Bir Singh vs Mukesh Kumar on 6 February, 2019

Supreme Court of India

Bir Singh vs Mukesh Kumar on 6 February, 2019
Author: I Banerjee
Bench: I Banerjee, R Banumathi
1

REPORTABLE

THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.230-231 OF 2019

(@ SLP(CRL ) NOS. 9334-35 OF 2018)

Bir Singh … Appellant

VERSUS

Mukesh Kumar …Respondent

JUDGMENT

Indira Banerjee, J.

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 respondent- accused, 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, passed by the Judicial Magistrate, 1 st 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
respondent- accused.

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 1

 Bir Singh vs Mukesh Kumar on 6 February, 2019

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 appellant- complainant, 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.

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

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 2

 Bir Singh vs Mukesh Kumar on 6 February, 2019

fifteen days of the receipt of the said notice.

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 & Anr 1, 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

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 appellant- complainant. 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 appellant- complainant
also filed a Criminal Revision Petition being CRR No.2017 of 2016 challenging the reduction of the
sentence from one year to six months.

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 3

 Bir Singh vs Mukesh Kumar on 6 February, 2019

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 138 of the Negotiable Instruments Act,
observing, inter alia, that there was fiduciary relationship between the appellant- complainant, an
Income Tax practitioner, and the respondent- accused 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 accused- petitioner 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 accused- petitioner took a risk by stepping himself
into the witness box and offered himself for cross- examination. 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 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.”

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 4

 Bir Singh vs Mukesh Kumar on 6 February, 2019

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.

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 appellant- complainant 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 evidence on record.

20. As held by this Court in Southern Sales and Services and Others vs. Sauermilch Design and
Handels GMBH 2, 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

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 5

 Bir Singh vs Mukesh Kumar on 6 February, 2019

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 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 non- existence 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
Director 6. 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 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 Another 9, 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 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

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 6

 Bir Singh vs Mukesh Kumar on 6 February, 2019

liability.

28. In R. Vijayan vs. Baby and Another 10 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

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 peculiar facts and circumstances of
the case where several civil suits between the parties were pending.

33. In Krishna Janardhan Bhat vs. Dattatraya G. Hegde 13, 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.

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 7

 Bir Singh vs Mukesh Kumar on 6 February, 2019

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 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

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 8

 Bir Singh vs Mukesh Kumar on 6 February, 2019

to the appellant- complainant, 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 appellant- complainant. 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

Indian Kanoon - http://indiankanoon.org/doc/157736723/ 9