The Himachal Pradesh High Court, in a judgment delivered by Justice Rakesh Kainthla, has dismissed a criminal revision petition and upheld the conviction of an individual in a cheque dishonour case. The Court held that an accused’s admission of borrowing a loan and the amount due, made during their statement under Section 313 of the Code of Criminal Procedure (Cr.P.C.), is sufficient to establish the existence of a legally enforceable debt, negating the need for the complainant to produce further documentary evidence like account statements.
The decision came in the case of Krishna Devi v. Himachal Pradesh Gramin Bank and another, where the petitioner challenged concurrent findings of conviction by the trial court and the appellate court under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).
Case Background
The case originated from a complaint filed by Himachal Pradesh Gramin Bank before the Judicial Magistrate First Class in Nahan. The bank contended that it had extended a personal loan of ₹2,50,000 to the accused, Krishna Devi. After she defaulted on repayments, an amount of ₹1,58,285 became due as of August 20, 2019. To discharge this liability, the accused issued a cheque for ₹1,50,000.
The bank presented the cheque, but it was dishonoured with the endorsement ‘funds insufficient’. Consequently, the bank served a legal notice upon the accused, demanding repayment within 15 days. When the accused failed to comply, the bank initiated criminal proceedings under Section 138 of the NI Act.
The learned Trial Court convicted the accused, sentencing her to one year of simple imprisonment and directing her to pay compensation of ₹3 lakhs, with a default sentence of two months’ simple imprisonment. On appeal, the learned Sessions Judge, Sirmour at Nahan, upheld the conviction but modified the sentence. The appellate court ordered that the accused would undergo imprisonment only till the rising of the court if she deposited the compensation amount within two months; otherwise, she would undergo the default sentence of two months’ simple imprisonment. This judgment was challenged before the High Court in the present revision petition.
Arguments of the Parties
Before the High Court, counsel for the petitioner, Krishna Devi, argued that the lower courts had erred in their findings. It was contended that the complainant bank had failed to prove the existence of an enforceable legal liability to the extent claimed, as no statement of account or account book was produced in evidence. The petitioner also submitted that the compensation awarded was harsh and the two-month period for payment was too short.
In response, counsel for the respondent bank argued that the petitioner had explicitly admitted to taking the loan and the outstanding liability in her statement recorded under Section 313 of the Cr.P.C. Therefore, it was submitted that “admitted facts need not be proved.” The bank also contested the appellate court’s sentence modification, arguing that the court had no jurisdiction to pass a conditional order.
High Court’s Analysis and Findings
Justice Rakesh Kainthla, after examining the record and hearing the submissions, proceeded to dismiss the revision petition. The Court began by reiterating the limited scope of its revisional jurisdiction, citing Supreme Court precedent that it could only interfere in cases of “patent defect or an error of jurisdiction or law” and could not reappreciate evidence at length.
On Admission of Liability: The Court found the petitioner’s admission to be the cornerstone of the case. It observed, “The accused admitted in her statement recorded under Section 313 of Cr.P.C. that the complainant bank had advanced the loan in her favour and that an amount of ₹1,58,285/- was due in the loan account. Therefore, the accused never disputed her liability… Hence, the submission made on behalf of the accused that the existence of liability was not established is not acceptable.”
On Presumption under the NI Act: The Court held that since the accused admitted her signatures on the cheque, the lower courts were correct in raising the statutory presumption under Sections 118(a) and 139 of the NI Act that the cheque was issued for consideration in discharge of a debt. Citing APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers, the judgment noted that once the issuance and signature on a cheque are admitted, the burden shifts to the accused to rebut the presumption.
On the ‘Security Cheque’ Defence: The petitioner’s claim that the cheque was issued as a blank security cheque was also rejected. The Court held that since the liability of ₹1,58,285 was admitted, a cheque for ₹1,50,000 was for a subsisting liability. The judgment referred to the Supreme Court’s ruling in Sripati Singh v. State of Jharkhand, stating: “A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance.” The Court further noted that the accused failed to lead any evidence to support this defence, and a mere statement under Section 313 Cr.P.C. is insufficient to rebut the presumption.
On Default Sentence for Non-Payment of Compensation: The High Court also addressed the bank’s objection to the sentence modification by the appellate court. It clarified that while the order was “not happily worded,” it was not a conditional order but a reduction of the substantive sentence. The Court affirmed the legality of imposing a sentence in default of payment of compensation, citing the Supreme Court’s decision in K.A. Abbas v. Sabu Joseph. The judgment quoted, “The provisions of Sections 357(3) and 431 CrPC, when read with Section 64 IPC, empower the court, while making an order for payment of compensation, to also include a default sentence in case of non-payment of the same.”
Final Decision
Finding no legal infirmity in the judgments of the lower courts, the High Court dismissed the revision petition. However, acknowledging that the time granted by the appellate court for depositing the compensation had lapsed during the pendency of the revision, the Court granted the petitioner a final opportunity.
The Court directed the petitioner “to deposit the compensation amount within a period of one month from today, failing which she will undergo imprisonment of two months as awarded by the learned Trial Court and affirmed by the learned Appellate Court for committing the default in the payment of compensation.”
