Delhi District Court
Giriraj Gupta vs Kamal Arora on 21 May, 2025
IN THE COURT OF JUDICIAL MAGISTRATE FIRST CLASS-02,
NORTH EAST DISTRICT, KARKARDOOMA COURTS, DELHI
PRESIDED BY: SH. ANMOL NOHRIA, DJS
CC No. : 317/2020
U/s : 138 N. I. Act
P.S : New Usmanpur
Giri Raj Gupta v. Kamal Arora
- : J U D G M E N T :-
1. CC No. : 317/2020
2. Date of institution of the case : 11.02.2020
3. Name of complainant : Giri Raj Gupta
S/o Lt. Sh. Ganja Ram Gupta
R/oC-4, Gali No. 06,
Brahmpuri, Delhi-53
4. Name of accused, parentage
and address : Sh. Kamal Arora
S/o Sh. Bhola Nath
Digitally signed
by ANMOL R/o 1/9152, Rohtash Nagar,
ANMOL NOHRIA
Date:
NOHRIA 2025.05.21
15:42:17
+0530
Shahdara, Delhi-32
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 1 of 33
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5. Offence complained of : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
7. Final order : Acquitted
8. Date on which order was
reserved : 02.04.2025
9. Date of pronouncement : 21.05.2025
1. The instant matter has originated out of a complaint under
section 200 Cr.PC read with Section 142 Negotiable Instruments Act
(hereinafter referred to as the 'N I Act'), filed by the complainant company
against the accused under Section 138 N I Act alleging that cheque bearing
number- 109722dated 15.11.2019 amounting to Rs. 1,00,000/-,drawn on
Dena Bank, Shahdara issued by the accused in favour of the complainant,
in discharge of a legal debt or other liability, has been dishonored and the
accused has not paid the said amount even after receiving the prescribed
legal demand notice. By virtue of this judgment, the present complaint is
being disposed off.
Digitally signed
by ANMOL
ANMOL NOHRIA
Date:
NOHRIA 2025.05.21
15:42:24
+0530
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 2 of 33
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BRIEF REASONS FOR THE DECISION OF THE CASE
FACTUAL BACKGROUND OF THE CASE:
2. Briefly stated facts of this case as per complaint are that
accused had made an agreement to sell of property bearing number S-11,
Old Plot no.24, Naveen Shahdara for a sum of Rs.94,00,000 on
18/05/2018, out of which complainant paid a total of Rs.20,00,000 as
earnest money; and accused had promised to deliver fully furnished first
floor of the same. However, nothing was ready by 31/01/2019, therefore
accused requested the complainant to extend the agreement till 10/05/2019,
but again accused failed to deliver the same and thereafter, at the request of
accused another agreement to sell was made on 09/05/2019 wherein
accused promised to deliver fully furnished the property fully furnished till
10/01/2020, when the agreement was to be executed. In furtherance of the
agreements to sell the complainant had paid a total of Rs. 40,00,000 via
various modes on various dates. It was further agreed that on failure the
accused will pay Rs. 60,00,000 on or before 10/01/2020 and with 2%
interest after the same. Since, no construction work was going on in
October 2019 when complainant visited the property, so the parties
mutually orally terminated the agreement dated 09/05/2019 and in the
second week of October 2019, accused towards the valuable consideration
and in discharge of the liability, handed over cheque bearing no. 109722
Digitally
signed by
dated 15/11/2019 amounting to Rs. 10,00,000/-,drawn on Dena Bank to
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:29
+0530
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Giri Raj Singh v. Kamal AroraPage no 3 of 33
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the complainant, with assurance that the same will be encashed on their
presentation but the same was returned unpaid with remarks “payment
stopped” vide returm memo dated 15/11/2019. Therafter, the complainant
after asking the accused again presenet the same but same was returned
unpaid with remarks “payment stopped” vide returm memo dated
27/12/2019 14.07.2017. Complainant got issued a legal notice dated
07.01.2020 but, no payment was made by the accused and hence, the
present complaint was filed.
PROCEEDINGS BEFORE COURT
3. On the basis of pre-summoning evidence, accused was
summoned by the court for the offence under Section 138 of Negotiable
Instrument Act. The accused put in his own appearance and thereafter
notice under Section 251 Cr.P.C. was framed upon the accused on
21.04.2022 to which accused pleaded not guilty and claimed trial. In his
plea of defence, the accused stated that the complainant on 15/11/2019
came to his house with 2-3 associates and pressurized him to handover
blank security cheque to secure his construction and he issued the same
under pressure. He has also made written complaint to SHO, PS Shahdara
vide DD no. 18A dated 15/11/2019 and has no liability towards him.
Statement under Section 294 Cr.P.C of the accused was also recorded on
Digitally
21.04.2022, wherein he has admitted his signatures on the cheque in
signed by
question but denied receiving legal demand notice.
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:35
+0530
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 4 of 33
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4. Vide order dated 21.04.2022 the accused to cross examine the
complainant and request has been allowed to cross examine the
complainant under Section 145 (2) NI Act on no objection given by the
counsel for the complainant.
5. During the trial, complainant has led the oral and
documentary evidence against the accused to prove his case beyond
reasonable doubt. The following evidence are as under:
Oral Evidence
CW1 Farha Deba (Complainant)
Documentary Evidence
Ex. CW1/A Evidence Affidavit
Mark A Collaboration Agreement
Mark B Copy of GPA
Ex. CW-1/1 Agreement
Digitally signedANMOL
by ANMOL
NOHRIA Ex. CW-1/2 Agreement to Sell
Date:
NOHRIA 2025.05.21
15:42:40
+0530 Ex. CW-1/3 Bank Statement of ComplainantEx. CW-1/3A Bank statement of wife of Complainant
Ex. CW-1/4 Original Cheque
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Ex. CW-1/5 Cheque return memoEx. CW-1/6 Legal demand notice
Ex. CW-1/7 Postal receipt
Ex. CW-1/8 Legal Notice sent by accused
Ex. CW-1/9 Photographs
Ex. CW-1/10 FIR
6. The complainant was cross examined at length by the counsel
for the accused on 24.11.2022. Thereafter the complainant’s evidence was
closed. Statement of accused was recorded under Section 313 of The Code
of Criminal Procedure, 1973 read with Section 281 of The Code of
Criminal Procedure, 1973 on 17.01.2023. Incriminating evidence was put
to him wherein he has admitted agreement to sell, signatures on cheque,
reply to legal demand notice but denied oral termination of agreement and
extension agreement and stated that construction was stopped by MCD and
complainant stated that he will not purchase the flat and requested to return
the money and that complainant had threatened him and took the cheque
and that he never gave instruction to present the cheque on said dates.
Digitally signed
by ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:44 +0530
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Giri Raj Singh v. Kamal Arora
Page no 6 of 33
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7. Thereafter, the matter was listed for defence evidence and
accused has examined ASI Satender and HC Pradeep as DW1 and DW2 to
prove DD No.18A as Mark D1, Mark D2 and Mark D3.Thereafter, DE
was closed and matter was listed for final arguments.
8. Afterwards, final arguments were heard on behalf of both the
parties and after hearing the arguments, trial was concluded.
9. It has been argued that the complainant has been able to prove
his case by way of presumptions in his favor and the accused has failed to
rebut the same by leading any cogent evidence. It has been further argued
that the accused in his various statements has admitted to issuance of
cheques as well as his liability but has not been able to rebut the
presumptions of law. It has been further argued that the accused failed to
discharge the burden cast upon him and has put forward a false defence;
and has failed to lead any evidence to rebut the version of the complainant;
consequently, the case of the complainant stands proved in view of the
Digitally
same.
signed by
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:50
+0530
10. Per contra, it has been argued that the case of the complainant
is false one. It has been argued that the complainant has not been able to
prove his case beyond reasonable doubt for securing a conviction; and the
accused by way of cross examination of the complainant has been able to
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
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dislodge the version of the complainant. It is submitted that the accused is
defending the case upon the following grounds:
i. Accused has never received the legal demand notice;
ii. The impugned cheque was blank signed security cheque
issued to the complainant under pressure;
iii. The accused does not have liability as per the version of the
complainant as the debt alleged has not legally become
enforceable.
11. I have heard the counsels for both the parties; perused the
record and have gone through relevant provisions of the law and the
judgments relied upon by both the parties.
INGREDIENTS OF OFFENCE AND DISCUSSION-
12. Before dwelling into the facts of the present case, it would be
apposite to discuss the legal standards required to be met by both sides. In
order to establish the offence under Section 138 of NI Act, the prosecution
must fulfill all the essential ingredients of the offence. Perusal of the bare
provision reveals the following necessary ingredients of the offence:-
First Ingredient: The cheque was drawn by a person
on an account maintained by him for payment of
Digitally signed
by ANMOL
ANMOL NOHRIA
money and the same is presented for payment within
Date:
NOHRIA 2025.05.21
15:42:54
a period of 3 months from the date on which it is
drawn or within the period of its validity;
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Second Ingredient: The cheque was drawn by the
drawer for discharge of any legally enforceable debt
or other liability;
Third Ingredient: The cheque was returned unpaid
by the bank due to either insufficiency of funds in
the account to honour the cheque or that it exceeds
the amount arranged to be paid from that account on
an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has
been made by the payee or holder in due course of
the cheque by a notice in writing given to the drawer
within thirty days of the receipt of information of the
dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment
of the said amount of money within fifteen days
from the date of receipt of notice.
13. It is only when all the aforementioned ingredients are satisfied
that the person who had drawn the cheque can be deemed to have
committed an offence under Section 138 of the NI Act
14. The accused can only be held guilty of the offence under
Section 138 NI Act if the above-mentioned ingredients are proved by the
complainant co-extensively. Additionally, the conditions stipulated under
Section 142 NI Act have to be fulfilled.
Digitally signed
by ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
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Giri Raj Singh v. Kamal AroraPage no 9 of 33
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APPRECIATION OF EVIDENCE-
15. Notably, there is no dispute qua the proof of first and fifth
ingredient. The complainant had proved the original cheque vide Ex.
CW1/4which the accused had not disputed as being drawn on the account
of the accused. It was not disputed that the cheque in question was
presented within its validity period. Notably, no dispute has been raised
qua the fifth ingredient as such the same is deemed to be proved that no
payment has been made after issuance of legal demand notice.
16. As far as the third ingredient is concerned, the complainant is
only required to prove the dishonor of the cheque for the reasons
attributable to the accused. In the instant case, the cheque in question was
returned unpaid vide return memos Ex. CW1/5. At this stage a reference
can be drawn from Section 146 of NI Act as per which the court shall on
production of bank’s slip or memo having thereon the official mark
denoting that the cheque has been dishonoured, presume the fact of
dishonour of such cheque, unless and until such fact is disproved. In the
instant case perusal of the cheque return memo Ex. CW1/5 shows that they
Digitally
ANMOL
signed by
ANMOL
NOHRIA
bear a stamp of the bank with signature and date. Further, neither any
NOHRIA Date:
2025.05.21
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+0530 question as to the factum of dishonor has been put to the complainant in
the cross examination nor any evidence regarding the same has been
brought in the defence. Thus, no evidence has been led to disprove the factCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 10 of 33
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of dishonor. Further, the Hon’ble Delhi High Court in the case of Guneet
Bhasin vs State of NCT of Delhi & Anr. & Ors; 2022/DHC/005048, has
observed that the purpose of the cheque return memo is to give the
information of the holder of the cheque that his cheque on presentation
could not be encashed due to the variety of reasons as mentioned in the
cheque return memo. From the discussion above it can be concluded that
there is no need for the complainant to examine any bank witness to prove
the cheque return memo if it falls in the ambit of Section 146 NI Act. Ergo,
the factum of dishonor stands proved in view of Section 146 and
consequently third ingredient stands proved.
17. So far as the legal demand notice is concerned it is one of the
statutory requirements in order to bring home the guilt of the accused
under section 138. Any defect in the statutory requirement would go to the
very root of the proceedings as such it is essential to first discuss whether
the legal notice issued by the complainant in compliance with the
provisions of section 138 or not. Provisio (b) appended to Section 138 with
respect to legal demand notice is reproduced below for ready reference:
Digitally signed
(a) “The payee or the holder in due course of the
ANMOL
by ANMOL
NOHRIA
Date:
cheque, as the case may be, makes a demand for the
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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 byCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 11 of 33
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him from the bank regarding the return of the
cheque as unpaid;”
18. As such, it is necessary that the payee or holder in due course
makes demand of money due by giving a notice to the drawer, in writing,
within 30 days of receipt of information from the bank regarding the return
of the cheque is dishonoured. The object of notice is to give a chance to the
door of the cheque to rectify his omission and also to protect an honest
drawer. Reliance is placed upon, Central Bank of India vs Saxons Farms ,
1999(39) ACC891(SC).
19. In the factual matrix of the present case, the accused in his
statement u/s 294 has denied receiving the legal demand notice but in his
statement u/s313 r/w 281 Cr.P.C has admitted to receiving of the same.
20. However, perusal of the cross examination of the complainant,
shows that no question qua the legal demand notice or the address of the
accused has been put by the accused to deny the service apart from a
suggestion that no legal notice was sent which has been denied by the
Digitally
signed by
complainant. Further, the summons have also been served to the accused at
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
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the same address and the accused has also in his particulars at stage of
+0530notice framing, statement u/s 313 has mentioned the address as mentioned
upon legal demand notice Ex. CW1/6. Furthermore, the notice sent by theCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 12 of 33
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accused Ex. CW1/8 has also been sent from the same addresss as
mentioned on Ex.CW1/6.
21. In the landmark decision of Hon’ble Supreme Court of India
in matter of “C. C. Alavi Haji Vs. Palapetty Mohd. & Anr.” reported in
(2007) 6 Supreme Court Cases 555 held that as under:-
“16. It is also to be borne in mind that the
requirement of giving of notice is a clear departure
from the rule of Criminal Law, where there is no
stipulation of giving of a notice before filing a
complaint Any drawer who claims that he did not
receive the notice sent by post, can, within 15 days
of receipt of summons from the court in respect of
the complaint under Section 138 of the Act, make
payment of the cheque amount and submit to the
Court that he had made payment within 15 days of
receipt of summons (by receiving a copy of
complaint with the summons) and, therefore, the
Digitally signed
complaint is liable to be rejected. A person who
ANMOL
by ANMOL
NOHRIA does not pay within 15 days of receipt of the
NOHRIA
Date:
2025.05.21
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summons from the Court along with the copy of the
+0530
complaint under Section 138 of the Act, cannot
obviously contend that there was no proper service
of notice as required under Section 138, by ignoring
statutory presumption to the contrary under Section
27 of the G.C. Act and Section 114 of the Evidence
Act. In our view, any other interpretation, of the
proviso would defeat the very object of the
legislation. As observed in Bhaskarans case (supra),CC No. 317/2020
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if the giving of notice in the context of Clause (b) of
the proviso was the same as the receipt of notice a
trickster cheque drawer would get the premium to
avoid receiving the notice by adopting different
strategies and escape from legal consequences of
Section 138 of the Act.”
22. The perusal of the address mentioned on the memo of parties,
the legal demand notice Ex. CW1/6 and Ex. CW1/8, summons, notice u/s
251 Cr.P.C. and statement of accused under section 313 of Cr.P.C shows
that addresses are same. Hence, placing reliance upon Hon’ble Supreme
Court of India in matter of “C. C. Alavi Haji Vs. Palapetty Mohd. &
Anr(Supra), there is a deemed delivery of legal demand notice.
Consequently, the legal demand notice Ex. CW1/6 and postal receipts Ex.
CW1/7 is deemed to be proved. Hence, the requirements of fourth
ingredient stand complied with.
23. As far as the proof of second ingredient is concerned, the
Digitally
signed by
ANMOL
ANMOL NOHRIA
complainant has to prove that the cheque in question was drawn by the
NOHRIA Date:
drawer for discharging a legally enforceable debt. However, as per the
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15:43:20
+0530scheme of the NI Act, once the accused admits signature on the cheque in
question, certain presumptions are drawn, which result in shifting of onus.
Section 118(a) of the NI Act lays down the presumption that every
negotiable instrument was made or drawn for consideration. AnotherCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 14 of 33
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presumption is enumerated in Section 139 of NI Act. The provision lays
down the presumption that the holder of the cheque received it for the
discharge, in whole or part, of any debt or other liability.
24. The combined effect of these two provisions is a presumption
that the cheque was drawn for consideration and given by the accused for
the discharge of debt or other liability. Both the sections use the expression
“shall”, which makes it imperative for the court to raise the presumptions,
once the foundational facts required for the same are proved. Reliance is
placed upon the judgment of the Hon’ble Supreme Court, Hiten P. Dalal
vs. Bratindranath Banerjee (2001) 6 SCC 16.
25. Further, it has been held by a three-judge bench of the
Hon’ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC
441 that the presumption contemplated under Section 139 of NI Act
includes the presumption of existence of a legally enforceable debt. Once
the presumption is raised, it is for the accused to rebut the same by
Digitally
ANMOL
signed by
ANMOL
NOHRIA
establishing a probable defence. The principles pertaining to the
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+0530
presumptions and the onus of proof were recently summarized by the
Hon’ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418
as under:
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
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“25. We having noticed the ratio laid down by this
Court in the above cases on Section 118(a) and 139,
we now summarize the principles enumerated by
this Court in the following manner:
25.1. Once the execution of cheque is admitted
Section 139 of the Act mandates a presumption that
the cheque was for the discharge of any debt or
other liability.
25.2. The presumption under Section 139 is a
rebuttable presumption and the onus is on the
accused to raise probable defence. The standard of
proof for rebutting the presumption is that of
preponderance of probabilities.
25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him or the
accused can also rely on the materials submitted by
the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be
drawn not only from the materials brought on record
by the parties but also by reference to the
circumstances upon which they rely.
25.4. That it is not necessary for the accused to
come in the witness box in support of his defence.
Digitally signed
by ANMOL Section 139 imposed an evidentiary burden and not
ANMOL NOHRIA
Date:
NOHRIA 2025.05.21 a persuasive burden.
25.5. It is not necessary for the accused to come in
15:43:30
+0530the witness box to support his defence.”
26. Thus, the presumptions raised under Section 118(b) and
Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on
the accused, who has to establish a probable defence on the standard ofCC No. 317/2020
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preponderance of probabilities to prove that either there was no legally
enforceable debt or other liability.
27. In this case, the accused in his plea of defence has stated that
he was pressurized by the complainant into issuing the cheque through his
associates in as security for his floor on 15.11.2019 for which written
police complaint has been given by him. Consequently, the accused has
raised the following defences to rebut the presumptions:
a) The cheque in question is blank security cheque;
Digitally
signed by
b) The accused does not have liability as per the version of the
ANMOL
ANMOL
complainant as the debt alleged has not legally become
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+0530
enforceable.
28. I will be discussing both the defences separately.
a.) The cheque in question is blank security cheque:
29. It has been stated by the accused that the cheque in question
was a blank security cheque issued under pressure of complainant and the
complainant has himself filled the particulars of the same before presenting
them.
30. At this stage reference can be drawn from Section 20 of the
NI Act talks about inchoate instruments. As per this provision if a personCC No. 317/2020
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gives a duly signed cheque which is either blank or partly filled then he is
deemed to have given implied authority to the holder to fill up the
particular in it and complete the cheque, thus making the drawer liable for
the payment mentioned in it. 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 provision
of section 138 would be attracted
31. The Hon’ble Supreme Court in the case of Bir Singh vs.
Mukesh Kumar (2019) 4 SCC 197 wherein the Apex Court while
upholding the validity of blank signed cheque in a proceeding u/s 138 of
the Act has interalia held the following:
“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
Digitally signed
by ANMOL
ANMOL NOHRIA still be on the accused to prove that the cheque was
NOHRIA Date:
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evidence.”
32. Notably, in the case of Suresh Chandra Goyal Vs. Amit Sing-
hal, Crl.L.P. 706/2014, it was held by the Hon’ble Delhi High Court that:
“The appellant was well within his rights to enforce
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the security in respect whereof the cheques in ques-
tion were issued and to seek to recover the out-
standing debt by encashment of the said cheques.
Since the cheques in question were dishonoured
upon presentation, the accused suffered all con-
sequences as provided for in law and the appellant
became entitled to invoke all his rights as created
by law. Thus, the appellant was entitled to invoke
Section 138 of the NI Act; issue the statutory notice
of demand, and; upon failure of the accused to
make payment in terms of notice of demand – to ini-
tiate the complaint under Section 138 of the NI
Act.”
33. It is noteworthy that the Hon’ble Apex Court in the case of
Sripati Singh Vs. The State of Jharkhand and Ors., AIR 2021 SC 5732, has
held that:
“16. A cheque issued as security pursuant to a
financial transaction cannot be considered as a
worthless piece of paper under every circumstance.
‘Security’ in its true sense is the state of being safe
and the security given for a loan is something given
as a pledge of payment. It is given, deposited or
Digitally signed
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pledged to make certain the fulfilment of an
ANMOL NOHRIA
Date:
obligation to which the parties to the transaction
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are bound. If in a transaction, a loan is advanced
and the borrower agrees to repay the amount in a
specified timeframe and issues a cheque as security
to secure such repayment; if the loan amount is not
repaid in any other form before the due date or ifCC No. 317/2020
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there is no other understanding or agreement
between the parties to defer the payment of
amount, the cheque which is issued as security
would mature for presentation and the drawee of
the cheque would be entitled to present the same.
On such presentation, if the same is dishonoured,
the consequences contemplated Under Section 138
and the other provisions of N.I. Act would flow.
17.When a cheque is issued and is treated as
‘security’ towards repayment of an amount with a
time period being stipulated for repayment, all that
it ensures is that such cheque which is issued as
‘security’ cannot be presented prior to the loan or
the instalment maturing for repayment towards
which such cheque is issued as security. Further,
the borrower would have the option of repaying the
loan amount or such financial liability in any other
form and in that manner if the amount of loan due
and payable has been discharged within the agreed
period, the cheque issued as security cannot
thereafter be presented. Therefore, the prior
discharge of the loan or there being an altered
situation due to which there would be
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understanding between the parties is a sine qua non
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security. These are only the defences that would be
available to the drawer of the cheque in a
proceedings initiated Under Section 138 of the N.I.
Act. Therefore, there cannot be a hard and fast
Rule that a cheque which is issued as security can
never be presented by the drawee of the cheque. If
such is the understanding a cheque would also be
reduced to an ‘on demand promissory note’ and inCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 20 of 33
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all circumstances, it would only be a civil litigation
to recover the amount, which is not the intention of
the statute. When a cheque is issued even though as
‘security’ the consequence flowing therefrom is also
known to the drawer of the cheque and in the
circumstance stated above if the cheque is
presented and dishonoured, the holder of the
cheque/drawee would have the option of initiating
the civil proceedings for recovery or the criminal
proceedings for punishment in the fact situation,
but in any event, it is not for the drawer of the
cheque to dictate terms with regard to the nature of
litigation.”
34. Further, in case of Credential Leasing & Credits Ltd. Vs.
Shruti Investments & Ors., 2015 (4) JCC 252, it was held that:
“30. Thus, I am of the considered view that there is
no merit in the legal submission of the respondent
accused that only on account of the fact that the
cheque in question was issued as security in respect
of a contingent liability, the complaint under
Section 138 of the NI Act would not be
maintainable. At the same time, I may add that it
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would need examination on a case to case basis as
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15:43:52
to whether, on the date of presentation of the
dishonoured cheque the ascertained and crystallised
+0530debt or other liability did not exist. The onus to
raise a probable defence would lie on the accused,
as the law raises a presumption in favour of the
holder of the cheque that the dishonoured cheque
was issued in respect of a debt or other liability. AsCC No. 317/2020
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settled by the Supreme Court, the said onus obliges
the accused to raise a defence – either by picking
holes in the case of the complainant and/ or by
positively leading defence evidence which leads the
Court to believe that there is a probable defence
raised by the accused to the claim of the
complainant with regard to the existence of the debt
or other liability. The said onus does not cast as
stringent an obligation on the accused, as it casts on
the complainant, who has to prove beyond
reasonable doubt the guilt of the accused.”
35. Thus, it is a settled of the proposition of law that a check
issued a security, pursuit of financial transaction, cannot be considered as a
worthless piece of paper. It is given to ensure the fulfillment of an
obligation undertaken. If a check issued to secure repayment of a loan
advanced and if the loan is not repaid on or before the due date, the drawee
would be entitled to get the cheque for payment, and if such a cheque is
dishonored, the consequences contemplated under section 138 NI act
would follow. Reliance is placed upon Sripati Singh v. State of
Jharkhand,2021 SCCOnline1002. Further as to the plea of cheque being a
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security check, it was held in ICDS v. Beena Shabir & Anr. (2002)6 SCC
NOHRIA
Date:
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+0530426, that security checks would also fall within the purview of section 138
NI act and a person cannot escape is liability unless he proves that the debt
or liability for which cheque was issued as security is satisfied otherwise.
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 22 of 33
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36. With regards to the submission that the cheque was issued
under the pressure of the police, the accused while cross examining the
complainant has never asked any question qua the same, never confronted
her with any such complaint made to the police. However, accused had
summoned DW2 to prove his complaint regarding the pressure exerted by
the complainant, who has produced a DD entry no. 18A dated 15.11.2019
but has also produced order of ACP HQ Mark D3, as per which record has
been destroyed. Perusal of Mark D2, shows that though a DD entry has
been made at the instance of the accused on 15.11.2019, however its
contents or allegations of the accused are not a part of the same. Further,
the accused has not produced any copy of the complaint given by him vide
the said DD entry where the same has been endorsed by the PS to prove
the contents of the same in order to substantiate his stand. In terms of
Section 101 of Indian Evidence Act a person is bound to prove the
existence of any fact, it is said that the burden of proof lies on that person.
In otherwords ” he who asserts must prove” the standard of proof in civil
cases is preponderance of probability, while in the criminal cases the
standard of proof is beyond the reasonable doubts. If no evidence at all is
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adduced by either side, the person on whom the burden of proof lies would
NOHRIA Date:
fail. One who asserts a particular fact is in existence, then he has to prove
2025.05.21
15:44:02
+0530the said fact unless and until the law says that the burden lies on anymore
else; and in the instant case the burden to prove issuance under pressureCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 23 of 33
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from police was upon the accused and in view of the discussion above, he
has failed to discharge the same.
37. Ergo, in light of the above discussion, this court is of the
considered view that, the ground that the cheque in question is a blank
security cheque does not hold water with this court and even in case of
blank signed cheque, the statutory presumptions under section 118(a) and
139 would be raised in favour of the complainant. Therefore, in instant
case, since, the accused has admitted the execution of impugned cheque,
the aforementioned statutory presumptions would be raised in favour of the
complainant regarding the fact that the impugned cheque have been drawn
for consideration and issued by the accused in discharge of legally
enforceable debt.
b.) The accused does not have liability as per the version of the
complainant as the debt alleged has not legally become enforceable:
38. In the instant case, the version of the complainant in the
complainant is that the accused has issued the impugned cheques in order
to discharge his liability to repay the amount advanced by the complainant
through agreement to sell dated 18.05.2018 and 09.05.2019, which being
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mutually and orally being terminated in first week of October 2019,
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+0530 wherein the accused had agreed to pay Rs.60,00,000 on or before
10.01.2020 on failure to construct the same. It has been argued by theCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 24 of 33
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complainant that the cheque has been issued to return part payment made
by the complainant from the commitment of Rs.60,00,000 given by the
accused vide agreement dated 09.05.2020 upon its termination.
39. By virtue of the presumptions the onus is upon to accused to
show the debt qua the cheque amount does not exist upon him; and for the
purposes of the same the accused has relied upon the cross examination of
the complainant. It has been further argued on behalf of the accused that no
liability has accrued to him as in terms of the agreement the said liability
was supposed to accrue on his failure to deliver on 10.01.2020; and the
complainant has not been able to prove the oral termination of the
agreement as alleged by him.
40. Perusal of the agreement dated 09.05.2019 shows that as per
clause 3 there is no liability of the accused to pay before 10.01.2020 and
his liability to pay Rs.60,00,000 only arises on his failure to deliver the
property in condition of possession on 10.01.2020. Further, perusal of the
record shows that the impugned cheque is dated 15.11.2019 and same has
been dishonored vide memo dated 31.12.2019 Ex. CW1/5. Hence, it is
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signed by
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15:44:15 agreement i.e. 10.01.2020.
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Giri Raj Singh v. Kamal AroraPage no 25 of 33
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41. At this juncture, it becomes necessary to discuss the definition
of legally enforceable debt in terms of Section 138 which has been
provided in the explanation attached with the section. As per the
explanation which is specific to Section 138, a debt of other liability means
a legally enforceable debt or other liability.
42. In Indus Airways Private Limited v. Magnum Aviation Private
Limited (2016) 10 SCC 458, the issue before a two-Judge Bench of
Hon’ble Supreme Court of India was whether dishonour of post-dated
cheques which were issued by the purchasers towards ‘advance payment’
would be covered by Section 138 of the Act if the purchase order was
cancelled subsequently. It was held that Section 138 NI Act would only be
applicable where there is a legally enforceable debt subsisted on the date
when the cheque is drawn. Further, in the case of Sampelly Satyanarayana
Rao v. Indian Renewable Energy Development Agency Limited , the
respondent advanced a loan for setting up a power project and post-dated
cheques were given for security. The cheques were dishonoured and a
complaint was instituted under Section 138. Distinguishing Indus Airways,
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it was held that the test for the application of Section 138 is whether there
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+0530 held that if the answer is in the affirmative, then the provisions of Section
138 would be attracted.
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 26 of 33
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43. Further, In Sripati Singh v. State of Jharkand(Supra), it was
observed that:-
“17. A cheque issued as security pursuant to a
financial transaction cannot be considered as a
worthless piece of paper under every circumstance.
‘Security’ in its true sense is the state of being safe and
the security given for a loan is something given as a
pledge of payment. It is given, deposited or pledged to
make certain the fulfillment of an obligation to which
the parties to the transaction are bound. If in a
transaction, a loan is advanced and the borrower
agrees to repay the amount in a specified time frame
and issues a cheque as security to secure such
repayment; if the loan amount is not repaid in any
other form before the due date or if there is no other
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understanding or agreement between the parties to
signed by
ANMOL defer the payment of amount, the cheque which is
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2025.05.21
issued as security would mature for presentation and
15:44:24
+0530 the drawee of the cheque would be entitled present the
same. On such presentation, if the same is
dishonoured, the consequences contemplated
under Section 138 and the other provisions of N.I.
Act would flow”.
44. Also, in Credential Leasing & Credits Ltd. vs Shruti
Investments & Anr. 2015(151) DRJ 147, it was held by Hon’ble High
Court of Delhi that:
“28. In my view, therefore, the scope of Section
138 NI Act would cover cases where the ascertainedCC No. 317/2020
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and crystallised debt or other liability exists on the
date that the cheque is presented, and not only to case
where the debt or other liability exists on the date on
which it was delivered to the seller as a post-dated
cheque, or as a current cheque with credit period. The
liability, though, should be in relation to the
transaction in respect whereof the cheque is given,
and cannot relate to some other independent liability.
If, on the date that the cheque is presented, the
ascertained and crystallised debt or other liability
relatable to the dishonoured cheque exists, the
dishonor of the cheque would invite action under
138 NI Act. There could be situations where, for
example, an issue may be raised with regard to the
quality, quantity, deficiency, specifications, etc. of the
goods/services supplied, or accounting. It would have
to be examined on a case-to-case basis, whether an
ascertained or crystallised debt or other liability
exists, which could be enforced by resort to Section
138 NI Act, or not.”
45. Recently, in Dashrathbhai Trikambhai Patel v/s Hitesh
Mahendrabhai Patel (2023) 1 SCC 578 it is held by Hon’ble Supreme
Court of India:-
“16. The judgments of this Court on post-dated
cheques when read with the purpose of Section
138 indicate that an offence under the provision arises
if the cheque represents a legally enforceable debt on
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15:44:29 +0530 the date of maturity. The offence under Section 138 is
tipped by the dishonour of the cheque when it is
sought to be encashed. Though a post- dated chequeCC No. 317/2020
Giri Raj Singh v. Kamal AroraPage no 28 of 33
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might be drawn to represent a legally enforceable debt
at the time of its drawing, for the offence to be
attracted, the cheque must represent a legally
enforceable debt at the time of encashment. If there
has been a material change in the circumstance such
that the sum in the cheque does not represent a legally
enforceable debt at the time of maturity or
encashment, then the offence under Section 138 is not
made out.”
46. The judgments of Hon’ble Supreme Court when read with the
purpose of Section 138 indicate that an offence under the provision arises
if the cheque represents a legally enforceable debt on the date of maturity.
The offence under Section 138 is tipped by the dishonour of the cheque
when it is sought to be encashed.
47. In the case at hand the date on which the cheque has been
presented for encashement the debt as per the agreemenet dated 09.05.2019
has not crystallized and same is not a legally enforceable debt and thus
outside the purview of Section 138 NI Act and accused has prima facie
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discharged the burden cast upon him by way of presumptions.
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48. However, the case of the complainant is that the cheque has
been issued after oral termination of the agreement on mutual basis in the
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 29 of 33
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first week of October 2019.
49. At this stage it becomes necessary to refer to Section 91 & 92
of the Indian Evidence Act. As per Section 91 Indian Evidence Act when a
contract, grant, or other disposition of property is in writing, the document
itself is the best evidence of its terms. This means that oral evidence cannot
be used to prove the terms of the document; instead, the document itself (or
a legally admissible copy) must be produced. Further as per Section 92 of
Indian Evidence Act, once the terms of the document have been established
through Section 91, Section 92 prevents the use of oral evidence to
contradict, vary, or add to those terms; this section ensures that the written
agreement is the final word on its terms, and oral agreements or
declarations between the parties cannot be used to alter the written
agreement.
50. Further as per Proviso 4 of Sec. 92, if parties agree orally to
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cancel or modify a document after its execution, such oral agreement may
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be proved. However, this does not apply if the contract must be in writing
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15:44:38by law or if it has been lawfully registered.
+0530
51. Further, Section 101 of Indian Evidence Act clearly stated
who ever desires any court to give judgment as to any legal right or
liability dependent on the existence of facts which he asserts, must prove
CC No. 317/2020
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that those facts exist. When a person is bound to prove the existence of any
fact, it is said that the burden of proof lies on that person. An obligation to
prove the case set up by the party who comes first to court i.e., whatsoever
comes to court for a remedy has to prove his case. In otherwords ” he who
asserts must prove” the standard of proof in civil cases is preponderance of
probability, while in the criminal cases the standard of proof is beyond the
reasonable doubts. If no evidence at all is adduced by either side, the
person on whom the burden of proof lies would fail. One who asserts a
particular fact is in existence, then he has to prove the said fact unless and
until the law says that the burden lies on anymore else.
52. A combined reading of Section 91, Section 92 and Section
101 of the Indian Evidence Act, thus brings us to the conclusion that a for a
document reduced into writing, no oral evidence as to its modification can
be given except for the purposes of rescission or cancellation; and the onus
to prove such oral rescission or cancelation would be upon the party
alleging the same.
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53. In the case at hand, it is the complainant who has alleged the
signed by
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+0530 oral termination of the agreement and hence onus of proving the same lies
upon him. The complainant in his entire complaint or evidence has not
mentioned any date upon which the said agreement was terminated and the
date on which the impugned cheque was given to him. Further, he hasCC No. 317/2020
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nowhere in the entire complaint mentioned any witness in who’s presence
the said termination had taken place. However, in his cross examination
when specifically questioned about the same he has stated that he had
visited the accused with a builder and upon asking the name of the said
builder he has stated the name of the accused as the one. He has further
improved by saying that he had gone with his son Chirag Gupta and dealer
Rajesh Khana but does not remember the exact date of oral termination of
the agreement.
54. Interestingly, the complainant has never cited the said persons
in his list of witnesses nor has ever filed any application to summon the
said witnesses in order to prove the oral termination of the agreement date
09.05.2019.
55. At this stage reference may be drawn from Section 114 of the
Indian Evidence Act which in illustration (g) states that evidence which
could be and is not produced would, if produced, be unfavourable to the
person who withholds it; and in terms of Section 114(g), a negative infer-
ence can be drawn against the complainant, wherein the non-production of
the said witness, shakes the legs of the case setup up the complainant as the
oral termination does not stand proved.
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Giri Raj Singh v. Kamal AroraPage no 32 of 33
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56. In the instant case, the onus was cast upon the complainant to
show that liability of the accused stood under a liability after oral
termination of the agreement; and the same has not been discharged by the
complainant by failing to prove the oral termination of agreement dated
09.05.2019 in the first week of October 2019.
57. Ergo, the second ingredient of the offence u/s138 does not
stand proved and the consequently, accused Kamal Arora S/o Bhola Nath is
acquitted of offence u/s138 NI Act.
58. This judgment contains 33 pages. This judgment has been
signed and pronounced by the undersigned in open court.
59. Let a copy of the judgment be uploaded on the official website
of District Courts, Karkardooma forthwith.
Digitally signed Announced in the open Court ANMOL by ANMOL NOHRIA NOHRIA Date: 2025.05.21 On 21st May 2025 15:44:54 +0530 (Anmol Nohria) JMFC-02/NE/KKD/Delhi CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 33 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi