Once Presumption U/S 118 & 139 NI Act Arises, Complainant Need Not Prove Consideration For Cheque: Himachal Pradesh High Court

The Court was hearing a criminal revision petition challenging the conviction of the accused under Section 138 of the Negotiable Instruments Act for dishonour of a cheque.

A Single Bench of Justice Rakesh Kainthla, while relying on the Supreme Court’s ruling in Uttam Ram v. Devinder Singh Hudan (2019), reiterated: “Once the presumption under Section 118(a) and 139 of the NI Act is drawn, the complainant is not required to prove the existence of the consideration. It was laid down by the Hon’ble Supreme Court, …that a presumption under Section 139 of the NI Act would obviate the requirement to prove the existence of consideration”.

Background

The dispute arose from a complaint filed alleging the commission of an offence under Section 138 of the Negotiable Instruments Act.

According to the complainant, the accused had borrowed ₹9,00,000 in July 2011 and agreed to repay the amount by October 2012. When the complainant demanded repayment, the accused issued a cheque for the said amount drawn on Union Bank of India.

Upon presentation, the cheque was returned unpaid with the endorsement “funds insufficient.” The complainant thereafter issued a statutory notice demanding payment within fifteen days, but the accused refused to receive the notice, resulting in deemed service. Consequently, a complaint under Section 138 of the NI Act was filed before the Trial Court.

During the trial, the complainant examined himself and another witness to support the case. The accused, while acknowledging that the cheque book belonged to him, claimed that the cheque did not bear his signature and that he did not know how the complainant came into possession of the cheque.

The Trial Court convicted the accused and sentenced him to six months’ simple imprisonment, along with payment of compensation. The conviction and sentence were subsequently affirmed by the Sessions Judge on appeal. Aggrieved by these concurrent findings, the accused approached the High Court in revision.

Court’s Observation

At the outset, the High Court noted that the scope of interference in criminal revision is limited and that revisional courts ordinarily do not reappreciate evidence unless the findings of the lower courts suffer from perversity or manifest illegality.

The Court observed that once the issuance of the cheque and the signature of the drawer are established, a statutory presumption arises that the cheque was issued in discharge of a legally enforceable debt or liability.

The Court referred to several Supreme Court decisions explaining that Sections 118(a) and 139 of the NI Act incorporate a reverse onus clause whereby the burden shifts to the accused to rebut the presumption by raising a probable defence.

The High Court noted that during cross-examination, the defence had suggested that the cheque had been handed over to a bank manager, which itself implied admission of the cheque’s issuance. The Court observed that such suggestions in cross-examination could be taken into consideration while determining the guilt or innocence of the accused.

Further, the Court held that the complainant’s version regarding the advancement of ₹9,00,000 was corroborated by the bank statement showing withdrawal of the same amount on the relevant date. Therefore, the complainant’s testimony could not be doubted.

Addressing the defence argument that no receipt had been produced to prove the loan, the Court held that such contention was untenable in view of the statutory presumption under Sections 118 and 139 of the NI Act.

Relying on the Supreme Court decision in Uttam Ram v. Devinder Singh Hudan, the Court reiterated that once the statutory presumption operates, the complainant is not required to prove the existence of consideration for the cheque. The burden lies on the accused to rebut the presumption by producing evidence.

The Court further held that the accused had failed to discharge this burden. The accused did not step into the witness box to prove his defence, and the evidence produced did not rebut the statutory presumption.

The Court also noted that the cheque had been dishonoured due to insufficient funds, and the bank’s memo regarding dishonour carries a statutory presumption of correctness unless rebutted.

On the issue of statutory notice, the Court observed that the notice sent to the accused had been returned with the endorsement “refused,” which constitutes deemed service under the law.

Accordingly, the Court concluded that all ingredients required to establish an offence under Section 138 of the Negotiable Instruments Act had been satisfied.

Conclusion

In view of the above findings, the Court held that the Trial Court and the Appellate Court had correctly appreciated the evidence and the legal presumptions under the Negotiable Instruments Act.

Finding no perversity or illegality in the concurrent findings, the High Court dismissed the criminal revision petition and upheld the conviction and sentence imposed upon the accused.

Cause Title: Inderjeet v. Kishan Chand (Neutral Citation: 2026:HHC:6104)

Appearances

Petitioner: Maan Singh, Advocate

Respondent: Surya Chauhan, Advocate

Click here to read/download Judgment