Once Signature on Cheque is Admitted, Statutory Presumption under S.139 NI Act Applies; Burden Shifts to Accused to Rebut: Himachal Pradesh High Court - 2025-09-14

HP High Court Upholds Conviction in Cheque Bounce Case, Reaffirms Limited Scope of Revisional Jurisdiction

Shimla: The Himachal Pradesh High Court, in a recent judgment, dismissed a criminal revision petition and upheld the concurrent conviction of an individual in a cheque dishonour case. Hon’ble Mr. Justice Rakesh Kainthla reiterated the settled legal principle that once the signature on a cheque is admitted, a statutory presumption under Section 139 of the Negotiable Instruments Act (NI Act) arises, shifting the burden onto the accused to prove that the cheque was not issued for a legally enforceable debt.

The Court emphasized its limited revisional jurisdiction, stating it cannot act as an appellate court to re-appreciate evidence unless the findings of the lower courts are perverse or demonstrate a patent error of law.

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Background of the Case

The case, Manish Gautam vs Yogesh Kumar and Another , originated from a complaint filed under Section 138 of the NI Act. The complainant, Yogesh Kumar, proprietor of Mittal Traders, alleged that he had supplied articles worth ₹90,000 on credit to the accused, Manish Gautam. To discharge this liability, Gautam issued a cheque dated March 25, 2013, for the said amount.

However, when presented, the cheque was dishonoured due to "insufficient funds." Despite receiving a legal notice, Gautam failed to make the payment, leading to the criminal complaint.

Both the Trial Court and the Sessions Court found Gautam guilty, sentencing him to two months of simple imprisonment and a fine of ₹1,60,000, which was to be paid as compensation to the complainant. Aggrieved by these concurrent findings, Gautam filed the present revision petition before the High Court.

Arguments Before the High Court

The petitioner's counsel argued that the lower courts had erred in their judgment. The primary contentions were: - The complainant failed to produce any bills or documents to prove the supply of goods. - The petitioner's defence that he had issued the cheque as a security measure was probable and should have been accepted. - The statutory notice was never served upon the accused, and therefore, an essential ingredient of Section 138 was not met.

Conversely, the counsel for the complainant supported the judgments of the lower courts, arguing that the conviction was based on a proper appreciation of law and evidence.

Court's Analysis and Legal Principles Applied

Justice Rakesh Kainthla began the analysis by outlining the narrow scope of the High Court's revisional jurisdiction, citing several Supreme Court precedents including Malkeet Singh Gill v. State of Chhattisgarh and Kishan Rao v. Shankargouda . The Court stressed that it could only interfere in cases of patent defects, jurisdictional errors, or perversity, not merely because another view is possible.

The Presumption Under the NI Act

The cornerstone of the judgment was the application of presumptions under Sections 118 and 139 of the NI Act. The Court noted a crucial admission from the accused:

"The accused admitted in his statement recorded under Section 313 of Cr.P.C. that the cheque bears his signature... once the accused has admitted the issuance of a cheque which bears his signature, there is a presumption that there exists a legally enforceable debt or liability under Section 139 of the NI Act."

The Court held that this admission triggered the "reverse onus clause," and the burden shifted squarely to the accused to rebut this presumption on a "preponderance of probabilities."

Failure to Rebut the Presumption

The High Court found the accused's defence to be inconsistent and unbelievable. At different stages, he claimed the cheque was stolen from his house by the complainant and that it was issued as a security cheque. The Court observed:

"...it is apparent that the accused had taken contradictory deposes at different points in time, and the learned Courts below were justified in discarding such a contradictory defence."

Furthermore, the Court rejected the argument that the complainant needed to prove the underlying transaction by producing bills. Citing the Supreme Court in Uttam Ram v. Devinder Singh Hudan , it clarified that due to the statutory presumption, the complainant is not initially required to prove the existence of consideration; the onus is on the accused to disprove it.

Regarding the service of the legal notice, the Court invoked Section 27 of the General Clauses Act, holding that a notice sent to the correct address is deemed served.

Final Decision and Implications

Concluding that the accused had failed to raise a probable defence to rebut the statutory presumption, the High Court found no perversity in the findings of the Trial Court and the Appellate Court. It also held that the sentence of two months' imprisonment and compensation of ₹1,60,000 (on a principal of ₹90,000 after over 10 years) was not excessive.

The petition was dismissed, and the conviction and sentence were upheld. This judgment serves as a strong reminder of the legal sanctity of cheques and the potent effect of the statutory presumptions under the NI Act, reinforcing that a mere denial or contradictory defence is insufficient to escape liability in cheque dishonour cases.