2025:HHC:21195 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.MP(M) No. 703 of 2025 Reserved on: 19.06.2025 Date of Decision: 04.07.2025. Surinder Azad ...Applicant/appellant Versus Ms. Annu Kumari ...Non-applicant/Respondent Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 No. For the applicant/appellant : Mr. Prashant Pandey, Adv. For the non-applicant/respondent: Nemo Rakesh Kainthla, Judge The petitioner has filed the present petition for seeking leave to appeal against the judgment dated 14.01.2025, passed by learned Judicial Magistrate, First Class, Kandaghat, District Solan, H.P. (learned Trial Court) vide which the complaint under Section 138 Negotiable Instruments Act (N.I Act) filed by the petitioner (complainant before learned Trial Court) was dismissed. (Parties shall hereinafter be referred to in 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 2025:HHC:21195 the same manner as they were arrayed before the learned Trial Court for convenience.) 2. Briefly stated, the facts giving rise to the present application 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 N.I. Act. It was asserted that the parties were known to each other. The accused required ₹1,30,000/- and she approached the complainant for a loan. The complainant handed over the money to the accused. The accused issued a cheque of ₹1,30,000/-to return the amount. The complainant presented the cheque to the bank, but it was dishonoured with an endorsement ‘funds insufficient’. The complainant served the notice upon the accused and asked her to pay the amount within 15 days from the date of receipt of the notice, but in vain. Hence, the complaint was filed to take action against the accused. 3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of accusation was put to her for the commission of an offence 3 2025:HHC:21195 punishable under Section 138 of the NI Act, to which she pleaded not guilty and claimed to be tried. 4. The complainant examined himself as CW1 to prove his case. 5. The accused, in her statement recorded under Section 313 of Cr.P.C., stated that she had taken a loan of ₹1,00,000/-. She handed over blank, signed cheques drawn in her account and the account of her mother. She admitted that the cheque was dishonoured with an endorsement ‘insufficient funds’. She admitted that she had received the notice. She claimed that she had paid the money through cash and a bank transaction. A false case was made against her. She examined Kalapna Mehta (DW-1) and Akshat Sharma (DW-2) to prove her defence. 6. The learned Trial Court held that the complainant admitted in his cross-examination the WhatsApp chat with the accused wherein he had stated that a sum of ₹1,00,000/- was advanced to the accused. He claimed that ₹30,000/- was advanced after the chat. This made his case highly doubtful. He could not recall the date of lending the amount. The 4 2025:HHC:21195 complainant stated in his cross-examination that the money was to be returned in 1 -1 ½ months, whereas the complaint shows that the money was to be paid within 10 months. The complainant admitted that he was to take money from the accused, but failed to provide any explanation for issuing the notice to the mother of the accused. The accused had paid ₹10,000/- on 05.05.2021 and₹10,000/- on 27.07.2021, therefore, cheque of ₹1,30,000/- could not have been presented. These circumstances made the case of the complainant suspect. Hence, the accused was acquitted of the commission of an offence punishable under Section 138 of the NI Act. 7. Being aggrieved by the judgment passed by the learned Trial Court, the complainant has filed the present appeal, asserting that the judgment passed by the learned Trial Court is against the law and facts. The complainant had proved his case beyond a reasonable doubt. The accused admitted that she had issued the cheque, which bears her signature. A presumption would arise that the cheque was issued for consideration in discharge of legal liability. The accused failed to rebut the presumption. The accused did not issue any reply to the notice served upon her. Learned Trial Court failed to 5 2025:HHC:21195 appreciate the material on record. Therefore, it was prayed that the appeal be allowed and the judgment passed by the learned Trial Court be set aside. 8. An application for leave to appeal is also filed along with the appeal. 9. I have heard Mr. Parshant Pandey, learned counsel for the applicant/complainant, who submitted that the learned Trial Court had failed to appreciate the material on record. The accused admitted her signatures on the cheque, and presumption under Section 139 and 118(a) of the NI Act would arise that the cheque was issued in discharge of legal liability for consideration. The accused failed to rebut the presumption. Learned Trial Court erred in relying upon the defence raised by the accused; therefore, he prayed that the present application be allowed and the leave to appeal be granted. 10. I have given considerable thought to the submissions made at the bar and have gone through the records carefully. 11. The complainant stated that the accused needed ₹1,30,000/- and he handed over ₹1,30,000/- in the form of currency notes of ₹500/-. He admitted the WhatsApp chat 6 2025:HHC:21195 (Ext.R-1) and that there is a reference of ₹1,00,000/- in the WhatsApp chat. He volunteered to say that ₹30,000/- was given after this chat. 12. The cross-examination in his cross-examination of the complainant makes it highly doubtful that he had handed over ₹1,30,000/-to the accused on one day in the form of currency notes of ₹500/-. He admitted that he had a WhatsApp chat with the accused regarding the loan of ₹1,00,000/- and claimed that ₹30,000/- was paid after that chat. This was never the version of the complainant, and the learned Trial Court was justified in holding that the payment of ₹1,30,000/- was not established. It was laid down by the Hon’ble Supreme Court in Dattatraya v. Sharanappa, (2024) 8 SCC 573, that where the accused had made a contradictory statement, his statement could not be relied upon, and this would shift the burden upon the complainant to prove the legal liability. It was observed: - “30. Admittedly, the appellant was able to establish that the signature on the cheque in question was of the respondent and in regard to the decision of this Court in Bir Singh [Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40], a presumption is to ideally arise. However, in the above- referred context of the factual matrix, the inability of the appellant to put forth the details of the loan advanced, 7 2025:HHC:21195 and his contradictory statements, the ratio therein would not impact the present case to the effect of giving rise to the statutory presumption under Section 139 of the NI Act, 1881. The respondent has been able to shift the weight of the scales of justice in his favour through the preponderance of probabilities.” 13. The complainant stated that documents were prepared and he had annexed those documents to the complaint; however, no such documents were filed on record. The documents would have corroborated the version of the complainant that he had handed over a sum of ₹1,30,000/- to the accused, which was necessary in view of his admission in the cross-examination that ₹1,00,000/- was paid before 20.10.2020 and ₹30,000/- was paid thereafter. Thus, an adverse inference had to be drawn against the complainant. 14. The complainant denied that the accused had returned ₹70,000/- in cash and ₹30,000/-by way of bank transaction. Akshat Sharma (DW-2) stated that as per the statement of account of the accused (Ext.DW-2/A) to Ext.DW2/D, an amount of ₹10,000/-was transferred from the account of Anu Kumai (accused) on 08.10.2020, ₹10,000/- were remitted on 05.05.2021 and ₹10,000/- were remitted on 27.07.2021. The accused deposited ₹6,900/- on 18.02.2020 in 8 2025:HHC:21195 the account of the complainant. The cheque was issued on 20.11.2020, and the accused had retuned ₹10,000/-on 27.07.2021 and 6,900/- on 18.02.2020 till the date of issuance of the cheque 15. The complainant stated that he had advanced ₹1,30,000/- in January 2020. He specifically stated in his cross- examination that no interest was to be charged upon the loan advanced to the accused. The evidence shows that the accused had returned ₹16,900/- before the cheque was presented by the complainant in the bank. Hence, the complainant was required to endorse this amount on the cheque, and he could not have presented the cheque for the whole amount. It was laid down by Hon’ble Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578: 2022 SCC OnLine SC 1376 that the cheque can be presented for the amount due and if some payment had been made before the presentation of the cheque, the complainant is bound to endorse the same and present the cheque for the remaining amount. It was observed: - “16. Based on the above analysis of precedent, the following principles emerge: 16.1. Where the borrower agrees to repay the loan within a specified timeline and issues a cheque for security but defaults in repaying the loan within the timeline, the cheque matures for presentation. 9 2025:HHC:21195 When the cheque is sought to be encashed by the debtor and is dishonoured, Section 138 of the Act will be attracted. 16.2. However, the cardinal rule when a cheque is issued for security is that between the date on which the cheque is drawn to the date on which the cheque matures, the loan could be repaid through any other mode. It is only where the loan is not repaid through any other mode within the due date that the cheque would mature for presentation. 16.3. If the loan has been discharged before the due date or if there is an “altered situation”, then the cheque shall not be presented for encashment. 17. In Sunil Todi v. State of Gujarat [Sunil Todi v. State of Gujarat, (2022) 16 SCC 762: 2021 SCC OnLine SC 1174], a two- Judge Bench of this Court expounded the meaning of the phrase “debt or other liability”. It was observed that the phrase takes within its meaning a “sum of money promised to be paid on a future day by reason of a present obligation”. The Court observed that a post-dated cheque issued after the debt was incurred would be covered within the meaning of “debt”. The Court held that Section 138 would also include cases where the debt is incurred after the cheque is drawn but before it is presented for encashment. In this context, it was observed: (SCC para 30) “30. The object of the NI Act is to enhance the acceptability of cheques and inculcate faith in the efficiency of negotiable instruments for the transaction of business. The purpose of the provision would become otiose if the provision is interpreted to exclude cases where debt is incurred after the drawing of the cheque but before its encashment. In Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014) 5 SCC (Civ) 138: (2014) 6 SCC (Cri) 845], advance payments were made but since the purchase agreement was cancelled, there was no occasion of incurring any debt. The true purpose of Section 138 would not be fulfilled if 10 2025:HHC:21195 “debt or other liability” is interpreted to include only a debt that exists as on the date of drawing of the cheque. Moreover, Parliament has used the expression “debt or other liability”. The expression “or other liability” must have a meaning of its own, the legislature having used two distinct phrases. The expression “or other liability” has a content which is broader than “a debt” and cannot be equated with the latter. In the present case, the cheque was issued near the commencement of the power supply. The issuance of the cheque in the context of a commercial transaction must be understood in the context of business dealings. The issuance of the cheque was followed close on its heels by the supply of power. To hold that the cheque was not issued in the context of a liability which was being assumed by the company to pay for the dues towards power supplied would be to produce an outcome at odds with the business dealings. If the company were to fail to provide a satisfactory LC and yet consume power, the cheques were capable of being presented for the purpose of meeting the outstanding dues.” 16. It was further held that when the payments were made after taking of debt, the presentation of the cheque for the whole amount of the debt is bad. It was observed: - 20. The judgments of this Court on post-dated cheques, when read with the purpose of Section 138, indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed. Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment. If there has been a material change in the circumstances such that the sum in the cheque does not represent a 11 2025:HHC:21195 legally enforceable debt at the time of maturity or encashment, then the offence under Section 138 is not made out. 24. It was the contention of the first respondent that the cheque was not dated. On the other hand, it was the contention of the appellant that the cheque was dated 17- 3-2014. The courts below did not record a finding on whether the cheque was undated or was dated 17-3-2014. However, it was conclusively held that the cheque was issued by the first respondent for security on the date when the loan was borrowed. It was also categorically recorded by the courts below that a sum of Rs 4,09,315 that was paid by the first respondent was paid to partly fulfil the debt of rupees twenty lakhs. The appellant, in his cross-examination, has stated that a “cheque against a cheque” was given when he loaned the sum of rupees twenty lakhs. Thus, it can be concluded that the cheque was given as a security to discharge the loan, either undated or dated as 17-3-2014. Merely because the sum of Rs 4,09,315 was paid between 8-4-2012 and 30-12- 2013, which was after 17-3-2014, it cannot be concluded that the sum was not paid in discharge of the loan of rupees twenty lakhs. The sum of Rs 4,09,315 was paid after the loan was lent to the first respondent. The appellant, in his cross-examination, has not denied the receipt of the payments. He has also stated it was not received as a “gift or reward”. In view of the above discussion, at the time of the encashment of the cheque, the first respondent did not owe a sum of rupees twenty lakhs as represented in the cheque at the time of encashment of the cheque that was issued for security. 34. In view of the discussion above, we summarise our findings below: 34.1. For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation. 12 2025:HHC:21195 34.2. If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. 34.3. When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted. 34.4. The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the “legally enforceable debt” on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds. 34.5. The notice demanding the payment of the “said amount of money” has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided.” 13 2025:HHC:21195 17. Therefore, the complainant could not have presented the cheque of ₹1,30,000/- and the dishonour of the cheque for ₹1,30,000/- will not give rise to any liability. 18. Thus, the learned Trial Court had rightly dismissed the complaint of the complainant, and there is no reason to grant any leave to appeal. 19. Consequently, the present application fails, and the same is dismissed. Criminal Appeal of 2025 (Cr.AST No. 2061 of 2025) 20. Since the leave to appeal has been declined, therefore, the proposed appeal is disposed of as having become infructuous. The pending miscellaneous application(s), if any, also stand disposed of. (Rakesh Kainthla) Judge 04th July, 2025 (ravinder)