A common defence in a Section 138 NI Act case is claiming that the cheque was issued for an advance payment and not for a legally enforceable debt. However, the onus to prove that the cheque was issued for an advance payment rests heavily on the accused. This article explores a recent judgment where this exact defence was raised. We will analyze the evidence to prove that the cheque was issued for an advance payment that the accused presented, and why the Hon’ble High Court found that the accused failed to rebut the presumption under Sections 118 and 139 of the NI Act. The judgment also clarifies the limited scope of the Revisional Jurisdiction in concurrent finding of two lower courts, reinforcing that the High Court will not interfere unless there is a gross miscarriage of justice.
STAY UPDATED: The legal position on whether a cheque was issued for an advance payment is constantly evolving. We will update this article with recent judgments from the Hon’ble Supreme Court and High Courts regarding the onus to prove this defence and how it impacts the presumption under Sections 118 and 139 of the NI Act.
YOUTUBE VIDEO: To better understand the complex arguments around the ‘cheque was issued for an advance payment’ defence, watch our detailed video analysis. We break down the evidence to prove this claim and why the accused failed to rebut the presumption in this case.
Navigating a cheque Dishonour case, especially when the defence is that the cheque was issued for an advance payment, can be complex. Understanding your onus to prove this and the scope of the Revisional Jurisdiction is critical.
If you need to understand how these legal principles apply to your specific situation, you can Schedule an Appointment.
To help you navigate this analysis, here is a table of contents. We will cover the case facts, the specific evidence to prove that the cheque was issued for an advance payment, and the Hon’ble High Court’s reasoning for upholding the conviction.
Table of Contents
- Judgment Details: Case Analysis on ‘Cheque was issued for an Advance Payment’
- Brief Facts of the Case: The ‘Advance Payment’ Defence
- Timeline of the Case: The ‘Onus to Prove’ the ‘Advance Payment’ Defence
- Lower Court Findings: Conviction by Trial Court and Sessions Court
- Core Contentions: Was the ‘Cheque issued for an Advance Payment’?
- Hon’ble High Court’s Analysis: Why the Accused ‘Failed to rebut the presumption…’
- Explaining the ‘Scope of the Revisional Jurisdiction in Concurrent finding’
- Final Judgment: Petition Dismissed and Conviction Upheld
- Conclusion: Key Takeaways for Complainant and Accused
- Frequently Asked Questions
1. Judgment Details: Case Analysis on ‘Cheque was issued for an Advance Payment’
A common challenge in cheque Dishonour cases under Section 138 of the NI Act is the defence that a cheque was issued for an advance payment, not for a debt. This article analyzes a Judgment from the Hon’ble High Court of Delhi that deals directly with this issue. The Hon’ble Court examines the evidence required when an accused claims a cheque was issued for an advance payment and discusses the high burden of proof needed to succeed with such a defence.
- Case Title: M/S SSM ENGINEERS PVT LTD & ANR versus STATE (GNCT) OF DELHI & ANR
- Case Number: CRL.REV.P. 652/2014
- Citation Number: 2025:DHC:8314
- Coram (Judge): HON’BLE MR JUSTICE AMIT MAHAJAN
- Date of Judgment: 19.09.2025
2. Brief Facts of the Case: The ‘Advance Payment’ Defence
The dispute in this case centered on three cheques that the petitioners (the accused) claimed were advanced, while the respondent (the complainant) claimed they were for an existing debt.
2.1. Complainant’s Allegations: A Legally Enforceable Debt
- The case for Respondent No. 2 (the complainant) was that they used to supply aluminum sections to the petitioners on a credit basis.
- It was alleged that as of March 31, 2009, the petitioners had an outstanding payment due of ₹37,87,641/-.
- The complainant alleged that Petitioner No. 1 company, through its Director (Petitioner No. 2), acknowledged this liability and issued three cheques.
- The cheques were for ₹10,00,000/-, ₹10,00,000/-, and ₹5,00,000/-, all drawn on Union Bank of India.
- The complainant was assured these cheques would be honoured upon presentation.
2.2. Accused’s Defence: The ‘Cheque was issued for an Advance Payment’ Claim
- The petitioners (the accused) argued that the learned lower courts had failed to appreciate their central defence.
- Their primary contention was that the subject cheques were not issued to discharge any legally enforceable debt.
- Instead, they claimed the cheques had been issued as advanced cheques.
- They submitted that their ledger and statement of accounts clearly showed that transactions between the parties were never on credit, but were always made through advance payments.
3. Timeline of the Case: The ‘Onus to Prove’ the ‘Advance Payment’ Defence
The matter proceeded to complaint and trial after the cheques were dishonoured. The timeline of these events was critical to the case.
- 31.03.2009: Date the complainant alleged an outstanding payment of ₹37,87,641/- was due.
- May 2009: The three disputed cheques were issued (dated 08.05.2009, 12.05.2009, and 18.05.2009).
- 06.11.2009: The complainant (Respondent No. 2) presented the three cheques for encashment.
- 09.11.2009: All three cheques were dishonoured and returned with the remark “Funds Insufficient”.
- 07.12.2009: The complainant issued a statutory legal demand notice to the petitioners demanding payment.
- Post 07.12.2009: The petitioners failed to make the payment, leading the complainant to file the complaint.
- 02.02.2010: The learned MM summoned the petitioners in the case.
- 31.01.2014: The learned MM convicted the petitioners for the offence under Section 138 of the NI Act.
- 07.02.2014: The learned MM passed the order on sentence.
- 11.09.2014: The learned ASJ dismissed the petitioners’ appeal (Criminal Appeal No. 36/2014).
- 19.09.2025: The Hon’ble High Court of Delhi delivered the final Judgment in the revision petition.
4. Lower Court Findings: Conviction by Trial Court and Sessions Court
The petitioners’ revision petition before the Hon’ble High Court was filed only after both lower courts had found them guilty.
4.1. Learned Metropolitan Magistrate’s Judgment: Accused ‘Failed to rebut the presumption’
- The learned Metropolitan Magistrate (MM) convicted the petitioners for the offence under Section 138 of the NI Act on 31.01.2014.
- The court sentenced Petitioner No. 2 (the Director) to simple imprisonment for one year and a fine of ₹25,00,000/-. In default of payment, he was to undergo further simple imprisonment for three and a half months.
- Petitioner No. 1 (the company) was sentenced to pay a fine of ₹25,00,000/- to the complainant.
- This conviction was based on the court appreciating the evidence and arguments, and was later noted by the learned ASJ as being correct.
4.2. Learned Additional Sessions Judge’s Judgment: Upholding ‘Concurrent finding’
- The petitioners challenged their conviction and sentence by filing Criminal Appeal No. 36/2014.
- The learned Additional Sessions Judge (ASJ) dismissed this appeal vide the impugned Judgment dated 11.09.2014.
- The learned ASJ specifically noted that the learned MM had “rightly observed that the petitioners failed to rebut the presumptions by raising any probable defence”. This created a concurrent finding of guilt by two separate courts.
5. Core Contentions: Was the ‘Cheque issued for an Advance Payment’?
Before the Hon’ble High Court, the arguments from both sides focused squarely on whether the accused had successfully proven their defence that the cheque was issued for an advance payment.
5.1. Petitioner’s (Accused) Plea: The ‘Cheque was issued for an Advance Payment’
The learned counsel for the petitioners (the accused) argued that both the learned MM and the learned ASJ had made a mistake. The main arguments were:
- The cheques were not issued to discharge any legally enforceable debt.
- The cheques had been issued by the petitioners as advanced cheques.
- The ledgers and statement of accounts produced during the trial clearly showed that transactions with Respondent No. 2 (the complainant) were never on credit but were always through advance payments.
- The petitioners had sent a letter to the complainant to cancel the purchase order and return the cheques, which was received by an employee named Mr. Kamal.
- The petitioners had also sent a letter to their bank asking them not to encash the cheques.
- With this evidence, the petitioners claimed they were able to rebut the presumptions under Sections 118 and 139 of the NI Act.
5.2. Respondent’s (Complainant) Argument: Accused ‘Failed to rebut the presumption’
The learned counsel for Respondent No. 2 (the complainant) argued against the revision petition. The key contentions were:
- The judgments from the learned MM and the learned ASJ were comprehensive, covered every aspect of the petitioners’ defence, and rightly convicted them after examining all the evidence.
- The petitioners failed during the trial to summon Mr. Kamal, the employee who allegedly received the cancellation letter.
- The petitioners had failed to prove their own documents during the course of the trial, which made their case devoid of any merit.
- The complainant prayed for the petition to be dismissed.
6. Hon’ble High Court’s Analysis: Why the Accused ‘Failed to rebut the presumption under the Sections 118 and 139 of the NI Act’
The Hon’ble High Court conducted a thorough analysis of the evidence and the legal position, ultimately agreeing with the two lower courts.
6.1. The Effect of Admitting Signatures on the Cheque
The Hon’ble Court first noted a crucial, undisputed fact: the signature of Petitioner No. 2 on the cheques in dispute was not denied. The Hon’ble Court reiterated the trite law that once the execution of the cheque is admitted, two presumptions are raised against the accused:
- Presumption under Section 118: That the cheque was drawn for consideration.
- Presumption under Section 139: That the holder (complainant) received the cheque in discharge of a legally enforceable debt or liability.
The Hon’ble Court cited the Hon’ble Apex Court in Rangappa v. Sri Mohan to support this.
6.2. The ‘Onus to prove that the Cheque was issued for an Advance Payment’ is on the Accused
Once the presumptions are activated, the evidential burden shifts to the accused. The Hon’ble Court, citing Rajesh Jain v. Ajay Singh, noted that the inquiry must then focus on the case set up by the accused. The question becomes: has the accused discharged his onus of rebutting the presumption?. The accused must prove the non-existence of the debt/liability by a preponderance of probabilities, either by leading defence evidence or by referring to the “particular circumstances of the case”.
6.3. Lack of ‘Evidence to prove that the Cheque was issued for an Advance Payment’
The Hon’ble High Court found that the petitioners (accused) had completely failed to discharge this onus, as their defence was not supported by credible evidence.
6.3.1. Failure to Examine the Employee (Mr. Kamal)
The petitioners claimed they sent a communication (Mark A) to the complainant to cancel the purchase order, which was received by an employee, Mr. Kamal. However, the complainant denied receiving this communication and disputed Mr. Kamal’s signatures. The Hon’ble Court noted it was undisputed that the petitioners had failed to summon Mr. Kamal as a witness or lead any other evidence to prove this fact.
6.3.2. Failure to Prove the ‘Stop Payment’ Letter to the Bank
Similarly, the petitioners argued they had sent a letter to the bank asking them to stop the encashment of the disputed cheques. The Hon’ble Court noted that the petitioners, during the trial, had failed to examine any of their own employees or any official from the bank to prove the receipt of this letter.
6.3.3. Failure to Explain Signatures on the Back of ‘Self’ Drawn Cheques
A significant inconsistency was noted with the cheques themselves. The cheques were addressed as “self”. The petitioners’ own witness, DW-1, an official from the bank, had deposed on the rules for “self” drawn cheques. He stated that for an overdraft account (which the petitioner had), the drawee is not required to sign on the back side of the cheque if it is addressed as “self”. However, a perusal of the cheques showed that the signature of Petitioner No. 2 did appear on the back side. The Hon’ble High Court noted that the petitioners had failed to give any explanation or lead any evidence as to why this signature was present, which contradicted their own witness’s testimony.
6.3.4. Failure to Produce Proper Ledgers or Financial Documents
The petitioners’ claim that transactions were “always through advanced payment” was based on their ledgers/statement of accounts. The Hon’ble MM and learned ASJ both noted that these documents had not been maintained in a proper manner. The Hon’ble High Court observed that no entry has been made in these documents after 21.02.2009, whereas the cheques were issued in May 2009. The difference between credit and debit entries was also not clear. The petitioners failed to produce any other financial document to support their claim.
7. Explaining the ‘Scope of the Revisional Jurisdiction in Concurrent finding’
The petitioners were asking the Hon’ble High Court to overturn the ‘concurrent findings’ (i.e., the same conclusion of guilt) of two lower courts. The Hon’ble Court began its analysis by defining its own limited power in this situation.
7.1. Hon’ble High Court’s Limited Power under Section 397 CrPC
- The petition was filed under Section 397 of the CrPC, challenging concurrent findings.
- The Hon’ble Court stated its role is limited to assessing the “correctness, legality and propriety” of the impugned Judgment.
- It affirmed that it is trite law that the Hon’ble Court must exercise restraint and should not interfere with the findings or re-appreciate evidence merely because another view is possible.
- Interference is only warranted if the impugned orders are “wholly unreasonable or untenable in law”.
- The Hon’ble Court stated that revisional proceedings cannot be treated as a second appeal.
7.2. Why the Hon’ble Court Refused to Re-appreciate Evidence
To emphasize this point, the Hon’ble Court quoted the Hon’ble Supreme Court in State of Kerala v. PuttumanaIllathJathavedanNamboodiri: (1999) 2 SCC 452. The Hon’ble Supreme Court held:
“5. …the jurisdiction is one of supervisory jurisdiction exercised by the High Court for correcting miscarriage of justice. But the said revisional power cannot be equated with the power of an appellate court nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its own conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to gross miscarriage of justice….”
Based on this principle, the Hon’ble High Court found no “glaring feature” or “gross miscarriage of justice” to warrant re-appreciating the evidence. The Hon’ble Court noted that the petitioners’ arguments had been “extensively dealt by the learned MM as well as the learned ASJ”.
Navigating a cheque Dishonour case, especially when the defence is that the cheque was issued for an advance payment, can be complex. Understanding your onus to prove this and the scope of the Revisional Jurisdiction is critical.
If you need to understand how these legal principles apply to your specific situation, you can Schedule an Appointment.
8. Final Judgment: Petition Dismissed and Conviction Upheld
Based on this detailed analysis, the Hon’ble High Court concluded that the petitioners had failed to rebut the presumptions under Sections 118 and 139 of the NI Act.
The Hon’ble Court found “no infirmity” with the impugned Judgment passed by the learned ASJ and held that it did not warrant any interference.
Consequently, the present revision petition was dismissed.
9. Conclusion: Key Takeaways for Complainant and Accused
This Judgment serves as a critical reminder for both parties in a Section 138 proceeding.
- For the Accused: Claiming a “cheque was issued for an advance payment” is not enough. The onus to prove this defence is squarely on the accused, and it must be proven by a preponderance of probabilities. As seen in this case, a failure to produce concrete evidence—such as summoning witnesses (like Mr. Kamal) or producing bank officials to prove a ‘stop payment’ request, or maintaining proper financial ledgers—will be fatal. Any inconsistencies, like unexplained signatures, will further weaken the defence.
- For the Complainant: The initial presumption under Sections 118 and 139 is a powerful tool. Once the signature on the cheque is admitted, the burden shifts. The complainant’s case is solidified if the accused fails to provide a probable and evidenced defence.
- On Revisional Jurisdiction: This case reiterates that the High Court’s revisional jurisdiction is not a third round of trial. An accused cannot expect the Hon’ble High Court to re-examine all the evidence that was already rejected by two lower courts, unless a fundamental legal error or a gross miscarriage of justice can be proven.
10. Frequently Asked Questions
Q: Can I be convicted under Section 138 if the cheque was given only as an advance payment for a purchase order?
Yes, you can be convicted. The article analyzes a case where the accused (petitioners) made this exact defence. They were convicted because they failed to provide sufficient evidence to prove this claim, and therefore could not rebut the legal presumptions under the NI Act. Simply stating the cheque was for an “advance payment” is not a sufficient defence on its own.
Q: How do I prove that a cheque was an advance cheque and not for a legally enforceable debt?
The onus to prove a cheque was for an advance payment rests entirely on the accused. The article highlights that to prove this, you must present credible evidence. This could include summoning witnesses (like an employee who received a cancellation order) or producing bank officials (to prove a ‘stop payment’ instruction) and, most importantly, maintaining proper, clear financial ledgers that support your claim.
Q: What evidence is needed for an ‘advance payment’ defence in a 138 case? Are ledgers enough?
Ledgers alone may not be enough, especially if they are not maintained properly. In the case analyzed, the accused’s ledgers were rejected because they were unclear and had no entries for the period when the cheques were issued. Other evidence the accused failed to provide included: testimony from a witness to prove a purchase order was cancelled and evidence from the bank to prove a ‘stop payment’ request was received.
Q: What happens if I fail to rebut the presumption under the NI Act?
If you admit your signature on the cheque, the presumptions under Sections 118 and 139 of the NI Act are automatically activated against you. If you fail to rebut these presumptions by proving (by a preponderance of probabilities) that there was no existing debt, the court will legally presume the cheque was issued for a valid debt, and this will lead to a conviction.
Q: I told the bank to ‘stop payment’ on an advance cheque, but I’m still convicted. What can I do?
In the case discussed, the accused also claimed to have sent a ‘stop payment’ letter to the bank but was still convicted. The Hon’ble High Court noted this was because the accused failed to prove this claim. They did not summon any bank official or provide any evidence to prove the bank had actually received this letter. A mere claim is not a substitute for evidence.
Q: If the Trial Court and Sessions Court both convicted me, will the High Court re-check the evidence in a revision petition?
Not ordinarily. The article explains that the Hon’ble High Court’s power in a revision petition (under Section 397 CrPC) is a limited “supervisory jurisdiction” and not a “second appeal.” When two lower courts have already reached the same conclusion (a “concurrent finding”), the Hon’ble High Court will not re-appreciate the evidence, unless it finds a “gross miscarriage of justice” or that the findings are “wholly unreasonable.”
Q: What does ‘concurrent findings’ under Section 397 CrPC mean in a cheque bounce case?
‘Concurrent findings’ means that two courts—the learned Metropolitan Magistrate (Trial Court) and the learned Additional Sessions Judge (first Appellate Court)—both came to the same conclusion of guilt. As per the Judgment, the Hon’ble High Court’s scope of revisional jurisdiction under Section 397 CrPC is very limited when faced with such concurrent findings.
Q: My defence was that I cancelled the order, but I couldn’t bring the employee as a witness. How does this affect my case?
This can be fatal to your defence. In the analyzed case, the accused claimed to have cancelled the purchase order via a letter received by an employee named Mr. Kamal. The Hon’ble High Court noted that the “undisputed” failure of the accused to summon this employee as a witness was a key reason why their defence was rejected and they were found to have failed to rebut the presumption.
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Disclaimer: In compliance with the Bar Council of India guidelines, this article is intended for informational purposes only and does not constitute legal advice or a solicitation for legal services.