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REPORTABLE

THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL    APPEAL NOS.230-231 OF 2019 (@ SLP(CRL ) NOS. 9334-35 OF 2018)

Bir Singh                … Appellant

VERSUS  

Mukesh Kumar                …Respondent

J U D G M E N T

Indira Banerjee, J.

Leave granted.

2. These appeals are against a Judgment and order dated 21-11-

2017  passed  by  the  High  Court  of  Punjab  and  Haryana  at

Chandigarh  allowing  the  Criminal  Revisional  Application  being

Criminal Revision Petition No.849 of 2016 filed by the respondent-

accused,  challenging  a  judgment  and  order  dated  20-2-2016

passed by the Additional Sessions Judge, Palwal in Criminal Appeal

No.13/2015 filed by the respondent-accused, inter alia, affirming a

judgment  and  order  of  conviction  of  the  respondent-accused,

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passed by the Judicial Magistrate, 1st Class, Palwal under Section

138 of the Negotiable Instruments Act, 1881.

3. It  is  the  case  of  the  appellant-complainant,  that  the

respondent-accused  issued  a  cheque  being  Cheque  No.034212

dated 4-3-2012 drawn on Axis Bank, Branch, Palwal in the name of

the  appellant  towards  repayment  of  a  “friendly  loan”   of  Rs.15

lakhs advanced by the appellant-complainant  to the respondent-

accused.  

4. On 11-4-2012, the appellant-complainant deposited the said

cheque in his bank, but the cheque was returned unpaid with the

endorsement “Insufficient Fund”.

5. The appellant-complainant has alleged that, on the assurance

of the respondent-accused, that there would be sufficient funds in

his  bank  account  to  cover  the  amount  of  the  cheque,  the

appellant-complainant again presented the cheque to his bank on

23-5-2012,  but  it  was  again  returned  unpaid  with  the  remark

“Insufficient Fund”.

6. On 15-6-2012, the appellant-complainant issued a legal notice

to  the  respondent-accused  through  his  lawyer,  calling  upon  the

respondent-accused to pay the cheque amount.  The said notice,

sent  by  registered  post,  was  according  to  the  appellant-

complainant,  duly  served  on  the  respondent-accused.  The

respondent-accused, however, did not reply to the notice. Nor did

he pay the cheque amount to the appellant-complainant.

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7. The appellant-complainant filed a Criminal Complaint against

the  respondent-accused,  being  Case No.106 of  2012 before  the

Judicial  Magistrate  1st Class,  Palwal,  under  Section  138  of  the

Negotiable Instruments Act.

8. Sections 138 and 139 of the Negotiable Instruments Act are

set out herein below for convenience:-

“138 Dishonour  of  cheque  for  insufficiency, etc., of funds in the account.  —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another  person  from  out  of  that  account  for  the discharge,  in  whole  or  in  part,  of  any  debt  or  other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds  the  amount  arranged  to  be  paid  from  that account  by an agreement made with that  bank,  such person shall be deemed to have committed an offence and shall,  without prejudice to any other provisions of this  Act,  be  punished  with  imprisonment  for  a  term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:  

Provided  that  nothing  contained  in  this  section  shall apply unless—

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of  the  said  amount  of  money  by  giving  a  notice  in writing, to the drawer of the cheque,within thirty days of the  receipt  of  information  by  him  from  the  bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or,  as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

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Explanation.— For the purposes of this section, “debt or other  liability”  means  a  legally  enforceable  debt  or other liability.]

139. Presumption in favour of holder.—It shall be presumed,  unless  the  contrary  is  proved,  that  the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.”

9. The object of Section 138 of the  Negotiable Instruments Act is

to  infuse credibility to negotiable instruments including cheques

and to encourage and promote the use of negotiable instruments

including cheques in financial transactions.  The penal provision of

Section 138 of the Negotiable Instruments Act is intended to be a

deterrent  to  callous  issuance  of  negotiable  instruments  such as

cheques without serious intention to honour the promise implicit in

the issuance of the same.   

10. Having regard to the object of Section 138 of the  Negotiable

Instruments Act,  a prosecution based on a second or successive

default  in  payment  of  the  cheque  amount  is  not  impermissible

simply because no statutory notice had been issued after the first

default and no proceeding for prosecution had been initiated.   As

held by this Court in MSR Leathers vs. S. Palaniappan & Anr1,

there  is  no real  or  qualitative  difference between a  case where

default  is  committed and prosecution immediately launched and

another where the prosecution is deferred till the cheque presented

again gets dishonoured for the second time or successive times.  1   (2013) 1 SCC 177

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11. By  a  judgment  and  order  dated  9-2-2015,  the  Judicial

Magistrate  I Class, Palwal convicted the respondent-accused under

Section 138 of the Negotiable Instruments Act and sentenced him

to undergo  simple imprisonment  for a period of  one year and

further directed him to pay compensation of Rs.15 lakhs  to the

appellant-complainant within one month from the date of the said

Judgment and order. Being aggrieved, the respondent-accused filed

a  criminal  appeal  No.13/2015  dated  9-3-2015  in  the  court  of

Additional Sessions Judge, Palwal.

12. By  a  judgment  and  order  dated  20-2-2016,  the  Appellate

Court  upheld  the  conviction  of  the  respondent-accused  under

Section 138 of the Negotiable Instruments Act and confirmed the

compensation of Rs.15 lakhs directed to be paid to the appellant-

complainant.  The sentence of imprisonment was however reduced

to six months from one year.

13. The  respondent-accused  filed  a  Criminal  Revision  Petition

being  CRR  No.849  of  2016  in  the  High  Court  challenging  the

Judgment  and  order  of  the  Appellate  Court.    The  appellant-

complainant  also  filed  a  Criminal  Revision  Petition  being  CRR

No.2017 of 2016 challenging the reduction of the sentence from

one year to six months.

14. By  a  common  final  Judgment  and  order  dated  21-11-2017

which  is  impugned  before  us,  the  High  Court  has  reversed  the

concurrent  factual  findings  of  the  Trial  Court  and  the  Appellate

Court and acquitted the respondent of the charge under Section

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138 of the Negotiable Instruments Act, observing,  inter alia,  that

there  was   fiduciary  relationship  between  the  appellant-

complainant,  an  Income  Tax  practitioner,  and  the  respondent-

accused who was his client.

15. The High Court observed and held:-

“The complainant had fiduciary relationship with the accused-petitioner.  Therefore, heavy burden was on the complainant to prove that he had advanced the loan and that  blank  cheque for  the  same was given  to  him.   The  complainant  is  an  income  tax practitioner  and  he  knows  that  whenever  loan  is advanced to anybody, receipt has to be obtained and that  such  heavy  amount  is  to  be  advanced  only through a cheque or  demand draft  or  RTGS.   The accused-petitioner was the client of the complainant and they were having professional relationship.  The accused-petitioner was no so thick and thin with the complainant.   There  is  no  reason  why  the complainant, who is an income tax practitioner, will advance such a heavy loan to his client without any close relationship and without obtaining any writing to  this  effect.   There  was  heavy  burden  on  the complainant.   In  such  circumstances,  the  accused- petitioner is successful in raising reasonable doubts that the complainant might have misused one of the blank cheques given to him for payment of income tax for depositing the same in the Treasury.   

In  order  to  support  his  case,  the  accused- petitioner  took  a  risk  by  stepping  himself  into  the witness  box  and  offered  himself  for  cross- examination.   He  asserted  in  his  cross-examination that  the  tax  return  was  deposited  in  cash and  the complainant used to take cash from him.  His version was also supported by one Praveen Kumar, DW2.   

From the abovenoted discussions, it is clear that the parties were in fiduciary relationship and heavy burden was on the complainant to prove that he had advanced  a  loan  of  Rs.15,00,000/-  to  his  client

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without  obtaining  any  writing  and  that  he  has  not misused any blank cheque of his client.   Such loan was  not  shown  in  the  income  tax  return  of  the complainant.   

For the reasons mentioned above, the case of the complainant  becomes  highly  doubtful  and  is  not beyond  all  reasonable  doubts.   Therefore,  no presumption  under  Section  138  of  the  Negotiable Instruments Act, 1881 can be raised.  Both the courts below erred  in  holding  the  accused-petitioner  guilty for  the  commission  of  offence  punishable  under Section 138 of the Negotiable Instruments Act, 1881.  

In view of the foregoing discussions, CRR No. 849 of  2016  is  allowed  and  CRR  No.2017  of  2016  is dismissed.  The accused- petitioner stands acquitted of the notice of accusation served upon him.”  

16. The short question before us is whether the High Court was

right in reversing the concurrent factual findings of the Trial Court

and of the Appellate court in exercise of its revisional jurisdiction.

The questions of law which rise in this appeal are, (i) whether a

revisional  Court  can,  in  exercise  of  its  discretionary  jurisdiction,

interfere  with  an  order  of  conviction  in  the  absence  of  any

jurisdictional error or error of law and (ii) whether the payee of a

cheque  is  disentitled   to  the  benefit  of  the  presumption  under

Section 139 of the Negotiable Instruments Act, of a cheque duly

drawn, having been issued in discharge of a debt or other liability,

only because he is in a fiduciary relationship with the person who

has drawn the cheque.

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17. The Trial Court, on analysis of the evidence adduced by the

respective  parties  arrived  at  the  factual  finding  that  the

respondent-accused  had duly  issued  the  cheque in  question  for

Rs.15 lakhs in favour of the appellant-complainant, in discharge of

a  debt  or  liability,  the  cheque  was  presented  to  the  bank  for

payment within the period of its validity, but the cheque had been

returned unpaid for want of sufficient funds in the account of the

respondent-accused in the bank on which the cheque was drawn.

Statutory Notice of dishonour was duly issued to which there was

no response from the respondent-accused.

18. The Appellate  Court  affirmed the  aforesaid  factual  findings.

The  Trial  Court  and  the  Appellate  Court  arrived  at  the  specific

concurrent  factual  finding that  the cheque had admittedly  been

signed  by  the  respondent-accused.   The  Trial  Court  and  the

Appellate Court rejected the plea of the respondent-accused that

the  appellant-complainant  had  misused  a  blank  signed  cheque

made  over  by  the  respondent-accused  to  the  appellant-

complainant for deposit of Income Tax, in view of the admission of

the respondent-accused that taxes were paid in cash for which the

appellant-complainant  used to take payment from the respondent

in cash.    

19. It is well settled that in exercise of revisional jurisdiction under

Section 482 of the Criminal Procedure Code, the High Court does

not, in the absence of perversity, upset concurrent factual findings.

It is not for the Revisional Court to re-analyse and re-interpret the

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evidence on record.   

20. As held by this Court in Southern Sales and Services and

Others vs. Sauermilch Design and Handels GMBH2, it is a well

established  principle  of  law  that  the  Revisional  Court  will  not

interfere  even  if  a  wrong  order  is  passed  by  a  court  having

jurisdiction, in the absence of a jurisdictional error. The answer to

the first question is therefore, in the negative.  

21. In  passing the impugned judgment  and order  dated 21-11-

2017,  the  High  Court  mis-construed  Section  139  of  Negotiable

Instruments  Act,  which  mandates  that  unless  the  contrary  is

proved, it is to be presumed that the holder of a cheque received

the  cheque  of  the  nature  referred  to  in  Section  138,  for  the

discharge,  in  whole  or  in  part,  of  any  debt  or  other  liability.

Needless  to  mention  that  the  presumption  contemplated  under

Section  139  of  the  Negotiable  Instruments  Act,  is  a  rebuttable

presumption.  However, the onus of proving that the cheque was

not in discharge of  any debt or other liability is  on the accused

drawer of the cheque.   

22. In Hiten P. Dalal vs. Bratindranath Banerjee3,  this Court

held that both Section 138 and 139 require that the Court shall

presume the liability of the drawer of the cheques for the amounts

for which the cheques are drawn.  Following the judgment of this

Court in State of Madras vs. Vaidyanatha Iyer4, this Court held

2  (2008) 14 SCC 457 3 (2001) 6 SCC 16 4 AIR 1958 SC 61

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that it was obligatory on the Court to raise this presumption.  

23. Section 139 introduces an exception to the general rule as to

the burden of  proof and shifts  the onus  on the  accused.    The

presumption under Section 139 of the Negotiable Instruments Act

is  a  presumption  of  law,  as  distinguished  from  presumption  of

facts. Presumptions are rules of evidence and do not conflict with

the presumption of innocence, which requires the prosecution to

prove the case against the accused beyond reasonable doubt.  The

obligation on the prosecution  may be discharged with the help of

presumptions of law and presumptions of  fact unless the accused

adduces evidence showing the reasonable possibility of the non-

existence of the presumed fact as held in Hiten P. Dalal (supra).

24. Presumption of  innocence is  undoubtedly  a human right  as

contended  on  behalf  of  the  respondent-accused,  relying  on  the

judgments of this Court in  Ranjitsing Brahmajeetsing Sharma

vs. State of Maharashtra and Anr5  and Rajesh Ranjan Yada

@ Pappu Yadav vs. CBI through its Director6.    However the

guilt may be established by recourse to presumptions in law and

presumptions in facts, as observed above.

25. In Laxmi Dyechem vs. State of Gujarat & Ors.7, this Court

reiterated that in view of Section 139, it has to be presumed that a

cheque was issued in discharge of a debt  or  other  liability but the

5 (2005) 5 SCC 294 6 (2007) 1 SCC 70 7 (2012) 13 SCC 375

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presumption could be rebutted by adducing evidence.   The burden

of  proof  was  however  on  the  person  who  wanted  to  rebut  the

presumption.  This Court held “however, this presumption coupled

with the object of Chapter XVII of the Act leads to the conclusion

that by countermanding payment of a post dated cheque, a party

should  not  be  allowed to  get  away from the penal  provision  of

Section 138 of the Act”.

26. In  Kumar  Exports  vs. Sharma  Carpets8,  this  Court

reiterated  that  there  is  a  presumption  that  every  negotiable

instrument duly executed, is for discharge of a debt or liability, but

the presumption is rebuttable by proving the contrary.  In the facts

and circumstances of  the case it  was found that  the cheque in

question was towards advance for purchase of carpets, which were

in  fact  not  sold  by  the  payee of  the  cheque to  the  drawer,  as

proved  from  the  deposition  of  an  official  of  the  Sales  Tax

Department, who stated that the payee had admitted that he had

not sold the carpets.  

27. In  K.N. Beena vs. Muniyappan and Another9,  this Court

held  that  in  view  of  the  provisions  of  Section  139  of  the

Negotiable  Instruments  Act  read with  Section 118 thereof,  the

Court  had  to  presume  that  the  cheque  had  been  issued  for

discharging  a  debt  or  liability.   The  said  presumption  was

rebuttable and could be rebutted by the accused by proving the

8 (2009) 2 SCC 513 9(2001) 8 SCC 458

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contrary.   But mere denial  or rebuttal  by the accused was not

enough.  The accused had to prove by cogent evidence that there

was no debt or liability.   This Court clearly held that the High

Court had erroneously set aside the conviction, by proceeding on

the basis that denials/averments in the reply of the accused were

sufficient to shift the burden of proof on the complainant to prove

that  the  cheque had been issued for  discharge of  a  debt  or  a

liability.  This was an entirely erroneous approach.  The accused

had to prove in the trial by leading cogent evidence that there

was no debt or liability.  

28. In  R. Vijayan vs. Baby and Another10 this Court observed

that the object of Chapter XVII of the Negotiable Instruments Act

is both punitive as also compensatory and restitutive.  It provides

a single forum and single proceeding for enforcement of criminal

liability by reason of dishonour of cheque and for enforcement of

the  civil  liability  for  realization  of  the  cheque  amount,  thereby

obviating the need for the creditor to move two different  fora for

relief.    This Court expressed its anguish that some Magistrates

went by the traditional view, that the criminal proceedings were

for imposing punishment and did not exercise discretion to direct

payment of compensation, causing considerable difficulty to the

complainant,  as  invariably  the  limitation  for  filing  civil  cases

would expire by the time the criminal case was decided.

10 (2012) 1 SCC 260

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29. In  R.  Vijayan  vs.  Baby  and  another  (supra)  this  Court

observed   that  unless  there  were  special  circumstances,  in  all

cases of conviction, the Court should uniformly exercise the power

to levy fine up to twice the cheque amount and keeping in view

the cheque  amount  and the  simple  interest  thereon at  9% per

annum as the reasonable quantum of loss, direct payment of such

amount  as  compensation.   This  Court  rightly  observed  that

uniformity and consistency in deciding similar cases by different

courts  not  only  increases  the  credibility  of  the  cheque  as  a

Negotiable  Instrument  but  also  the  credibility  of  the  Courts  of

Justice.

30. The judgment of this Court in Raj Kumar Khurana vs. State

of (NCT of Delhi) & Anr.11 was rendered in the particular facts of

the case where the drawer of the cheque had reported to the police

and the bank that two unfilled cheques signed by him had been

stolen.

31. The proposition  as  re-enunciated in  John K John vs.  Tom

Varghese & Anr.12 cited on behalf of the respondent-accused that

if two views are possible, this Court, in exercise of its jurisdiction

under Article 136 of the Constitution would ordinarily not interfere

with a judgment of acquittal, is well settled.

32. In the aforesaid case this Court affirmed an acquittal under

Section  138  of  the  Negotiable  Instrument  Act,  in  the

11 (2009) 6 SCC 72 12 (2007) 12 SCC 714

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peculiar facts and circumstances of the case where several civil

suits between the parties were pending.  

33. In  Krishna Janardhan Bhat vs.  Dattatraya G. Hegde13,

cited on  behalf of the respondent-accused, this Court reaffirmed

that Section 139 of the Act raises a presumption that a cheque duly

drawn was towards a debt or liability.  However, keeping in view

the peculiar facts and circumstances of the case, this Court was of

the opinion that the courts below had approached the case from a

wholly different angle by wrong application of legal principles.   

34. It is well settled that a judgment is a precedent for  the issue

of law which is raised and decided.  It is  the ratio decidendi of the

case which operates as a binding precedent.  As observed by this

Court in State of Punjab & Ors. vs. Surinder Kumar & Ors.14,

what is binding on all courts is what the Supreme Court says under

Article 141 of the Constitution, which is declaration of the law and

not what it does under Article 142 to do complete justice.

35. Furthermore,  to  quote  V.  Sudhish  Pai  from  his  book

“Constitutional Supremacy - A Revisit”:-

“Judgments and observations in judgments are not to be read as Euclid’s theorems or as provisions of statute.   Judicial  utterances/pronouncements  are  in the  setting  of  the  facts  of  a  particular  case.   To interpret  words  and  provisions  of  a  statute  it  may become necessary for judges to embark upon lengthy discussions, but such discussion is meant to explain not define, Judges interpret statutes, their words are

13 (2008) 4 SCC 54 14 (1992) 1 SCC 489

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not to be interpreted as statutes.  Thus, precedents are not to be read as statutes.”

36. The  proposition  of  law  which  emerges  from the  judgments

referred to above is that the onus to rebut the presumption under

Section 139 that the cheque has been issued in discharge of a debt

or liability is on the accused and the fact that the cheque might be

post dated does not absolve the drawer of a cheque of the penal

consequences of Section 138 of the Negotiable Instruments Act.

37. A  meaningful  reading  of  the  provisions  of  the   Negotiable

Instruments Act including, in particular, Sections 20, 87 and 139,

makes it amply clear that a person who signs a cheque and makes

it over to the payee remains liable unless he adduces evidence to

rebut  the  presumption  that  the  cheque  had  been  issued  for

payment of a debt or in discharge of a liability.  It is immaterial that

the cheque may have been filled in by any person other than the

drawer, if the cheque is duly signed by the drawer.   If the cheque

is otherwise valid, the penal provisions of  Section 138 would be

attracted.

38. If a signed blank cheque is voluntarily presented to a payee,

towards  some payment,  the  payee may fill  up  the  amount  and

other particulars.  This in itself would not invalidate the cheque.

The onus would still be on the accused to prove that the cheque

was not in discharge of a debt or liability by adducing evidence.  

39. It  is  not the case of  the respondent-accused that  he either

signed the cheque or parted with it under any threat or coercion.

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Nor  is  it  the  case  of  the  respondent-accused  that  the  unfilled

signed  cheque  had  been  stolen.   The  existence  of  a  fiduciary

relationship between the payee of a cheque and its drawer, would

not disentitle the payee to the benefit of the presumption under

Section 139 of the Negotiable Instruments Act, in the absence of

evidence of exercise of undue influence or coercion. The second

question is also answered in the negative.

40. Even a blank cheque leaf, voluntarily signed and handed over

by the accused,  which  is  towards  some payment,  would  attract

presumption under Section 139 of the Negotiable Instruments Act,

in the absence of any cogent evidence to show that the cheque

was not issued in discharge of a debt.

41. The fact that the appellant-complainant might have been an

Income Tax practitioner conversant with knowledge of law does not

make any difference to  the law relating to the  dishonour of  a

cheque.  The fact that the loan may not have been advanced by a

cheque or demand draft or a receipt might not have been obtained

would make no difference.  In this context, it would, perhaps, not

be out of context to note that the fact that the respondent-accused

should  have  given  or  signed  blank  cheque  to  the  appellant-

complainant,  as  claimed by the respondent-accused,  shows that

initially there was mutual trust and faith between them.

42.  In the absence of any finding that the cheque in question was

not signed by the respondent-accused or not voluntarily made over

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to the payee and in the absence of any evidence with regard to the

circumstances in which a blank signed cheque had been given to

the appellant-complainant,  it may reasonably be presumed that

the cheque was filled in by the appellant-complainant being the

payee  in  the  presence  of  the  respondent-accused  being  the

drawer,  at  his  request  and/or  with  his  acquiescence.   The

subsequent  filling  in  of  an  unfilled  signed  cheque  is  not  an

alteration. There was no change in the amount of the cheque, its

date or the name of the payee. The High Court ought not to  have

acquitted the respondent-accused of the charge under Section 138

of the  Negotiable Instruments Act.  

43. In  our considered opinion,  the High Court  patently  erred in

holding that the burden was on the appellant-complainant to prove

that he had advanced the loan and the blank signed cheque was

given to him in repayment of the same.  The finding of the High

Court that the case of  the appellant-complainant became highly

doubtful or not beyond reasonable doubt is patently erroneous for

the reasons discussed above.

44. The appeals are allowed.  The judgment and order of the High

Court is set aside.   The conviction of the respondent under Section

138 of the Negotiable Instruments Act is confirmed.   However, the

respondent-accused is sentenced only to fine, which is enhanced to

Rs.16 lakhs and shall be paid as compensation to the appellant-

complainant.   The fine shall be deposited in the Trial Court within

eight  weeks  from  the  date,  failing  which  the  sentence  of

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imprisonment  of  one  year  as  imposed  by  the  Trial  Court  shall

revive.  There shall be no order as to costs.

.................................J.  (R. BANUMATHI)

.................................J. (INDIRA BANERJEE)

FEBRUARY 06, 2019 NEW DELHI