowledgement (Ext. C-5) bears the signatures of the accused, which are similar to the signatures on the statement on oath, notice of accusation and the statement recorded under Section 313 of Cr. P.C. The accused stated in his cross-examination that he might have received the notice, and he had not sent a reply to the notice. Thus, he has not specifically denied the receipt of the notice, and the learned Courts below had rightly held that the notice was duly served upon the accused. Learned Trial Court had ordered the accused to pay a compensation of ₹3,44,000/- to the complainant, which is double of the cheque amount. The cheque was issued on 12.11.2015, and the learned Trial Court imposed the sentence on 09.11.202 after the lapse of 8 years. The complainant lost interest on the amount, and she had to pay the litigation expenses for filing the complaint. She was entitled to be compensated for the same - The amount of ₹ 1,23,840/- would accrue as interest for a period of 8 years @9% per annum on the principal of ₹ 1,72,000/- . The complainant had also paid money to her lawyer and had incurred the litigation expenses; therefore, the amount of ₹1,72,000/- awarded as compensation cannot be said to be excessive. Conclusion - i) The accused was rightly convicted under Section 138 of the NI Act as the cheque was issued in discharge of a legal liability and dishonoured due to insufficient funds. ii) The accused failed to rebut the presumption under Section 139 of the NI Act by adducing any credible evidence. iii) The plea that the cheque was issued as security was held to be legally insufficient to absolve liability. iv) The revisional court declined to interfere with the concurrent findings of the trial and appellate courts, holding that no patent illegality or perversity was shown. The present revision fails, and the same is dismissed. The core legal questions considered in this judgment revolve around the applicability and interpretation of Section 138 of the Negotiable Instruments Act (NI Act), specifically:Whether the issuance of a post-dated cheque by the accused towards the purchase of apple boxes creates a legally enforceable debt or liability under Section 138 of the NI Act.Whether the accused successfully rebutted the statutory presumption under Section 139 of the NI Act that the cheque was issued for discharge of a debt or liability.Whether the accused's plea that the cheque was issued as security, and not as discharge of a debt, absolves him of liability under Section 138.The evidentiary requirements and burden of proof concerning the issuance, dishonour, and notice under Section 138.The scope and limits of revisional jurisdiction of the High Court under Sections 397 and 401 of the Criminal Procedure Code (CrPC) in criminal cases, especially in cases involving concurrent findings of fact by trial and appellate courts.The appropriateness of the sentence and compensation awarded under Section 138 of the NI Act.Issue-wise detailed analysis:1. Applicability of Section 138 of the NI Act and presumption under Section 139:The legal framework mandates that when a cheque is issued and dishonoured for insufficiency of funds, the holder of the cheque is entitled to presume that the cheque was issued for discharge of a debt or liability (Section 139). The complainant must prove the cheque was issued by the accused and dishonoured, after which the burden shifts to the accused to rebut the presumption.The Court relied extensively on Supreme Court precedents, including Malkeet Singh Gill, Basalingappa v. Mudibasappa, Kalamani Tex v. P. Balasubramanian, and others, which consistently establish that the presumption under Section 139 is a statutory, rebuttable presumption of law. The accused must raise a probable defence with evidence to rebut this presumption, but is not required to prove the defence beyond reasonable doubt-only on the preponderance of probabilities.In the present case, the accused admitted the issuance of the cheque and his signature thereon, which triggered the presumption under Section 139. The cheque was dishonoured with the endorsement 'insufficient funds,' and the complainant proved service of the statutory notice. Thus, the core ingredients of Section 138 were established.2. Rebuttal of presumption and accused's defence:The accused contended that the cheque was issued as security and not in discharge of any debt. However, the Court noted that the accused took contradictory pleas-initially stating the cheque was security for purchase of apples, later claiming it was security for repayment of a loan. Such contradictory statements weakened his defence.Precedents such as Hamid Mohammad v. Jaimal Dass and Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited clarify that even a cheque issued as security attracts liability under Section 138 if a legally enforceable debt or liability exists at the time of issuance. The Court emphasized that a security cheque is not 'waste paper' and can be presented once the debt matures or is due.The accused failed to produce any evidence to show repayment of the loan or that the complainant prevented him from plucking apples, which would have supported his defence. The Court also rejected the accused's submission that the complainant's failure to produce goods receipts undermined the claim, reiterating that the burden to prove the debt does not lie with the complainant due to the statutory presumption.3. Allegations of material alteration and different pens used on cheque:The accused alleged that the signatures and body of the cheque were written with different pens, suggesting material alteration. The Court found this submission unsubstantiated as no expert evidence was produced to establish this fact. Reliance was placed on Bir Singh v. Mukesh Kumar, which held that a cheque filled by a person other than the drawer does not absolve the drawer's liability if the cheque is duly signed.4. Dishonour memo and statutory notice:The dishonour memo issued by the bank, which stated 'insufficient funds,' was presumed correct under Section 146 of the Evidence Act. The accused did not rebut this presumption. The statutory notice was served through registered AD post, and the accused's signature on the acknowledgement was similar to his admitted signatures. The accused did not deny receipt of the notice or payment of the cheque amount within 15 days of receipt, satisfying the procedural requirements of Section 138.5. Scope of revisional jurisdiction:The Court reiterated the well-settled principle that revisional jurisdiction under Sections 397 and 401 CrPC is narrow and supervisory in nature. The High Court cannot reappreciate evidence or substitute its own view unless there is a patent error, perversity, or illegality in the concurrent findings of fact by the trial and appellate courts. This principle was drawn from authoritative judgments including Malkeet Singh Gill, State of Gujarat v. Dilipsinh Kishorsinh Rao, Kishan Rao v. Shankargouda, and Bir Singh v. Mukesh Kumar.Given that both the Trial Court and Appellate Court had concurrently found the accused liable under Section 138 after detailed appreciation of evidence, the revisional court was not justified in interfering with the conviction and sentence unless a glaring miscarriage of justice was demonstrated, which was not the case.6. Sentence and compensation:The learned Trial Court sentenced the accused to one year's simple imprisonment and awarded compensation of Rs. 3,44,000/-, which is double the cheque amount of Rs. 1,72,000/-. The Court upheld this sentence and compensation as appropriate and not excessive, relying on the deterrent nature of Section 138 as emphasized in Bir Singh v. Mukesh Kumar and the compensatory principles laid down in Kalamani Tex v. P. Balasubramanian. Interest was calculated at 9% per annum for 8 years, and litigation expenses borne by the complainant were also considered.7. Treatment of competing arguments:The accused's arguments that the cheque was security, that the complainant failed to produce goods receipts, and that the cheque was materially altered were carefully examined and rejected due to lack of evidence or contradictory statements. The Court emphasized that mere denial or plausible explanations without supporting evidence do not suffice to rebut the statutory presumption under Section 139.The Court also distinguished the accused's case from precedents where the presumption was rebutted due to cogent evidence, noting that the facts here did not support such a defence.Significant holdings and core principles established:'The accused did not dispute the issuance of the cheque in his statement recorded under Section 313 of Cr.P.C. and in the statement on oath. He specifically stated while appearing as DW-1 that the cheque (Ext.C-1) was signed by him.''The plea taken by the accused that he had issued the cheque as a security would not help him because a cheque issued towards the security also attracts the provisions of Section 138 of the NI Act.''The presumption under Section 139 of the NI Act is a statutory presumption of law which shifts the burden on the accused to raise a probable defence, which must be established on the preponderance of probabilities.''The revisional jurisdiction under Sections 397 and 401 CrPC is limited to correcting patent illegality, error of jurisdiction or perversity and does not permit reappreciation of evidence or substitution of concurrent findings of fact.''The complainant is not required to prove the existence of debt beyond the statutory presumption; the burden to rebut the presumption lies on the accused.''Dishonour memo issued by the bank with official mark is presumed correct and the accused must rebut it.''The sentence of one year's imprisonment and compensation up to twice the cheque amount with interest is appropriate and consistent with the deterrent purpose of Section 138.'Final determinations:The accused was rightly convicted under Section 138 of the NI Act as the cheque was issued in discharge of a legal liability and dishonoured due to insufficient funds.The accused failed to rebut the presumption under Section 139 of the NI Act by adducing any credible evidence.The plea that the cheque was issued as security was held to be legally insufficient to absolve liability.The statutory requirements of notice and dishonour were duly complied with and proved.The revisional court declined to interfere with the concurrent findings of the trial and appellate courts, holding that no patent illegality or perversity was shown.The sentence of one year's imprisonment and compensation of Rs. 3,44,000/- was upheld as just and proper.