Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(HP) 1981

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J
Hoshiar Singh – Appellant
Versus
Rakesh Kumar – Respondent
Cr. Revision No. 432 of 2025

Advocates:
For the Appellants/Petitioners: G R Palsra
For the Respondents: Vinod Chauhan

In proceedings under Section 138 of the Negotiable Instruments Act, admission of the cheque and signature triggers a rebuttable presumption of debt under Section 139. A notice returned as 'unclaimed' constitutes valid service, and revisional courts should not reappreciate evidence absent legal perversity.

Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Dishonour of cheque - Presumption of debt/liability - Once issuance of cheque and signature are admitted, provisions of Section 139 trigger a rebuttable presumption that the cheque was issued in discharge of a legally enforceable debt - Burden lies on the drawer to rebut this presumption by leading cogent evidence. (Paras 6, 20, 21, 22)

(B) Negotiable Instruments Act, 1881 - Section 138, Proviso (b) - Service of notice - Notice returned with endorsement 'unclaimed' constitutes deemed service - Unless the drawer proves non-receipt was not due to their own fault, the service is valid and the cause of action arises after the expiry of the statutory period. (Paras 35, 36, 37, 39)

(C) Criminal Procedure Code, 1973 - Section 397/401 - Revisional jurisdiction - Scope of interference is extremely narrow - Revisional court must not act as an appellate court and cannot re-appreciate evidence to substitute its own views unless the findings are perverse, grossly erroneous, or indicate a miscarriage of justice. (Paras 13, 14, 15, 16)

(D) Criminal Procedure Code, 1973 - Section 357(3) - Compensation - Courts have the authority to impose a sentence of imprisonment in default of payment of compensation to ensure enforceability of the order and avoid the remedy becoming illusory. (Paras 47, 48, 49)

Facts of the case:
The complainant filed a complaint under Section 138 of the Negotiable Instruments Act alleging the dishonour of a cheque issued by the accused for the repayment of a loan. The accused contended that the cheque was merely a security instrument handed over to a third party. The trial court and appellate court convicted the accused, dismissing the defence as unsubstantiated. The accused challenged the conviction in revision, claiming the complaint was time-barred and the defence regarding the nature of the cheque was not duly considered.

Findings of Court:
The court held that the accused failed to provide evidence to rebut the statutory presumption under Section 139 of the Act. The claim regarding the cheque being a security instrument was found to be without basis as no complaint was lodged regarding its non-return. The court rejected the argument that the complainant lacked financial capacity without independent proof. However, the court found the quantum of compensation excessive and reduced it to align with principles regarding compensatory interest.

Issues: The main issues were the validity of the service of notice returned as 'unclaimed', the burden of proof regarding the statutory presumption of debt, and the appropriateness of imprisonment in default of compensation payment.

Ratio Decidendi: The court maintained that once execution of the cheque is admitted, the presumption under Section 139 of the Act stands in favor of the complainant. A notice returned as 'unclaimed' must be treated as validly served under the principle of deemed service. Appellate interference is restricted only to cases of patent perversity or legal error.

Result: Revision partly allowed. Conviction upheld; sentence modified by reducing the compensation amount.

Table of Content
1. overview of case history and facts regarding ni act dishonour. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. summary of oral arguments presented by both parties. (Para 9 , 10 , 11)
3. scope of revisional jurisdiction and non-interference in concurrent findings. (Para 12 , 13 , 14 , 15 , 16 , 17)
4. rebuttable presumption of consideration and liability under ni act. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32)
5. deemed service of legal notice and proof of cheque dishonour. (Para 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42)
6. deterrent sentencing and validity of default imprisonment for compensation. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49)
7. partial allowance of revision and modification of compensation fine. (Para 50 , 51 , 52 , 53)

Rakesh Kainthla, Judge

The present revision is directed against the judgment dated 20.06.2025 passed by the learned Sessions Judge, Mandi, District Mandi, H.P. (learned Appellate Court) vide which judgment of conviction and order of sentence dated 24.12.2025 passed by the learned Additional Chief Judicial Magistrate, Mandi, District Mandi, H.P. (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 Act, 1881 (in short, 'NI Act'). It was asserted that the parties were known to each other. The accused asked for ₹5,50,000 from the complainant, and the complainant advanced the amount to the accused. The accused issued a cheque of ₹5,50,000 drawn on State Bank of India, Degree College Mandi, District Mandi, to discharge his liability. The complainant deposited the cheque in his bank, and it was dishonoured with an endorsement “insufficient funds'. The complainant issued a demand notice to the accused asking him to pay the amount within 15 days. Notice was returned with an endorsement of unclaimed, which is a deemed service. The accused failed to pay the money despite the deemed service of the notice. Hence, a complaint was filed before the learned Trial Court against the accused for taking action as per law.

3. 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 himself (CW1) to prove his complaint.

5. The accused, in his statement recorded under section 313 Cr. P.C. denied the complainant’s case in its entirety. He stated that he had taken a loan from Kashmir Singh and had issued a security cheque to him. Kashmir Singh did not return the cheque, and the complainant misused the cheque. He examined Bhavdev (DW1) and himself (DW2) to prove his defence.

6. Learned Trial Court held that the cheque carries with it a presumption that it was issued for consideration to discharge debt/liability. The accused failed to rebut the presumption. The plea taken by him that the cheque was handed over to Kashmir Singh, as security was not proved by producing any satisfactory evidence. The accused failed to show any relationship between the complainant and Kashmir Singh.

The cheque was dishonoured with endorsement “insufficient funds”, and the notice was served upon the accused. All the ingredients of the commission of an offence punishable under Section 138 of the NI Act 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 six months, pay a compensation of ₹11,00,000/- and in default of the payment of compensation to undergo further s

Click Here to Read the rest of this document

2026 Supreme(Online)(HP) 1981

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLARakesh Kainthla, JHoshiar Singh – AppellantVersusRakesh Kumar – RespondentCr. Revision No. 432 of 2025

Cases Referred (16)

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J
Hoshiar Singh – Appellant
Versus
Rakesh Kumar – Respondent
Cr. Revision No. 432 of 2025