1 2026:HHC:28270 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Revision No. 185 of 2026 Reserved on: 22.06.2026 Date of Decision: 13.07.2026 Sudhir Kumar ...Petitioner Versus Branch Manager Kangra Central Co.operative Bank ...Respondent Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1No For the Petitioner : Mr Jeet Singh, Advocate. For the Respondent : None. Rakesh Kainthla, Judge The present revision is directed against the judgment dated 28.02.2026 passed by the learned Additional Sessions Judge, Rampur Bushehar, District Shimla (learned Appellate Court) vide which the judgment of conviction and order of sentence dated 23.04.2025 passed by the learned Judicial Magistrate First Class, Anni, District Kullu, 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:28270 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 that give 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 Instrument Act (NI Act). It was asserted that the complainant is engaged in banking activities. The accused applied for a consumer loan of ₹3,00,000/-. He completed all the formalities by executing various documents, and the complainant advanced a loan of ₹3,00,000/- to the accused. This loan was to be repaid as per the terms and conditions of the agreement. However, the accused defaulted on the repayment of the loan. The complainant demanded the money from the accused, and the accused issued a cheque of ₹1,47,000/- to the complainant to repay the amount on 18.06.2022. The complainant presented the cheque to the bank, but it was dishonoured with an endorsement “funds insufficient”. The complainant issued a legal notice to the accused, which was duly served upon him on 06.07.2022. The accused failed to repay the amount despite the receipt of the notice. Hence, the complainant 3 2026:HHC:28270 filed a complaint before the learned Trial Court against the accused for taking action as per the law. 3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of 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 Madan Bhandari (CW1) to prove its complaint. 5. The accused admitted in his statement recorded under Section 313 of the Code of Criminal Procedure (Cr.P.C.) that a loan of ₹3,00,000/- was sanctioned in his favour. He stated that the cheque was issued by him in favour of the bank as security. He admitted that the notice was received by him. He did not produce any evidence in his defence. 6. Learned Trial Court held that the accused had admitted the issuance of the cheque and his signature. Therefore, a presumption would arise that the cheque was issued for consideration to discharge the debt/liability. The plea taken by the accused that the cheque was issued as a security will not help him 4 2026:HHC:28270 because a cheque issued as a security also attracts the provisions of Section 138 of the NI Act. The cheque was dishonoured with an endorsement of “insufficient funds”. The notice was duly served upon the accused, and he failed to repay the money despite the receipt of the notice. 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 1 year, pay a compensation of ₹1,67,000/- (₹1,47,000/- cheque amount + ₹20,000 for suffering) and in default of payment of compensation to undergo simple imprisonment for two months. 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, Rampur Bushehar, District, Shimla (learned Appellate Court). The Appellate Court concurred with the findings recorded by the learned Trial Court that the presumption under Section 118 (a) and 139 of the NI Act would be attracted to the present case, that the cheque was issued for consideration to discharge the debt/liability. The accused admitted that he had taken the loan from the complainant, 5 2026:HHC:28270 and there was nothing to rebut the presumption. The cheque issued as security also attracted the provisions of Section 138 of the NI Act. The cheque was dishonoured with an endorsement “insufficient funds”, and the notice was duly served upon the accused. All the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied. Learned Trial Court had imposed an adequate sentence, and no interference was required with the judgment and order passed by the learned Trial Court. Hence, the appeal was dismissed. 8. Being aggrieved by the judgment and order passed by the learned Courts below, the accused has filed the present revision, asserting that the learned Courts below erred in appreciating the material on record. The plea taken by the accused that the cheque was issued as security and was misused by the complainant was highly probable, and the learned Courts below erred in rejecting it. The testimony of the complainant's witness suffered from material infirmity, and the learned Court below erred in relying upon such testimony. Therefore, it was prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside. 6 2026:HHC:28270 9. Mr Jeet Singh, learned Counsel for the petitioner, submitted that the learned Courts below have erred in appreciating the material on the record. The complainant had not produced any evidence of advancing the loan to the accused. The plea taken by the accused that the cheque was issued as a security was highly probable, and the learned Courts below erred in rejecting the plea taken by the accused. Therefore, he prayed that the present revision be allowed and the judgment and order passed by the learned Courts below be set aside. He relied upon the judgments in Bharat Sharma vs. Beli Ram 2025:HHC:28473, Rajesh Anchan vs. K.B. Suresh 2023 Supreme (Kar) 1013, Vardhineedi Sri Ramanjaneyulu vs. Yeeda Sasibhushan and another 2025 SCC Online AP 1801 and Brij Mohan vs. Virendra Bhandari 2017 Supreme(Raj) 2105 in support of his submissions. 10. I have given considerable thought to the submissions made at the bar and have gone through the records carefully. 11. 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 7 2026:HHC:28270 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. 12. This position was reiterated in State of Gujarat v. Dilipsinh Kishorsinh 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 8 2026:HHC:28270 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 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.” 9 2026:HHC:28270 13. 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 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. …” 10 2026:HHC:28270 13. Another judgment which has also been referred to and relied on by the High Court is the judgment of this Court in Sanjaysinh Ramrao 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 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.” 14. 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: 11 2026:HHC:28270 “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.” 15. The present revision has to be decided as per the parameters laid down by the Hon’ble Supreme Court. 16. The ingredients of an offence punishable under Section 138 of the NI Act were explained by the Hon’ble Supreme Court in Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul, 2025 SCC OnLine SC 2019 as under: - 5.1.1. In K.R. Indira v. Dr. G. Adinarayana (2003) 8 SCC 300, this Court enlisted the components, aspects and the acts, the concatenation of which would make the offence under Section 138 of the Act complete, to be these (i) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/in part of any debt or liability, (ii) presentation of the cheque by the payee or the holder in due course to the bank, (iii) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (iv) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding 12 2026:HHC:28270 the return of the cheque as unpaid demanding payment of the cheque amount, and (v) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice. 17. The accused admitted in his statement recorded under Section 313 of the Cr.P.C. that a loan of ₹3,00,000/- was sanctioned in his favour. He admitted his signature on the cheque and the issuance of the cheque. He claimed that the cheque was issued as security. Therefore, the taking of the loan, issuance of the cheque and signature on the cheque are not disputed. Learned Courts below had rightly held that once issuance of the cheque and signatures on the cheque are admitted, a presumption would be triggered that the cheque was issued for consideration to discharge the debt/liability. 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 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 13 2026:HHC:28270 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 and 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.” 18. A similar view was taken 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.” 14 2026:HHC:28270 19. This position was reiterated 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. 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]. 20. Thus, the Court has to start with the presumption that the cheque was issued in discharge of the liability for consideration, and the burden is upon the accused to rebut this presumption. 15 2026:HHC:28270 21. It was submitted that the cheque was issued as security, and the accused is not liable for its dishonour. This submission cannot be accepted. 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 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.” 22. 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 16 2026:HHC:28270 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) 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 17 2026:HHC:28270 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 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) 23. 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 paper 18 2026:HHC:28270 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 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 the 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 a presentation, if the same is dishonoured, the consequences 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' towards 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 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 the 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 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 Section 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 reduced to an 'on-demand promissory note', and in all circumstances, it would only be civil litigation to recover the amount, which is 19 2026:HHC:28270 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.” 24. Therefore, the accused cannot escape from the liability by taking a plea that he had issued a signed cheque in the complainant’s favour. 25. In any case, learned Courts below had rightly held that there was no evidence to prove that the accused had issued the cheque as security. The accused did not produce any evidence to show that he had issued the cheque as security. He did not step into the witness box to prove this version. He relied upon the statement recorded under Section 313 of the Cr.P.C. 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 defence evidence to rebut the presumption and mere denial in his statement under section 313 of Cr.P.C. is not sufficient to rebut the presumption. It was observed at page 700: “20. That apart, when the complainant exhibited all these 20 2026:HHC:28270 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)” 26. Madan Bhandari (CW1) denied in his cross-examination that the bank had taken the cheque as security at the time of advancing the loan. A denied suggestion does not amount to any proof. Hence, the complainant’s evidence was not sufficient to rebut the presumption attached to the cheque. There was no other evidence to establish that the cheque was issued as security by the accused to the complainant, and the learned Courts below had rightly rejected the defence taken by the accused that he had issued the cheque as security to the complainant. 27. In Bharat Sharma (Supra), this Court held that the accused has a right to demonstrate that the complainant did not have sufficient financial capacity to advance the loan. This judgment will not apply to the present case because in the present case, the complainant is engaged in banking activities, and it 21 2026:HHC:28270 cannot be believed that the complainant would have no financial capacity to advance the loan. Further, the accused admitted to taking a loan in his statement recorded under Section 313 of the Cr.P.C., and the advancement of the loan was not disputed. 28. In Rajesh Anchan (supra), the accused was acquitted because there was a discrepancy regarding the loan transaction. In the present case, the loan transaction is not disputed, and the cited judgment does not apply to the present case. 29. In Vardhineedi Sri Ramanjaneyulu (supra), the advancement of the loan was not proved. In the present case, advancement of the loan is not disputed by the accused in his statement recorded under Section 313 of the Cr.P.C. Therefore, the cited judgment does not apply to the present case. 30. There is no other material to rebut the presumption attached to the cheque, and the learned Courts below have rightly held that the accused had failed to rebut the presumption. 31. Madan Bhandari (CW1) stated that the cheque was dishonoured with an endorsement of “insufficient funds”. This was dully corroborated by the memo of return (Ext.C3/CW1) in which the reason for dishonour of the cheque was mentioned as 22 2026:HHC:28270 “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, no evidence was produced to rebut the presumption, and the learned Courts below had rightly held that the cheque was dishonoured with an endorsement ‘insufficient funds.’ 33. Madan Bhandari stated that the complainant had issued a notice to the accused, which was received by him. This is duly corroborated by the acknowledgement (Ext.C6/CW1). The accused also admitted in his statement recorded under Section 313 of the Cr.P.C. that he had received the notice. Thus, the receipt of the notice was not in dispute. 23 2026:HHC:28270 34. Thus, it was duly proved before the learned Trial Court that the accused had issued a cheque to discharge his legal liability, the cheque was dishonoured with an endorsement ‘insufficient funds’, and the accused had failed to pay the money despite the receipt of a notice of demand. Hence, all the ingredients of the offence punishable under Section 138 of the NI Act were duly satisfied, and the learned Trial Court had rightly convicted the accused for the commission of the offence punishable under Section 138 of the NI Act. 35. Learned Trial Court sentenced the accused to undergo simple imprisonment for 1 year and pay a compensation of ₹1,67,000/-. 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 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 24 2026:HHC:28270 without serious intention to honour the promise implicit in the issuance of the same.” 36. Keeping in view the deterrent nature of the offence, the sentence of 1 year is not excessive. 37. The Learned Trial Court awarded a compensation of ₹1,47,000/- as the cheque amount and ₹20,000/- for suffering. The accused had issued a cheque on 18.06.2022. The sentence was awarded on 23.04.2025. The complainant was deprived of the interest that it would have gained by advancing the money to other persons, and it was entitled to be compensated for the same. The complainant had to engage a counsel and pay expenses for prosecuting the complaint. 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 25 2026:HHC:28270 there needs to be a consistent approach towards awarding compensation, and unless there exist special circumstances, the courts should uniformly levy 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]” 38. Thus, the compensation of ₹ 20,000/- on an amount of ₹1,67,000/- cannot be said to be excessive. 39. Learned Trial Court had imposed a sentence of two months in default of payment of compensation. It was submitted that the learned Trial Court could not have sentenced the accused to undergo imprisonment in default of payment of compensation. This submission is not acceptable. 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, that 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 26 2026:HHC:28270 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 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.” 40. 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 27 2026:HHC:28270 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 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. 41. Thus, there is no infirmity in imposing a sentence of imprisonment in case of default in the payment of compensation. 42. No other point was urged. 43. In view of the above, the present revision petition fails and is dismissed. 44. The present petition stands disposed of, and so are the pending applications, if any. (Rakesh Kainthla) Judge 13th July, 2026 (Nikita)