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2026 DAILYLAW 11022 (HP)

VIJAY KUMAR v. M/S NEW SHILPI JEWELLERS

CR.R/641/2025 · 2026-06-02

Rakesh Kainthla

body2026

Judgment text

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2026:HHC:21019 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Revision No. 641 of 2025 Reserved on: 23.4.2026 Date of Decision: 2.6.2026. Vijay Kumar ...Petitioner Versus M/s New Shilpi Jewellers ...Respondent Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 No. For the Petitioner : Mr Jeewan Kumar, Advocate. For the Respondent : Mr Jitender Sharma, Advocate. Rakesh Kainthla, Judge The petitioner has filed the present petition against the judgment dated 16.9.2025, passed by learned Additional Sessions Judge-I, Kangra at Dharamshala, District Kangra, H.P. (learned Appellate Court), vide which the judgment of conviction and order of sentence dated 26.5.2025, passed by learned Chief Judicial Magistrate, Kangra at Dharamshala, District Kangra, H.P. (learned Trial Court) were upheld. (The 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 2026:HHC:21019 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 (NI Act). It was asserted that the complainant is a partner of M/s New Shilpi Jewellers. The accused had purchased gold worth ₹1,76,000/- from the complainant vide invoice No. 1230. He issued a cheque No. 651308, dated 9.11.2019, amounting to ₹1,76,000/-, drawn on SBI Branch, Yol Cant, Tehsil Dharamshala, District Kangra, H.P., to discharge his liability. The complainant presented the cheque at his bank, but it was dishonoured with the endorsement ‘insufficient funds’. The complainant served a notice upon the accused asking him to pay the money within 15 days of the receipt of the notice. The notice was duly served upon the accused, but he failed to pay the amount. Hence, a complaint was filed before the Court for taking action against the accused as per the law. 3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of 3 2026:HHC:21019 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 (CW1) to prove his complaint. 5. The accused, in his statement recorded under Section 313 of the Code of Criminal Procedure, admitted that he had issued a cheque for ₹1,76,000/- to the complainant, which was dishonoured with endorsement ‘funds insufficient’. He claimed that he had issued a blank security cheque in favour of the complainant, and the complainant misused the cheque. He had made the payment against the cheque. He claimed that he wanted to lead defence evidence but failed to produce any evidence, and the learned Trial Court closed the evidence by the order of the Court on 7.2.2025. 6. The learned Trial Court held that the accused admitted the issuance of the cheque and its dishonour. The plea taken by him that he had issued the cheque as security was not probable. A presumption arises under Section 118 (a), read with Section 139 of the NI Act, that the cheque was issued for consideration to discharge the debt/liability. The burden is upon 4 2026:HHC:21019 the accused to rebut the presumption. The accused failed to rebut the presumption. The notice was duly served upon the accused, and he failed to pay the amount. All the ingredients of the commission of an offence punishable under section 138 of the NI Act were duly satisfied. 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 one year, pay a fine of ₹2,50,000/- and in default of payment of fine to undergo further imprisonment for one month. 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 Additional Sessions Judge-I, Kangra at Dharamshala, District Kangra, H.P. (learned Appellate Court). The Appellate Court concurred with the findings recorded by the learned Trial Court that the issuance of the cheque and the signatures of the accused are not disputed. Therefore, a presumption would arise that the cheque was issued for consideration to discharge the debt/liability. The burden is upon the accused to rebut the presumption, but he failed to lead any evidence to rebut the presumption. The cheque was dishonoured 5 2026:HHC:21019 with an endorsement ‘insufficient funds’. The notice was duly served upon the accused, and the accused failed to repay the amount despite the valid service upon him. All the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied, and the sentence imposed by the learned Trial Court was adequate, which did not require any interference. Hence, the learned Appellate Court dismissed the appeal. 8. Being aggrieved by the judgments and order passed by the learned Courts below, the accused has filed the present revision asserting that the complaint was barred by limitation. The amount of ₹1,76,000/- had already been paid to the complainant. The accused had no subsisting liability, and the cheque was without any consideration. Hence, it was prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside. 9. I have heard Mr Jeewan Kumar, learned counsel for the petitioner/accused, and Mr Jitender Sharma, learned counsel for the respondent/complainant. 6 2026:HHC:21019 10. Mr Jeewan Kumar, learned counsel for the petitioner/accused, submitted that the complaint was hopelessly barred by limitation and the accused had paid the amount of ₹1,76,000/- into the complainant’s account during the pendency of the complaint. The learned courts below erred in not considering these aspects. Therefore, he prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside. 11. Mr Jitender Sharma, learned counsel for the respondent, submitted that the learned Courts below had rightly held that the cheque carried with it a presumption that it was issued for consideration to discharge the debt/liability. The accused has failed to rebut the presumption. The complainant had proved all the ingredients of the commission of an offence punishable under Section 138 of the NI Act. He had duly explained that the amount paid by the accused was adjusted in some other account, which was duly proved by the statement of accounts. There is no infirmity in the judgments and order passed by learned Courts below. Hence, he prayed that the present appeal be dismissed. 7 2026:HHC:21019 12. I have given considerable thought to the submissions made at the bar and have gone through the records carefully. 13. It was laid down by the Hon’ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed at page 207- “10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like the appellate court, and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short “CrPC”) vests jurisdiction to satisfy itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error that is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings. 8 2026:HHC:21019 14. This position was reiterated in State of Gujarat v. DilipsinhKishorsinh Rao, (2023) 17 SCC 688: 2023 SCC OnLine SC 1294, wherein it was observed at page 695: “14. The power and jurisdiction of the Higher Court under Section 397 CrPC, which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept in such proceedings. 15. It would be apposite to refer to the judgment of this Court in Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460: (2012) 4 SCC (Civ) 687: (2013) 1 SCC (Cri) 986], where scope of Section 397 has been considered and succinctly explained as under: (SCC p. 475, paras 12-13) “12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error, and it may not be appropriate for the court to scrutinise the orders, which, upon the face of it, bear a token of careful consideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored, or judicial discretion is exercised arbitrarily or perversely. These are not 9 2026:HHC:21019 exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits. 13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even the framing of the charge is a much-advanced stage in the proceedings under CrPC.” 15. It was held in Kishan Rao v. Shankargouda, (2018) 8 SCC 165: (2018) 3 SCC (Cri) 544: (2018) 4 SCC (Civ) 37: 2018 SCC OnLine SC 651 that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. It was observed at page 169: “12. This Court has time and again examined the scope of Sections 397/401 CrPC and the grounds for exercising the revisional jurisdiction by the High Court. In State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452: 1999 SCC (Cri) 275], while considering the scope of the revisional jurisdiction of the High Court, this Court has laid down the following: (SCC pp. 454-55, para 5) 5. … In its revisional jurisdiction, the High Court can call for and examine the record of any proceedings to satisfy itself as to the correctness, legality or propriety of any finding, sentence or order. In other words, the jurisdiction is one of supervisory 10 2026:HHC:21019 jurisdiction exercised by the High Court for correcting a miscarriage of justice. But the said revisional power cannot be equated with the power of an appellate court, nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise amount to a gross miscarriage of justice. On scrutinising the impugned judgment of the High Court from the aforesaid standpoint, we have no hesitation in concluding that the High Court exceeded its jurisdiction in interfering with the conviction of the respondent by reappreciating the oral evidence. …” 13. Another judgment which has also been referred to and relied on by the High Court is the judgment of this Court in SanjaysinhRamrao Chavan v. Dattatray Gulabrao Phalke, (2015) 3 SCC 123: (2015) 2 SCC (Cri) 19]. This Court held that the High Court, in the exercise of revisional jurisdiction, shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non- consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The following has been laid down in para 14: (SCC p. 135) “14. … Unless the order passed by the Magistrate is perverse or the view taken by the court is wholly unreasonable or there is non- consideration of any relevant material or there is palpable misreading of records, the Revisional Court is not justified in setting aside the order, merely because another view is possible. The Revisional Court is not meant to 11 2026:HHC:21019 act as an appellate court. The whole purpose of the revisional jurisdiction is to preserve the power in the court to do justice in accordance with the principles of criminal jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, the courts may not interfere with the decision in exercise of their revisional jurisdiction.” 16. This position was reiterated in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 13, wherein it was observed at page 205: “16. It is well settled that in the 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 evidence on record. 17. As held by this Court in Southern Sales & Services v. Sauermilch Design and Handels GmbH, (2008) 14 SCC 457, 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.” 17. A similar view was taken in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed: 12 2026:HHC:21019 “27. It is well settled that in exercise of revisional jurisdiction, the High Court does not, in the absence of perversity, upset concurrent factual findings [See: Bir Singh(supra)]. This Court is of the view that it is not for the Revisional Court to re-analyse and re-interpret the evidence on record. As held by this Court in Southern Sales & Services v. Sauermilch Design and Handels GMBH, (2008) 14 SCC 457, 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. 28. Consequently, this Court is of the view that in the absence of perversity, it was not open to the High Court in the present case, in revisional jurisdiction, to upset the concurrent findings of the Trial Court and the Sessions Court. 18. The present revision has to be decided as per the parameters laid down by the Hon’ble Supreme Court. 19. The accused admitted in his statement recorded under Section 313 of the Code of Criminal Procedure (Cr.PC) that he had issued a cheque in favour of the complainant. He stated that he had issued a blank security cheque, which was misused by the complainant. The learned courts below had rightly held that the issuance of the cheque and the signatures on the cheque were not disputed. It was laid down by the Hon'ble Supreme Court in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC 724, that when the issuance of a cheque and signature on the cheque are not disputed, a presumption 13 2026:HHC:21019 would arise that the cheque was issued in discharge of the legal liability. It was observed: - “9. Coming back to the facts in the present case and considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such a presumption is rebuttable. However, to rebut the presumption, the accused was required to lead evidence that the full amount due and payable to the complainant had been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption, and more particularly, the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists a legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both the learned trial court as well as the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of a reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evidence.” 14 2026:HHC:21019 20. This position was reiterated in N. Vijay Kumar v. Vishwanath Rao N., 2025 SCC OnLine SC 873, wherein it was held as under: “6. Section 118 (a) assumes that every negotiable instrument is made or drawn for consideration, while Section 139 creates a presumption that the holder of a cheque has received the cheque in discharge of a debt or liability. Presumptions under both are rebuttable, meaning they can be rebutted by the accused by raising a probable defence.” 21. A similar view was taken in Sanjabij Tari v. Kishore S. Borcar, 2025 SCC OnLine SC 2069, wherein it was observed: “ONCE EXECUTION OF A CHEQUE IS ADMITTED, PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF THE NI ACT ARISE 15. In the present case, the cheque in question has admittedly been signed by the Respondent No. 1-Accused. This Court is of the view that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque received the said cheque in discharge of a legally enforceable debt or liability arises against the accused. It is pertinent to mention that observations to the contrary by a two-Judge Bench in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54, have been set aside by a three-Judge Bench in Rangappa(supra). 16. This Court is further of the view that by creating this presumption, the law reinforces the reliability of cheques as a mode of payment in commercial transactions. 15 2026:HHC:21019 17. Needless to mention that the presumption contemplated under Section 139 of the NI Act is rebuttable. However, the initial onus of proving that the cheque is not in discharge of any debt or other liability is on the accused/drawer of the cheque [See: Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197]. 22. Thus, the learned Courts below had rightly held that the cheque was issued for consideration in discharge of the liability, and the burden is upon the accused to rebut this presumption. 23. The complainant proved the statement of account (Ex.C8) in which the sale of ₹1,84,000/- and ₹1,76,000/- were reflected. The complainant also produced a bill (Ex.C3) regarding the sale of the ornaments worth ₹1,76,871.60 to the accused. It also mentions that the payment was made by cheque No.651308 (Ex.C2). Therefore, the complainant’s version was duly corroborated by the documents on record. 24. The complainant admitted in his cross-examination that the accused had deposited ₹1,76,000/- on 29.5.2023. He claimed that he had deducted ₹1,76,000/- from the account, and a sum of ₹5,05,141/- was still due. This is duly corroborated by the statement of account (Ex.C8) in which a deduction of ₹1,76,000/- was made on 13.5.2023 and an amount of 16 2026:HHC:21019 ₹6,45,899/- was shown to be due on 31.3.2024. The cause of action for filing the complaint was complete on the expiry of 15 days from the date of the receipt of the notice, and any payment made thereafter will not help the accused. It was laid down by the Hon’ble Supreme Court in Rajneesh Aggarwal v. Amit J. Bhalla, (2001) 1 SCC 631, that any payment made after the cause of action had arisen would not wipe out the offence. It was observed:- 7. So far as the question of deposit of the money during the pendency of these appeals is concerned, we may state that in course of hearing the parties wanted to settle the matter in Court and it is in that connection, to prove the bona fides, the respondent deposited the amount covered under all the three cheques in the Court, but the complainant's counsel insisted that if there is going to be a settlement, then all the pending cases between the parties should be settled, which was, however not agreed to by the respondent and, therefore, the matter could not be settled. So far as the criminal complaint is concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding of sentence, it may have some effect on the court trying the offence. But by no stretch of imagination, a criminal proceeding could be quashed on account of the deposit of money in the court or that an order of quashing of a criminal proceeding, which is otherwise unsustainable in law, could be sustained because of the deposit of money in this Court. In this view of the matter, the so-called deposit of money by the respondent in this Court is of no consequence. 17 2026:HHC:21019 25. Section 59 of the Indian Contract Act enables a debtor owing distinct debts to make the payment with express intimation that the payment is to be applied to discharge the particular debt. Section 60 of the Contract Act empowers the creditor to appropriate the amount towards any of the debts in the absence of any such stipulation. It was laid down by the Delhi High Court in Amazing Research Laboratories Ltd. v. Krishna Pharma, 2023 SCC OnLine Del 1498, that the creditor is entitled to appropriate the amount towards any debt in the absence of a specific stipulation from the debtor. It was observed: “48. The underlying principles of apportionment as contained in above sections according to Pollock & Mulla, Indian Contract Act, 12thEdition, is that when several debts are due and owing to one person, any payment made by the debtor either with an express intimation or under circumstances from which an intimation may be implied, must be applied to the discharge of the debt in the manner intimated or which can be implied from the circumstances. Mulla proceeds to observe that “where several distinct debts are owed by a debtor to his creditor, the debtor has the right when he makes a payment to appropriate the money to any of the debts that he pleases, and the creditor is bound, if he takes the money, to apply it in the manner directed by the debtor. If the debtor does not make any appropriation at the time when he makes the payment, the right of appropriation devolves on the creditor”. 49. The Rule of Appropriation of money was summed up by Mr Justice T.L. Venkatarama Aiyar (as he then was) in the Full Bench decision of the Madras High Court in 18 2026:HHC:21019 Marimella Suryanarayana v. Venkataraman Rao (AIR 1953 Mad 458). His Lordship stated: “The principles governing appropriation of payments made by a debtor are under the general law, well settled. When a debtor makes a payment, he has a right to have it appropriated in such manner as he decides, and if the creditor accepts the payment, he is bound to make the appropriation in accordance with the directions of the debtor. This is what is known in England as the rule in ‘Clayton's case” (1861) 1 Mar. 572: 35 E.R. 781, and it is embodied in Section 59, Contract Act. But when the debtor has not himself made any appropriation, the right devolves on the creditor who can exercise it at any time, vide ‘Cory Bros. & Co. v. Owners of the Turkish Steamship ‘Mecca’, [1897] A.C. 286; and even at the time of the trial: Vide ‘Symore v. Picket’, [1905] 1 K.B. 715. That is Section 60, Contract Act. It is only when there is no appropriation either by the debtor or the creditor that the Court appropriates the payments as provided in Section 61, Contract Act.” 50. In the case of Anmol Steel Processors Private Limited v. Colour Roof (India) Limited (2022 SCC OnLine Bom 116), the Bombay High Court analysed Sections 60 and 61 of the Indian Contracts Act and observed: “55. Under section 60 of the Indian Contract Act, where the debtor has omitted to intimate, and there are no settled circumstances undertaking the debt to be applied, the creditor may apply at his discretion to any lawful debt actually due and payable to him from the debtor, whether it is regular or is not barred by law in force for the time being as to the limits of the suit” “56. At this stage, it would be apposite to refer to section 61 of the Indian Contract Act, which provides that where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are 19 2026:HHC:21019 of equal standing, the payment shall be applied in discharge of each proportionally.” 51. Thus, to summarise, where a debtor, owing several distinct debts to one person, makes a payment indicating that the payment is to be applied to the discharge of some particular debt, the payment must be applied accordingly in terms of S. 59 of the Contract Act. However, where the debtor omits to so intimate, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits, according to S. 60. Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by limitation in terms of Section 61 of the Contract Act.” 26. In the present case, there is no evidence that the accused had specified that the amount was being paid towards the cheque amount, and in the absence of any such stipulation, the complainant was justified in adjusting the amount towards the other payment. 27. The plea taken by the accused that he had issued a blank security cheque is not supported by any evidence. The bill (Ex.C3) shows the sale of the ornaments worth ₹1,76,871.60 to the accused and payment by cheque to the complainant. The accused did not step into the witness box to prove this fact. It was held in Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15 SCC 689: 2021 SCC OnLine SC 201 that the accused has to lead 20 2026:HHC:21019 defence evidence to rebut the presumption and mere denial in his statement under section 313 is not sufficient to rebut the presumption. It was observed at page 700: “20. That apart, when the complainant exhibited all these documents in support of his complaints and recorded the statement of three witnesses in support thereof, the appellant recorded her statement under Section 313 of the Code but failed to record evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused recorded under Section 313 of the Code is not substantive evidence of defence, but only an opportunity for the accused to explain the incriminating circumstances appearing in the prosecution's case against the accused. Therefore, there is no evidence to rebut the presumption that the cheques were issued for consideration." (Emphasis supplied)” 28. Even if the cheque was issued as a security, the accused had a subsisting liability of ₹1,76,000/- on the date of issuance of the cheque, as per the statement of account, and the complainant was entitled to present the cheque before the bank. It was laid down by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that even if the cheque is issued towards the security, the accused is liable. It was observed: “9. Submission of learned Advocate appearing on behalf of the revisionist that the cheque in question was issued to the complainant as security, and on this ground, the criminal revision petition is rejected as being devoid of any force for the reasons hereinafter mentioned. As per Section 138 of the Negotiable Instruments Act 1881, if any 21 2026:HHC:21019 cheque is issued on account of other liability, then the provisions of Section 138 of the Negotiable Instruments Act 1881 would be attracted. The court has perused the original cheque, Ext. C-1 dated 30.10.2008, placed on record. There is no recital in the cheque Ext. C-1, that cheque was issued as a security cheque. It is well-settled law that a cheque issued as security would also come under the provisions of Section 138 of the Negotiable Instruments Act 1881. See 2016 (3) SCC page 1 titled Don Ayengia v. State of Assam & another. It is well-settled law that where there is a conflict between former law and subsequent law, then subsequent law always prevails.” 29. It was laid down by the Hon'ble Supreme Court in Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited 2016(10) SCC 458 that issuing a cheque toward security will also attract the liability for the commission of an offence punishable under Section 138 of the NI Act. It was observed: - “10. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways Private Limited versus Magnum Aviation Private Limited (2014) 12 SCC 53 with reference to the explanation to Section 138 of the Act and the expression “for the discharge of any debt or other liability” occurring in Section 138 of the Act. We are of the view that the question of whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the transaction. If on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 11. Reference to the facts of the present case clearly shows that though the word “security” is used in clause 3.1(iii) 22 2026:HHC:21019 of the agreement, the said expression refers to the cheques being towards repayment of instalments. The repayment becomes due under the agreement, the moment the loan is advanced, and the instalment falls due. It is undisputed that the loan was duly disbursed on 28th February 2002, which was prior to the date of the cheques. Once the loan was disbursed and instalments had fallen due on the date of the cheque as per the agreement, the dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of a claim for breach of contract under Section 138, which arises on account of dishonour of a cheque issued, was not by itself at par with a criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of a cheque issued for the discharge of a later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque, there was a debt/liability in praesenti in terms of the loan agreement, as against the case of Indus Airways (supra), where the purchase order had been cancelled, and a cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for the discharge of liability but as an advance for the purchase order, which was cancelled. Keeping in mind this fine, but the real distinction, the said judgment cannot be applied to a case of the present nature, where the cheque was for repayment of a loan instalment which had fallen due, though such a deposit of cheques towards repayment of instalments was also described as “security” in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of the purchase order which is cancelled and that of a loan transaction where the loan has actually 23 2026:HHC:21019 been advanced, and its repayment is due on the date of the cheque. 13. The crucial question to determine the applicability of Section 138 of the Act is whether the cheque represents the discharge of existing enforceable debt or liability, or whether it represents an advance payment without there being a subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the underlying principle as can be discerned from the discussion of the said cases in the judgment of this Court.” (Emphasis supplied) 30. This position was reiterated in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was held that a cheque issued as security is not waste paper and a complaint under section 138 of the NI Act can be filed on its dishonour. It was observed: “17. A cheque issued as security pursuant to a financial transaction cannot be considered a worthless piece of pa- per 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, de- posited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the bor- rower agrees to repay the amount in a specified time- frame and issues a cheque as security to secure such re- payment; if the loan amount is not repaid in any other form before the due date or if there is no other under- standing or agreement between the parties to defer the payment of the amount, the cheque which is issued as se- curity would mature for presentation and the drawee of the cheque would be entitled to present the same. On such a presentation, if the same is dishonoured, the conse- 24 2026:HHC:21019 quences contemplated under Section 138 and the other provisions of the NI Act would flow. 18. When a cheque is issued and is treated as 'security' to- wards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such a cheque, which is issued as 'security, cannot be presented prior to the loan or the instalment maturing for repay- ment 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 the loan due and payable has been discharged within the agreed pe- riod, 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 an 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 proceedings initiated under Sec- tion 138 of the NI 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 understanding, a cheque would also be re- duced to an 'on-demand promissory note', and in all cir- cumstances, it would only be civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the conse- quence 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 re- gard to the nature of litigation.” 31. The accused admitted in his statement recorded under Section 313 of the Cr.PC that the cheque was dishonoured 25 2026:HHC:21019 with an endorsement ‘insufficient funds’. This is also established by the memo of dishonour (Ex.P4), which bears an endorsement of ‘insufficient funds’. It was laid down by the Hon’ble Supreme Court in Mandvi Cooperative Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC 83: (2010) 1 SCC (Civ) 625: (2010) 2 SCC (Cri) 1: 2010 SCC OnLine SC 155 that the memo issued by the Bank is presumed to be correct, and the burden is upon the accused to rebut the presumption. It was observed at page 95: 24. Section 146, making a major departure from the principles of the Evidence Act, provides that the bank's slip or memo with the official mark showing that the cheque was dishonoured would, by itself, give rise to the presumption of dishonour of the cheque, unless and until that fact was disproved. Section 147 makes the offences punishable under the Act compoundable. 32. In the present case, the accused did not produce any evidence to rebut the presumption, and the learned Courts below had rightly held that the cheque was dishonoured because of insufficient funds. 33. The complainant stated that he had issued a notice to the accused asking him to pay the amount within 15 days of the receipt of the notice. The complainant has placed on record the acknowledgement (Ex.C7), which shows that the notice was delivered. 26 2026:HHC:21019 34. It was submitted that the complaint is barred by limitation. The legal notice was received by the accused on 4.12.2019, and the limitation for filing the complaint had expired on 17.1.2020, but it was filed on 18.1.2020. This submission cannot be accepted. The notice was received on 4.12.2019, as per the acknowledgement. It was laid down by the Hon’ble Supreme Court in Saketh India Ltd. v. India Securities Ltd., (1999) 3 SCC 1, that the date on which the notice was served has to be excluded while calculating the period of limitation. It was observed:- 7. The aforesaid principle of excluding the day from which the period is to be reckoned is incorporated in Section 12(1) and (2) of the Limitation Act, 1963. Section 12(1) specifically provides that in computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned shall be excluded. Similar provision is made in sub-section (2) for appeal, revision or review. The same principle is also incorporated in Section 9 of the General Clauses Act, 1897 which, inter alia, provides that in any Central Act made after the commencement of the General Clauses Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word “from” and for the purpose of including the last in a series of days or any other period of time, to use the word “to”. 8. Hence, there is no reason for not adopting the rule enunciated in the aforesaid case, which is consistently followed and which is adopted in the General Clauses Act and the Limitation Act. Ordinarily, in computing the time, 27 2026:HHC:21019 the rule observed is to exclude the first day and to include the last. Applying the said rule, the period of one month for filing the complaint will be reckoned from the day immediately following the day on which the period of 15 days from the date of the receipt of the notice by the drawer expires. The period of 15 days in the present case expired on 14-10-1995. So, the cause of action for filing a complaint would arise from 15-10-1995. That day (15th October) is to be excluded from counting the period of one month. Complaint is filed on 15-11-1995. The result would be that the complaint filed on 15th November is within time. 35. This judgment was followed in Econ Antri Ltd. v. Rom Industries Ltd., (2014) 11 SCC 769, wherein it was observed: - 42. Having considered the question of law involved in this case in proper perspective, in the light of relevant judgments, we are of the opinion that Saketh [Saketh India Ltd. v. India Securities Ltd., (1999) 3 SCC 1: 1999 SCC (Cri) 329] lays down the correct proposition of law. We hold that for the purpose of calculating the period of one month, which is prescribed under Section 142(b) of the NI Act, the period has to be reckoned by excluding the date on which the cause of action arose. We hold that SIL Import, USA [SIL Import, USA v. Exim Aides Silk Exporters, (1999) 4 SCC 567: 1999 SCC (Cri) 600] does not lay down the correct law. Needless to say, any decision of this Court which takes a view contrary to the view taken in Saketh [Saketh India Ltd. v. India Securities Ltd., (1999) 3 SCC 1: 1999 SCC (Cri) 329] by this Court, which is confirmed by us, do not lay down the correct law on the question involved in this reference. The reference is answered accordingly.” 36. Therefore, the date of service of notice, i.e., 4.12.2019, has to be excluded, and the complaint filed on 28 2026:HHC:21019 18.1.2020, within 45 days from the date of the service of notice, cannot be said to be barred by limitation. 37. The accused had not paid the amount despite the receipt of the notice. Hence, the learned Trial Court had rightly held that all the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied. 38. Learned Trial Court had sentenced the accused to undergo simple imprisonment for one year. It was laid down by the Hon’ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provision of section 138 is a deterrent in nature. It was observed at page 203: “6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into 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.” 39. Keeping in view the deterrent sentence to be awarded, the sentence of one year cannot be said to be excessive, and no interference is required with it. 29 2026:HHC:21019 40. The learned Trial Court had awarded the composition of ₹2,50,000/- to the complainant, which means that an amount of ₹74,000/- was awarded as compensation on an amount of ₹1,76,000/-. The cheque was issued on 9.11.2019, and the sentence was pronounced on 26.5.2025 after the lapse of more than five years. The complainant lost money that he would have gained by depositing the cheque amount in the bank or by investing it somewhere else. He had to engage a counsel to prosecute the complaint filed by him. Therefore, he was entitled to be compensated for his loss. It was laid down by the Hon’ble Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. It was observed at page 291: - 19. As regards the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for the dishonour of a cheque as well as civil liability for the realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation, and unless there exist special circumstances, the courts should uniformly levy 30 2026:HHC:21019 fines up to twice the cheque amount along with simple interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]” 41. The interest on the amount of ₹1,76,000/- @5% per annum for five years would be ₹79,200/- and the compensation of ₹2,50,000/- cannot be said to be excessive. 42. It was submitted that the learned Trial Court could not have awarded the sentence of imprisonment in default of payment of compensation. This submission cannot be accepted. It was laid down by the Hon’ble Supreme Court in K.A. Abbas v. Sabu Joseph, (2010) 6 SCC 230: 2010 SCC OnLine SC 612, the Courts can impose a sentence of imprisonment in default of payment of compensation. It was observed at page 237: “26. From the above line of cases, it becomes very clear that a sentence of imprisonment can be granted for default in payment of compensation awarded under Section 357(3) CrPC. The whole purpose of the provision is to accommodate the interests of the victims in the criminal justice system. Sometimes the situation becomes such that there is no purpose served by keeping a person behind bars. Instead, directing the accused to pay an amount of compensation to the victim or affected party can ensure the delivery of total justice. Therefore, this grant of compensation is sometimes in lieu of sending a person to bars or in addition to a very light sentence of imprisonment. Hence, in default of payment of this compensation, there must be a just recourse. Not imposing a sentence of imprisonment would mean allowing the accused to get away without paying the 31 2026:HHC:21019 compensation, and imposing another fine would be impractical, as it would mean imposing a fine upon another fine and therefore would not ensure proper enforcement of the order of compensation. While passing an order under Section 357(3), it is imperative for the courts to look at the ability and the capacity of the accused to pay the same amount as has been laid down by the cases above; otherwise, the very purpose of granting an order of compensation would stand defeated.” 43. This position was reiterated in R. Mohan v. A.K. Vijaya Kumar, (2012) 8 SCC 721: 2012 SCC OnLine SC 486, wherein it was observed at page 729: “29. The idea behind directing the accused to pay compensation to the complainant is to give him immediate relief so as to alleviate his grievance. In terms of Section 357(3), compensation is awarded for the loss or injury suffered by the person due to the act of the accused for which he is sentenced. If merely an order directing compensation is passed, it would be totally ineffective. It could be an order without any deterrence or apprehension of immediate adverse consequences in case of its non- observance. The whole purpose of giving relief to the complainant under Section 357(3) of the Code would be frustrated if he is driven to take recourse to Section 421 of the Code. An order under Section 357(3) must have the potential to secure its observance. Deterrence can only be infused into the order by providing for a default sentence. If Section 421 of the Code puts compensation ordered to be paid by the court on a par with the fine so far as the mode of recovery is concerned, then there is no reason why the court cannot impose a sentence in default of payment of compensation, as it can be done in case of default in payment of a fine under Section 64 IPC. It is obvious that in view of this, in Vijayan [(2009) 6 SCC 652: (2009) 3 SCC (Cri) 296], this Court stated that the 32 2026:HHC:21019 abovementioned provisions enabled the court to impose a sentence in default of payment of compensation and rejected the submission that the recourse can only be had to Section 421 of the Code for enforcing the order of compensation. Pertinently, it was made clear that observations made by this Court in Hari Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984] are as important today as they were when they were made. The conclusion, therefore, is that the order to pay compensation may be enforced by awarding a sentence in default. 30. In view of the above, we find no illegality in the order passed by the learned Magistrate and confirmed by the Sessions Court in awarding a sentence in default of payment of compensation. The High Court was in error in setting aside the sentence imposed in default of payment of compensation. 44. Hence, the award of a sentence in default of the payment of compensation is not bad. 45. No other point was urged. 46. In view of the above, the present revision fails, and it is dismissed, and so are the pending miscellaneous applications, if any. (Rakesh Kainthla) Judge 2nd June, 2026 (Chander)