Delhi District Court
Chander Sharma vs Saurabh Sharma on 22 January, 2025
IN THE COURT OF SH. RISHABH TANWAR,
JUDICIAL MAGISTRATE FIRST CLASS/NI ACT-01/WEST/TIS
HAZARI COURT/DELHI
C.T. Cases no. 3770/2020
CNR No. DLWT020093002020
Sh. Chander Sharma,
S/o Jagdish Sharma,
R/o M-45-46, Raghubir Nagar
New Delhi. .........Complainant
Vs.
Sh. Saurabh Sharma
S/o Sh. Raj Kumar Sharma,
R/o B-113/2, Near JVTS Garden, 1st Floor
Chhattarpur Extension,
New Delhi ............Accused
JUDGMENT
1. Date of institution of case : 05.02.2021
2. Date of reserving the judgment : 08.01.2025
3. Date of pronouncement of judgment : 22.01.2025
4. Offence complained or proved : 138 N.I. Act
5. Plea of Accused : “Not Guilty”
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 1/17
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signed by
RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
16:44:05
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6. Final Order : GUILTY/CONVICTION
7. Date of Final Order : 22.01.2025
BRIEF FACTS AND REASONS FOR DECISION
1. The present case has arisen out of a complaint filed under section 138
read with section 142 of Negotiable Instrument Act, 1881 (hereinafter
referred to as N.I. Act) by one Chander Sharma (hereinafter referred to as
‘the Complainant’) for dishonour of cheques bearing number 000007 dated
15.01.2020 for Rs.1,00,000/-, number 000006 dated 20.01.2020 for Rs.
1,00,000/- and number 000005 dated 30.01.2020 for Rs.2,00,000/- each
drawn on Standard Chartered Bank, DLF Cyber City Sector 24/25/25A,
Gurugram Branch, (hereinafter referred to as ‘the cheques in question’)
issued by one Saurabh Sharma (hereinafter referred to as ‘the accused’) in
favor of the complainant.
2. Biref facts of the case are that the accused had taken a friendly loan of
Rs. 4,00,000/- from the complainant, in cash, in January 2018, for 12
months. As per the complainant, the accused failed to return the amount and
instead issued the cheques in question towards discharge of his legal
liability. These cheques came to be dishonored upon presentation through
the return memo dated 18.02.2020 issued by the complainant’s bank with the
remark ‘funds insufficient’. The complainant issued the legal demand notice
dated 26.03.2020 under section 138(b) NI Act. The present complaint came
to be filed by the complainant when the accused failed to pay the amount of
the cheques despite receipt of the legal demand notice.
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 2/17
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by RISHABH
TANWAR
RISHABH Date:
TANWAR 2025.01.22
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3. The complainant examined himself in pre-summoning evidence as
CW-1 on 09.12.2021 and tendered his evidence on affidavit which was
exhibited as Ex. CW-1/1. He also placed reliance on the following
documents: –
(a) Ex. CW1/A, Ex. CW-1/B and Ex. CW-1/C are the cheques in
question.
(b) Ex. CW1/D, Ex. CW-1/E and Ex. CW-1/F are the return memo
dated each dated 08.02.2020.
(c) Ex. CW-1/G is the legal notice dated 26.03.2020
(d) Mark A is the proof of delivery of the legal notice through
WhatsApp.
4. After taking pre-summoning evidence, this Court took cognizance of
the offence under section 138 NI Act on the same day and directed issuance
of summons against accused. The accused appeared on 23.08.2022. The
accused was granted bail under section 436 Criminal Procedure Code, 1973
(hereinafter referred to as “Cr.P.C.” for the sake of brevity) on furnishing bail
bonds to the tune of Rs. 40,000/- with one surety of the like amount and the
defense of the accused under section 251 Cr.P.C. was recorded, after serving
upon him the substance of accusation on 06.12.2022.
5. The accused disclosed his defense the cheques in question were blank
signed cheques given to the father of the accused as security. He further
stated that he had taken Rs. 1,00,000/- from the complainant which he had
repaid in cash installments and that the complainant has misused his
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 3/17
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signed by
RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
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cheques.
6. This court had allowed the oral prayer made by the accused to cross-
examine the complainant under section 145(2) NI Act on 06.12.2022. The
complainant’s evidence on affidavit (Ex. CW-1/1) was read as his
examination in chief under section 145(1) NI Act and he relied on the
documents exhibited by him at the time of pre-summoning evidence. CW-1
was cross-examined by Ld. Counsel for the accused.
7. The complainant also examined his father Jagdish Sharma as CW-2
and one bank witness Sh. Santosh Kumar, Assistant Manager, Axis bank
who proved cheque return register showing the date of intimation of the
dishonor of the cheques in question to the complainant as Ex. CW-3/A. Both
the witnesses were duly cross-examined by the Ld. Counsel for the accused
8. The Statement of accused u/s. 313 Cr.P.C. was recorded on
06.08.2024 wherein he stated that he had no legal liabilities towards the
complainant. He stated that he had given 4 to 5 blank signed cheques to his
father and his father had taken a loan of ₹1,00,000 from the father of the
complainant. He further stated that he did not know how his cheques came
into the possession of the complainant and that his father had repaid the
entire loan in instalments to the father of the complainant. He denied taking
any loan from the complainant. He stated that he did not owe the cheque
amount to the complainant. The accused also denied service of legal notice
upon him.
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 4/17
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by RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
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9. No defense has been led by the accused in the present case and
accordingly, the case was put up for final arguments.
THE APPLICABLE LAW
10. Before appreciating the facts of the case in detail for the purpose of
decision, let relevant position of law be discussed first. It is well settled
position of law that to constitute an offence under S.138 N.I. Act, the
following ingredients are required to be fulfilled:
(1) That the cheque in question has been drawn by a person on an
account maintained by him with a banker, for payment to another
person from out of that account for discharge in whole/part any debt
or liability.
(2) That the said cheque has been presented to the bank within a
period of six months (now three months) from the date on which it is
drawn or within the period of its validity whichever is earlier.
(3) That the cheque was returned dishonoured by the drawee bank for
want of sufficient funds or the same exceeded any arrangement with
the banker to pay the sum covered by the cheque.
(4) That the complainant gave a notice in writing to the drawer of the
cheque within 30 days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid demanding payment
of the cheque amount.
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 5/17
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RISHABH
RISHABH TANWAR
TANWAR Date:
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(5) Lastly that the accused failed to make payment to the payee (the
complainant), or the holder in due course, the cheque amount within
15 days of the receipt of the notice.
11. It is only when all the aforementioned ingredients are satisfied that the
person who had drawn the cheque can be deemed to have committed an
offence under Section 138 of the N I Act. The Act also raises two
presumptions in favour of the holder of the cheque namely first, in Section
118(a) which says that every negotiable instrument was made or drawn for
consideration, and, second, a presumption under Section 139, that the holder
of cheque receiving the same of the nature referred to in Section 138 for
discharge, in whole or in part, of any debt or other liability. Analysing all the
concerned provisions of law and various pronouncements in this regard, the
Hon’ble Apex Court in ‘Basalingappa v. Mudibasappa, AIR 2019 SC 1983′,
noted at para 23 Bharat Barrel and Drum Manufacturing Company v. Amin
Chand Pyarelal, (1999) 3 SCC 35; M.S. Narayana Menon alias Mani v. State
of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat v.
Dattatraya G. Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma Carpets,
(2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC 441]:
(i) Once the execution of cheque is admitted, Section 139 of the
Act mandates a presumption that the cheque was for the discharge
of any debt or other liability.
(ii) The presumption under Section 139 is a rebuttable presumption
and the onus is on the accused to raise the probable defence. The
standard of proof for rebutting the presumption is that ofCC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 6/17
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RISHABH
RISHABH TANWAR
TANWAR Date:
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preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on
evidence led by him or accused can also rely on the materials
submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only
from the materials brought on record by the parties but also by
reference to the circumstances upon which they rely.
(iv) That it is not necessary for the accused to come in the witness box
in support of his defence, Section 139 imposes an evidentiary
burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to
support his defence.
ARGUMENTS ADVANCED ON BEHALF OF THE PARTIES
12. Ms. Jyoti Batra, Ld. counsel for the complainant has argued that the
complainant has been able to prove all the pre-requisites of Section 138 NI
Act against the accused and the accused has failed to rebut the presumption
u/s. 138 NI Act. Ld. counsel has prayed that the accused be convicted of the
offence u/s. 138 NI Act.
13. Per contra, Ms. Drishti Mittal, Ld. Counsel for the accused has argued
that the cheque in question was taken as security by the complainant and that
the complainant has failed to prove that the cheques in question were issued
for legally recoverable liability as the loan amount was not shown in the
income tax returns (I.T.R.). It was further argued that the accused has never
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 7/17
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signed by
RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
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received any legal notice. It is also argued that there are contradictions in the
testimonies of the complainant and his witness. Ld. counsel has prayed that
the complainant has failed to prove its case, and the accused has rebutted the
presumption under section 139 NI Act and has prayed that the accused be
acquitted of the offence alleged against him. Ld. Counsel as placed reliance
upon the following cases: C.C. Alavi Haji Vs. Palapetty Muhammed & Anr.,
Basalingappa Vs. Mudibasappa AIR 2019 SC 1983, Rangappa Vs Sri Mohan
(2010) 11 SCC 441, Sridhar M.A. Vs. Metalloy N Steel Corp. (2000) 1 SCC
397, Shakti Travel & Tours v. State of Bihar (2002) 9 SCC 415, R.L. Varma
and Sons V. P.C. Sharma (Hon’ble High Court of Delhi). (Note: Citations
noted as provide in written submissions).
FINDINGS OF THE COURT
Points of determination number (A):
14. Whether the complainant has successfully proven the facts which
would raise the presumption u/s. 118 r/w Section 139 of NI Act by proving
that the cheque in question bears the signature of the accused?
15. It is settled law that once the signature upon the cheques in question
has been admitted by the accused, certain presumptions are drawn, which
result in shifting of onus. Section 118(a) of the NI Act lays down the
presumption that every negotiable instrument was made or drawn for
consideration. Another presumption is enumerated in Section 139 of NI Act.
The provision lays down the presumption that the holder of the cheque
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 8/17
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by RISHABH
RISHABH TANWAR
TANWAR Date:
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received it for the discharge, in whole or part, of any debt or other liability.
16. The combined effect of these two provisions is a presumption that the
cheque was drawn for consideration and given by the accused for the
discharge of debt or other liability. Both the sections use the expression
“shall”, which makes it imperative for the court to raise the presumptions,
once the foundational facts required for the same are proved. Reliance is
placed upon the judgment of the Hon’ble Supreme Court in ‘Hiten P. Dalal
vs. Bratindranath Banerjee (2001) 6 SCC 16′.
17. The Hon’ble Supreme Court in ‘Kumar Exports vs. Sharma Carpets
(2009) 2 SCC 513′, while elaborating upon the interplay of section 118(a)
r/w 139 of the N I Act, has held that:
“14. Section 139 of the Act provides that 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.
15. Applying the definition of the word “proved” in section 3 of
the Evidence Act to the provisions of sections 118 and 139 of the Act,
it becomes evident that in a trial under section 138 of the Act a
presumption will have to be made that every negotiable instrument
was made or drawn for consideration and that it was executed for
discharge of debt or liability once the execution of negotiable
instrument is either proved or admitted. As soon as the complainant
discharges the burden to prove that the instrument, say a note, was
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 9/17
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RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
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executed by the accused, the rules of presumptions under section 118
and 139 of the Act help him shift the burden on the accused. The
presumption will live, exist and survive and shall end only when the
contrary is proved by the accused, that is, the cheque was not issued
for consideration and in discharge of any debt or liability. A
presumption is not in itself evidence, but only makes a prima facie
case for a party for whose benefit it exists.”
18. In the present case, the accused at the time of framing of notice u/s
251 and statement recorded u/s 313 Cr.P.C has admitted the issuance of
cheques to the complainant, even though he stated that the same were
security cheques.
19. It is a settled of the proposition of law that a cheque issued a security,
towards any financial transaction, cannot be considered redundant paper
note. It is given to secure the obligation of a party. If a cheque issued to
secure repayment of a loan advanced and if the loan is not repaid on or
before the due date, the drawee would be entitled to present the cheques, and
if such a cheque is dishonoured, the offence under section 138 NI act would
be committed. Reliance is placed upon the judgement of Hon’ble Supreme
Court in ‘Sripati Singh v. State of Jharkhand, 2021 SCCOnline 1002′.
Further reliance is placed upon the judgment of ‘ICDS v. Beena Shabir &
Anr. (2002)6 SCC 426’, wherein it was held that security cheques would
also fall within the purview of section 138 NI Act and a person cannot
escape is liability unless he proves that the debt or liability for which cheque
was issued as security is satisfied otherwise.
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 10/17
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by RISHABH
RISHABH TANWAR
Date:
TANWAR 2025.01.22
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20. Therefore, the defence of security cheques is not tenable, and the
presumption cannot be considered to have been rebutted only on bald
assertions without cogent proof. Once signatures are admitted, the
presumption under section 118(a) r/w 139 NI Act must be raised in favour of
the complainant.
21. Accordingly, the point of determination number A is decided in the
affirmative.
Points of determination number (B):
22. Whether the accused has been successful in raising a probable defence
or in another words, whether he had been able to prove that the cheques
were not issued towards any legally recoverable debt or any other liability?
23. Let us discuss the factual matrix of the present case. The complainant
has stated in his cross-examination that he had arranged the loan in question
by taking Rs. 1,00,000/- from a committee, Rs. 1,50,000/- from his own sav-
ings and Rs. 1,50,000/- from his father. When the latter was examined as
CW-2 by the complainant, he had deposed that Rs. 1,50,000/- were out of his
rental income, Rs. 1,50,000/- were taken by him from CW-1 and Rs.
1,00,000/- were taken from a committee. It is this contradiction that the ac-
cused wants to make a ground for this court to disbelieve the complainant.
After perusing the defense of the accused, certain contradictions have crept
in his defense as well. He has stated in his defense under section 251 Cr.P.C.
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 11/17
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RISHABH
RISHABH TANWAR
TANWAR Date:
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that he had taken an amount of Rs. 1,00,000/- from the complainant which
he had fully pain in cash installments. In his statement under section 313
Cr.P.C., the accused had stated that his father had taken a loan of Rs.
1,00,000/- from the father of the complainant and his father has repaid the
entire amount. Therefore, the accused himself has contradicted himself and
if these contradictions can be made a ground of disbelieving one’s story, then
the accused would not be safe too.
24. Now let us consider the contradictions on their merits. CW-1 and
CW-2 are no strangers. They share the relationship of a son and father. It is
often seen that in between the son and his father, strict personal boundaries
are often absent on account of natural love and affection. The son often ends
up calling the house, which stands in the name of his father, his own home;
and the father would happily call a car his own car, which was bought by his
son from his income. For they think it trivial to explain to a stranger the fine
distinction of assets bought by income of the either.
25. In light of the same argument, the inconsistency in the testimony of
the complainant and his witness CW-2, as highlighted above, appear to be
minor and immaterial, as the amounts and their sources disclosed by CW-1
and CW-2 broadly matches with each other. It appears inconsequential as to
who had given the loan to the accused, since the accused himself has given
contradictory statements as to who had taken a loan and from whom. Ac-
cordingly, the argument of the accused that there are inconsistencies in the
evidence of the complainant is liable to be rejected.
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 12/17
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TANWAR
RISHABH Date:
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26. The accused has further taken a defense that he had not received the
legal notice allegedly sent by the complainant through WhatsApp. In this re-
gard, it would be relevant to discuss the judgement of the Hon’ble Supreme
Court in “C.C. Alavi Haji vs Palapetty Muhammad & Anr AIR
2007 SC (SUPP) 1705″ wherein it was held that: ” 17. It is also to be borne
in mind that the requirement of giving of notice is a clear departure from the
rule of Criminal Law, where there is no stipulation of giving of a notice be-
fore filing a complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons from the
court in respect of the complaint under Section 138 of the Act, make pay-
ment of the cheque amount and submit to the Court that he had made pay-
ment within 15 days of receipt of summons (by receiving a copy of com-
plaint with the summons) and, therefore, the complaint is liable to be re-
jected. A person who does not pay within 15 days of receipt of the summons
from the Court along with the copy of the complaint under Section 138 of
the Act, cannot obviously contend that there was no proper service of notice
as required under Section 138, by ignoring statutory presumption to the con-
trary under Section 27 of the G.C. Act and Section 114 of the Evidence Act.”
27. In the present case, it is an admitted position that the accused has not
paid the amount of the cheque in question within 15 days of his appearance
in this court and after knowing the case against him. Therefore, the accused
cannot now contend that he had not received the legal notice or there was
not proper service of the same upon him. Hence, this defense of the accused
does not hold any water and is liable to be dismissed
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 13/17
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TANWAR
RISHABH Date:
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28. The accused has taken a defence that he had only taken a loan of Rs.
1,00,000/- and he had paid the entire amount in cash installments. No evi-
dence has been led and no witnesses have been examined in this regard,
therefore, the defense of the accused cannot be presumed only the basis of
bald statements made in the court.
29. As far as the defence of not disclosing the loan amount in the ITR of
the complainant is concerned, in the case of ‘Dilip Chawla v. Ravinder Ku-
mar, 2017 SCC Online 9753′ the Hon’ble Supreme Court has observed that:
“23. The advancement of loan in cash may entail negative con-
sequences for a party especially an Income Tax assessee as his having
acted in breach of Section 269SS of Income Tax Act, 1961. Chapter
XXB provides for the requirement as to the mode of acceptance, pay-
ment or repayment in certain cases to counteract evasion of tax. Sec-
tion 269SS mandates that no person, after the cut off date shall take or
accept from any other person any loan or de- posit otherwise than by
an account payee cheque or an account payee bank draft if the amount
is more than Rs. 10,000/-. Breach of Section 269SS of the Income Tax
Act provides penalty to which a person would be subjected to under
Section 271D.
24. However, Section 271D does not provide that such transac-
tion would be null and void. The payer of money in cash, in violation
of Section 269SS of the Income Tax Act can always have the money
recovered.” (Emphasis is of the undersigned).
CC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 14/17
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RISHABH
RISHABH TANWAR
TANWAR Date:
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30. Furthermore, the Hon’ble Supreme Court in the case of ‘Assistant Di-
rector of Inspection v. A.B. Shanthi, (2002) 6 SCC 259′ has held that “It is
incontrovertible that proceedings u/s 138 of Negotiable Instruments Act,
1881 cannot be dismissed or stalled for non-compliance/violation of Section
269 SS of the Income Tax Act. Such violation may give rise to penal pro-
ceedings under the Income Tax Act but the prosecution of the accused for
the alleged dishonor of cheque u/s 138 NI Act does not become bad in law
on this score.”
31. Considering the aforesaid, the loan does not become irrecoverable
merely because the complainant has admitted that he had not shown the loan
in his ITR. Non-disclosure of the loan in the income tax returns may lead to
imposition of penalty upon the complainant but its absence in the ITR can-
not be taken as the absence of loan. It could be one of the factors to doubt
the veracity of the complainant, if there are more cogent circumstances in
the evidence of the complainant speaking against him. However, those fac-
tors are absent in the present case. Therefore, this argument of the Ld. Coun-
sel for the accused is also liable to be rejected.
32. The accused has not disputed issuing cheques to the complainant. It is
also not in doubt that the cheques in question (Ex. CW-1/A, Ex. CW-1/B and
Ex. CW-1/C) were presented by the complainant to his banker within 3
months. It is also not disputed that the same were returned dishonored vide
return memos (Ex. CW-1/D, Ex. CW-1/E and Ex. CW-1/F). It is also not dis-
puted that the complainant had issued the legal notice to the accused within
30 days of receiving the information of dishonor of cheques in question from
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TANWAR
RISHABH Date:
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his banker, as proven by Ex. CW-3/A. About section 138 clauses (c), it has
already been concluded that the defence of the accused that he had not re-
ceived the legal notice is not tenable, as he had failed to make the payment
of the cheques in question within 15 days of his appearance in this court (re-
fer to paragraph no. 26 and 27). Therefore, the complainant has been able to
prove the basic ingredients of the offence under section 138 clauses (a), (b)
and (c) NI Act.
33. On the other hand, the accused has failed to prove his defence on the
scale of preponderance of probability. Therefore, this Court finds that the ac-
cused has failed to rebut the presumption under section 139 r/w 118(a) NI
Act. Accordingly, the point of determination number B is decided in the neg-
ative.
CONCLUSION
34. Accordingly, this Court finds the accused Saurabh Sharma S/o Sh. Raj
Kumar Sharma ‘guilty’ of the offence under Section 138 NI Act and
accordingly he is convicted of the said offence.
35. This judgement contains 17 pages, and each page has been signed by
the undersigned as per rules.
Digitally
signed by
RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
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36. Let the copy of digitally signed judgment be uploaded on the website
of Tis Hazari District Court as per rules. Digitally
signed by
RISHABH
RISHABH TANWAR
TANWAR Date:
2025.01.22
16:45:15
+0530Announced in open Court (RISHABH TANWAR)
On 22nd Day of January 2025 JMFC (NI ACT-01)/WEST/DELHICC No. 3770/2020 Chander Sharma Vs. Saurabh Sharma pg. no. 17/17
