VISHWANATH vs DEEP KUMAR AND ANOTHER - 2026 Supreme(Online)(HP) 3164

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 118(a), 138, 139, 146 - Presumptions - Once the signature on a cheque is admitted, a statutory presumption arises under Sections 118 and 139 that the instrument was issued for consideration and in discharge of a legally enforceable debt or liability (Paras 18-21) - The burden of proof shifts to the accused to rebut this presumption by leading evidence or raising a probable defence (Para 18).

(B) Code of Criminal Procedure, 1973 - Section 397 - Scope of Revisional Jurisdiction - A revisional court is not an appellate court and its jurisdiction is limited to rectifying patent defects, errors of jurisdiction, or law (Paras 13-16) - It cannot re-appreciate evidence or interfere with concurrent findings of fact unless the findings are perverse or based on no evidence (Paras 15-16).

(C) Income Tax Act, 1961 - Section 269SS and 271D - Cash Loans - Contravention of Section 269SS regarding the mode of accepting loans in cash exceeding ₹20,000/- attracts a penalty under Section 271D but does not render the transaction null, void, or legally unenforceable under Section 138 of the Negotiable Instruments Act (Paras 32-34).

(D) General Clauses Act, 1897 - Section 27 - Deemed Service - When a statutory notice is dispatched by registered post to the correct address and is returned with an endorsement of "refused", it is deemed to have been served upon the recipient (Paras 38-41). (E) Financial Capacity and Income Tax Returns - The complainant is not required to prove financial capacity in the first instance unless specifically challenged in the reply to the statutory notice (Paras 23-24) - The failure to mention a loan in Income Tax Returns does not automatically entitle the accused to acquittal (Para 25).

Facts of the case:
A complainant filed a complaint against the accused for the dishonour of a cheque amounting to ₹9,00,000/- due to insufficient funds. The accused failed to pay the amount despite the notice of demand. The accused contended that he had only borrowed ₹4,50,000/- and had issued a blank security cheque which was misused. Both the Trial Court and the Appellate Court convicted the accused, sentencing him to five months' simple imprisonment and a fine of ₹10,00,000/- as compensation.

Findings of Court:
The accused admitted his signatures on the cheque, triggering the statutory presumptions. The defence that the cheque was for security was not supported by cogent evidence. The arguments regarding the complainant's financial capacity and the violation of cash transaction limits under the Income Tax Act were rejected. The notice was held to be deemed served upon refusal.

Issues: Whether the revisional court should interfere with the concurrent findings of conviction; whether non-disclosure of a loan in income tax returns or violation of Section 269SS of the Income Tax Act invalidates the debt for the purpose of Section 138 of the Negotiable Instruments Act.

Ratio Decidendi: The court held that once the execution of a cheque is admitted, the burden lies on the accused to rebut the statutory presumption of a legally enforceable debt. A breach of Section 269SS of the Income Tax Act is a regulatory violation subject to penalty and does not invalidate the underlying debt. Revisional jurisdiction cannot be used to re-examine facts in the absence of perversity.

Result: Revision dismissed.

Legal Category Hierarchy

1. Cheque dishonour — Complaint under Section 138, NI Act — Concurrent conviction upheld in revision. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 )

2. Accused disputed financial capacity, income-tax return omission, and cheque-as-security plea. Complainant denied defence. (Para 8 , 10 , 11 )

3. Revision dismissed; concurrent conviction and sentence under Section 138, NI Act upheld. (Para 51 , 52 )

4. What is the scope of revisional jurisdiction under Section 397 CrPC in a cheque dishonour case?

The revisional court can only rectify patent defects, errors of jurisdiction or law, and cannot reappreciate evidence unless there is perversity or gross miscarriage of justice. (Para 13 , 14 , 15 , 16 , 17 )

5. Does a complainant under Section 138 NI Act need to prove financial capacity to advance a loan?

No, unless the accused challenges it in the reply notice or raises it in defence. The statutory presumption shifts the burden onto the accused. (Para 22 , 23 , 24 , 30 )

6. Is non-mention of loan in income tax return a ground to rebut the presumption under Section 139 NI Act?

No. Failure to mention a loan in the income tax return does not automatically entitle an accused to acquittal; it is not a ground to rebut the presumption. (Para 25 , 26 )

7. Does violation of Section 269SS Income Tax Act render a cash transaction unenforceable under Section 138 NI Act?

No. Contravention attracts penalty under Section 271D but does not invalidate the transaction or rebut the presumptions under Sections 118 and 139 NI Act. (Para 32 , 33 , 34 )

8. Is notice served when returned with endorsement 'refused' for Section 138 NI Act?

Yes. A notice returned with endorsement 'refused' is deemed served. The drawer must pay within 15 days of receiving court summons if they claim no notice. (Para 38 , 39 , 40 , 41 , 42 , 43 )

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 f 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 Hjudgment 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 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 at 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 hserved 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.

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 learuned 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 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 tAppellate). 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 Sudesh Kumar (DW-1) was not satisfactory. The cheque was dishonoured with an endorsement ‘insufficient funds’. The accused had refused to acc

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2026 Supreme(Online)(HP) 3164

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE RAKESH KAINTHLA
VISHWANATH – Appellant
Versus
DEEP KUMAR AND ANOTHER – Respondent
CR.R/214/2026

Under the NI Act, admitted signatures trigger a presumption of legally enforceable debt. Rebuttal requires a probable defence. Violation of Section 269SS of the Income Tax Act (cash loans) attracts penalties but does not render the debt unenforceable under Section 138 of the NI Act.

Legal Category Hierarchy

Table of Contents

4. What is the scope of revisional jurisdiction under Section 397 CrPC in a cheque dishonour case?

5. Does a complainant under Section 138 NI Act need to prove financial capacity to advance a loan?

6. Is non-mention of loan in income tax return a ground to rebut the presumption under Section 139 NI Act?

7. Does violation of Section 269SS Income Tax Act render a cash transaction unenforceable under Section 138 NI Act?

8. Is notice served when returned with endorsement 'refused' for Section 138 NI Act?

2026 Supreme(Online)(HP) 3164

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLAHON'BLE MR. JUSTICE RAKESH KAINTHLAVISHWANATH – AppellantVersusDEEP KUMAR AND ANOTHER – RespondentCR.R/214/2026

Under the NI Act, admitted signatures trigger a presumption of legally enforceable debt. Rebuttal requires a probable defence. Violation of Section 269SS of the Income Tax Act (cash loans) attracts penalties but does not render the debt unenforceable under Section 138 of the NI Act.

Legal Category Hierarchy

Table of Contents

4. What is the scope of revisional jurisdiction under Section 397 CrPC in a cheque dishonour case?

5. Does a complainant under Section 138 NI Act need to prove financial capacity to advance a loan?

6. Is non-mention of loan in income tax return a ground to rebut the presumption under Section 139 NI Act?

7. Does violation of Section 269SS Income Tax Act render a cash transaction unenforceable under Section 138 NI Act?

8. Is notice served when returned with endorsement 'refused' for Section 138 NI Act?

Cases Referred (20)

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE RAKESH KAINTHLA
VISHWANATH – Appellant
Versus
DEEP KUMAR AND ANOTHER – Respondent
CR.R/214/2026