Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(HP) 1385

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J.
Ajay Chauhan - Petitioner
Versus
C.D. Co-operative Credit Society Gohar & Anr - Respondents
Cr. Revision No. 172 of 2025
Decided On : 30-10-2025

Advocates Appeared:
For the Petitioner:Mr Tejasvi Verma, Advocate.
For the Respondent:Ms Sunaina, Deputy Advocate General.

Presumption under NI Act Sections 118/139 arises on cheque issuance admission; security cheque attracts Section 138 liability if debt exists; not rebutted here. Revisional jurisdiction limited to perversity, not evidence re-appreciation.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138, 118(a) and 139 - Cheque dishonour - Ingredients: drawing cheque for discharge of debt, presentation, dishonour for insufficient funds, demand notice within 15 days, failure to pay within 15 days of notice - Accused admitted issuance and signatures, claimed blank signed security cheque misused - Presumption arises that cheque issued for consideration and discharge of debt/liability; rebuttable by preponderance of probabilities - Accused failed to rebut by evidence of repayment or probable defence - Even security cheque attracts liability under Section 138 if underlying debt exists and cheque represents enforceable liability. (Paras 6, 7, 18, 20, 22, 25, 26, 28, 29, 35)

(B) Code of Criminal Procedure, 1973 - Section 397 - Revisional jurisdiction - Narrow scope; to correct patent defects, jurisdictional errors or perversity - Cannot re-appreciate evidence or substitute views unless findings perverse, based on no evidence or ignoring material evidence - Concurrent findings by trial and appellate courts not to be interfered with absent gross error. (Paras 13-17)

(C) Negotiable Instruments Act, 1881 - Section 138 r/w Section 357(3) CrPC - Sentence - Six months simple imprisonment and compensation twice cheque amount reasonable and deterrent - Default imprisonment for non-payment of compensation permissible to enforce order. (Paras 36-42)

Facts of the case:
Complainant advanced loan, accused issued cheque for repayment which was dishonoured for insufficient funds; statutory notice served, no payment made. Accused claimed issued blank signed security cheque misused, but admitted loan and cheque pertained to his account. Trial court convicted under Section 138 NI Act, sentenced to six months SI and Rs.7,00,000 compensation (default one month SI); upheld by appellate court.

Findings of Court:
All ingredients under Section 138 proved; presumption not rebutted; even if security, liability exists; no perversity in concurrent findings; sentence not excessive.

Issues: Whether presumption under Sections 118(a) and 139 rebutted by claim of blank security cheque; scope of revisional interference with concurrent convictions; propriety of sentence and default stipulation.

Ratio Decidendi: Upon admission of cheque issuance, presumption of debt discharge mandatory; accused must rebut by probable defence on preponderance of probabilities, not mere denial; security cheque enforceable if debt subsists; revisional court examines legality/propriety, not re-weighs evidence; compensation up to twice cheque amount with interest, enforceable by default imprisonment.

Result: Revision dismissed; conviction and sentence upheld.

Table of Content
1. loan advanced; cheque for repayment dishonoured insufficient funds. (Para 1 , 2 , 3 , 4 , 5)
2. lower courts upheld conviction; presumption under sections 118/139. (Para 6 , 7)
3. petitioner claims blank security cheque misused. (Para 8 , 10 , 11)
4. revisional jurisdiction limited; no re-appreciation absent perversity. (Para 12 , 13 , 14 , 15 , 16 , 17)
5. presumption of debt on admitted cheque issuance; rebuttable by probabilities. (Para 18 , 19 , 20 , 21 , 22)
6. blank security cheque plea discarded for lack of evidence. (Para 23 , 24)
7. security cheques attract section 138 liability on dishonour. (Para 25 , 26 , 27 , 28)
8. dishonour presumed; notice served, no repayment. (Para 29 , 30 , 31 , 32 , 33)
9. interest justifies cheque exceeding principal amount. (Para 34)
10. all section 138 ingredients satisfied. (Para 35)
11. six months imprisonment and compensation reasonable. (Para 36 , 37 , 38 , 39)
12. default imprisonment valid for compensation non-payment. (Para 40 , 41 , 42)
13. no infirmity; revision dismissed. (Para 43 , 44)

JUDGMENT :

Rakesh Kainthla, J.

The present revision is directed against the judgment dated 03.01.2025, passed by learned Sessions Judge, Mandi, H.P. (learned Appellate Court), vide which the judgment of conviction and order of sentence dated 09.08.2024 passed by learned Judicial Magistrate First Class, Chachiot at Gohar (learned Trial Court) were upheld. (Parties 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 society is a corporate body. The accused approached the complainant for a loan of Rs.4,00,000/-. The complainant sanctioned the loan, and the accused undertook to repay it in monthly installments. However, the accused defaulted on the repayment. He issued a cheque of Rs.4,98,000/- (Ext. CW-1/B) drawn on PNB, New Shimla in favour of the complainant to discharge his liability. The complainant presented the cheque to the bank, but it was dishonoured with an endorsement, ‘funds insufficient’ (Ext.CW-1/C). The complainant issued a notice (Ext.CW-1/D) asking the accused to repay the amount. The notice was duly served upon the accused, and an acknowledgment (Ext.CW-1/F) was received. The accused failed to repay the amount. Hence, a complaint was filed before the learned Trial Court 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 Prakash Chand (CW-1) to prove its case.

5. The accused, in his statement recorded under Section 313 Cr.P.C., denied the case of the complainant. He examined himself (DW-1).

6. Learned Trial Court held that the accused did not dispute the signatures on the cheque. He asserted that the cheque was issued in favour of the complainant as security at the time of taking the loan. Therefore, the presumption under Section 118(a) and Section 139 of the NI Act would arise that the cheque was issued for consideration to discharge the debt/liability. The burden would shift upon the accused to rebut the presumption. The plea taken by him that the blank signed cheque was issued as security was highly improbable. The cheque was dishonoured with the endorsement “insufficient funds”. The notice was issued to the accused, which was duly received by him. The accused failed to repay the amount. Hence, all the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied. Consequently, the learned Trial