Court affirms statutory presumptions, rejects defence of cheque misuse and financial incapacity; sentences accused to six months imprisonment with compensation
In a significant judgment delivered on October 14, 2026, the Himachal Pradesh High Court dismissed the revision petition filed by Krishan Kumar challenging his conviction under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) for dishonour of cheque. The Court upheld the concurrent findings of the trial and appellate courts, affirming that the accused had issued a cheque of ₹75,000 to the complainant, Vijender Kumar, which was dishonoured due to insufficient funds.
The case arose from a dispute where the accused, after having a long-standing friendly relationship with the complainant, requested a loan of ₹75,000 for business purposes. The complainant advanced the loan without any formal agreement, based on trust, and the accused issued a cheque as repayment assurance. Upon presentation, the cheque was dishonoured with the endorsement "funds insufficient."
The complainant sent a demand notice via registered post which was refused by the accused, resulting in deemed service of the notice. The accused neither paid the cheque amount nor replied to the notice, leading to the filing of the complaint before the Trial Court.
The Trial Court convicted the accused and sentenced him to six months' simple imprisonment along with payment of compensation equal to the cheque amount, with further imprisonment in default of payment. The Sessions Court upheld this conviction and sentence in appeal.
On revision, the accused contended that the cheque was misused by the complainant, who allegedly filled the cheque amount and payee's name in a blank cheque signed by him. He also challenged the financial capacity of the complainant to lend the amount, citing irregularities in the complainant's bank account. However, the High Court found these arguments untenable.
The Court reiterated the settled legal position that once the execution of a cheque is admitted or proved, statutory presumptions under Sections 118 and 139 of the NI Act arise that the cheque was issued for discharge of a legally enforceable debt. The mere fact that the cheque's body was filled in by someone other than the drawer does not absolve the drawer of liability if the cheque is duly signed. Furthermore, the accused failed to rebut the presumption by adducing any defence evidence or explaining how the signed cheque came into the complainant's possession.
Regarding the financial capacity challenge, the Court noted that unless the accused raises this defence explicitly in reply to the statutory notice, the complainant is not initially required to prove his capacity to lend. Since no such reply was filed, the plea was rejected.
The High Court further emphasized that refusal to accept the statutory demand notice amounts to deemed service, fulfilling another essential ingredient for offence under Section 138.
On the sentencing aspect, the Court observed that the punishment of six months' simple imprisonment was not excessive considering the deterrent object of Section 138. The Court also upheld the legality of awarding simple imprisonment in default of payment of compensation, citing Supreme Court precedents.
The Court declined to reappreciate evidence as it was exercising revisional jurisdiction and not acting as an appellate court. It stressed that concurrent findings of conviction by the trial and appellate courts should not be disturbed unless found to be perverse or resulting in miscarriage of justice, which was not the case here.
Consequently, the High Court dismissed the revision petition, thereby confirming the conviction and sentence of the accused.
This judgment reinforces the legal principles governing dishonour of cheque cases, particularly the statutory presumptions, the procedural requirements of notice service, and the scope of defence available to the drawer of the cheque.
Bottom Line:
Negotiable Instruments Act, 1881 Section 138 Once signature/execution of cheque is admitted or proved, presumptions under Sections 118 and 139 arise - Plea that cheque was blank or body was filled by complainant does not by itself rebut presumption - Financial capacity of complainant need not be proved in the first instance unless specifically challenged in reply to statutory notice - Refusal of notice amounts to deemed service - In revision, concurrent findings of conviction are not to be disturbed absent perversity.
Statutory provision(s):
Negotiable Instruments Act, 1881 Sections 118, 138, 139; Criminal Procedure Code, 1973 Section 397 (now Bharatiya Nagarik Suraksha Sanhita, 2023 Section 438)
Krishan Kumar v. Vijender Kumar, (HP) : Law Finder Doc Id # 2996619
