The judgment was delivered by Justice Rakesh Kainthla in Pyare Lal vs Baldev, Criminal Revision No. 417 of 2026, decided on 24 July 2026 by the High Court of Himachal Pradesh, Shimla. The revision petition was filed against the concurrent findings of the Trial Court and the Appellate Court, which had already convicted the accused under Section 138 of the NI Act.
Background of the Case
The dispute arose from a transaction involving an apple orchard. The complainant, an agriculturist, claimed that the accused had purchased his apple crop for ₹10 lakh and had promised to make payment after selling the produce. The complainant allowed the accused to pluck the crop, but according to the complaint, the accused failed to pay the agreed amount. Subsequently, the accused issued a cheque of ₹10 lakh towards payment of the liability.
When the cheque was presented before the bank, it was dishonoured with the remark “funds insufficient.” The complainant thereafter issued a statutory demand notice requiring payment within 15 days. Despite receipt of the notice, the accused failed to make payment, leading to the filing of proceedings under Section 138 of the NI Act.
Defence Taken by Accused
The accused admitted issuance of the cheque but claimed that it was a blank security cheque issued in connection with a loan allegedly taken by his son's mother-in-law from the complainant. He argued that the complainant failed to produce independent evidence regarding the apple crop transaction and therefore the conviction could not be sustained.
The accused further contended that no documentary evidence, such as goods receipts or independent witnesses regarding transportation and sale of the apple crop, had been produced by the complainant. According to him, the complainant had failed to prove the existence of a legally enforceable debt.
High Court Examines Scope of Revision Jurisdiction
The High Court observed that while exercising revisional jurisdiction, it cannot act as a second appellate court and re-appreciate evidence unless there is a patent illegality, jurisdictional error, perversity, or miscarriage of justice.
Relying upon judgments of the Supreme Court including Malkeet Singh Gill v. State of Chhattisgarh, the Court reiterated that revisional jurisdiction is limited and is meant only to correct serious legal defects rather than to conduct a fresh examination of evidence.
The Court also referred to decisions including State of Gujarat v. Dilipsinh Kishorsinh Rao and Amit Kapoor v. Ramesh Chander, holding that interference in revision is justified only where findings are grossly erroneous, based on no evidence, or affected by jurisdictional defects.
Presumption Under Sections 118 and 139 of NI Act
A significant part of the judgment dealt with the statutory presumption attached to negotiable instruments.
The Court held that once the accused admits issuance of the cheque and his signature, the presumption under Section 139 of the NI Act operates in favour of the complainant that the cheque was issued towards discharge of a legally enforceable debt or liability. However, this presumption is rebuttable, and the accused must place sufficient material before the Court to establish a probable defence.
The Court relied upon the Supreme Court judgment in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers, observing that admission of cheque issuance shifts the burden upon the accused to rebut the presumption through evidence. A mere statement or denial is not sufficient.
The Court further referred to N. Vijay Kumar v. Vishwanath Rao N., reiterating that presumptions under Sections 118 and 139 of the NI Act are rebuttable, but the accused must establish a probable defence through evidence.
Absence of Supporting Documents by Complainant Not Fatal
The accused argued that the complainant had not produced documents proving ownership of the orchard, transportation records, or independent witnesses regarding the apple crop transaction.
Rejecting this argument, the High Court held that because of the statutory presumption under Section 139 of the NI Act, the complainant was not required to prove the transaction like a civil recovery suit. Once the cheque issuance and dishonour were established, the burden shifted upon the accused to rebut the presumption.
The Court relied upon Uttam Ram v. Devinder Singh Hudan, where the Supreme Court had held that a cheque dishonour case cannot be treated like an ordinary civil suit requiring the complainant to prove every aspect of the underlying transaction once the statutory presumption arises.
Security Cheque Defence Rejected
The accused also argued that the cheque was issued only as a security cheque and therefore Section 138 proceedings could not be initiated.
The High Court rejected this argument and held that a cheque issued as security is not automatically excluded from the provisions of Section 138 of the NI Act. If there exists a legally enforceable liability on the date of presentation of the cheque, dishonour of such cheque can attract criminal liability.
The Court relied upon the Supreme Court judgment in Sampelly Satyanarayana Rao vs Indian Renewable Energy Development Agency Limited, which clarified that merely describing a cheque as a security cheque does not prevent application of Section 138 where an existing debt or liability is due.
The Court also referred to Sripati Singh v. State of Jharkhand, observing that a security cheque issued in a financial transaction cannot be treated as worthless paper and may attract consequences under Section 138 if the liability remains unpaid.
Conviction Maintained by High Court
The High Court found that the accused failed to produce any evidence to rebut the statutory presumption attached to the cheque. The Court held that the complainant had successfully established that the cheque was issued towards liability, dishonoured due to insufficient funds, and payment was not made despite service of demand notice. Therefore, all ingredients of Section 138 of the NI Act stood satisfied.
The Court also observed that the purpose of Section 138 of the NI Act is to maintain credibility of cheque transactions and discourage issuance of cheques without intention to honour financial commitments.
The Trial Court had sentenced the accused to one year simple imprisonment and imposed a fine of ₹10,05,000, which included compensation to the complainant. The High Court held that considering the deterrent nature of Section 138 proceedings, the sentence could not be considered excessive.
Conclusion
The Himachal Pradesh High Court dismissed the criminal revision petition and upheld the conviction of the accused. The judgment reinforces the settled principle that once execution of a cheque is admitted, the statutory presumptions under the NI Act operate in favour of the cheque holder, and the accused must establish a credible defence through evidence.
The decision again highlights that a simple denial, a plea of security cheque, or questioning the underlying transaction without supporting evidence may not be sufficient to escape liability under Section 138 of the Negotiable Instruments Act.