2026:HHC:37770 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Appeal No. 28 of 2014 Reserved on: 27.08.2026 Date of Decision: 07.09.2026 M/s Himalayan Plastics Ltd. ..Appellant Versus Anoop Kumar ...Respondent Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 Yes. For the Appellant : Mr O.C. Sharma, Advocate. For the Respondent/ : Mr Mukul Sood, Advocate. Rakesh Kainthla, Judge The present appeal is directed against the judgment dated 14.10.2013, passed by learned Judicial Magistrate, First Class, Solan, District Solan, H.P. (learned trial Court), vide which the respondent (accused before the learned trial Court) was acquitted of the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). (The parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience). 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 2026:HHC:37770 2. Briefly stated, the facts giving rise to the present appeal are that the complainant presented a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant deals with the manufacture and sale of HDPE pipes, fittings, sprinkler, drip irrigation system, PIB (silicon coated) and HDPE Telecom Duct. The accused had been purchasing the material from the complainant on a credit basis. He issued a cheque of ₹ 14,79,374/- to repay the amount due to the complainant. The complainant presented the cheque before its bank for realisation, but it was dishonoured with an endorsement ‘funds insufficient’. The complainant issued a legal notice. The notice was duly served upon the accused, but the accused failed to repay the amount. Hence, the complaint was filed before the learned trial Court for taking action against the accused as per the law. 3. The 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. 3 2026:HHC:37770 4. The complainant examined Sita Ram (CW-1), Anil Sharma (CW-2), M.L. Marwari (CW-3), Sita Ram (CW-4) and Dharam Pal (CW-5) to prove its complaint. 5. The accused, in his statement recorded under Section 313 of the Code of Criminal Procedure (CrPC), admitted that he is a proprietor of Baba Company, the cheque bears his signature, and he had received the notice. He claimed that the cheque was blank, he had sent a reply to the notice, he is not liable to pay any amount to the complainant and that he is innocent. He examined himself (DW-1), Kanwar Singh (DW-2), Satish Kumar (DW-3), Virender Singh (DW-4) and Sant Kumar (DW-5) to prove his defence. 6. The learned trial Court held that the complainant failed to prove the business relationship between the parties. The authorised person of the complainant admitted that the account of the sale and purchase of the items is maintained. However, no sale and purchase record was produced before the Court. The statements of the defence witnesses proved that the complainant company used to receive the entire payment directly from the farmers through the bank. The copies of the challan reflected that the accused acted as an agent to the complainant company. 4 2026:HHC:37770 This evidence was sufficient to rebut the presumption attached to the cheque. Hence, the learned trial Court acquitted the accused. 7. Being aggrieved by the judgment passed by the learned trial Court, the complainant filed the present appeal asserting that the learned trial Court erred in acquitting the accused. There is a presumption that the cheque was issued for consideration to discharge the debt/liability. The complaint was to be tried as a summary case, and it was not permissible for the successor to rely upon the evidence recorded before his predecessor. The accused sent a reply (Ext.D-13) to the legal notice in which he admitted the receipt of the material through some of the challans, which proved the business and commercial transactions between the parties. The learned trial Court failed to consider this reply. A blank cheque issued as a security would give rise to liability. Therefore, it was prayed that the present appeal be allowed and the judgment passed by the learned trial Court be set aside. 8. I have heard Mr O.C. Sharma, learned counsel for the appellant and Mr Mukul Sood, learned counsel for the respondent. 5 2026:HHC:37770 9. Mr O.C. Sharma, learned counsel for the appellant, submitted that the case was to be tried as a summary case and it was impermissible for the learned Magistrate to rely upon the evidence recorded by his predecessor. The learned Magistrate erred in considering the evidence recorded by his predecessor. The accused admitted the transaction between the parties in the reply to the notice, and the learned Trial Court erred in holding that the complainant had failed to prove the business transaction between the parties. Therefore, he prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. 10. Mr Mukul Sood, learned counsel for the respondent/accused, submitted that the case was tried as a summons case. Notice of accusation was put to the accused and complete record of the evidence was maintained; therefore, the provisions of Section 326(3) of the CrPC do not apply to the present case. The learned trial Court had rightly held that the accused was an agent of the complainant. The money was paid by the farmers through the bank from which the loan was taken. The accused was not required to pay any money to the complainant. The learned trial Court had taken a reasonable view 6 2026:HHC:37770 while acquitting the accused, and this Court should not interfere with the reasonable view of the learned Trial Court. Therefore, he prayed that the present appeal be dismissed. He relied upon the following judgments in support of his submissions:  Rangappa vs. Sri Mohan (2010) 11 SCC 441 ;  Basalingappa vs. Mudibasappa (2019) 5 SCC 418; and  Rajesh Jain vs. Ajay Singh (2023) 10 SCC 148. 11. I have given considerable thought to the submissions made at the bar and have gone through the records carefully. 12. The present appeal has been filed against a judgment of acquittal. It was laid down by the Hon’ble Supreme Court in Sanjay Kumar v. State of Bihar, 2026 SCC OnLine SC 1373, that the Court can interfere with a judgment of acquittal only if it is impossible, perverse, wholly unsustainable, or manifestly illegal. It was observed: Scope of interference with an acquittal: 26. At the outset, it is necessary to remind ourselves of the settled principles governing interference with an order of acquittal. An accused is presumed innocent until proven guilty. When a court of competent jurisdiction acquits the accused, the presumption of innocence is not weakened but reinforced. Where such acquittal is affirmed by the High Court, the caution to be exercised by this Court under Article 136 is even greater. 27. In Kali Ram v. State of Himachal Pradesh (1973) 2 SCC 808: 1973 SCC (Cri) 1048, this Court explained the golden 7 2026:HHC:37770 thread running through criminal jurisprudence in the following words: “25. Another golden thread which runs through the web of the administration of justice in criminal cases is that if two views are possible on the evidence adduced in the case, one pointing to the guilt of the accused and the other to his innocence, the view which is favourable to the accused should be adopted. This principle has a special relevance in cases wherein the guilt of the accused is sought to be established by circumstantial evidence. A rule has accordingly been laid down that unless the evidence adduced in the case is consistent only with the hypothesis of the guilt of the accused and is inconsistent with that of his innocence, the Court should refrain from recording a finding of guilt of the accused. It is also an accepted rule that in case the Court entertains reasonable doubt regarding the guilt of the accused, the accused must have the benefit of that doubt. Of course, the doubt regarding the guilt of the accused should be reasonable; it is not the doubt of a mind which is either so vacillating that it is incapable of reaching a firm conclusion or so timid that it is hesitant and afraid to take things to their natural consequences. The rule regarding the benefit of doubt also does not warrant acquittal of the accused by resort to surmises, conjectures or fanciful considerations. As mentioned by us recently in the case of State of Punjab v. Jagir Singh, a criminal trial is not like a fairy tale wherein one is free to give flight to one's imagination and fantasy. It concerns itself with the question as to whether the accused arraigned at the trial is guilty of the offence with which he is charged. Crime is an event in real life and is the product of the interplay of different human emotions. In arriving at the conclusion about the guilt of the accused charged with the commission of a crime, the Court has to judge the evidence by the yardstick of probabilities, intrinsic worth and the animus of witnesses. Every case in the final analysis would have to depend upon its own facts. Although the benefit of every reasonable doubt should be given to the accused, the Courts should not at the same 8 2026:HHC:37770 time reject evidence which is ex facie trustworthy on grounds which are fanciful or in the nature of conjectures.” 28. The decision in Kali Ram (supra) further cautions that wrongful acquittal and wrongful conviction do not stand on the same footing, for conviction of an innocent person causes grave injustice and shakes public confidence in the administration of criminal justice. The rule of benefit of doubt, therefore, is not a technical rule; it is a substantive safeguard flowing from the presumption of innocence. 29. In Ghurey Lal v. State of Uttar Pradesh (2008) 10 SCC 450: (2009) 1 SCC (Cri) 60, this Court reiterated the limited scope of interference with acquittals. This Court observed: “75. The Trial Court has the advantage of watching the demeanour of the witnesses who have given evidence; therefore, the appellate court should be slow to interfere with the decisions of the Trial Court. An acquittal by the Trial Court should not be interfered with unless it is totally perverse or wholly unsustainable.” 30. The decision in Ghurey Lal (supra) also crystallised certain propositions: first, there is a double presumption of innocence in favour of an acquitted accused; secondly, if two views are possible, the view favourable to the accused must prevail; thirdly, though the appellate court has the power to reappreciate evidence, it should interfere only when the acquittal is manifestly illegal, perverse or results in miscarriage of justice; and fourthly, due weight must be given to the Trial Court's findings, particularly because the trial judge had the advantage of observing the demeanour of witnesses. 31. In Chandrappa v. State of Karnataka (2007) 4 SCC 415: (2007) 2 SCC (Cri) 325, this Court held that though the appellate court has full power to review and reappreciate the evidence, the presumption of innocence is strengthened by an order of acquittal. It was held that when two reasonable conclusions are possible on the basis 9 2026:HHC:37770 of evidence on record, the appellate court should not disturb the finding of acquittal. 32. The same principle was restated in Mrinal Das v. State of Tripura (2011) 9 SCC 479, wherein this Court held that an order of acquittal is to be interfered with only when there are compelling and substantial reasons for doing so. If two reasonable views are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal. 33. Therefore, the question before us is not whether another view on the evidence is possible. The question is whether the view taken by the Trial Court and affirmed by the High Court is impossible, perverse, wholly unsustainable, or manifestly illegal. Having examined the record, we are unable to hold so. 13. While dealing with the appeal against the acquittal in a complaint filed for the commission of an offence punishable under Section 138 of the NI Act the Hon’ble Supreme Court held in Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 18 SCC 106 that the normal rules with same rigour cannot be applied to the cases under Negotiable Instruments Act because there is a presumption that the holder had received the cheque for consideration to discharge the debt/liability. The Appellate Court is entitled to look into the evidence to determine whether the accused has discharged the burden or not. It was observed: - “12…. The principles aforesaid are not of much debate. In other words, ordinarily, the appellate court will not be upsetting the judgment of acquittal, if the view taken by the trial court is one of the possible views of the matter and unless the appellate court arrives at a clear finding 10 2026:HHC:37770 that the judgment of the trial court is perverse i.e. not supported by evidence on record or contrary to what is regarded as normal or reasonable; or is wholly unsustainable in law. Such general restrictions are essential to remind the appellate court that an accused is presumed to be innocent unless proven guilty beyond a reasonable doubt, and a judgment of acquittal further strengthens such presumption in favour of the accused. However, such restrictions need to be visualised in the context of the particular matter before the appellate court and the nature of the inquiry therein. The same rule with the same rigour cannot be applied in a matter relating to the offence under Section 138 of the NI Act, particularly where a presumption is drawn that the holder has received the cheque for the discharge, wholly or in part, of any debt or liability. Of course, the accused is entitled to bring on record the relevant material to rebut such presumption and to show that preponderance of probabilities are in favour of his defence but while examining if the accused has brought about a probable defence so as to rebut the presumption, the appellate court is certainly entitled to examine the evidence on record in order to find if preponderance indeed leans in favour of the accused. 13. For determination of the point as to whether the High Court was justified in reversing the judgment and orders of the trial court and convicting the appellant for the offence under Section 138 of the NI Act, the basic questions to be addressed are twofold: as to whether the complainant Respondent 2 had established the ingredients of Sections 118 and 139 of the NI Act, so as to justify drawing of the presumption envisaged therein; and if so, as to whether the appellant-accused had been able to displace such presumption and to establish a probable defence whereby, the onus would again shift to the complainant?” 14. The ingredients of the commission of an offence punishable under Section 138 of the NI Act were explained in Kuntegowda v. Thurubaiah, 2026 SCC OnLine SC 1485 as under: 11 2026:HHC:37770 5.3. At this juncture, it is pertinent to highlight the key ingredients as highlighted by this Court in the case of Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745: 2000 SCC (Cri) 546: (2000) 100 COMP CAS 755. “10. On a reading of the provisions of Section 138 of the NI Act, it is clear that the ingredients which are to be satisfied for making out a case under the provision are: (i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability; (ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank; (iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. 11. If the aforementioned ingredients are satisfied, then the person who has drawn the cheque shall be deemed to have committed an offence. In the 12 2026:HHC:37770 explanation to the section, clarification is made that the phrase “debt or other liability” means a legally enforceable debt or other liability. 5.4. The ingredients of the offence under Section 138 are as follows: i. The drawing of a cheque by a person on an account maintained by him with the banker for the payment of any amount of money to another from that account. ii. The cheque being drawn for the discharge in whole or in part of any debt or other liability. iii. Presentation of the cheque to the bank within the period of six months or within the period of its validity. iv. The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account. v. A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within thirty days of the receipt of information from the bank in regard to the return of the cheque. vi. Failure of the drawer of the cheque to make payment of the amount of money to the payee or the holder in due course within fifteen days of the receipt of the notice. vii. Filing of the complaint within a month from the date of expiry of the grace period of fifteen days before a Metropolitan Magistrate or a Judicial Magistrate not below first class. 15. The present appeal has to be decided as per the parameters laid down by the Hon’ble Supreme Court 13 2026:HHC:37770 16. It was submitted that the case was to be tried as a summary case and learned Magistrate erred in relying upon the evidence recorded before his predecessor. This submission is only stated to be rejected. The record of the learned trial Court shows that a notice of accusation was put to the accused. The summary of the statements of the witnesses was not recorded, but the evidence was recorded in full. It was laid down by a Division Bench of the Andhra Pradesh High Court in Food Inspector, Cir. V.M.C.H. v. Y. Babji, 2001 SCC OnLine AP 799: (2001) 3 AP LJ 45, that Section 326 (3) of CrPC does not apply where the complete record of the evidence was maintained. It was observed at page 48: “6. It is not in dispute, in the instant case, that the summary of deposition of the witnesses had not been recorded, and the entire depositions of the witnesses were recorded. The witnesses had also been cross-examined. Section 16A of the Act provides for a trial in a summary way. In a case where the second proviso is appended to Sec. 16A of the Act applies, summons trial may be taken recourse to. 7. Even in a summary trial, in terms of Section 262 of the Code, the procedure specified in the Code for the trial of summons cases would be followed. In the event that the procedure specified under sub-sec. (1) of Sec. 262 had been followed, we are of the opinion that sub-section (3) of Sec. 326 will have no application.” 14 2026:HHC:37770 17. A similar view was taken by the Rajasthan High Court in Tripti Vyas v. State of Rajasthan, 2013 SCC OnLine Raj 1030: (2014) 3 RLW 1980 wherein it was observed: “27. Coming to the facts of these cases, I find that the courts below are trying these cases by summons trial. The facts aforesaid are coming out as the accused cross- examined the complainant extensively, and it was recorded by the court word to word. It does not happen in the summary trial where only the substance of the evidence is to be recorded. In the background aforesaid, Sec. 326(3) CrPC has no application to the facts of these cases. ….” 18. Allahabad High Court also held in Manoj Kumar Agrawal v. State of U.P., 2014 SCC OnLine All 14904: (2014) 87 ACC 7 that when the case was tried as a summons case, the successor magistrate can act upon the evidence recorded by his predecessor. It was observed at page 9: “7. I find myself in complete agreement with the findings given by the Revisional Court and am of the opinion that had it been a case where the trial would have taken place in a summary manner, the situation would have been different. The judicial rationale of section 326(3) Cr.P.C. is also not difficult to discern out. When the accused is tried summarily, the presiding officer is not required to record the evidence word by word, and it is only the substance of the evidence which is required to be recorded. The Judicial Officer who records the substance of the evidence himself knows best as to how and in what manner he has summarised and abridged the statements given before him. If and when a succeeding officer comes and takes over, who is then required to look into the same evidence, and is also required to draw out inference out of the same, 15 2026:HHC:37770 it may be a hazardous exercise and may have a misleading effect. Therefore, it was found very much desirable that the same judicial officer who had recorded the evidence should also decide the same matter. It was also presumed that the matters which were tried summarily should also get concluded in a short period and would not get procrastinated for an unduly prolix period of time. But nowadays the gross reality is that only as a matter of exception we may find cases where the same judicial officer could have recorded the evidence and pronounced the verdict also. The prolonged interregnum between the outset and conclusion of the trial is often, if not always, intercepted by change of presiding officers. May be once, may be more than once even. In the present matter, the complaint was lodged in 2006, and the major part of the evidence was recorded in the year 2008, and since then the matter is lingering on, and we are in the year 2014 now. If section 326(3) Cr.P.C. is brought into operation unmindfully, in matters like this, men probably it may not be possible to conclude any trial at all. The dockets of the pending cases are already bursting at the seams, and it has become a daily feature to see that the trials do not get concluded for years and years together. Even the special provisions of the Negotiable Instruments Act have not proved to be of much avail. In the wake of this woeful reality staring in our face, the aforesaid provisions cannot be unmindfully brought into application, and there has to be a strict, not liberal, construction of this statute. It shall have to be seen with a deft judicial vigil that the procedure of a summary trial has actually been adopted or not. 8. In any view, so far as the facts of the present case are concerned, when the factual basis of the argument itself is not sustainable and has scuttled down, and the trial had actually not proceeded as a summary trial, there is hardly any question of 326 (3) Cr.P.C. to be brought into application. It is also true that if the Trial Court had adopted a different procedure and tried the case not in a summary manner, then he ought to have recorded a special finding to that effect. But even if it is presumed that there is no such specific finding given by the Court as 16 2026:HHC:37770 was required, if the record itself proves that the Court never proceeded in the matter as a summary trial, then the absence of the aforesaid finding will be a curable irregularity which may hardly be said to have caused any prejudice to the accused. All the while the trial took place, the accused was very much in the know of the fact that the procedure of summary trial was never being adopted. He neither held any objection nor raised the same.” 19. Kerala High Court also took a similar view in Indira Gandhi Memorial General Marketing Society Ltd. v. Abraham Varghese & Co., 2014 SCC OnLine Ker 16802: (2014) 3 MWN (Cri) DCC 8 and observed at page 15: “4. Considering the above legal proposition, it is clear that the Trial Magistrate had recorded the evidence of PW1 following a summons trial and thereafter he was transferred from his office. When a new Magistrate took charge remitted the case to a de novo trial. When the case is not tried in a Summary manner, the provisions of Section 326(1) are squarely applicable in this case. The only reason stated by the Second Respondent is that since it is a case under Section 138 of the N.I. Act based upon a special statute, it will give privilege over the general statute, and the trial can be only summary. I cannot agree with that ratio since a summons trial was ordered and adopted; it cannot be changed into another way in the midst of the trial. Therefore, half a Summons trial and half a Summary trial is not possible in a Criminal case. The Magistrate has to either follow the procedure in a Summons trial or follow the Summary trial. If a Summons trial is ordered, the Magistrate shall complete the trial according to that procedure. Since the procedure of a summons trial is adopted, there is no question of getting the benefit of the exception of Section 326(3), Cr.P.C.” 17 2026:HHC:37770 20. A similar view was taken in Rakeshbhai Ambalal Patel v. State of Gujarat, 2025 ACD 593 (GUJ) = AIROnline 2025 GUJ 349 wherein it was observed: “5. Having heard learned advocate appearing for the applicant and perusing the material on record, it is evident that the complaint was filed in the year 2007. Thereafter, the plea of the applicant was recorded below Exhibit '7'. Thereafter, documentary evidence was produced by the present applicant by way of Exhibit '9'. The testimony of two witnesses was recorded at Exhibit '18' and Exhibit '55' and thereafter, the trial proceeded as a normal trial, which is clear from the bare perusal of the record and proceedings. It is pertinent to note that the prayers made in the application preferred by the present applicant are for conducting a de novo trial. It has been categorically recorded by the learned appellate court that the plea has been recorded by the learned trial court below, Exhibit '7 ', as a summons triable case and not as a summary triable case. It has further been recorded by the appellate court that there is no argument on behalf of the revisionist - applicant before the trial court during the course of the trial regarding the aspect that the case has to be conducted as a summary triable case. Xxxx 7. In view of the same, the issue of de novo trial is now no more res intigra. The order passed by the appellate court dated 21.06.2013 in Criminal Appeal No.25 of 2013 below Exhibit '7' by the 5th Sessions Court cannot be interfered with. The appellate court is hereby directed to hear Criminal Appeal No.25 of 2013 on merits and dispose of the same in accordance with law within a period of 6 months from today.” 21. Therefore, learned Magistrate did not err in relying upon the statements recorded by his predecessor. 18 2026:HHC:37770 22. The accused admitted in his statement recorded under Section 313 of Cr.P.C. that the cheque bears his signatures. He stated on oath while appearing as DW-1 that the cheque (Ext.CW-1/D) was issued by him and it was signed by him as the proprietor. Therefore, the issuance of the cheque and 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 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 19 2026:HHC:37770 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.” 23. 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.” 24. 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 20 2026:HHC:37770 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 arise 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]. 25. 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. 26. The accused admitted that he had received a notice from the complainant and had issued a reply to it. Reply (Ext.D- 13) mentions that blank cheques were obtained by the complainant at the time of taking the agency. The accused received the articles worth ₹23,78,128/-. The accused had paid ₹28,42,850/- by means of cheque. In this manner, the accused had overpaid the money. This reply shows that the transactions 21 2026:HHC:37770 between the parties are not disputed. The accused did not dispute that he had received the articles worth ₹23,78,128/-. He claimed that he had paid ₹ 28,42,850/- by means of the cheque. However, no such cheque was produced on record. 27. The statement of account (Ext.CW-5/A) does not show that the accused ever had money in lakhs, and it falsifies the plea taken by the accused in the reply that a cheque of ₹28,42,850/- was issued in the complainant’s favour. 28. The accused Anoop Kumar (DW-1) stated that he was appointed as a commission agent. He used to supply the articles to the farmers, who used to directly pay the money to the complainant. The company had sent the articles mentioned in the Challan (Ext.D-1 to Ext. D-11). The complainant sent the statement marked DX-1 to mark DX-6, in which his commission was shown as ₹6,31,969/-. He had instructed his bank not to honour the cheque. 29. The statement of the accused does not mention that he had paid the money by means of a cheque as was claimed by him in the reply to the notice. Thus, the plea taken by the accused in the notice was not substantiated on oath. 22 2026:HHC:37770 30. The statement of account (Mark DX1 to Mark DX4) shows the commission due, amount received and amount recoverable. It does not mention the amount paid by the accused to the complainant. This statement is not signed by any person, and it cannot be said that it was issued by the complainant. Sita Ram (CW-4) was not asked anything about these statements. Thus, these statements of account are not sufficient to rebut the presumption attached to the cheque. 31. Kanwar Singh (DW-2) and Satish Kumar (DW-3) stated that the loan was sanctioned to different persons, and the money was paid to the complainant by account payee cheque. They admitted in their cross-examination that the record brought by them does not pertain to the accused or his concern. Therefore, the statements of these witnesses do not show that the money paid on behalf of the farmers is being claimed from the accused. 32. Sant Kumar (DW-5) stated that his father had taken the loan and the money was paid to the complainant by the bank. The accused used to work as the complainant’s agent. He stated in his cross-examination that the company itself used to supply 23 2026:HHC:37770 the articles. He admitted that the accused is a resident of his village. 33. The statement of this witness does not disprove the complainant's case. Even if the accused had acted as an agent of the complainant on some occasion, it does not disprove the effect of the admission made by him in reply to the notice that he had received the articles from the complainant, for which he was liable to pay money and had paid the money by means of a cheque. Therefore, no advantage can be derived from the statement of this witness. 34. Varinder Singh (DW-4) proved the reply to the notice, which corroborates the complainant's version and does not rebut it. Therefore, his testimony will not help the accused. 35. Sita Ram (CW-4) stated in his cross-examination that the company sends the bill for the articles sold by it and the company maintains the record. The record of the articles sold to the accused was available with the complainant. The learned trial Court held that the complainant was required to produce the record, and the absence of the record makes the complainant's version doubtful. This finding cannot be sustained. It was laid down by the Hon’ble Supreme Court in Uttam Ram Versus 24 2026:HHC:37770 Devinder Singh Hudan and another (2019) 10 SCC 287 that the complainant is not to prove the debt as in a civil court in view of the presumption, but only to prove that the cheque was issued by the accused. It was observed: “20. The Trial Court and the High Court proceeded as if the appellant were to prove a debt before a civil court; the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. Dishonour of a cheque carries a statutory presumption of consideration. The holder of the cheque in due course is required to prove that the cheque was issued by the accused and that when the same was presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.” 36. It was laid down in P. Rasiya v. Abdul Nazer, 2022 SCC OnLine SC 1131, that the complainant is not to state the nature of the transaction or the source of funds. It was observed: “By the impugned common judgment and order, the High Court has reversed the concurrent findings recorded by both the courts below and has acquitted the accused on the ground that, in the complaint, the Complainant has not specifically stated the nature of transactions and the source of funds. However, the High Court has failed to note the presumption under Section 139 of the N.I. Act. As per Section 139 of the N.I. Act, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque 25 2026:HHC:37770 are not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary, that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption, and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary. The aforesaid has not been dealt with and considered by the High Court.” 37. Therefore, no adverse inference could have been drawn against the complainant for not producing the record, especially in the present case when the accused admitted in reply to the notice that articles were received by him from the complainant. 38. The accused claimed that a blank cheque was issued as a security in the complainant’s favour. This plea will not help the accused. He admitted in the reply to the notice that the complainant had supplied the articles worth ₹23,78,128/-. He claimed that he had repaid the money by means of a cheque; however, he had not produced the cheque. His statement of account does not prove his version. The cheque was issued for ₹14,79,374/-. Therefore, even if it was a security cheque, the accused was liable to pay the amount mentioned in the cheque. It was laid down by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that the accused is liable for the dishonour 26 2026:HHC:37770 of the cheque even if the cheque is issued towards security. 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 the 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.” 39. 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 also attracts 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 27 2026:HHC:37770 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 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 28 2026:HHC:37770 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) 40. 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 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 29 2026:HHC:37770 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 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.” 30 2026:HHC:37770 41. Therefore, the accused cannot escape from the liability by taking a plea that he had issued the cheque as security. 42. The accused asserted that the cheque was blank and the complainant had filled in the amount. There is no evidence of this fact, as Sita Ram (CW4) denied in his cross-examination that a blank cheque was issued by the accused, and a denied suggestion does not amount to any proof in any case. In any case, 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 a person is liable for the commission of an offence punishable under section 138 of the Negotiable Instruments Act even if some other person fills the cheque. It was observed: “33. A meaningful reading of the provisions of the Negotiable Instruments Act, including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. 34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill in the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the 31 2026:HHC:37770 accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. 35. It is not the case that the respondent accused him of either signing the cheque or parting with it under any threat or coercion. Nor is it the case that the respondent accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.” 43. This position was reiterated in Oriental Bank of Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089, wherein it was observed: “12. The submission, which has been urged on behalf of the appellant, is that even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer. xxxxxx 32. A drawer who signs a cheque and hands it over to the payee is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued towards payment of a debt or in the discharge of a liability. The presumption arises under Section 139. 44. Therefore, the cheque is not bad even if it is not filled in by the drawer. 32 2026:HHC:37770 45. The accused claimed that he was appointed as a commission agent by the complainant. Sita Ram (CW-4) denied in his cross-examination that the accused was appointed as an agent. He stated in his cross-examination that there were many dealers of the company in Haryana. He volunteered to say that they were not dealers, but purchasers, who used to purchase the article from the complainant and thereafter sell it to the public. He admitted that the record of the purchaser was available with the company, but he had not produced the record. He specifically denied that the accused was appointed as a commission agent, who was to be paid commission on the sale made by him. Therefore, the cross-examination of this witness does not establish the plea taken by the accused that the accused was appointed as a commission agent. The accused has not produced any letter of appointment as commission agent, and the plea of the accused that he was a commission agent is not acceptable. 46. There was no other evidence to rebut the presumption attached to the cheque, and the learned trial Court erred in holding that the accused had successfully rebutted the presumption attached to the cheque. The learned trial Court failed to notice the contents of the reply, which had material 33 2026:HHC:37770 bearing in the present case, and this adversely affected the reasoning of the learned trial Court. 47. The judgments in Basalingappa (supra), Rajesh Jain (supra) and Rangappa (supra) deal with the rebuttal of presumption and that the presumption can be rebutted by preponderance of probability, regarding which there is no dispute. However, the accused had failed to rebut the presumption even on the preponderance of probability. Hence, these judgments will not help the accused. 48. The complainant stated that the cheque was dishonoured with an endorsement ‘insufficient funds’. This was proved by M.L. Marwari (CW-3), who stated that the cheque was presented before the bank and it was sent for realisation, but it was dishonoured with an endorsement ‘insufficient funds’. 49. Dharam Pal (CW5) stated that the cheque (Ext. CW1/D) was received in the bank, but the accused did not have sufficient money. Therefore, the cheque was dishonoured. He proved the statement of account (Ext.CW-5/A), which shows that an amount of ₹9,90/- was available on 21.09.2002. 50. Dharam Pal (CW-5) admitted in his cross- examination that the accused had issued a letter, stating that the 34 2026:HHC:37770 cheque was wrongly issued and it should not be honoured. This letter and the admission made by this witness will not help the accused. The letter written by the complainant that the cheque was wrongly issued was an admission in favour of the accused and was inadmissible as per Section 21 of the Indian Evidence Act. 51. It was submitted that the cheque should have been dishonoured with an endorsement ‘stop payment’ and not ‘insufficient funds’. This submission will not make any difference because the statement of this witness shows that the accused did not have any money in his account to honour the cheque. Therefore, even if the cheque was dishonoured with an endorsement ‘stop payment’, it would have attracted the provisions of Section 138 of the NI Act. It was laid down by the Hon’ble Supreme Court in Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970 that the dishonour of a cheque on the ground that the drawer stopped the payment attracted the provisions of Section 138 of the NI Act. It was observed at page 388: 12. In Modi Cements Ltd. [(1998) 3 SCC 249: 1999 SCC (Cri) 252], a similar question had arisen for the consideration of this Court. The question was whether dishonour of a cheque on the ground that the drawer had stopped payment was a dishonour punishable under Section 138 of 35 2026:HHC:37770 the Act. Relying upon two earlier decisions of this Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists and Engineers (Electronics) (P) Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] and K.K. Sidharthan v. T.P. Praveena Chandran [(1996) 6 SCC 369: 1996 SCC (Cri) 1340], it was contended by the drawer of the cheque that if the payment was stopped by the drawer, the dishonour of the cheque could not constitute an offence under Section 138 of the Act. That contention was specifically rejected by this Court. Not only that, the decision in Electronics Trade & Technology Development Corpn. Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] to the extent that the same held that dishonour of the cheque by the bank after the drawer had issued a notice to the holder not to present the same would not constitute an offence, was overruled. This Court observed: (Modi Cements Ltd. case [(1998) 3 SCC 249: 1999 SCC (Cri) 252], SCC pp. 257-58, paras 18 & 20) “18. The aforesaid propositions in both these reported judgments, in our considered view, with great respect, are contrary to the spirit and object of Sections 138 and 139 of the Act. If we are to accept this proposition, it will make Section 138 a dead letter, for, by giving instructions to the bank to stop payment immediately after issuing a cheque against a debt or liability, the drawer can easily get rid of the penal consequences, notwithstanding the fact that a deemed offence was committed. Further, the following observations in para 6 in Electronics Trade & Technology Development Corpn. Ltd. [(1996) 2 SCC 739: 1996 SCC (Cri) 454] (SCC p. 742) Section 138 is intended to prevent dishonesty on the part of the drawer of a negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induce the payee or holder in due course to act upon it. Section 138 draws the presumption that one commits the offence if one issues the cheque dishonestly. In our opinion, do not also lay down the law correctly. *** 36 2026:HHC:37770 20. On a careful reading of Section 138 of the Act, we are unable to subscribe to the view that Section 138 of the Act draws a presumption of dishonesty against the drawer of the cheque if he, without sufficient funds to his credit in his bank account to honour the cheque, issues the same and, therefore, this amounts to an offence under Section 138 of the Act. For the reasons stated hereinabove, we are unable to share the views expressed by this Court in the above two cases, and we respectfully differ with the same regarding the interpretation of Section 138 of the Act to the limited extent as indicated above.” (emphasis in original) 13. We may also, at this stage, refer to the decisions of this Court in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. [(2002) 1 SCC 234: 2002 SCC (Cri) 121], where to this Court considering an analogous question held that even in cases where the dishonour was on account of “stop- payment” instructions of the drawer, a presumption regarding the cheque being for consideration would arise under Section 139 of the Act. The Court observed: (SCC p. 240, para 19) “19. Just such a contention has been negatived by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi [(1998) 3 SCC 249: 1999 SCC (Cri) 252]. It has been held that even though the cheque is dishonoured by reason of a ‘stop-payment’ instruction, an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is also attracted in such a case. The authority shows that even when the cheque is dishonoured by reason of ‘stop-payment’ instructions by virtue of Section 139, the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course, this is a rebuttable presumption. The accused can thus show that the ‘stop-payment’ instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque 37 2026:HHC:37770 for encashment at the drawer bank and that the stop- payment notice had been issued because of other valid reasons, including that there was no existing debt or liability at the time of presentation of a cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus, a court cannot quash a complaint on this ground.” 14. To the same effect is the decision of this Court in Goaplast (P) Ltd. v. Chico Ursula D'Souza [(2003) 3 SCC 232: 2003 SCC (Cri) 603: 2003 Cri LJ 1723] where this Court held that “stop-payment instructions” and consequent dishonour of a post-dated cheque attract the provision of Section 138. This Court observed: (SCC pp. 232g-233c) “Chapter XVII, containing Sections 138 to 142, was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. The said provisions were intended to discourage people from not honouring their commitments by way of payment through cheques. The court should lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. In view of Section 139, it has to be presumed that a cheque is issued in the discharge of any debt or other liability. The presumption can be rebutted by adducing evidence, and the burden of proof is on the person who wants to rebut the presumption. This presumption, coupled with the object of Chapter XVII of the Act, leads to the conclusion that by countermanding payment of a post- dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A 38 2026:HHC:37770 contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts, which, in other words, can be said to be taking advantage of one's own wrong.” (emphasis supplied) 52. The accused admitted that the notice was received by him. He had sent a reply to the notice(Ext.D-13) and examined Virender Singh, his Advocate, (DW4) to prove the reply. Therefore, it was duly proved that the accused had received the notice. The accused never claimed that he had paid the money after the receipt of the notice, and it was proved that the accused had failed to repay the money despite the receipt of the notice of demand. 53. Therefore, it was duly proved on record that the accused had issued a cheque in favour of the complainant to discharge his debt/liability which was dishonoured with an endorsement ‘insufficient funds’ and the accused had failed to pay the amount despite the receipt of valid notice of demand. Hence, all the ingredients of the commission of an offence punishable under Section 138 of NI Act were duly satisfied, and the learned trial Court erred in acquitting the accused. 54. No other point was urged 39 2026:HHC:37770 55. In view of the above, the present appeal is allowed and the judgment passed by the learned trial Court, acquitting the accused, is set aside and the accused is convicted for the commission of an offence punishable under Section 138 of N I Act. 56. Let the accused be produced on 23.09.2026 for hearing him on the quantum of sentence. (Rakesh Kainthla) Judge 07th September, 2026. (Ravinder)