Delhi District Court
Intec Capital Ltd vs Tarun Kumar on 30 July, 2025
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
IN THE COURT OF JUDICIAL MAGISTRATE FIRST CLASS (NI ACT-02),
SOUTH EAST DISTRICT, SAKET COURT COMPLEX, NEW DELHI
(Presided over by Ms. Shruti Sharma-I)
DLSE020033412017
Criminal Complaint No.: 2149/2017
M/s INTEC CAPITAL LTD. ....................... Complainant
Vs.
TARUN KUMAR ....................... Accused
Sr. No Particulars Details
A. Name and address of M/s Intec Capital Ltd. office at 701,
the Complainant: Manjusha Building, 57, Nehru Place, New
Delhi-110019
B. Name and address of Mr Tarun Kumar S/o Late Vipin Uppal R/o
the Accused. 3402, Sector 32, Ludhiana, Punjab.
C. Offence complained of U/s 138 NI Act
D. Plea of the accused Pleaded not guilty.
E. Final order Conviction
F. Date of institution 16.03.2017
G. Date of pronouncement 30.07.2025
Digitally signed
SHRUTI by SHRUTI
SHARMA
SHARMA Date: 2025.07.30
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CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
JUDGMENT
Brief facts and reasons for decision of the case
1. By way of the present judgment, I propose to adjudicate upon and dispose of the
instant complaint instituted by M/s Intec Capital Ltd. (hereinafter referred to as
“the complainant”) which is a law abiding firm represented by its Authorized
representative The said complaint has been filed against Sh. Tarun Kumar S/o
Late Vipin Uppal (hereinafter referred to as “the accused”) for commission of the
alleged offence punishable under Section 138, read with Section 142, of the
Negotiable Instruments Act, 1881 (for short, “the NI Act“). The present
proceedings emanate from the alleged dishonour of a cheque issued by the accused
in favour of the complainant institution, giving rise to the present cause of action.
2. It has been specifically averred by the complainant that the borrower firm, namely
M/s Om Industries, had approached the complainant company for financial
assistance in order to meet its business requirements and operational exigencies.
Pursuant thereto, the complainant company agreed to extend a corporate finance
loan to the said borrower to the tune of ₹14,84,700/- (Rupees Fourteen Lakhs
Eighty-Four Thousand Seven Hundred only). The said loan was advanced for
legitimate commercial purposes, as mutually agreed between the parties, and was
sanctioned under the usual terms and conditions governing such financial
transactions.
3. To formalize the terms and to regulate the rights and obligations of the parties, a
detailed loan agreement was executed between the complainant company and the
borrower firm, M/s Om Industries. It is the categorical assertion of the complainant
that in addition to the borrower, the present accused, Mr. Tarun Kumar, had
voluntarily and unequivocally agreed to stand as a guarantor for the due repayment
of the loan amount, along with applicable interest and other charges, in accordance
with the terms of the said agreement. By executing the necessary guarantee
documents, the accused allegedly undertook joint and several liability for the
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SHARMA
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CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
financial obligations arising out of the said loan transaction. Thus, according to the
complainant, the accused Mr. Tarun Kumar had not only knowledge of but also
legal responsibility for the repayment of the aforesaid loan amount, in the event of
default by the principal borrower.
4. It has been alleged by the complainant company that the accused has committed a
breach of the terms and conditions stipulated under the loan agreement executed
between the parties, by willfully defaulting in the payment of the installments that
had become due and payable by him in accordance with the agreed repayment
schedule. The complainant has asserted that despite repeated reminders and
demands, the accused failed to regularize the account or discharge his outstanding
liability, thereby rendering himself liable for legal action.
5. In order to partially discharge the said outstanding liability and towards payment
of the dues owed by him to the complainant company, the accused is stated to have
issued a cheque bearing No. 317603 dated 16.07.2017 for a sum of ₹9,32,027/-
(Rupees Nine Lakhs Thirty-Two Thousand and Twenty-Seven only), drawn on his
account maintained with Punjab National Bank. The said instrument (hereinafter
referred to as “the cheque in question”) was handed over by the accused to the
complainant with the assurance that the same would be duly honoured upon
presentation and would serve to clear a substantial portion of his pending dues.
6. It has been further averred by the complainant company that, acting upon the
assurance of the accused and in the ordinary course of business, the complainant
presented the aforementioned cheque in question–bearing No. 317603 dated
16.07.2017 for a sum of ₹9,32,027/—for encashment through its banker, namely
HDFC Bank Ltd., Nehru Place Branch, New Delhi. However, to the utter shock
and dismay of the complainant, the said cheque was returned unpaid by the drawee
bank, Punjab National Bank, with the explicit endorsement “Funds Insufficient,”
indicating that the account of the accused did not have adequate balance to honour
the instrument.
Digitally signed
by SHRUTI
SHRUTI SHARMA
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7. The dishonour of the cheque on the ground of insufficiency of funds, as reflected
in the cheque return memo issued by the bank, constitutes a clear violation of the
assurance extended by the accused and gave rise to a legally enforceable cause of
action in favour of the complainant. The complainant has relied upon the said
cheque return memo and related banking documents to substantiate the allegation
of default and to establish the foundational ingredients under the provisions of the
Negotiable Instruments Act, 1881.
8. It has been further stated by the complainant that upon being informed of the
dishonour of the cheque in question due to insufficiency of funds, the complainant
immediately contacted the accused and apprised him of the said development. The
complainant also demanded that the accused clear the outstanding liability
forthwith. However, instead of making the payment or offering any concrete
assurance, the accused allegedly furnished evasive and unsatisfactory explanations
for the dishonour of the cheque and failed to take any remedial steps to regularize
the default.
9. The complainant has further alleged that the accused was well aware of the fact
that his bank account did not maintain sufficient balance to honour the cheque at
the time of its issuance. Despite such knowledge, the accused willfully and
dishonestly issued the said cheque, thereby inducing the complainant to believe
that the payment would be honoured upon presentation. It is, therefore, the specific
case of the complainant that the accused had knowingly and intentionally issued
the cheque without having sufficient funds in his account, thereby attracting penal
liability under the provisions of Section 138 of the Negotiable Instruments Act,
1881.
10. Thereafter, in compliance with the statutory requirement under Section 138 of the
Negotiable Instruments Act, the complainant caused a legal demand notice dated
09.02.2017 to be issued and dispatched to the accused through Speed post through
its counsel, calling upon accused to make payment due. The said legal notice was
addressed to the residential address of the accused as provided in the complaint, as
Digitally signed by
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CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumarper the complainant’s assertion. However, despite the service of the legal demand
notice and the expiry of the statutory period granted for compliance, the accused
failed to make the payment of the dishonoured cheque amount or to respond to the
said notice in any manner. In view of the continued default and non-payment, the
complainant was constrained to initiate the present proceedings by filing a
complaint under Sections 138 and 142 of the NI Act, seeking redressal for the
dishonour of cheque and enforcement of the accused’s liability.
11. Upon consideration of the material placed on record along with the complaint, and
after due recording of the pre-summoning evidence as mandated under law, this
Court found sufficient prima facie grounds to proceed against the accused for
commission of the alleged offence punishable under Section 138 of the Negotiable
Instruments Act, 1881. Accordingly, vide order dated 16.03.2017, the accused was
directed to be summoned to face trial in the present case for dishonour of cheque
issued towards discharge of a legally enforceable debt or liability, as contemplated
under the provisions of the NI Act.
12. The accused appeared on 15.11.2018 with his counsel, and was granted bail by this
Court on the very same date. Pursuant to the grant of bail, the accused was directed
to furnish requisite bail bonds, and accordingly, his personal bonds and surety
bonds were furnished and accepted on the same date. Subsequently, upon
satisfaction that a prima facie case existed warranting trial, this Court proceeded to
frame notice under Section 251 of the Code of Criminal Procedure, 1973 ( CrPC),
which was duly served upon the accused on 29.07.2022. On being apprised of the
substance of accusation, the accused pleaded not guilty and claimed trial.
13. Thereafter, the an application u/s 145(2) NI Act was moved on behalf of the
accused on 01.02.2023 which was allowed by the court and a chance to cross
examine the complainant was given to the accused.
14. In support of its case, the complainant led evidence by examining its AR as CW-1.
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SHARMA
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CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
CW-1 entered the witness box and was duly examined-in-chief as well as cross-
examined by the counsel for the accused. During his testimony, CW-1/AR Sh.
Kunal Sharma relied upon and proved the following documents in support of his
case:-
Sr. No. Exhibits Particulars
1. Ex.CW-1/X Post summoning evidence by way of affidavit
2. Ex.CW-1/A(OSR) Original Authorisation letter dated 21.09.2021
3. Ex.CW-1/B (OSR) Original Board of Resolution dated 24.05.2019.
4. Ex.CW-1/C Complaint u/s 138 of NI Act.
5. Ex.CW-1/D Original Cheque question bearing no. 317603 dated
16.01.2017.
6. Ex.CW-1/E Return Memo dated 20.01.2017.
7. Ex.CW-1/F Copy of legal demand notice dated 09.02.2017.
8. Ex.CW-1/G Postal receipt dated 11.02.2017.
9. Ex.CW-1/H Computer generated tracking report.
10. Ex.CW-1/I Certificate u/s 65 B Indian Evidence Act.
11. Mark 1(Colly.) Copy of Loan Document.
12. Mark 2 Copy of notice of termination dated 22.03.2016.
13. Mark 3 (colly.) Copy of Statement of account of M/s Om
Industries.
That CW-1 was discharged on 12.02.2024 and CE was closed as complainant
company did not produce any other witnesses to be examined at their behest.
Digitally signed by
SHRUTI SHRUTI SHARMA
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15. Subsequent to the conclusion of the complainant’s evidence, the statement of the
accused was recorded under Section 313 of the Code of Criminal Procedure, 1973
(CrPC), so as to afford him an opportunity to explain the incriminating
circumstances appearing against him in the prosecution evidence. During his
examination, the accused candidly admitted that the fact that he issued the cheque.
However, he denied the particulars of the cheque and stated that the cheque was
given a blank signed security cheque as a guarantee for obtaining fiance loan by
his father. He also admitted the receipt of legal demand notice from the
complainant and further admitted that he had already paid Rs. 8,50,000/- to
9,00,000/- to the complainant. He further stated that an amount of approximately
Rs. 4,50,000/- to Rs. 5,00,000/- is pending to be paid against the loan obtained by
his father and that he approached the complainant to settle the amount as well.
16. That the accused did not wish to lead defence evidence and the matter was
thereupon fixed for and proceeded to final arguments.
Final arguments
17. This Court heard the final arguments on 01.07.2025.
18. The learned counsel for the complainant has vehemently argued that the
essential ingredients of Section 138 of the Negotiable Instruments Act, 1881,
stand satisfied in the present case. It is submitted that M/s Om Industries had
availed a corporate finance loan of ₹14,84,700/- from the complainant
company, and the accused herein stood as a guarantor in respect of the said
loan. In discharge of part of the liability, the accused issued a cheque bearing
no. 317603 dated 16.01.2017 for a sum of ₹9,32,027/- drawn on Punjab
National Bank, which, when presented, was returned dishonoured with the
remark “Funds Insufficient.”
19. The learned counsel further submitted that a legal demand notice dated
09.02.2017 was duly issued and served upon the accused at his correct
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CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
address, calling upon him to make payment of the cheque amount within
fifteen days. Despite service of notice, the accused failed to make the payment
within the statutory period, thereby attracting the penal consequences under
Section 138 of the NI Act. It was urged that the complainant has strictly
complied with the mandatory provisions of law.
20. It was argued that the accused has admitted his signature on the cheque in
question and has also acknowledged having received the legal notice in
statement recorded u/s 313 CrPC. These admissions, coupled with the
statutory presumptions under Sections 118 and 139 of the NI Act, give rise to
a presumption that the cheque was issued towards a legally enforceable debt or
liability. It was submitted that the burden then shifted upon the accused to
rebut the presumption by leading cogent evidence, which the accused has
failed to do.
21. The complainant’s counsel further contended that the defence taken by the
accused, namely that the cheque in question was a blank signed security
cheque issued in his capacity as guarantor, is a bald and unsubstantiated
assertion. It was argued that even assuming arguendo that the cheque was
issued as a security instrument, the same would nonetheless attract the
provisions of Section 138 NI Act if presented for an outstanding liability, as
held by the Hon’ble Supreme Court in numerous decisions.
22. It was also submitted that the accused has not denied the underlying loan
transaction or the outstanding liability. In fact, in his statement under Section
313 CrPC, he has admitted that the loan was taken by his late father, and that
an amount of ₹4.5 to ₹5 lakhs remained unpaid. Thus, even on his own
showing, there exists a subsisting liability, which the complainant was well
within its rights to recover.
23. The complainant’s counsel argued that the accused has not brought on record
any material to rebut the complainant’s evidence or the statutory
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presumptions. The accused did not lead any defence evidence nor examine any
witness in support of his plea. Hence, the defence raised is not probable in the
light of the record, and deserves to be rejected.
24. It was prayed on behalf of the complainant that the accused be convicted for
the offence under Section 138 of the NI Act and that appropriate orders under
Section 357 CrPC be passed in favour of the complainant for recovery of the
cheque amount and incidental charges.
25. The learned counsel for the accused has strenuously argued that the accused is
not liable to be convicted under Section 138 of the Negotiable Instruments
Act, 1881, as the cheque in question was not issued in discharge of any legally
enforceable debt or liability. It was submitted that the accused had merely
stood as a guarantor for the loan availed by his father from the complainant
company, and the cheque in question was handed over at the time of disbursal
of the loan purely as a blank signed security cheque.
26. It was further contended that the accused had no independent transaction with
the complainant company and that the primary borrower was M/s Om Indus-
tries. The accused’s father was solely responsible for the loan, and the accused
had no liability in his personal capacity except for signing the cheque as a for-
mality at the insistence of his late father. The cheque was never intended to be
presented for payment and was misused by the complainant after the demise
of the principal borrower.
27. Learned defence counsel submitted that the complainant has failed to produce
any evidence to establish that the cheque was filled by the accused himself or
that it was issued voluntarily for discharge of a live debt. In fact, during the
cross-examination of CW1, the authorised representative of the complainant,
it was admitted that the company used to collect security cheques from guar-
antors and post-dated cheques from the borrowers at the time of loan disburse-
ment. The witness also expressed inability to specify who had filled in the
particulars on the cheque in question.
Digitally signed
SHRUTI by SHRUTI
SHARMA
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28. It was further argued that the complainant has failed to initiate any legal pro-
ceedings either against the principal borrower or against the co-guarantor, nor
has it taken steps for recovery by way of arbitration or repossession of hy-
pothecated assets, as per the terms of the loan agreement. These omissions, it
was urged, cast serious doubt on the bona fides of the complainant’s case.
29. The defence also relied on the principle that the statutory presumption under
Sections 118 and 139 of the NI Act is rebuttable and that once a probable de-
fence is raised, the burden shifts back to the complainant. In the present case,
it was contended, the accused has explained the circumstances under which
the cheque came to be issued and has thereby discharged his burden of rebut-
tal. It was submitted that the mere admission of signature on the cheque does
not ipso facto prove the existence of legally enforceable liability.
30. The learned counsel also pointed out that the complainant has not produced
any cogent evidence to establish that the legal notice dated 09.02.2017 was in
fact served upon the accused. This, it was urged, vitiates the mandatory re-
quirement of service of legal notice under Section 138 of the NI Act.
31. Lastly, it was contended that the complaint has been instituted with a malafide
intention to exploit the blank signed security cheque furnished during the loan
formalities and to unfairly recover amounts that are not legally owed by the
accused. Hence, it was prayed that the accused be acquitted of all charges.
Legal Analysis & Findings :-
32. I have heard at length the detailed arguments advanced by the learned counsels
for both the complainant and the accused. The submissions have been
carefully considered in light of the factual matrix and the legal principles
applicable to the case. This Court has also undertaken a thorough and
meticulous examination of the entire record, including the contents of the
complaint, the affidavits and documents annexed therewith, the oral
depositions of the prosecution and defence witnesses recorded during the trial,
and the exhibits relied upon by both sides. Each piece of evidence has been
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scrutinized independently as well as cumulatively to assess its evidentiary
value and probative force. The rival contentions have been weighed
objectively in the backdrop of the statutory provisions and the settled law
governing cases under Section 138 of the Negotiable Instruments Act, 1881.
The Court has thus endeavored to arrive at a well-reasoned and just conclusion
based on a holistic appreciation of the material on record.
33. Before embarking upon a discussion on the merits of the present case, it is
considered apposite to first set out the legal framework governing the offence
of dishonour of cheque, as encapsulated under Section 138 of the Negotiable
Instruments Act, 1881. The said provision was introduced with the object of
enhancing the credibility of negotiable instruments in commercial transactions
and ensuring greater financial discipline by attaching penal consequences to
the issuance of cheques that are dishonoured on presentation for insufficiency
of funds or if the amount exceeds the arrangement made with the banker.
34. In order to fasten criminal liability upon an accused under Section 138 of the
Negotiable Instruments Act, 1881, it is incumbent upon the complainant to es-
tablish, through the averments made in the complaint and the evidence led
during trial, the existence of the following essential ingredients:
a) That the accused must have drawn a cheque on an account maintained by
him with a banker, for payment of a certain sum of money to another person,
and such payment must be towards the discharge, in whole or in part, of any
legally enforceable debt or other liability;
b) That the said cheque must have been presented to the bank within a period
of three months from the date on which it was drawn, or within the period of
its validity, whichever is earlier;
Digitally signed
by SHRUTI
SHRUTI SHARMA
SHARMA Date:
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c) That upon such presentation, the cheque must have been returned unpaid by
the bank, either due to insufficiency of funds in the drawer’s account or be-
cause the amount exceeds the arrangement made by the drawer with the bank;
d) That the payee or the holder in due course of the cheque must have issued a
statutory demand notice in writing to the drawer, seeking payment of the
cheque amount, within 30 days from the date of receipt of information from
the bank regarding the return of the cheque as unpaid;
e) That the drawer of the cheque, despite receipt of the said legal notice, failed
to make payment of the cheque amount to the payee or holder in due course
within 15 days of such receipt.
35. It is also pertinent to note that, as per the Explanation appended to Section
138, the expression “debt or other liability” refers only to a legally enforce-
able debt or other liability. Thus, the dishonoured cheque must have been is-
sued against a subsisting and enforceable obligation under the law.
36. It is well-settled that the aforementioned ingredients must co-exist and be sat-
isfied cumulatively in order to constitute the offence under Section 138 of the
Negotiable Instruments Act, 1881. The absence or non-fulfilment of even one
of these statutory requirements would disentitle the complainant from invok-
ing penal liability against the drawer of the cheque. Thus, only when all the
conditions–namely, the issuance of the cheque in discharge of a legally en-
forceable debt or liability, its presentation within the stipulated period, dishon-
our by the bank, issuance of a valid legal demand notice within the prescribed
time frame, and the failure of the drawer to make payment within 15 days of
receipt of the said notice–are conclusively established through evidence, can
the offence under Section 138 be deemed to have been committed.
Digitally signed
by SHRUTI
SHRUTI SHARMA
SHARMA Date:
2025.07.30
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37. The Authorised Representative of the complainant company entered the
witness box as CW1 and deposed on oath that the complainant is a non-
banking financial company engaged in the business of extending corporate
finance loans. He stated that M/s Om Industries, a concern of the accused’s
father, had availed a corporate loan of ₹14,84,700/- from the complainant
company and that the accused had stood as a guarantor in respect of the said
loan. He further deposed that in discharge of the outstanding liability arising
under the said loan agreement, the accused had voluntarily issued the cheque
in question bearing No. 317603 dated 16.01.2017 for a sum of ₹9,32,027/-,
drawn on Punjab National Bank, from his own account.
38. In his cross-examination, CW1 admitted that the complainant company
generally obtained security cheques from both borrowers and guarantors at the
time of loan disbursal. He also admitted that he was unable to state who had
filled in the particulars on the cheque in question, and that he could not
confirm whether any independent legal action had been initiated against the
principal borrower or the co-guarantor. However, he maintained that the
cheque was issued in acknowledgment of a subsisting liability, and denied the
suggestion that the cheque was blank at the time of issuance. He categorically
denied the allegation that the cheque had been misused or filled in unilaterally
by the complainant company. The witness also affirmed that the cheque, upon
presentation, was dishonoured with the remarks “Funds Insufficient,” and no
payment was forthcoming despite service of statutory legal demand notice.
39. During the course of his cross-examination, learned defence counsel made a
strenuous effort to dislodge the credibility of the witness by questioning the
cheque amount. However, despite an extensive cross-examination, the witness
remained firm and unwavering in his stance. No material contradictions or
admissions could be elicited from the complainant that would cast any
reasonable doubt on the veracity of his version.
Digitally signed
SHRUTI by SHRUTI
SHARMA
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40. This Court finds the deposition of CW1 to be consistent, natural, and bearing
the hallmark of truth. Hence, the testimony of CW1 inspires confidence and is
found to be trustworthy and credible. The Court has no hesitation in placing
reliance upon the same.
41. Insofar as the above mentioned ingredients (b), (c), (d), and (e) are concerned
–namely, the presentation of the cheque within the prescribed period, its
dishonour by the bank due to insufficiency of funds, the issuance of a legal
demand notice within 30 days of intimation of dishonour, and the failure of the
drawer to make payment within 15 days of receipt of such notice–all seem to
have been duly proved by the complainant. The said facts stand duly
substantiated by the documentary evidence placed on record, including the
cheque, the return memo, copy of the legal demand notice, courier/ postal
receipts evidencing dispatch indicating service of notice upon the accused.
42. It is also not in dispute that the accused failed to make payment of the cheque
amount to the complainant within the statutory period of 15 days from the date
of receipt of the legal demand notice. The record reflects that the legal notice
was duly served upon the accused as the accused has not disputed the receipt
of the said legal demand notice and despite the opportunity afforded under the
mandate of Section 138 of the NI Act, no payment was made within the
prescribed period.
43. The Court shall now proceed to examine the most crucial ingredient under
Section 138 of the Negotiable Instruments Act, 1881, which constitutes the
core issue in controversy in the present case–whether the impugned cheque
was issued by the accused (drawer)in discharge of a legally enforceable debt
or other liability. This aspect is of paramount importance, as the existence of
such liability is the very foundation upon which the statutory presumption
under Section 139 of the NI Act rests. The complainant must prima facie
demonstrate that the cheque was issued in respect of a subsisting and legally
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enforceable obligation. The accused, on the other hand, may rebut this
presumption either by leading direct evidence or by eliciting material
inconsistencies or improbabilities in the complainant’s case during cross-
examination, thereby raising a reasonable doubt as to the existence of such
liability. Thus, this Court now undertakes a detailed examination of the rival
contentions and the evidence on record to determine whether the said
ingredient stands proved to the requisite standard in the present matter.
44. Once foundational facts are admitted, it is a well-settled position of law that
when a negotiable instrument is drawn, two statutory presumptions arise in
favour of the complainant, one under Section 139 NI Act and another under
Section 118(a) of the NI Act, which is a presumption of the cheque having
been issued in discharge of legal liability and drawn for good consideration.
Section 118(a) of the N.I Act and Section 139 NI Act are reproduced for ready
reference:
Section 118 NI Act provides:
“Presumptions as to negotiable instruments”: “Until the
contrary is proved, the following presumptions shall be made: (a) of
consideration – that every negotiable instrument was made or drawn
for consideration, and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred was accepted, indorsed,
negotiated or transferred for consideration;
Section 139 of the NI Act further provides as follows:
“Presumption in favour of holder – It shall be presumed, unless
the contrary is proved, that the holder of a cheque received the
cheque of the nature referred to in Section 138 for the discharge, in
whole or in part, of any debt or other liability”
Digitally signed
by SHRUTI
SHRUTI SHARMA
SHARMA Date:
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45. Hence, in light of the aforesaid statutory provisions, particularly Sections
118(a) and 139 of the Negotiable Instruments Act, it is manifest that once the
complainant successfully establishes the foundational facts–namely, the
execution and issuance of the cheque by the accused–the Court is bound to
raise a presumption that the said cheque was drawn for consideration and in
discharge of a legally enforceable debt or liability. This presumption is a
rebuttable one; however, the initial evidentiary burden lies squarely upon the
accused to rebut the same by raising a probable defence. Such rebuttal need
not be proved beyond reasonable doubt, but must be sufficient to create a
preponderance of probability in favour of the accused. Unless such a rebuttal
is successfully established by the accused through direct evidence or material
inconsistencies in the complainant’s version, the presumption under law
continues to operate in favour of the complainant.
46. This is an example of the rule of ‘reverse onus’ in action, where it is an
obligation on the accused to lead what can be called ‘negative evidence’. The
accused is not to prove a fact affirmatively, but to lead evidence to
demonstrate the non-existence of debt or liability. Since, this rule is against the
general principle of the criminal law of ‘presumption of innocence in favour of
the accused’ and considering that such negative evidence, by character is
difficult to lead, the threshold for the accused to rebut the presumption is on
the scale of the preponderance of probabilities. This was held in ‘ Sangappa v.
Sri Mohan'[(2010) 11 SCC 441], this means that the lack of consideration or a
legally enforceable debt is not to be proved beyond all reasonable doubt.
47. The accused is required to either prove the non-existence of the liability or the
existence of it so improbable that a prudent man would think that it does not
exist. The accused can do this either by leading direct or relying upon
circumstantial evidence in his defence. Alternatively, the accused can punch
holes within the case of the complainant by way of cross-examination.
Thereafter, the onus of proof shifts back to the complainant, and the
Page no. 16/24
Digitally signed by
SHRUTI SHRUTI SHARMA
SHARMA Date: 2025.07.30
15:49:56 +0530
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumarpresumptions under Sections 118 and 139 of the Act, will not again come to
the complainant’s rescue.
48. In the light of the foregoing statutory provisions and the settled principles of
law governing the presumptions under Sections 118 and 139 of the Negotiable
Instruments Act, this Court shall now proceed to scrutinize the defence set up
by the accused. The primary question that arises for consideration at this stage
is whether the defence raised by the accused is a plausible, probable, and
legally tenable one–capable of rebutting the presumption of the existence of a
legally enforceable debt or liability. The defence, whether founded on direct
evidence or drawn from material contradictions, omissions, or improbabilities
in the complainant’s case, must inspire confidence and raise a credible doubt
regarding the purpose for which the impugned cheque was issued. The Court,
therefore, undertakes a comprehensive examination of the evidence led on
behalf of the defence, as well as the nature and consistency of the explanations
offered by the accused, to determine whether the statutory presumption has
been effectively dislodged.
49. In his defence, the accused has asserted that the cheque in question was not is-
sued in discharge of any legally enforceable debt or liability owed by him per-
sonally, but was instead handed over as a blank signed security cheque in his
capacity as a guarantor, at the time when his deceased father had availed a
corporate finance loan from the complainant company on behalf of the bor-
rower entity, M/s Om Industries. The accused has alleged that he had no di-
rect financial liability towards the complainant and that the cheque was given
merely as a form of security, without any intention of it being used for en-
cashment unless the borrower defaulted and a final reconciliation of dues had
been arrived at.
Digitally signed
SHRUTI by SHRUTI
SHARMA
SHARMA Date: 2025.07.30
15:50:01 +0530Page no. 17/24
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
50. The accused has further contended that the complainant company has acted in
a mala fide manner by misusing the said security cheque, filling in the particu-
lars unilaterally and arbitrarily, and presenting it without any intimation or
due process, thereby initiating false and frivolous proceedings against him.
While not denying the existence of the underlying loan transaction, the ac-
cused has submitted that a substantial portion of the loan amount–approxi-
mately to the tune of ₹8.5 to ₹9 lakhs–had already been repaid by his father
during his lifetime, and that only a residual sum in the range of ₹4.5 to ₹5
lakhs, if any, remained unpaid at the time of his father’s demise. The accused
has thus disputed the quantum of liability claimed by the complainant and has
challenged the genuineness of the filling of cheque particulars.
51. It is pertinent to note that the accused has not led any evidence in support of
his defence, nor has he produced a single document on record–such as pay-
ment receipts, bank statements, correspondence with the complainant, or any
written acknowledgment or settlement offer–that could lend credence to his
claim that a substantial portion of the loan liability, allegedly amounting to
₹8.5-9 lakhs, had already been repaid by his deceased father. Despite taking a
specific stand that the cheque in question was issued merely as a blank secu-
rity instrument and was subsequently misused by the complainant, the ac-
cused has failed to adduce any cogent evidence–oral or documentary–to
substantiate these allegations.
52. The entire defence of the accused is based on bare and unsubstantiated asser-
tions, which remain uncorroborated by any contemporaneous material. No in-
dependent witness has been examined to support the alleged repayment or to
establish the circumstances under which the cheque was purportedly issued.
The absence of any tangible evidence significantly undermines the credibility
of the defence and renders it a mere afterthought, lacking in evidentiary value.
Digitally signed
SHRUTI by SHRUTI
SHARMA
SHARMA Date: 2025.07.30
15:50:05 +0530
Page no. 18/24
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
53. It is particularly noteworthy that the accused, during the course of his defence,
has himself admitted that an amount in the range of ₹4.5 to ₹5 lakhs remained
due and outstanding towards the complainant. While the accused has sought
to use this admission as a mitigating assertion–aimed at portraying the liabil-
ity as lesser than the amount mentioned in the cheque–this very statement in
fact reinforces the existence of a legally enforceable debt or liability on the
date when the cheque in question was issued and presented. The existence of
such outstanding dues, by the accused’s own showing, satisfies one of the key
ingredients required to invoke the penal provisions of Section 138 of the Ne-
gotiable Instruments Act, 1881.
54. Furthermore, the accused’s general denial of the total amount claimed and his
allegation of inflation or misuse of the cheque by the complainant are not sub-
stantiated by any credible evidence. In the absence of any proof of repayment,
altered arrangement, or misuse of the cheque, such vague and self-serving as-
sertions fall short of rebutting the statutory presumption that arises under Sec-
tion 139 of the Act. It is a settled position in law that the burden to rebut the
presumption is on the accused, and such rebuttal must be based on preponder-
ance of probabilities through cogent evidence. Mere oral assertions, without
any supporting documentation or witness testimony, are insufficient to dis-
charge this burden.
55. Even assuming, for the sake of argument, that the cheque in question was
originally issued as a blank security cheque, the legal position governing such
instruments has been authoritatively settled by the Hon’ble Supreme Court of
India. It is now well established that a cheque given by way of security, if
presented for discharge of a subsisting and legally enforceable debt or liability,
would squarely attract the penal provisions of Section 138 of the Negotiable
Instruments Act, 1881.
Digitally signed
by SHRUTI
SHRUTI SHARMA
SHARMA Date:
2025.07.30
15:50:09 +0530
Page no. 19/24
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumar
56. The Hon’ble Supreme Court, in Sripati Singh (Dead) through his daughter
Ganga Singh v. State of Jharkhand & Anr., LL 2021 SC 606, has authorita-
tively clarified the legal position with respect to cheques issued as security. It
was held that the mere nomenclature of a cheque as being issued by way of
‘security’ does not, by itself, preclude the invocation of penal consequences
under Section 138 of the Negotiable Instruments Act, 1881, provided that the
said cheque was presented against a subsisting liability which had matured for
repayment. The Hon’ble Court observed that when a cheque is issued as secu-
rity with a stipulated time period for repayment, such cheque merely ensures
that it cannot be presented before the maturity of the underlying obligation.
However, in the absence of prior discharge of the debt or any altered arrange-
ment between the parties, the cheque so issued remains validly enforceable
against the outstanding liability.
57. The Hon’ble Supreme Court further held that the availability of alternative
modes of repayment does not nullify the legal consequences of dishonour un-
der Section 138 if the drawer has failed to discharge the liability within the
agreed period. It was categorically stated that there can be no rigid or inflexi-
ble rule that a security cheque can never be presented. If such a view were to
be taken, the cheque would be reduced to the status of a mere promissory
note, defeating the very object and purpose of the legislation. The Court ob-
served that where a cheque–albeit issued as security–is presented against a
legally enforceable debt and is dishonoured, the drawee has the lawful right to
choose between initiating civil proceedings for recovery or prosecuting the
drawer under the criminal provisions of the Act.
58. Applying the said principle to the facts of the present case, it is evident that
the accused has not shown any material to prove that the underlying loan was
discharged prior to the presentation of the cheque in question, nor has he
demonstrated the existence of any altered arrangement precluding its presen-
tation. In fact, he has admitted that a significant portion of the loan remained
Digitally signed
Page no. 20/24 by SHRUTI
SHRUTI SHARMA
SHARMA Date:
2025.07.30
15:50:13 +0530
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumarunpaid. Therefore, the presentation of the cheque cannot be said to be prema-
ture or unauthorized. In such a factual scenario, the defence that the cheque
was merely issued as a security instrument is untenable and cannot absolve
the accused from liability under Section 138 of the Act.
59. The accused has further taken the plea that the cheque in question was issued
solely in his capacity as a guarantor in respect of the corporate loan availed by
his deceased father from the complainant company, and that the said cheque
was not issued in discharge of any personal liability. On this basis, it has been
contended that since the underlying liability pertained to the principal bor-
rower and not to the accused himself, the provisions of Section 138 of the Ne-
gotiable Instruments Act, 1881, are not attracted in his case. However, this
contention stands squarely negated by the authoritative pronouncement of the
Hon’ble Supreme Court in I.C.D.S. Ltd. v. Beena Shabeer & Ors. , (2002) 6
SCC 426, wherein it was categorically held that the scope of Section 138 is
broad enough to encompass even those cheques which are drawn by a person
towards the discharge of another’s liability, including the liability of a princi-
pal debtor.
60. The Hon’ble Court in the said decision emphasized that the expression “any
cheque” and the phrase “for the discharge, in whole or in part, of any debt or
other liability” occurring in Section 138 are of wide amplitude and must be
construed purposively to give effect to the legislative intent. It was explicitly
observed that there exists no statutory bar against initiating prosecution under
Section 138 against a guarantor who issues a cheque in satisfaction of the debt
owed by a principal borrower. Once such a cheque is issued and is subse-
quently dishonoured on presentation–on grounds such as insufficiency of
funds–the penal liability under Section 138 stands attracted.
61. In light of the binding ratio laid down in the aforesaid decision, this Court
finds no merit in the accused’s plea that he is insulated from criminal prosecu-
tion merely because he issued the cheque in the capacity of a guarantor. APage no. 21/24 Digitally signed by
SHRUTI SHRUTI SHARMA
SHARMA Date: 2025.07.30
15:50:17 +0530
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumarguarantor, by the very nature of the obligation undertaken, assumes a legally
enforceable liability upon default of the principal borrower, and the issuance
of a cheque in furtherance of such liability squarely falls within the ambit of
Section 138. Accordingly, the defence raised by the accused on this count is
rejected as being wholly untenable in law and contrary to the settled legal po-
sition.
62. Another significant aspect which undermines the credibility of the defence set
up by the accused is his own inaction in pursuing any legal remedy against the
complainant for the alleged misuse of the cheque in question. Despite assert-
ing that the cheque was issued merely as a blank security instrument and that
the complainant unilaterally filled in the particulars and misused it to initiate
false proceedings, the accused has admittedly not initiated any civil or crimi-
nal proceedings against the complainant. No complaint or FIR has been
lodged alleging cheating, criminal breach of trust, or forgery. Nor has any suit
for injunction or declaration been filed to restrain the complainant from mis-
using the said cheque or to seek its return.
63. Such conspicuous inaction on the part of the accused, despite the gravity of
the allegations levelled by him, casts a serious doubt on the genuineness of his
version. The absence of any contemporaneous legal action reflects that the al-
legations of cheque misuse are not supported by bona fide conduct and appear
to have been raised as an afterthought, only by way of a defence to evade pe-
nal consequences under Section 138 of the Negotiable Instruments Act, 1881.
64. The Court also takes note of the fact that while the accused initially denied
having received the statutory legal demand notice issued by the complainant
under Section 138(b) of the Negotiable Instruments Act, 1881, he subse-
quently admitted, in unequivocal terms, during his examination under Section
313 of the Code of Criminal Procedure, that he had in fact received the said
notice. Furthermore, the accused also conceded that the address mentioned inDigitally signed
by SHRUTI
SHRUTI SHARMA
Page no. 22/24 SHARMA Date:
2025.07.30
15:50:21 +0530
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumarthe legal notice was correct and corresponded to his own address. This admis-
sion conclusively establishes the fact of service and receipt of the legal de-
mand notice within the statutory period.
65. It is a well-settled principle of law that once the accused acknowledges the re-
ceipt of the legal notice and does not raise any objection as to the correctness
of the address or the mode of service, the requirement under Section 138(b) of
issuing a demand notice and affording 15 days’ time for payment stands duly
complied with. The initial denial of service, followed by subsequent admis-
sion, further diminishes the credibility of the defence and indicates a lack of
consistency in the stand taken by the accused. Accordingly, the mandatory re-
quirement of issuance and service of legal notice stands duly satisfied in the
present case.
66. The conduct of the accused, viewed holistically, significantly strengthens the
case of the complainant and undermines the defence version. It is a matter of
record that upon receipt of the statutory legal demand notice, the accused
failed to issue any written response or reply disputing the liability or asserting
any alternative explanation for the issuance of the cheque. The failure to re-
spond to a legal notice, while not conclusive in itself, does have evidentiary
value and is a relevant consideration under Section 114 of the Indian Evidence
Act, 1872, as it reflects upon the consciousness of liability and weakens the
credibility of any subsequently raised defence.
67. Accordingly, the failure of the accused to furnish a satisfactory rebuttal,
coupled with his silence in response to the demand notice and the absence of
any counter-proceedings, firmly tilts the scales in favour of the complainant.
The statutory presumptions, therefore, remain unrebutted and operate to the
benefit of the complainant.
68. On a cumulative appreciation of the oral and documentary evidence adduced
by both sides, and the admissions made by the accused, it stands conclusivelyDigitally signed
Page no. 23/24 SHRUTI by SHRUTI
SHARMA
SHARMA Date: 2025.07.30
15:50:26 +0530
CC no. 2149/2017 M/s Intec Capital Ltd. Vs. Tarun Kumarproved that the cheque in question was issued by the accused towards a legally
enforceable debt, was dishonoured for insufficiency of funds, and despite
service of a valid legal notice, the accused failed to make payment within the
stipulated period. The defence raised by the accused is illusory, lacks
documentary corroboration, and fails to rebut the statutory presumption in
favour of the complainant. All the essential ingredients of the offence under
Section 138 of the Negotiable Instruments Act, 1881 stand satisfied.
Conclusion
69. In the light of the aforementioned discussion, the complainant has successfully
proved all the ingredients of Section 138 NI Act. Accordingly, this court holds
accused Mr. Tarun Kumar guilty for committing the offence under section 138
of the NI Act and he is hereby convicted. Let he be heard on point of sentence
on another date.
70. The judgment duly digitally signed be uploaded on CIS and and a copy of the
judgment be given dasti to the convict free of cost forthwith.
Digitally signed
by SHRUTI
SHARMA
Announced in the open SHRUTI Date:
SHARMA 2025.07.30
on 30.07.2025 15:50:32
+0530
(Shruti Sharma-I)
JMFC (NI Act)-02, South-East,
Saket Courts, New Delhi,30.07.2025
Certified that this judgment contains 24 pages and each page bears my signature.
Page no. 24/24