Saturday, 9 February 2019

How to appreciate evidence in cheque dishonour case if there is allegation that cheque is materially altered?

 If a signed blank cheque is voluntarily presented to a payee,
towards some payment, the payee may fill up the amount and
other particulars. This in itself would not invalidate the cheque.
The onus would still be on the accused to prove that the cheque
was not in discharge of a debt or liability by adducing evidence.
39. It is not the case of the respondent-accused that he either
signed the cheque or parted with it under any threat or coercion.

Nor is it the case of 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.
40. 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.
41. The fact that the appellant-complainant might have been an
Income Tax practitioner conversant with knowledge of law does not
make any difference to the law relating to the dishonour of a
cheque. The fact that the loan may not have been advanced by a
cheque or demand draft or a receipt might not have been obtained
would make no difference. In this context, it would, perhaps, not
be out of context to note that the fact that the respondent-accused
should have given or signed blank cheque to the appellantcomplainant,
as claimed by the respondent-accused, shows that
initially there was mutual trust and faith between them.
42. In the absence of any finding that the cheque in question was
not signed by the respondent-accused or not voluntarily made over

to the payee and in the absence of any evidence with regard to the
circumstances in which a blank signed cheque had been given to
the appellant-complainant, it may reasonably be presumed that
the cheque was filled in by the appellant-complainant being the
payee in the presence of the respondent-accused being the
drawer, at his request and/or with his acquiescence. The
subsequent filling in of an unfilled signed cheque is not an
alteration. There was no change in the amount of the cheque, its
date or the name of the payee. The High Court ought not to have
acquitted the respondent-accused of the charge under Section 138
of the Negotiable Instruments Act.
REPORTABLE
THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.230-231 OF 2019

Bir Singh  Vs Mukesh Kumar 

Indira Banerjee, J.
Dated:FEBRUARY 06, 2019.

Leave granted.
2. These appeals are against a Judgment and order dated 21-11-
2017 passed by the High Court of Punjab and Haryana at
Chandigarh allowing the Criminal Revisional Application being
Criminal Revision Petition No.849 of 2016 filed by the respondentaccused,
challenging a judgment and order dated 20-2-2016
passed by the Additional Sessions Judge, Palwal in Criminal Appeal
No.13/2015 filed by the respondent-accused, inter alia, affirming a
judgment and order of conviction of the respondent-accused,
2
passed by the Judicial Magistrate, 1st Class, Palwal under Section
138 of the Negotiable Instruments Act, 1881.
3. It is the case of the appellant-complainant, that the
respondent-accused issued a cheque being Cheque No.034212
dated 4-3-2012 drawn on Axis Bank, Branch, Palwal in the name of
the appellant towards repayment of a “friendly loan” of Rs.15
lakhs advanced by the appellant-complainant to the respondentaccused.
4. On 11-4-2012, the appellant-complainant deposited the said
cheque in his bank, but the cheque was returned unpaid with the
endorsement “Insufficient Fund”.
5. The appellant-complainant has alleged that, on the assurance
of the respondent-accused, that there would be sufficient funds in
his bank account to cover the amount of the cheque, the
appellant-complainant again presented the cheque to his bank on
23-5-2012, but it was again returned unpaid with the remark
“Insufficient Fund”.
6. On 15-6-2012, the appellant-complainant issued a legal notice
to the respondent-accused through his lawyer, calling upon the
respondent-accused to pay the cheque amount. The said notice,
sent by registered post, was according to the appellantcomplainant,
duly served on the respondent-accused. The
respondent-accused, however, did not reply to the notice. Nor did
he pay the cheque amount to the appellant-complainant.
3
7. The appellant-complainant filed a Criminal Complaint against
the respondent-accused, being Case No.106 of 2012 before the
Judicial Magistrate 1st Class, Palwal, under Section 138 of the
Negotiable Instruments Act.
8. Sections 138 and 139 of the Negotiable Instruments Act are
set out herein below for convenience:-
“138 Dishonour of cheque for insufficiency,
etc., of funds in the account. —Where any cheque
drawn by a person on an account maintained by him
with a banker for payment of any amount of money to
another person from out of that account for the
discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either because
of 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 by an agreement made with that bank, such
person shall be deemed to have committed an offence
and shall, without prejudice to any other provisions of
this Act, be punished with imprisonment for a term
which may be extended to two years, or with fine which
may extend to twice the amount of the cheque, or with
both:
Provided that nothing contained in this section shall
apply unless—
(a) the 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;
(b) the payee or the holder in due course of the cheque,
as the case may be, 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 thirty days of
the receipt of information by him from the bank
regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment
of the said amount of money to the payee or, as the
case may be, to the holder in due course of the cheque,
within fifteen days of the receipt of the said notice.
4
Explanation.— For the purposes of this section, “debt or
other liability” means a legally enforceable debt or
other liability.]
139. Presumption in favour of holder.—It shall be
presumed, unless the contrary is proved, that the
holder of a cheque received the cheque of the nature
referred to in section 138 for the discharge, in whole or
in part, of any debt or other liability.”
9. The object of Section 138 of the Negotiable Instruments Act is
to infuse credibility to negotiable instruments including cheques
and to encourage and promote the use of negotiable instruments
including cheques in financial transactions. The penal provision of
Section 138 of the Negotiable Instruments Act is intended to be a
deterrent to callous issuance of negotiable instruments such as
cheques without serious intention to honour the promise implicit in
the issuance of the same.
10. Having regard to the object of Section 138 of the Negotiable
Instruments Act, a prosecution based on a second or successive
default in payment of the cheque amount is not impermissible
simply because no statutory notice had been issued after the first
default and no proceeding for prosecution had been initiated. As
held by this Court in MSR Leathers vs. S. Palaniappan & Anr1,
there is no real or qualitative difference between a case where
default is committed and prosecution immediately launched and
another where the prosecution is deferred till the cheque presented
again gets dishonoured for the second time or successive times.
1 (2013) 1 SCC 177
5
11. By a judgment and order dated 9-2-2015, the Judicial
Magistrate I Class, Palwal convicted the respondent-accused under
Section 138 of the Negotiable Instruments Act and sentenced him
to undergo simple imprisonment for a period of one year and
further directed him to pay compensation of Rs.15 lakhs to the
appellant-complainant within one month from the date of the said
Judgment and order. Being aggrieved, the respondent-accused filed
a criminal appeal No.13/2015 dated 9-3-2015 in the court of
Additional Sessions Judge, Palwal.
12. By a judgment and order dated 20-2-2016, the Appellate
Court upheld the conviction of the respondent-accused under
Section 138 of the Negotiable Instruments Act and confirmed the
compensation of Rs.15 lakhs directed to be paid to the appellantcomplainant.
The sentence of imprisonment was however reduced
to six months from one year.
13. The respondent-accused filed a Criminal Revision Petition
being CRR No.849 of 2016 in the High Court challenging the
Judgment and order of the Appellate Court. The appellantcomplainant
also filed a Criminal Revision Petition being CRR
No.2017 of 2016 challenging the reduction of the sentence from
one year to six months.
14. By a common final Judgment and order dated 21-11-2017
which is impugned before us, the High Court has reversed the
concurrent factual findings of the Trial Court and the Appellate
Court and acquitted the respondent of the charge under Section
6
138 of the Negotiable Instruments Act, observing, inter alia, that
there was fiduciary relationship between the appellantcomplainant,
an Income Tax practitioner, and the respondentaccused
who was his client.
15. The High Court observed and held:-
“The complainant had fiduciary relationship with
the accused-petitioner. Therefore, heavy burden was
on the complainant to prove that he had advanced
the loan and that blank cheque for the same was
given to him. The complainant is an income tax
practitioner and he knows that whenever loan is
advanced to anybody, receipt has to be obtained and
that such heavy amount is to be advanced only
through a cheque or demand draft or RTGS. The
accused-petitioner was the client of the complainant
and they were having professional relationship. The
accused-petitioner was no so thick and thin with the
complainant. There is no reason why the
complainant, who is an income tax practitioner, will
advance such a heavy loan to his client without any
close relationship and without obtaining any writing
to this effect. There was heavy burden on the
complainant. In such circumstances, the accusedpetitioner
is successful in raising reasonable doubts
that the complainant might have misused one of the
blank cheques given to him for payment of income
tax for depositing the same in the Treasury.
In order to support his case, the accusedpetitioner
took a risk by stepping himself into the
witness box and offered himself for crossexamination.
He asserted in his cross-examination
that the tax return was deposited in cash and the
complainant used to take cash from him. His version
was also supported by one Praveen Kumar, DW2.
From the abovenoted discussions, it is clear that
the parties were in fiduciary relationship and heavy
burden was on the complainant to prove that he had
advanced a loan of Rs.15,00,000/- to his client
7
without obtaining any writing and that he has not
misused any blank cheque of his client. Such loan
was not shown in the income tax return of the
complainant.
For the reasons mentioned above, the case of the
complainant becomes highly doubtful and is not
beyond all reasonable doubts. Therefore, no
presumption under Section 138 of the Negotiable
Instruments Act, 1881 can be raised. Both the courts
below erred in holding the accused-petitioner guilty
for the commission of offence punishable under
Section 138 of the Negotiable Instruments Act, 1881.
In view of the foregoing discussions, CRR No. 849
of 2016 is allowed and CRR No.2017 of 2016 is
dismissed. The accused- petitioner stands acquitted of
the notice of accusation served upon him.”
16. The short question before us is whether the High Court was
right in reversing the concurrent factual findings of the Trial Court
and of the Appellate court in exercise of its revisional jurisdiction.
The questions of law which rise in this appeal are, (i) whether a
revisional Court can, in exercise of its discretionary jurisdiction,
interfere with an order of conviction in the absence of any
jurisdictional error or error of law and (ii) whether the payee of a
cheque is disentitled to the benefit of the presumption under
Section 139 of the Negotiable Instruments Act, of a cheque duly
drawn, having been issued in discharge of a debt or other liability,
only because he is in a fiduciary relationship with the person who
has drawn the cheque.
8
17. The Trial Court, on analysis of the evidence adduced by the
respective parties arrived at the factual finding that the
respondent-accused had duly issued the cheque in question for
Rs.15 lakhs in favour of the appellant-complainant, in discharge of
a debt or liability, the cheque was presented to the bank for
payment within the period of its validity, but the cheque had been
returned unpaid for want of sufficient funds in the account of the
respondent-accused in the bank on which the cheque was drawn.
Statutory Notice of dishonour was duly issued to which there was
no response from the respondent-accused.
18. The Appellate Court affirmed the aforesaid factual findings.
The Trial Court and the Appellate Court arrived at the specific
concurrent factual finding that the cheque had admittedly been
signed by the respondent-accused. The Trial Court and the
Appellate Court rejected the plea of the respondent-accused that
the appellant-complainant had misused a blank signed cheque
made over by the respondent-accused to the appellantcomplainant
for deposit of Income Tax, in view of the admission of
the respondent-accused that taxes were paid in cash for which the
appellant-complainant used to take payment from the respondent
in cash.
19. It is well settled that in 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
9
evidence on record.
20. As held by this Court in Southern Sales and Services and
Others vs. Sauermilch Design and Handels GMBH2, 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.
21. In passing the impugned judgment and order dated 21-11-
2017, the High Court mis-construed Section 139 of Negotiable
Instruments Act, which mandates that unless the contrary is
proved, it is to be presumed that the holder of a cheque received
the cheque of the nature referred to in Section 138, for the
discharge, in whole or in part, of any debt or other liability.
Needless to mention that the presumption contemplated under
Section 139 of the Negotiable Instruments Act, is a rebuttable
presumption. However, the onus of proving that the cheque was
not in discharge of any debt or other liability is on the accused
drawer of the cheque.
22. In Hiten P. Dalal vs. Bratindranath Banerjee3, this Court
held that both Section 138 and 139 require that the Court shall
presume the liability of the drawer of the cheques for the amounts
for which the cheques are drawn. Following the judgment of this
Court in State of Madras vs. Vaidyanatha Iyer4, this Court held
2 (2008) 14 SCC 457
3 (2001) 6 SCC 16
4 AIR 1958 SC 61
10
that it was obligatory on the Court to raise this presumption.
23. Section 139 introduces an exception to the general rule as to
the burden of proof and shifts the onus on the accused. The
presumption under Section 139 of the Negotiable Instruments Act
is a presumption of law, as distinguished from presumption of
facts. Presumptions are rules of evidence and do not conflict with
the presumption of innocence, which requires the prosecution to
prove the case against the accused beyond reasonable doubt. The
obligation on the prosecution may be discharged with the help of
presumptions of law and presumptions of fact unless the accused
adduces evidence showing the reasonable possibility of the nonexistence
of the presumed fact as held in Hiten P. Dalal (supra).
24. Presumption of innocence is undoubtedly a human right as
contended on behalf of the respondent-accused, relying on the
judgments of this Court in Ranjitsing Brahmajeetsing Sharma
vs. State of Maharashtra and Anr5 and Rajesh Ranjan Yada
@ Pappu Yadav vs. CBI through its Director6. However the
guilt may be established by recourse to presumptions in law and
presumptions in facts, as observed above.
25. In Laxmi Dyechem vs. State of Gujarat & Ors.7, this Court
reiterated that in view of Section 139, it has to be presumed that a
cheque was issued in discharge of a debt or other liability but the
5 (2005) 5 SCC 294
6 (2007) 1 SCC 70
7 (2012) 13 SCC 375
11
presumption could be rebutted by adducing evidence. The burden
of proof was however on the person who wanted to rebut the
presumption. This Court held “however, 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”.
26. In Kumar Exports vs. Sharma Carpets8, this Court
reiterated that there is a presumption that every negotiable
instrument duly executed, is for discharge of a debt or liability, but
the presumption is rebuttable by proving the contrary. In the facts
and circumstances of the case it was found that the cheque in
question was towards advance for purchase of carpets, which were
in fact not sold by the payee of the cheque to the drawer, as
proved from the deposition of an official of the Sales Tax
Department, who stated that the payee had admitted that he had
not sold the carpets.
27. In K.N. Beena vs. Muniyappan and Another9, this Court
held that in view of the provisions of Section 139 of the
Negotiable Instruments Act read with Section 118 thereof, the
Court had to presume that the cheque had been issued for
discharging a debt or liability. The said presumption was
rebuttable and could be rebutted by the accused by proving the
8 (2009) 2 SCC 513
9(2001) 8 SCC 458
12
contrary. But mere denial or rebuttal by the accused was not
enough. The accused had to prove by cogent evidence that there
was no debt or liability. This Court clearly held that the High
Court had erroneously set aside the conviction, by proceeding on
the basis that denials/averments in the reply of the accused were
sufficient to shift the burden of proof on the complainant to prove
that the cheque had been issued for discharge of a debt or a
liability. This was an entirely erroneous approach. The accused
had to prove in the trial by leading cogent evidence that there
was no debt or liability.
28. In R. Vijayan vs. Baby and Another10 this Court observed
that the object of Chapter XVII of the Negotiable Instruments Act
is both punitive as also compensatory and restitutive. It provides
a single forum and single proceeding for enforcement of criminal
liability by reason of dishonour of cheque and for enforcement of
the civil liability for realization of the cheque amount, thereby
obviating the need for the creditor to move two different fora for
relief. This Court expressed its anguish that some Magistrates
went by the traditional view, that the criminal proceedings were
for imposing punishment and did not exercise discretion to direct
payment of compensation, causing considerable difficulty to the
complainant, as invariably the limitation for filing civil cases
would expire by the time the criminal case was decided.
10 (2012) 1 SCC 260
13
29. In R. Vijayan vs. Baby and another (supra) this Court
observed that unless there were special circumstances, in all
cases of conviction, the Court should uniformly exercise the power
to levy fine up to twice the cheque amount and keeping in view
the cheque amount and the simple interest thereon at 9% per
annum as the reasonable quantum of loss, direct payment of such
amount as compensation. This Court rightly observed that
uniformity and consistency in deciding similar cases by different
courts not only increases the credibility of the cheque as a
Negotiable Instrument but also the credibility of the Courts of
Justice.
30. The judgment of this Court in Raj Kumar Khurana vs. State
of (NCT of Delhi) & Anr.11 was rendered in the particular facts of
the case where the drawer of the cheque had reported to the police
and the bank that two unfilled cheques signed by him had been
stolen.
31. The proposition as re-enunciated in John K John vs. Tom
Varghese & Anr.12 cited on behalf of the respondent-accused that
if two views are possible, this Court, in exercise of its jurisdiction
under Article 136 of the Constitution would ordinarily not interfere
with a judgment of acquittal, is well settled.
32. In the aforesaid case this Court affirmed an acquittal under
Section 138 of the Negotiable Instrument Act, in the
11 (2009) 6 SCC 72
12 (2007) 12 SCC 714
14
peculiar facts and circumstances of the case where several civil
suits between the parties were pending.
33. In Krishna Janardhan Bhat vs. Dattatraya G. Hegde13,
cited on behalf of the respondent-accused, this Court reaffirmed
that Section 139 of the Act raises a presumption that a cheque duly
drawn was towards a debt or liability. However, keeping in view
the peculiar facts and circumstances of the case, this Court was of
the opinion that the courts below had approached the case from a
wholly different angle by wrong application of legal principles.
34. It is well settled that a judgment is a precedent for the issue
of law which is raised and decided. It is the ratio decidendi of the
case which operates as a binding precedent. As observed by this
Court in State of Punjab & Ors. vs. Surinder Kumar & Ors.14,
what is binding on all courts is what the Supreme Court says under
Article 141 of the Constitution, which is declaration of the law and
not what it does under Article 142 to do complete justice.
35. Furthermore, to quote V. Sudhish Pai from his book
“Constitutional Supremacy - A Revisit”:-
“Judgments and observations in judgments are not
to be read as Euclid’s theorems or as provisions of
statute. Judicial utterances/pronouncements are in
the setting of the facts of a particular case. To
interpret words and provisions of a statute it may
become necessary for judges to embark upon lengthy
discussions, but such discussion is meant to explain
not define, Judges interpret statutes, their words are
13 (2008) 4 SCC 54
14 (1992) 1 SCC 489
15
not to be interpreted as statutes. Thus, precedents
are not to be read as statutes.”
36. The proposition of law which emerges from the judgments
referred to above is that the onus to rebut the presumption under
Section 139 that the cheque has been issued in discharge of a debt
or liability is on the accused and the fact that the cheque might be
post dated does not absolve the drawer of a cheque of the penal
consequences of Section 138 of the Negotiable Instruments Act.
37. 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.
38. If a signed blank cheque is voluntarily presented to a payee,
towards some payment, the payee may fill up the amount and
other particulars. This in itself would not invalidate the cheque.
The onus would still be on the accused to prove that the cheque
was not in discharge of a debt or liability by adducing evidence.
39. It is not the case of the respondent-accused that he either
signed the cheque or parted with it under any threat or coercion.

Nor is it the case of 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.
40. 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.
41. The fact that the appellant-complainant might have been an
Income Tax practitioner conversant with knowledge of law does not
make any difference to the law relating to the dishonour of a
cheque. The fact that the loan may not have been advanced by a
cheque or demand draft or a receipt might not have been obtained
would make no difference. In this context, it would, perhaps, not
be out of context to note that the fact that the respondent-accused
should have given or signed blank cheque to the appellantcomplainant,
as claimed by the respondent-accused, shows that
initially there was mutual trust and faith between them.
42. In the absence of any finding that the cheque in question was
not signed by the respondent-accused or not voluntarily made over

to the payee and in the absence of any evidence with regard to the
circumstances in which a blank signed cheque had been given to
the appellant-complainant, it may reasonably be presumed that
the cheque was filled in by the appellant-complainant being the
payee in the presence of the respondent-accused being the
drawer, at his request and/or with his acquiescence. The
subsequent filling in of an unfilled signed cheque is not an
alteration. There was no change in the amount of the cheque, its
date or the name of the payee. The High Court ought not to have
acquitted the respondent-accused of the charge under Section 138
of the Negotiable Instruments Act.
43. In our considered opinion, the High Court patently erred in
holding that the burden was on the appellant-complainant to prove
that he had advanced the loan and the blank signed cheque was
given to him in repayment of the same. The finding of the High
Court that the case of the appellant-complainant became highly
doubtful or not beyond reasonable doubt is patently erroneous for
the reasons discussed above.
44. The appeals are allowed. The judgment and order of the High
Court is set aside. The conviction of the respondent under Section
138 of the Negotiable Instruments Act is confirmed. However, the
respondent-accused is sentenced only to fine, which is enhanced to
Rs.16 lakhs and shall be paid as compensation to the appellantcomplainant.
The fine shall be deposited in the Trial Court within
eight weeks from the date, failing which the sentence of

imprisonment of one year as imposed by the Trial Court shall
revive. There shall be no order as to costs.
.................................J.
(R. BANUMATHI)
.................................J.
(INDIRA BANERJEE)
FEBRUARY 06, 2019
NEW DELHI
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