Delhi High Court
Barun Bhanot vs M/S Annie Impexpo Marketing Pvt Ltd & Anr on 9 June, 2025
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 09.06.2025
+ CRL.L.P. 45/2018 & CRL.M.A. 1078/2018
BARUN BHANOT .....Petitioner
versus
M/S ANNIE IMPEXPO
MARKETING PVT LTD & ANR .....Respondents
Advocates who appeared in this case:
For the Appellant : Mr. Anand Ranjan, Mr. Abhishek Kumar
Singh & Mr. Alok Kumar, Advs.
For the Respondents : Ms. Dharini Windlass, Adv. through V.C.
CORAM
HON'BLE MR JUSTICE AMIT MAHAJAN
JUDGMENT
1. The present leave to appeal is filed against the judgment dated
26.04.2017 (hereafter ‘impugned judgment’) passed by the learned
Metropolitan Magistrate (‘MM’), Patiala House Courts, New Delhi in
CC No. 42989/2016 dismissing the complaint filed by the petitioner
under Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act‘).
2. Briefly stated, the petitioner is the proprietor of M/s A. B.
Consultants and is in the business of providing consultancy and other
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services in relation to custom clearance and freight forwarding to
exporters and importers. It is alleged that the petitioner provided its
services to the respondents and consequently raised regular invoices. It
is alleged that a sum of ₹2,64,689/- was due to the petitioner. It is
alleged that Respondent No. 1 through its managing director being
Respondent No. 2, in discharge of the liability, issued two cheques
bearing nos. 465680 and 465681 for a sum of ₹50,000/- each duly
signed by Respondent No. 2. It is alleged that the subject cheques, on
presentation, got dishonoured and returned unpaid vide return memo
dated 05.01.2009 with the remarks “payment stopped.” Subsequently,
when the respondents failed to make the payment within the stipulated
period despite the issuance of the legal demand notice, the petitioner
instituted the subject complaint under Section 138 of the NI Act.
3. By the impugned judgment, the learned MM dismissed the
complaint filed by the petitioner and acquitted the respondents of the
offence under Section 138 of the NI Act. It was noted that the
petitioner failed to file a valid legal notice in terms of Section 138 of
the NI Act; the petitioner failed to make a demand for the amount that
was to be paid by the respondents; the petitioner failed to specify or
raise a demand for the amount in the subject cheques; while the legal
demand notice raised the issue that a sum of ₹2,64,689/- was
outstanding, and that two cheques were issued by the respondents
towards part payment, the details of the two cheques issued by the
respondent towards part payment of the outstanding amount had not
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been specified.
4. The learned MM held that the petitioner failed to raise a
demand for money in the legal notice as is stipulated under Section
138(b) of the NI Act and vaguely mentioned to clear all the
outstanding dues which does not meet the requisite under Section 138
of the NI Act. It was held that while the accused can be prosecuted
even when the cheque gets dishonored for the reason “payment
stopped by drawer”, the accused is liable to acquitted where he is able
to raise a probable defence on a preponderance of probabilities to
show that there existed no debt in the manner so pleaded by the
complainant.
5. It was held that the respondents were able to raise a probable
defence on a preponderance of probabilities by highlighting that the
petitioner issued incorrect as well as double bills for the same
consignment. The respondents pointed out that the petitioner failed to
maintain proper statement of accounts. It was noted that while the
petitioner in his complaint stated that the total outstanding sum was
₹2,64,689/-, the document produced by the petitioner in Court showed
that the outstanding sum was ₹2,43,982/-. It was noted that the
petitioner failed to render any explanation as to why the legal demand
notice reflected the outstanding amount as ₹2,64,689/- when the
amount due was only ₹2,43,982/-. Consequently, considering the
invalid legal notice and the defence of the respondents, the learned
MM acquitted the respondents of the offence under Section 138 of the
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NI Act.
6. The learned counsel for the petitioner submitted that the learned
MM erred in acquitting the respondents of the offence under Section
138 of the NI Act. He submitted that the learned MM failed to take
into account the evidence on record while dismissing the complaint
filed by the petitioner. He submitted that since the petitioner had
proved the issuance of the subject cheque, the presumption under
Section 139 of the NI Act stood in favour of the petitioner and against
the respondents. He submitted that the onus was on the respondents to
raise a probable defence in order to rebut the statutory presumption
under Section 139 of the NI Act. He submitted that since the
respondents failed to raise a probable defence to dislodge the
presumptions raised against them, the present petition be allowed.
7. The learned counsel for the respondent submitted that the
learned MM rightly acquitted the respondent of the offence under
Section 138 of the NI Act. She submitted that the legal demand notice
was invalid, and the said ground alone is sufficient for the complaint
to be dismissed. She submitted that the respondents raised a probable
defence by pointing towards the contradictions in the account
maintained by the petitioner, and the amount claimed in the legal
notice. She consequently submitted that since the respondent had
raised a probable defence by pointing towards the loopholes in the
version of the petitioner, the burden inasmuch as Section 139 of the NI
Act was concerned stood discharged.
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ANALYSIS
8. The present case relates to acquittal of an accused in a
complaint under Section 138 of the NI Act. The restriction on the
power of Appellate Court in a petition seeking leave to appeal against
order of acquittal in regard to other offence does not apply with same
vigor in the offence under NI Act which entails presumption against
the accused. The Hon’ble Apex Court in the case of Rohitbhai
Jivanlal Patel v. State of Gujarat : (2019) 18 SCC 106 had observed
as under:
“12. According to the learned counsel for the appellant-accused,
the impugned judgment is contrary to the principles laid down by
this Court in Arulvelu [Arulvelu v. State, (2009) 10 SCC 206 :
(2010) 1 SCC (Cri) 288] because the High Court has set aside the
judgment of the trial court without pointing out any perversity
therein. The said case of Arulvelu [Arulvelu v. State, (2009) 10
SCC 206 : (2010) 1 SCC (Cri) 288] related to the offences under
Sections 304-B and 498-A IPC. Therein, on the scope of the powers
of the appellate court in an appeal against acquittal, this Court
observed as follows : (SCC p. 221, para 36)
“36. Careful scrutiny of all these judgments leads to the
definite conclusion that the appellate court should be very
slow in setting aside a judgment of acquittal particularly in
a case where two views are possible. The trial court
judgment cannot be set aside because the appellate court’s
view ismore probable. The appellate court would not be
justified in setting aside the trial court judgment unless it
arrives at a clear finding on marshalling the entire
evidence on record that the judgment of the trial court is
either perverse or wholly unsustainable in law.”
The principles aforesaid are not of much debate. In other words,
ordinarily, the appellate court will not be upsetting the judgment of
acquittal, if the view taken by the trial court is one of the possible
views of matter and unless the appellate court arrives at a clear
finding that the judgment of the trial court is perverse i.e. not
supported by evidence on record or contrary to what is regarded
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as normal or reasonable; or is wholly unsustainable in law. Such
general restrictions are essentially to remind the appellate court
that an accused is presumed to be innocent unless proved guilty
beyond reasonable doubt and a judgment of acquittal further
strengthens such presumption in favour of the accused. However,
such restrictions need to be visualised in the context of the
particular matter before the appellate court and the nature of
inquiry therein. The same rule with same rigour cannot be
applied in a matter relating to the offence under Section 138 of
the NI Act, particularly where a presumption is drawn that the
holder has received the cheque for the discharge, wholly or in
part, of any debt or liability. Of course, the accused is entitled to
bring on record the relevant material to rebut such presumption
and to show that preponderance of probabilities are in favour of
his defence but while examining if the accused has brought about
a probable defence so as to rebut the presumption, the appellate
court is certainly entitled to examine the evidence on record in
order to find if preponderance indeed leans in favour of the
accused.”
(emphasis supplied)
9. It is well settled that once the execution of the cheque is
admitted, the presumption under Section 118 of the NI Act that the
cheque in question was drawn for consideration and the presumption
under Section 139 of the NI Act that the holder of the cheque/
respondent received the cheque in discharge of a legally enforceable
debt or liability are raised against the accused [Ref. Rangappa v. Sri
Mohan:(2010) 11 SCC 441].
10. The Hon’ble Apex Court in Rajesh Jain v. Ajay Singh : (2023)
10 SCC 148, while discussing the appropriate approach in dealing
with presumption under Section 139 of the NI Act, observed the
following :
“54. …. Once the presumption under Section 139 was given effect
to, the courts ought to have proceeded on the premise that the
cheque was, indeed, issued in discharge of a debt/liability. TheSignature Not Verified
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entire focus would then necessarily have to shift on the case set up
by the accused, since the activation of the presumption has the
effect of shifting the evidential burden on the accused. The nature
of inquiry would then be to see whether the accused has discharged
his onus of rebutting the presumption. If he fails to do so, the court
can straightaway proceed to convict him, subject to satisfaction of
the other ingredients of Section 138. If the court finds that the
evidential burden placed on the accused has been discharged, the
complainant would be expected to prove the said fact
independently, without taking aid of the presumption. The court
would then take an overall view based on the evidence on record
and decide accordingly.
55. At the stage when the courts concluded that the signature had
been admitted, the court ought to have inquired into either of the
two questions (depending on the method in which the accused has
chosen to rebut the presumption) : Has the accused led any defence
evidence to prove and conclusively establish that there existed no
debt/liability at the time of issuance of cheque? In the absence of
rebuttal evidence being led the inquiry would entail : Has the
accused proved the non-existence of debt/liability by a
preponderance of probabilities by referring to the “particular
circumstances of the case”?
xxx xxx xxx
57. Einstein had famously said:
“If I had an hour to solve a problem, I’d spend 55 minutes thinking
about the problem and 5 minutes thinking about solutions.”
Exaggerated as it may sound, he is believed to have suggested that
quality of the solution one generates is directly proportionate to
one’s ability to identify the problem. A well-defined problem often
contains its own solution within it.
58. Drawing from Einstein’s quote, if the issue had been properly
framed after careful thought and application of judicial mind, and
the onus correctly fixed, perhaps, the outcome at trial would have
been very different and this litigation might not have travelled all
the way up to this Court.
xxx xxx xxx
61. The fundamental error in the approach lies in the fact that the
High Court has questioned the want of evidence on the part of the
complainant in order to support his allegation of having extended
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loan to the accused, when it ought to have instead concerned itself
with the case set up by the accused and whether he had discharged
his evidential burden by proving that there existed no debt/liability
at the time of issuance of cheque.”
(emphasis supplied)
11. It is relevant to note that the presumption under Section 139 of
the NI Act is not absolute, and may be controverted by the accused. In
doing so, the accused only ought to raise a probable defence on a
preponderance of probabilities to show that there existed no debt in
the manner so pleaded by the complainant in his complaint/ demand
notice or the evidence. Once the accused successfully raises a
probable defence to the satisfaction of the Court, his burden is
discharged, and the presumption ‘disappears.’ The burden then shifts
upon the complainant, who then has to prove the existence of such
debt as a matter of fact. The Hon’ble Apex Court in Rajesh Jain v.
Ajay Singh (supra), in this regard has observed as under:
“41. In order to rebut the presumption and prove to the contrary,
it is open to the accused to raise a probable defence wherein the
existence of a legally enforceable debt or liability can be
contested. The words ‘until the contrary is proved’ occurring in
Section 139 do not mean that accused must necessarily prove the
negative that the instrument is not issued in discharge of any
debt/liability but the accused has the option to ask the Court to
consider the non-existence of debt/liability so probable that a
prudent man ought, under the circumstances of the case, to act
upon the supposition that debt/liability did not exist.
[Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also
Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513]
xxx xxx xxx
44. The accused may adduce direct evidence to prove that the
instrument was not issued in discharge of a debt/liability and, if
he adduces acceptable evidence, the burden again shifts to the
complainant. At the same time, the accused may also rely upon
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are compelling the burden may likewise shift to the complainant.
It is open for him to also rely upon presumptions of fact, for
instance those mentioned in Section 114 and other sections of the
Evidence Act. The burden of proof may shift by presumptions of
law or fact. In Kundanlal’s case- (supra) when the creditor had
failed to produce his account books, this Court raised a
presumption of fact under Section 114, that the evidence, if
produced would have shown the non-existence of consideration.
Though, in that case, this Court was dealing with the presumptive
clause in Section 118 NI Act, since the nature of the presumptive
clauses in Section 118 and 139 is the same, the analogy can be
extended and applied in the context of Section 139 as well.
45. Therefore, in fine, it can be said that once the accused
adduces evidence to the satisfaction of the Court that on a
preponderance of probabilities there exists no debt/liability in the
manner pleaded in the complaint or the demand notice or the
affidavit-evidence, the burden shifts to the complainant and the
presumption ‘disappears’ and does not haunt the accused any
longer. The onus having now shifted
to the complainant, he will be obliged to prove the existence of a
debt/liability as a matter of fact and his failure to prove would
result in dismissal of his complaint case. Thereafter, the
presumption under Section 139 does not again come to the
complainant’s rescue. Once both parties have adduced evidence,
the Court has to consider the same and the burden of proof loses
all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC
1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441]”
(emphasis supplied)
12. The short point of determination by this Court is thus whether
the learned MM rightly acquitted the respondents of the offence under
Section 138 of the NI Act.
13. The learned MM, in the impugned judgment, noted that the
petitioner failed to raise a valid legal demand notice. For this reason,
before delving into the correctness of the impugned judgment, it
becomes imperative to examine the contours of Section 138 of the NI
Act. Section 138(b) of the NI Act in relation to the contents of legal
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demand notice provides as under:
“Provided that nothing contained in this section shall apply
unless–
(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;”
14. It is pertinent to note that the Hon’ble Apex Court in the case of
Rahul Builders v. Arihant Fertilizers & Chemicals : (2008) 2 SCC
321 while delineating the importance of a valid legal demand notice,
and that the same can be a ground for dismissal of complaint under
Section 138 of the NI Act had observed as under:
“10. Service of a notice, it is trite, is imperative in character for
maintaining a complaint. It creates a legal fiction. Operation of
Section 138 of the Act is limited by the proviso. When the proviso
applies, the main section would not. Unless a notice is served in
conformity with proviso (b) appended to Section 138 of the Act, the
complaint petition would not be maintainable. Parliament while
enacting the said provision consciously imposed certain conditions.
One of the conditions was service of a notice making demand of the
payment of the amount of cheque as is evident from the use of the
phraseology “payment of the said amount of money”. Such a
notice has to be issued within a period of 30 (sic 15) days from the
date of receipt of information from the bank in regard to the return
of the cheque as unpaid. The statute envisages application of the
penal provisions. A penal provision should be construed strictly;
the condition precedent wherefor is service of notice. It is one thing
to say that the demand may not only represent the unpaid amount
under cheque but also other incidental expenses like costs and
interests, but the same would not mean that the notice would be
vague and capable of two interpretations. An omnibus notice
without specifying as to what was the amount due under the
dishonoured cheque would not subserve the requirement of law…”
15. It is pertinent to note that the object of a legal demand notice is
to afford an opportunity to the drawer of the cheque to rectify his
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omission and also to protect the interests of an honest drawer. For this
reason, the service of demand notice under Section 138(b) of the NI
Act is a condition precedent to the filing of complaint under Section
138 of the NI Act. Further, since Section 138 of the NI Act mandates
the imposition of criminal liability and is penal in nature, the same
ought to be strictly construed.
16. The language of Section 138(b) of the NI Act provides that the
payee or the holder in due course ought to make a demand for the
payment of “the said amount of money” by giving a notice in writing
to the drawer of the cheque. The term “the said amount of money” as
occurring in Section 138 of the NI Act refers to the cheque amount.
[Ref : Suman Sethi v. Ajay K. Churiwal : (2000) 2 SCC 380]. While
Section 138 of the NI Act does not mandate that a demand notice can
only represent the amount unpaid under the cheque and no other
expenses, however, the same should be severable from the cheque
amount failing which the demand notice would be invalid.
17. The present case relates to the dishonour of two cheques for a
sum of ₹50,000/- each thereby amounting to a total of ₹1,00,000/-.
Accordingly, as per the mandate of Section 138 of the NI Act, the
petitioner was required to a make a demand for a sum of ₹1,00,000/-
from the respondents. However, upon a perusal of the record, it is
apparent that the legal demand notice failed to make a demand for the
payment of cheque amount. The legal notice sent by the petitioner
though mentions that the subject cheques were issued towards part
payment of the total dues, however, the demand is made for the entire
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outstanding amount mentioned in the notice in the following words:
“you are called upon to clear all the dues of my client within 15 days
of this notice by way of demand draft failing which my client will be
under constrained to file a civil suit as per the available position in
each case to recover its dues.” The same does not qualify as a demand
for money as is stipulated under Section 138 of the NI Act. In that
light, the learned MM rightly noted that the petitioner failed to comply
with the requirement under Section 138(b) of the NI Act.
18. Much emphasis has also been laid on the fact that since the
signatures on the subject cheques were not disputed, the presumption
under Section 139 of the NI Act stood in favour of the petitioner. As
noted earlier, the presumption under Section 139 of the NI Act is not
absolute and may be controverted by the accused by raising a probable
defence on a preponderance of probabilities. In the present case, the
respondents were able to dislodge the presumptions raised against
them. While raising a probable defence, the respondents challenged
the bills raised by the petitioner. The respondents highlighted that
incorrect as well as double bills for the same consignment had been
raised by the petitioner. It was further pointed out that the petitioner
failed to maintain a proper statement of accounts.
19. It is pertinent to mention that the petitioner in his complaint as
well as legal demand notice stated that the total outstanding amount
was ₹2,64,689/-. However, the document produced by the petitioner
before the Court to show the total outstanding amount showed that the
total outstanding amount was only ₹2,43,982/-. No explanation was
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rendered by the petitioner to highlight the discrepancy in the total
outstanding amount as reflected in the legal demand notice/complaint
and the document produced by him.
20. In the opinion of this Court, even if the petitioner’s case is taken
at the highest, yet, since the respondents had already raised a probable
defence to dislodge the presumptions raised against them, the onus
was on the petitioner to show that there existed a debt/liability in the
manner as pleaded by him. The respondents having already dislodged
their burden, it was on the petitioner to show the existence of the debt,
that too, as a matter of fact. For this reason, the petitioner having
failed to do so, his contention that the presumption under Section 139
of the NI Act was in his favour, does not bolster the case of the
petitioner.
21. It is pertinent to note that a decision of acquittal fortifies the
presumption of innocence of the accused, and the said decision must
not be upset until the appreciation of evidence is perverse.
22. Upon a consideration of the facts and circumstances of the case,
this Court finds no such perversity in the impugned judgment so as to
merit an interference in the finding of acquittal. Consequently, this
Court finds no reason to entertain the present petition.
23. The present leave petition is accordingly dismissed.
AMIT MAHAJAN, J
JUNE 9, 2025
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