1 2025:CGHC:51268 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR CRR No. 198 of 2019 1 - Anil Sharma S/o Late Nandkishore Sharma Aged About 42 Years Occupation Carpenter, R/o Fundurdihari , Mohalla Godhanpur, Police Station Gandhinagar, District Surguja Chhattisgarh. ... Petitioner(s) versus 1 - Manoj Kumar Pandey S/o Ramnaresh Pandey Aged About 34 Years Occupation Service, R/o Bhattiroad Kedarpur, Police Station Kotwali, Tahsil Ambikapur, District Surguja Chhattisgarh. ... Respondent(s) (Cause title taken from Case Information System) For Petitioner(s) : Mr. Ashok Kumar Shukla, Advocate For Respondent(s) : Mr. Vikas Kumar Pandey, Advocate Hon'ble Shri Justice Ravindra Kumar Agrawal Order on Board 14/10/2025 1. The criminal revision under Section 397 read with Section 401 of Code of Criminal Procedure, 1973 has been filed by the petitioner against the impugned judgment dated 31.12.2018, passed by learned Additional Sessions Judge, Ambikapur, District Surguja, in Criminal Appeal No. 106/2018, whereby the criminal appeal filed by the petitioner is dismissed and the judgment of conviction and sentence dated 21.08.2018, passed by learned Judicial Magistrate VED PRAKASH DEWANGAN Digitally signed by VED PRAKASH DEWANGAN Date: 2025.12.16 18:47:04 +0530 2 First Class, Ambikapur, District Surguja, in Complaint Case No. 48/2011 is affirmed. The petitioner has been convicted by the learned trial Court for the offence under Section 138 of the Negotiable Instruments Act, 1881 (in short “NI Act”) and sentenced for till rising of the Court with fine of Rs. 1,00,000/-, in default of payment of fine, two months additional simple imprisonment. 2. The brief facts of the case are that, the parties are well known to each other and the accused borrowed Rs. 2,50,000/- from the complainant in various installments and ultimately Rs. 2,50,000/- was outstanding. On 02.01.2010, an agreement was also executed by the accused with respect to sell of his land of khasra No. 425/40, area 0.021 hectare, situated at Fundurdihari (Godhanpur) in lieu of borrowed amount. Initially, the accused borrowed Rs. 2,00,000/-, out of which he refunded Rs. 10,000/- on 05.05.2010, and thereafter, again borrowed Rs. 60,000/- on 24.06.2010, Rs. 1,00,000/- was refunded on 26.06.2010, however again borrowed Rs. 1,00,000/- on 29.06.2010. In lieu of repayment of borrowed amount, the accused had given a cheque of Surguja Kshetriya Gramin Bank, Ambikapur bearing No. 752762, dated 26.11.2010, amounting to Rs. 2,50,000/- to the complainant. When the complainant deposited the said cheque in his bank account for its clearance, the same was dishonored by the payee bank on 08.04.2011 on the ground of insufficient fund. A legal demand notice was served upon the accused by the complainant on 11.04.2011, but the accused neither paid the amount of cheque nor replied the notice and then the complainant has filed the complaint case under Section 138 of NI Act. 3 3. The complaint case was registered on 13.10.2011 and summons was issued to the accused. After his appearance in the complaint case, the details of offence was explained on 15.06.2016 and thereafter the evidences were recorded. Statement of the accused under Section 313 of CRPC has also been recorded, in which he denied the circumstances that appears against him, pleaded innocence and submitted that there was an agreement to sell the land between him and the complainant and Rs. 1,50,000/- he received as an advance amount of sale consideration and in lieu thereafter, the complainant has taken a cheque for the advance amount along with interest. However, he has already paid the amount to the complainant and in order to recover illegal money from him, the complainant filed the complaint case. 4. After appreciation of oral and documentary evidence led by the parties, the learned trial Court has passed a judgment, convicted the accused for the offence under Section 138 of NI Act and sentenced as mentioned in the earlier part of the judgment. The judgment of conviction and sentence dated 21.08.2018 was challenged by the accused in the appeal filed before Additional Sessions Judge, Ambikapur, which has also been dismissed by the judgment dated 31.12.2018 and the conviction and sentence awarded by the learned trial Court is affirmed, hence this criminal revision. 5. Learned counsel appearing for the petitioner would submit that, there is material illegality and irregularity in the consideration of the learned trial Court as well as Appellate Court. They should have considered that, there was no legally recoverable debt exists on the date, when 4 the cheque was presented for its realization. The complainant has admitted in his evidence that, certain amount has been refunded by the accused and the learned trial Court has also held that, certain amount has been refunded to the complainant out of the total borrowed amount. Since, certain amount has been refunded, there was no liability of Rs. 2,50,000/- for which the cheque was said to have been issued, and therefore, there is no legally recoverable debt and the accused cannot be convicted for the offence. He would further submit that the alleged cheque was not the legally tendered document and it was given as a security of repayment of advance amount paid by the complainant towards sale consideration of the land of the accused, therefore, the impugned judgment of conviction against the petitioner is erroneous and liable to be set aside. 6. He would rely upon the judgments passed by Hon'ble Supreme Court in the matter of “Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and another” 2023 (1) SCC 578 and “Indus Airways Private Limited and others v. Magnum Aviation Private Limited and another” 2014 (12) SCC 539. 7. On the other hand, learned counsel appearing for the respondent/ complainant supported the impugned judgment of conviction and sentence passed by learned trial Court as well as Appellate Court and has submitted that the accused has issued a cheque of Rs. 2,50,000/- for discharge of his liability, which was borrowed by him. Although, the cheque was issued for discharge of his liability, however, even if, it is issued as a security, he cannot absolve from his liability and the cheque issued as a security, the offence under 5 the Negotiable Instruments Act, 1881 is attracted. The transaction between the parties are the factual issue, which has been concurrently decided against the accused by the learned trial Court as well as Appellate Court, and therefore, it cannot be re-appreciated in the present revision. He would further submit that the refund and re-borrowed the amount are the instances prior to issuance of the cheque, and therefore, the same cannot be considered that on the date when the cheque was issued, the liability of Rs. 2,50,000/- was not there against the accused, therefore, there is no merit in the criminal revisions and the same is liable to be dismissed. 8. I have heard learned counsel for the parties and perused the record of the trial Court as well as Appellate Court. 9. It is the case of the complainant that, on 02.01.2010, the accused had borrowed Rs. 2,00,000/- from him with the assurance that he will repay the same along with interest within four months and if he fails to repay, he would get the sale-deed registered in favour of the complainant with respect to his land bearing khasra No. 425/40, area 0.021 hectare situated at village Fundurdihari and executed an agreement (exhibit P-4). On 05.05.2010, he refunded Rs. 10,000/- and again extended the time of six months for refund of remaining amount. He again borrowed Rs. 60,000/- more on 24.06.2010 and repaid Rs. 1,00,000/- on 26.06.2010, but again borrowed Rs. 1,00,000/- on 29.06.2010. Thus, there was total outstanding amount was Rs. 2,50,000/- for which the accused had issued a cheque on 26.11.2010 for the said amount of Rs. 2,50,000/-. The said cheque was dishonored by the payee bank on 08.04.2011 on the ground of 6 insufficient fund. He issued a legal demand notice, but the accused has not paid his amount. In cross-examination, the accused himself had given the suggestion that, except the transaction of Rs. 2,00,000/-, there was no transaction between the parties. The total amount was including the interest amount. He further stated in his evidence that, after giving the cheque to him by the accused, their relation was good and there was a transaction between them. He admitted that, the accused had given him three cheques for refund of Rs. 70,000/-, which was of Rs. 20,000/-, Rs. 20,000/- and Rs. 30,000/-. The said three cheques were given in the month of February, March and April, 2011. He also admitted that, apart from the amount of cheque, the accused had given him Rs. 60,000/- on 06.04.2010, Rs. 25,000/- on 30.04.2010. He further admitted that the amount paid by the accused to him are, some of prior to giving the cheque and some of after giving the cheque, but before presentation of the complaint. He voluntarily stated that in the month of January, 2018 during the negotiation of compromise, he again paid him Rs. 20,000/-. In para 8, when the question asked from the complainant about the total liability of Rs. 2,50,000/-, he answered that since, he was having only one cheque of Rs. 2,50,000/-, therefore, he has to produce it for its clearance. In further cross-examination, he admitted that he had given Rs. 2,00,000/- to the accused and after some time, the accused had given the cheque of Rs. 2,50,000/-. The said cheque was bearing the date. He clarified that at the time of execution of agreement, he given Rs. 2,00,000/- and on 24.06.2010, he also given Rs. 60,000/- to the accused, out of which he refunded only Rs. 10,000/-. He denied that at the time of execution of 7 agreement, he obtained blank cheque from the accused to produce it with the bank after filling up of the amount. 10. The submission of the accused that on the date, when the cheque is said to have been issued, there was no existing liability of Rs. 2,50,000/- against the accused, which vividly appears in the evidence of the complainant/PW-1. Admittedly, in lieu of sale agreement (exhibit P-4), an amount of Rs. 2,00,000/- was paid to the accused and it was a sale agreement and nothing is there for repayment of the amount. From perusal of the document (exhibit P-4) in the backside of its second leaf, there are endorsement of refund of Rs. 10,000/- on 05.05.2010 duly signed by the parties and witnesses. Again the endorsement of taking Rs. 60,000/- more from the complainant on 24.06.2010 signed by the parties and witnesses and further there is acknowledgment of outstanding amount of Rs. 2,50,000/-, which has been signed by the accused as well as the witnesses, which was executed on 29.06.2010. Since, the accused had acknowledged on 29.06.2010 with respect to outstanding amount of Rs. 2,50,000/- and he assures that the said amount will repay within five months, it can safely be held that the subject cheque (exhibit P-1) was issued in discharge of his liability. The subject cheque was issued on 26.11.2010, which is exactly after five months of the acknowledgment dated 29.06.2010, which was given in the document (exhibit P-4), though the accused had tried to built up his case that there was a frequent money transaction between them and Rs. 2,50,000/- was not the exact outstanding amount, and therefore, the said cheque does not satisfy the requirement of the 8 offence of Section 138 of NI Act, but from the acknowledgment executed by the accused on 29.06.2010, it is quite vivid that there was an existing liability of Rs. 2,50,000/- against the accused. The accused could not explain as to under what circumstance the said acknowledgment was issued of 29.06.2010. 11. Section 118 of the N.I. Act provides presumption as to negotiable instruments until contrary is proved, which reads as under:- “118. Presumptions as to negotiable instruments.— Until the contrary is proved, the following presumptions shall be made:— (a) of consideration —that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; (b) as to date —that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance —that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer —that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements —that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps —that a lost promissory note, bill of exchange or cheque was duly stamped; 9 (g) that holder is a holder in due course — that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.” 12. Section 139 of the N.I. Act provides presumption in favour of holder which reads as under:- “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.” 13. When the cheque was drawn by a person on account maintained by him for payment of any amount to another person for discharge of his liability is returned by the bank unpaid because of insufficient balance in the bank account such person shall be deemed to have committed the offence and shall be liable to be punished. Section 138 of the N.I. Act provides that a cheque has to be presented to the bank within a period of six months from the date on which it is drawn or within a period of its validity whichever is earlier. The period of six months has been reduced by the Reserve Bank of India to three months vide its notification dated 04-11-2011 w.e.f. 01-04-2012. After receipt of the information by the complainant from the bank regarding return of cheque as unpaid he has to serve a legal demand notice in writing to the drawer of the cheque within 30 days of receipt of such information and then the drawer of the cheque shall pay the amount 10 of cheque within 15 days of receipt of said notice. Section 142 of the N.I. Act provides for cognizance of the offences which provides that the Court may take cognizance of the offence punishable under Section 138 of the N.I. Act upon complaint in writing made by the payee or the holder in due course of the cheque within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of the N.I. Act. Section 9 of the N.I. Act gives definition of holder in due course which reads as under:- “9. “Holder in due course”.─“Holder in due course” means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.” 14. In the matter of “Dashrathbhai Trikambhai Patel” (supra), in para 12 to 16, the Hon'ble Supreme Court has held that:- “12. The primary contention of the first respondent is that the offence under Section 138 was not committed since the amount that was payable to the appellant, as on the date the cheque was presented for encashment, was less than the amount that was represented in the cheque. The question before this Court is whether Section 138 of the Act would still be attracted when the drawer of the cheque makes a part payment towards the debt or liability after the cheque is drawn but before the cheque is encashed, for the dishonour of the cheque which represents the full sum. 13. It must be noted that when a part-payment is made after the issuance of a post-dated cheque, the legally enforceable debt at the time of encashment is less than the sum represented in the cheque. A part- payment or a full payment may have been made 11 between the date when the debt has accrued to the date when the cheque is sought to be encashed. Thus, it is crucial that we refer to the law laid down by this Court on the issuance of post-dated cheques and cheques issued for the purpose of security. 14. In Indus Airways Private Limited v. Magnum Aviation Private Limited, (2014) 12 SCC 539 the issue before a two-Judge Bench of this Court was whether dishonour of post-dated cheques which were issued by the purchasers towards ‘advance payment’ would be covered by Section 138 of the Act if the purchase order was cancelled subsequently. It was held that Section 138 would only be applicable where there is a legally enforceable debt subsisting on the date when the cheque is drawn. In Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited 3 (2016) 10 SCC 458, the respondent advanced a loan for setting up a power project and post-dated cheques were given for security. The cheques were dishonoured and a complaint was instituted under Section 138. Distinguishing Indus Airways (supra), it was held that the test for the application of Section 138 is whether there was a legally enforceable debt on the date mentioned in the cheque. It was held that if the answer is in the affirmative, then the provisions of Section 138 would be attracted. 15. In Sripati Singh v. State of Jharkand, this Court observed that if a cheque is issued as security and if the debt is not repaid in any other form before the due date or if there is no understanding or agreement between the parties to defer the repayment, the cheque would mature for presentation: “21. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. ‘Security’ in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to 12 which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow. 22. When a cheque is issued and is treated as ‘security’ towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as ‘security’ cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the 13 understanding a cheque would also be reduced to an ‘on demand promissory note’ and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as ‘security’ the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation.” (emphasis supplied) 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. 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.” 14 15. Under the facts and evidence in the present case, it is quite vivid that the accused has acknowledged his liability of Rs. 2,50,000/- on 29.06.2010 and stated that a postdated cheque has already been given after taking five months time for repayment of the amount, it cannot be said that there was no outstanding amount against him. Although, the complainant has admitted in his complaint that there were certain transaction between them, but he explained the liability of Rs. 2,50,000/- for which the said cheque was issued. The evidence of the complainant clearly suggestive of liability of Rs. 2,50,000/- against the accused, for which subject cheque was issued and under the statutory presumption as well as evidence available on record, the learned trial Court as well as Appellate Court has convicted and sentenced the petitioner, in which this Court does not find any illegality or perversity. 16. Consequently, the criminal revision filed by the petitioner is liable to be and hereby dismissed. Sd/- (Ravindra Kumar Agrawal) Judge ved