Delhi High Court
Arun Narula – Proprietor Of Parul … vs Electromech Industrial Corporation & … on 27 June, 2025
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on:27.06.2025
+ CRL.L.P. 198/2022
ARUN NARULA - PROPRIETOR OF
PARUL AGENCIES .....Petitioner
versus
ELECTROMECH INDUSTRIAL
CORPORATION & ANR. .....Respondents
+ CRL.L.P. 199/2022
ARUN NARULA - PROPRIETOR OF
PARUL AGENCIES .....Petitioner
versus
ELECTROMECH INDUSTRIAL
CORPORATION & ANR. .....Respondents
+ CRL.L.P. 200/2022
ARUN NARULA- PROPRIETOR OF
PARUL AGENCIES .....Petitioner
versus
ELECTROMECH INDUSTRIAL
CORPORATION & ANR. .....Respondents
Advocates who appeared in this case:
For the Petitioner : Mr. Vikram Saini and Mr. Dharmendra
Chaudhary, Advocates.
For the Respondents :Mr. Anil Goel, Mr. Aditya Goel and Mr.
Pranjal Sharma, Advocates.
CORAM
HON'BLE MR JUSTICE AMIT MAHAJAN
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JUDGMENT
1. The present leave to appeals are filed against the judgments
dated 14.06.2021 (hereafter ‘impugned judgments’) passed by the
learned Metropolitan Magistrate (‘MM’), Tis Hazari Courts, Delhi in
CC No. 6830/2019, 6831/2019, 6832/2019 whereby the respondents
were acquitted of the offence under Section 138 of the Negotiable
Instruments Act, 1881 (‘NI Act‘).
2. Briefly stated, the complainant/petitioner is the proprietor of
Parul Agencies and is engaged in the business of telecommunication
and shielded cables. It is alleged that Respondent No. 2 as partner of
Respondent No. 1 and having friendly relations with the petitioner,
approached the petitioner for a friendly loan for a sum of ₹75 lakhs in
the month of November 2017. It is alleged that the respondents
assured to return the loan amount by January, 2019. Thereafter, the
petitioner advanced a sum of ₹75 lakhs to the respondents.
3. It is alleged that thereafter the respondents failed to pay the loan
amount within the stipulated time and after much insistence issued
three cheques bearing nos. 243761 dated 28.01.2019 (CC No.
6830/2019), 243762 dated 27.02.2019 (CC No. 6832/2019), 243763
dated 28.03.2019 (CC No. 6831/2019) each for a sum of ₹25 lakhs.
The said cheques on presentation got dishonoured and returned unpaid
vide return memos dated 23.04.2019 with the remarks : Cheque Nos.
243761 and 243763 with remarks “exceeds arrangement” and cheque
no. 243762 with remark “drawer signature differs”. Thereafter, on the
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failure of the respondents to repay the cheque amount despite the
issuance of legal demand notice, the subject complaints were filed
under Section 138 of the NI Act.
4. By the impugned judgments, the learned MM acquitted the
respondents of the offence under Section 138 of the NI Act. The
learned MM took into consideration the defence of the respondents
who questioned mode and manner of the advancement of the loan
amount by the petitioner. The respondents contended that as per the
case of the petitioner he had advanced a loan for a sum of ₹75 lakhs to
the respondents, however, no document of loan or witness had been
brought forth by the petitioner to prove the advancement of loan. It
was noted that despite the respondents having questioned the mode,
manner and advancement of loan amount including the petitioner’s
capacity to lend such a huge amount, no evidence or document was
placed on record by the petitioner to corroborate the advancement of
the loan or his capacity to lend the loan.
5. It was noted that the petitioner despite having admitted that the
respondents in their reply to the legal demand notice had asked for a
copy of accounts and ITR of the petitioner, yet failed to place on
record any proof to substantiate the advancement of the loan amount.
The learned MM noted that the non-production of ITR assumed
significance because the entire loan amount was allegedly advanced
by the petitioner in cash, and despite being cross-examined on the
specific aspect, the petitioner had failed to produce any document or
witness in respect of the advancement of the alleged friendly loan and
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that the loan had not been proven by any independent
witness/document. Consequently, the learned MM acquitted the
respondents of the offence under Section 138 of the NI Act.
6. The learned counsel for the petitioner submitted that the finding
of acquittal ought to be reversed as the same is only based on
conjectures, and not cogent evidence. He submitted that all the
presumptions under Sections 139 and 118(a) of the NI Act stood
against the respondents and in favour of the petitioner. He submitted
that the respondents failed to produce material evidence to rebut the
presumption that existed in the favour of the petitioner. He submitted
that merely because there was no documentary record to manifest the
terms and conditions in which the loan was advanced to the
respondents, given their cordial relations, cannot be the ground to
dismiss the case of the petitioner. He submitted that the non-
production of ITR by the petitioner does not tantamount to mean that
the petitioner did not advance the loan amount or lacked the financial
means to advance the loan amount.
7. The learned counsel for the respondents submitted that the
petitioner failed to show that there existed any legally recoverable
debt. He submitted that contrary to the allegation of the petitioner that
he had advanced a friendly loan to the respondents, the petitioner
failed to mention that there existed strictly business relations between
the parties. He submitted that while the petitioner alleged that he had
advanced a loan for a sum of ₹75,00,000/-, as per his own cross-
examination, he was unable to point to a date as to when the said
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amount was advanced.
8. He submitted that as per the petitioner’s own stand, he had
advanced the said loan to the respondents in cash, yet either in the
complaint or during his cross-examination, the petitioner could not
mention the denomination in which the amount was advanced. He
submitted that despite being questioned, the petitioner failed to bring
forth any witness to attest the grant of loan. He submitted that the
petitioner even failed to specify the date, time or purpose for which
the loan was advanced. He submitted that it is implausible for the
petitioner to have advanced a huge sum of ₹75 lakhs in cash, that too,
without any document or security.
9. He submitted that the respondents even contested the
advancement of loan in the reply to the legal demand notice, and
demanded a statement of accounts and ITR from the petitioner to
showcase the advancement of the loan amount. He submitted that
while the same has been duly admitted by the petitioner in his cross-
examination, yet no proof of the alleged advancement of loan had
been brought forth by the petitioner. He further submitted that the
petitioner, despite having been questioned about his ability to advance
such a huge sum, failed to show that he had the financial means to
advance the loan amount to the respondents. He submitted that since
the respondents had raised a probable defence on a preponderance of
probabilities by questioning the mode, manner, purpose or financial
wherewithal of the petitioner to advance the loan amount, the
presumptions raised against the respondents had duly been
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controverted. He consequently submitted that since the respondents
had raised a probable defence by pointing towards the loopholes in the
case of the petitioner, the burden inasmuch as Section 139 of the NI
Act was concerned, stood discharged.
Analysis
10. 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.”
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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
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)
11. 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].
12. The Hon’ble Apex Court in Rajesh Jain v. Ajay Singh : (2023)
10 SCC 148, while discussing the appropriate approach in dealing
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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. The
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
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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
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)
13. Before delving into the correctness of the impugned order, it is
pertinent 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.
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[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
circumstantial evidence and, if the circumstances so relied upon
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)
14. On a perusal of the impugned judgments, it is seen that right
from the time of the framing of notice, the statement under Section
313 of the CrPC, and during the course of the trial, the respondents
denied having taken any loan from the petitioner. The respondents
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pointed out that they were in a business relationship with the
petitioner, and used to give cheques as a security. The respondents
further showed a ledger entry to contend that it was in fact the
petitioner who owed a sum of ₹19,00,407 to the respondents. The
respondents raised a probable defence by questioning the mode,
manner and purpose of the advancement of the said loan. The
respondents further contended that it is not plausible for the petitioner
to have advanced such an enormous amount without any documentary
proof or security.
15. This Court finds force in the defence raised by the respondents.
From a perusal of the cross-examination of the petitioner, it is evident
that despite the respondents having questioned the mode, manner and
advancement of loan amount, no evidence or document was placed on
record by the petitioner to corroborate the advancement of the loan.
The petitioner was further unable to point towards the date or the
purpose for which the loan amount was advanced.
16. Much emphasis has been placed by the petitioner on the fact the
learned MM erred in finding the acquittal of the respondents on the
non-production of the ITR by the petitioner. At this stage, it is
pertinent to mention that mere non production of statement of
accounts or the ITR does not ipso facto negate the case of the
complainant [Ref: S. S. Production v. Tr. Pavithran Prasanth : 2024
INSC 1059]. However, in the present case, it is pertinent to note that
right from the time of reply to legal demand notice, the respondents
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denied the issuance of the loan and questioned the mode and manner
of the advancement of the loan amount. It is pertinent to note that
despite having admitted the same, the petitioner failed to bring forth
any material to substantiate that he had advanced the said loan to the
respondents.
17. It is pertinent to note that in terms of the dictum of the Hon’ble
Apex Court in Rajesh Jain v. Ajay Singh (supra), once the
respondents were able to raise a probable defence by either leading
direct or circumstantial evidence to show that there existed no
debt/liability in the manner as pleaded in the complaint/ demand
notice/ affidavit-evidence, the presumption raised against them
disappeared. It was then for the petitioner to prove as a matter of fact
that there in fact existed a debt/liability.
18. 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 as on the date appearing on the
impugned cheques. The rationale behind the order of acquittal in the
present case was not based on the observation whether the ITR was
produced per se or not but the fact that the petitioner had failed to
prove that there existed any debt/liability on date, or show the mode,
manner, purpose or the capacity of the petitioner to advance the said
loan, or lead any evidence/documentary proof so as to establish how
the sum of ₹75,00,000/- was advanced. The respondents already
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having dislodged the burden, it was on the petitioner to show the
existence of the debt, that too, as a matter of fact. In fact, once the
respondents had raised a probable defence to the satisfaction of the
Court, the presumptions under Sections 118(a) or 139 of the NI Act
were no longer in the favour of the petitioner. For this reason, the
petitioner having failed to lead evidence to show the existence of the
debt/liability, his contentions that the presumptions under Section 118
and 139 of the NI Act were in his favour, do not bolster the case of the
petitioner.
19. 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.
20. Upon a consideration of the facts and circumstances of the case,
this Court finds no such perversity in the impugned judgments so as to
merit an interference in the finding of acquittal. Consequently, this
Court finds no reason to entertain the present petitions. The present
leave petitions are accordingly dismissed.
21. A copy of the order be placed in all the matters.
AMIT MAHAJAN, J
JUNE 27, 2025
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