Delhi District Court
Dharam Singh vs Lal Babu Shah on 3 March, 2025
IN THE COURT OF SH. ABHISHEK GOYAL, ADDITIONAL
SESSIONS JUDGE-03, CENTRAL DISTRICT, TIS HAZARI
COURTS, DELHI
CNR No.: DLCT01-002760-2024
CRIMINAL APPEAL No.: 62/2024
DHARAM SINGH,
S/o. Shri. Chunni Lal,
R/o. H. No. 100, Gali No. 5/6,
Near Hanuman Mandir,
Sangam Vihar, Wazirabad,
Burari, Delhi. ... APPELLANT
VERSUS
LAL BABU SHAH,
S/o. Shri. Ram Lakhan Shah,
R/o. Khasra No. 29/16/2, Gali No. 9,
Surender Colony, Part-II,
Jharoda Mazra, Burari,
Delhi. ... RESPONDENT
Date of Institution : 23.02.2024
Date when judgment was reserved : 20.01.2025
Date when judgment is pronounced : 03.03.2025
JUDGMENT
1. The present appeal has been preferred under Section
374 of the Code of Criminal Procedure, 1973 (hereinafter,
referred to as ‘Cr.P.C.’) against the judgment dated 11.12.2023
(hereinafter referred to as ‘impugned judgment’), passed by
learned Metropolitan Magistrate-05/Ld. MM-05 (NI Act),
Central, Tis Hazari Courts, Delhi (hereinafter referred to as the
‘Ld. Trial Court/Ld. MM Court’) in case bearing; “Lal Babu
Shah v. Dharam Singh, CC No. 13519/2017”, convicting the
appellant for the offence punishable under Section 138
Negotiable Instrument Act, 1881 (hereinafter referred to as the
‘NI Act‘), and the consequent order of sentence dated 24.01.2024
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
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(hereinafter referred to as ‘impugned order’), passed by the Ld.
Trial Court, awarding the appellant; simple imprisonment for a
period of 01 (one) month and fine to a tune of Rs. 3,55,000/-
(Rupees Three Lakhs Fifty Five Thousand only) along with
simple interest to be computed at the rate of 9% (nine percent.)
per annum as quantum of loss and reasonable amount of
litigation cost suffered by the prosecution for more than six
years, to be paid as compensation by the appellant to
respondent/complainant, and in default of payment of
fine/compensation, the appellant, being further directed to
undergo simple imprisonment for a further period of 03 (three)
months (hereinafter impugned judgment and impugned order are
collectively referred to as the ‘impugned judgment and order’).
2.1. Pithily put, the genesis of the present proceedings is
the complaint, filed by the respondent/complainant before the Ld.
Trial Court in terms of the provisions under Section 138 of NI
Act. Under the said complaint, the respondent inter alia asserted
that the respondent and appellant were acquainted with each
other for quite some time and that in August 2016, the appellant
was in heavy financial crises. At that point in time, the appellant
is asserted to have approached the respondent with a proposal for
friendly loan to a tune of Rs. 2,25,000/- (Rupees Two Lakhs
Twenty Five Thousand only), without interest. As per the
respondent, convinced with the insistence of the appellant as well
as the fact of their acquaintance, the respondent loaned a sum of
Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand only)
to the appellant against Receipt-cum-Undertaking dated
10.08.2016 (hereinafter referred to as the ‘loan
receipt/undertaking/receipt-cum-undertaking’). Notably, under
the undertaking, the appellant is proclaimed to have inter alia
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ABHISHEK ABHISHEK GOYAL
GOYAL Date: 2025.03.03
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undertaken to repay the said amount to the respondent on or
before 31.08.2017, failing which, the appellant further conceded
that he would be liable to further pay an interest @ 12% (twelve
percent) per annum on the said amount/principal amount.
Relevantly, the respondent further avowed under his complaint
that he demanded his money from the appellant and approached
him for the repayment of his loan, whereupon the appellant
issued a cheque bearing no.; 058561, dated 18.08.2017 for a sum
of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five Thousand
only), drawn on Oriental Bank of Commerce, Shalimar Bagh,
Delhi-110052 branch (hereinafter referred to as the ‘cheque in
question/dishonoured cheque’), to the respondent.
2.2. As per the complainant/respondent, the appellant, at
the time of issuance of the cheque in question had assured the
complainant/respondent that the same would be honored upon
presentation. Subsequently, on the assurance of the appellant, the
respondent presented the cheque in question with his banker, i.e.,
ICICI Bank, Sant Nagar, Main Road, Burari, Delhi-110007
branch for encashment. However, the same was returned,
dishonoured with the remarks, “Funds Insufficient” vide return
memo dated 31.08.2017 (hereinafter referred to as the ‘cheque
dishonour memo/cheque return memo’). Consequently, the
complainant/respondent issued a legal demand notice dated
23.09.2017 (hereinafter referred to as the ‘demand notice/legal
demand notice’) to the appellant in terms of the provisions under
Section 138 NI Act. However, despite the same, no payment was
made by the appellant to the respondent. Ergo, under such
circumstances, the respondent filed the aforenoted complaint in
terms of the provisions under Section 138 NI Act before the Ld.
Trial Court.
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
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2.3. Notably, consequent upon pre-summoning evidence
by way of affidavit having been tendered by the respondent and
thereupon, Ld. Trial Court’s taking cognizance of the offence
under Section 138 NI Act on 03.11.2017, summons was issued to
the appellant/accused. Subsequently, upon the appellant entering
appearance before the Ld. Trial Court, notice under Section 251
Cr.P.C. was framed against him vide order dated 01.08.2018, to
which, the appellant plead not guilty and claimed trial.
Correspondingly, the appellant admitted the cheque dishonour
memo [Ex. CW1/C] and postal/courier receipts [Ex. CW1/E] on
the said date, in terms of the provisions under Section 294 Cr.P.C.
Relevantly, during the course of trial, the respondent examined
himself as CW-1 as well as tendered his Evidence by way of
Affidavit as CW-1/1, besides proved/adduced documents, i.e.,
Original receipt-cum-undertaking dated 10.08.2016 (Ex.
CW1/A); Original cheque bearing no.; 058561, dated 18.08.2017
for a sum of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five
Thousand only), drawn on Oriental Bank of Commerce, Shalimar
Bagh, Delhi-110052 branch (Ex. CW1/B); Original cheque return
memo dated 31.08.2017 (Ex. CW1/C); Copy of Legal
Notice/demand notice dated 23.09.2017 (Ex. CW1/D); Original
postal/courier receipt (Ex. CW1/E); tracking receipt (Ex.
CW1/F); and original returned registered AD ( Ex. CW1/G).
Correspondingly, the complainant/respondent further
summoned/produced, Mr. Ramnath as CW-2. Subsequently, on
conclusion of the complainant’s/respondent’s evidence, statement
of the appellant was recorded in terms of the provisions under
Section 313/281 Cr.P.C. on 14.07.2022. Strikingly, at the time of
recording of appellant’s statement under Section 313/281 Cr.P.C.,
the appellant proposed to lead defence evidence, with the Ld.
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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Trial Court, whereupon, the appellant entered as witness (DW-1)
as well as produced/summoned, Ms. Sunita as DW-2. Needless to
mention, subsequently, arguments were addressed by/on behalf
of the appellant and the complainant/respondent before the Ld.
Trial Court, whereupon conclusion of arguments on behalf of the
parties, as aforementioned, the Ld. Trial Court vide impugned
judgment and order, while holding the appellant guilty of the
offence punishable under Sections 138 NI Act, sentenced him in
the manner, as noted hereinabove.
3.1. Learned Amicus Curiae1 for the appellant
1
Relevantly, subsequent to the reference of the parties before the Delhi Mediation Centre, Tis Hazari Court
by this Court vide order dated 01.04.2024, the appellant and the respondent executed a Mediation
Settlement Agreement on 04.04.2024. However, subsequently, the appellant failed to abide by the terms of
said settlement, as submitted by/on behalf of the respondent on 10.05.2024 and 27.05.2024. Subsequently,
on 31.05.2024, the appellant’s sister, namely, Ms. Sunita, entered appearance before this Court (though
appellant did not appear before this Court) and undertook to pay a sum of Rs. 70,000/- (Rupees Seventy
Thousand only) to the appellant, which was paid on 05.06.2024 with an undertaking to pay further sum of
Rs. 70,000/- (Rupees Seventy Thousand only) to the respondent. However, subsequently, on 15.07.2024, no
payment was made by/on behalf of the appellant. On the contrary, subsequently, on 23.07.2024, fresh
vakalatnama was filed by the newly engaged counsel for the appellant and again on 23.08.2024, fresh
vakalatnama was again filed by/on behalf of the appellant by his newly engaged counsel. Thereupon, on
23.09.2024, neither the appellant was present nor was he represented, leading to appointment/nomination of
Amicus Curiae on behalf of the appellant. Subsequently, on 08.10.2024, 20.11.2024, 07.12.2024,
24.12.2024 and 20.01.2025, the appellant opted not to appear before this Court. Even the newly engaged
counsel did not enter appearance. Accordingly, arguments in the instant case were addressed by Ld. Amicus
Curiae on behalf of the appellant and the matter was reserved for judgment/orders. At this stage, this Court
deems it pertinent to make a reference to the decision of the Hon’ble Supreme Court in Surya Baksh Singh
v. State of U.P., (2014) 14 SCC 222, wherein the Hon’ble Court in a situation akin to the present, observed;
“17. The criminal justice delivery system is being held to ransom by convicts who have developed the
devious and dishonest practice of escaping punishment or sentence by filing appeals, obtaining bail or
suspension of sentence and thereafter disappearing beyond the reach of the arms of the law. The inherent
powers under Section 482 CrPC, which the Supreme Court has on several occasions expounded to have
existed from time immemorial, predating the present as well as the previous CrPC, must be pressed into
action lest the already fragile policing and prosecuting branches of governance are rendered redundant.
Since Section 482 CrPC was not considered by either of the three-Judge Benches of this Court, we have not
found it necessary to resort to recommending the matter for being laid before a larger Bench. The facts and
pronouncement in Bani Singh [Bani Singh v. State of U.P., (1996) 4 SCC 720: 1996 SCC (Cri) 848: AIR
1996 SC 2439] cannot be extrapolated to the factual matrix before us. On the contrary the opinion in Ram
Naresh Yadav [Ram Naresh Yadav v. State of Bihar, (2014) 14 SCC 238: AIR 1987 SC 1500: 1987 Cri LJ
1856] as well as in Kishan Singh [Kishan Singh v. State of U.P., (1996) 9 SCC 372: 1996 SCC (Cri) 1010:
1992 Supp (2) SCR 305] are available to us to ensure that preventive action is devised to combat the abuse
of court process so that facilitative steps are taken to secure the ends of justice.***24. It seems to us that it
is necessary for the appellate court which is confronted with the absence of the convict as well as his
counsel, to immediately proceed against the persons who stood surety at the time when the convict was
granted bail, as this may lead to his discovery and production in court. If even this exercise fails to locate
and bring forth the convict, the appellate court is empowered to dismiss the appeal. We fully and
respectfully concur with the recent elucidation of the law, profound yet perspicuous, in K.S. Panduranga v.
State of Karnataka [K.S. Panduranga v. State of Karnataka, (2013) 3 SCC 721: (2013) 2 SCC (Cri) 257:
(2013) 1 SCC (L&S) 791]. After a comprehensive analysis of previous decisions our learned Brother had
distilled the legal position into six propositions: (SCC p. 734, para 19)***”19.1. that the High Court cannot
dismiss an appeal for non-prosecution simpliciter without examining the merits;***19.2. that the Court is
not bound to adjourn the matter if both the appellant or his counsel/lawyer are absent;***19.3. that the court
may, as a matter of prudence or indulgence, adjourn the matter but it is not bound to do so;***19.4. that it
can dispose of the appeal after perusing the record and judgment of the trial court .***19.5. that if the
accused is in jail and cannot, on his own, come to court, it would be advisable to adjourn the case and fix
another date to facilitate the appearance of the appellant-accused if his lawyer is not present, and if the
lawyer is absent and the court deems it appropriate to appoint a lawyer at the State expense to assist it,
nothing in law would preclude the court from doing so; and***19.6. that if the case is decided on merits in
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ABHISHEK ABHISHEK GOYAL
GOYAL Date: 2025.03.03
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vehemently contended that the impugned judgment and order
were passed by the Ld. Trial Court on mere conjunctures,
surmises and in contravention of the settled principles of law,
deserving their setting aside at the outset. Ld. Counsel further
submitted that the Ld. Trial Court failed to appreciate that in the
instant case, there are numerous yawning holes in the case put
forth by the respondent/complainant and that the respondent’s
story does not inspire confidence, nor appeals to the senses of a
prudent man. In this regard, Ld. Amicus Curiae further submitted
that the Ld. Trial Court failed to appreciate that the appellant, in
his statement recorded under Section 313 Cr.P.C., asserted that he
had taken only Rs. 50,000/- (Rupees Fifty Thousand only) as
loan from the respondent, however, despite repeated requests, the
respondent failed to return the original cheque. Correspondingly,
it was averred that the Ld. Trial Court failed to appreciate that in
the instant case, there are no specific allegations against the
appellant, besides the respondent has failed to produce any
document(s)/material on record to prove that the appellant has
taken loan from the respondent. Further, as per the Ld. Amicus
Curiae, the Ld. Trial Court failed to consider that the respondent
had taken signatures on blank paper as the appellant as illiterate.
3.2. Ld. Amicus Curiae for the appellant further
vigorously argued that the Ld. Trial Court did not even consider
that the respondent failed to give any detail of the alleged loan,
against which the cheque in question was given by the appellant
to the respondent. Further, as per Ld. Amicus Curiae, the Ld.
Trial Court failed to evaluate the evidence placed on record,
the absence of the appellant, the higher court can remedy the situation.”…” (Emphasis supplied). Reference
is further made to the decision in; Kabira v. State of U.P., 1981 Supp SCC 76, wherein the Hon’ble Supreme
Court inter alia observed, “…The appeal could not be dismissed by the learned Judge for default of
appearance. If the appellant was not present, the learned Judge should have appointed some advocate as
amicus curiae and then proceeded to dispose of the appeal on merits…” (Emphasis supplied).
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
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meticulously, on the contrary, passed the order of conviction
mechanically, without appreciating the evidence brought forth
and the statements/evidence of defence witnesses. Even
otherwise, as per Ld. Amicus Curiae, no finding qua the financial
capacity of the appellant to give huge loan amount was brought
forth on record. It was further contended by Ld. Amicus Curiae
that the Ld. Trial Court also failed to appreciate that in the cross
examination of the complainant/respondent, the appellant was
able to rebut the presumption of 139 NI Act and had further put
forward his/appellant’s case/defence, as mandated under law on
preponderance of probabilities. Accordingly, Ld. Amicus Curiae
for the appellant submitted that not only did the Ld. Trial Court
failed to consider the truth of circumstances and passed the
impugned judgment in haste, rather, did not properly
appreciate/examine the facts of the present case, wrongly holding
the appellant guilty of the aforementioned offences. Even
otherwise, as per the Ld. Amicus Curiae for the appellant, the
impugned order on sentence was passed by the Ld. Trial Court,
inconsiderate of the correct factual scenario, awarding an
exorbitant sentence and order of compensation against the
appellant. In this regard, it was strenuously contended that the
appellant was unwell/medically unfit and first-time offender,
with no other cases pending against him or registered against him
in any court of law. Further, as per the Ld. Amicus Curiae, the
appellant is solely liable for the take care/look after of his family
members, which factors were not considered by the Ld. Trial
Court while passing the impugned order on sentence.
Consequently, the Ld. Amicus Curiae for the appellant inter alia
prayed that the present appeal be allowed, and the impugned
judgment and order be set aside, and the appellant be acquitted of
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ABHISHEK GOYAL
GOYAL Date:
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the alleged charges. In the alternate, Ld. Amicus Curiae for the
appellant prayed that the appellant be entitled to the benefit of
probation, by adopting a reformative approach.
4. Per contra, Ld. Counsel for the respondent
submitted that the impugned judgment and order were passed by
the Ld. Trial Court after due appreciation of the facts and
circumstances of the case as well as in consonance with the
settled judicial precedents. Even otherwise, Ld. Counsel
outrightly contended that the instant appeal has been filed by the
appellant with a sole motive to delay compliance of the
impugned judgment and order, besides cause undue harassment
to the complainant/respondent. Further, as per the Ld. Counsel,
the appellant is guilty of persistently playing a fraud upon this
Court as well as the Ld. Trial Court, as manifest from his conduct
of neither surrendering before the Ld. Trial Court nor complying
with the repeated undertakings tendered before this Court as well
as to the respondent. As per the Ld. Counsel, the appellant
preserved to buy time by mediating with respondent, however,
not abiding by the terms of said settlement, besides avoiding
appearance before this Court despite repeated adjournments,
exemptions and issuance of process(es) for appearance,
disentitling him to seek any indulgence/relief from this Court.
Even otherwise, as per the Ld. Counsel, even on merits, the
appellant has wrongly/falsely contended that the dishonoured
cheque was not filled by him or that there was no legally
recoverable debt or liability due and payable by the appellant to
the respondent. Ld. Counsel further submitted that the appellant
further made contradictory and conflicting statements at different
stages during trial, which are sufficient to prove appellant’s
malaise, besides the appellant, besides only denying the receipt
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of legal notice, opted not to lead any evidence in support of his
said averment. Even otherwise, it was fervently argued by the Ld.
Counsel that the appellant has been unable to rebut the
presumption under Section 139 NI Act, even on preponderance
of probabilities. Ld. Counsel further strenuously reiterated that
the facts and circumstances put forth as well as the evidence
placed on record, unerringly point out towards the guilt of the
appellant and that no fault can be attributed to the finding of the
Ld. Trial Court, which is based on proper appreciation of facts as
well as law. Lastly, as per the Ld. Counsel, the
evidence/witnesses tendered by the appellant in support of his
case are also grossly unreliable and do not support the version
put forth by the appellant. Accordingly, Ld. Counsel for the
respondent contended that the present appeal deserves to be
dismissed at the outset, as grossly malicious and devoid of
merits.
5. The arguments of Ld. Amicus Curiae for the
appellant as well as that of Ld. Counsel for the
complainant/respondent, heard and the record(s), including the
Trial Court Record have been thoroughly perused.
6. At the outset, this Court deems it apposite to
enunciate the scope of jurisdiction of this Court in an appeal. In
this regard, this Court it is pertinent to outrightly make a
reference to the decision of the Hon’ble Supreme Court 1 in Atley
v. State of U.P., 1955 SCC OnLine SC 51 , wherein the Hon’ble
Court, while delving into the ‘scope an ambit’ of appellate court’s
jurisdiction inter alia noted as under;
“8. … It is also well settled that the Court of
appeal has as wide powers of appreciation of
evidence in an appeal against an order of acquittal as1
Reference further made to; Padam Singh v. State of U.P., (2000) 1 SCC 621.
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ABHISHEK GOYAL
Date:
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in the case of an appeal against an order of
conviction, subject to the riders that the presumption
of innocence with which the accused person starts in
the trial court continues even up to the appellate
stage and that the appellate court should attach due
weight to the opinion of the trial court which
recorded the order of acquittal. If the appellate court
reviews the evidence, keeping those principles in
mind, and comes to a contrary conclusion, the
judgment cannot be said to have been vitiated…”
(Emphasis supplied)
7. Correspondingly, the Hon’ble Apex Court in
Narendra Bhat v. State of Karnataka, (2009) 17 SCC 785, iterated
in respect of the foregoing as under;
“3. This Court has in a series of judgments held
that a court exercising appellate power must not only
consider questions of law but also questions of fact
and in doing so it must subject the evidence to a
critical scrutiny. The judgment of the High Court
must show that the Court really applied its mind to
the facts of the case as particularly when the offence
alleged is of a serious nature and may attract a heavy
punishment.”
(Emphasis supplied)
8. Quite evidently, from a conjoint reading of the
aforenoted judicial dictates it can be perspicuously deduced that
the jurisdiction of this Court in an appeal extends to
reappreciation of the entire material placed on record of the trial
court and to arrive at an independent conclusion as to whether the
said evidence can be relied upon or not. In fact, as aforenoted,
court(s), while exercising appellate power is not required to
consider the question of law, rather, also question of facts to
affirmatively reach a conclusion of guilt or innocence of an
accused. In fact, it is trite law1 that non-re-appreciation of the
evidence on record in an appeal may affect the case of either the
prosecution or even the accused. Needless to reemphasize that
the appellate court is to be further wary of fact that presumption
1
State of Gujarat v. Bhalchandra Laxmishankar Dave, (2021) 2 SCC 735.
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of innocence of an accused, even extents until an accused is held
guilty by the final court of appeal and that such a presumption is
neither strengthened by an acquittal nor weakened by a
conviction in the trial court.
9. Therefore, being cognizant of the aforesaid
principles, however, before proceeding further with the
appreciation of the merits of the case as well as rival contentions
of/on behalf of the parties, this Court deems it pertinent to
outrightly reproduce the relevant provisions under law/NI Act,
for the purpose of present adjudication, as under;
“118. 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;
(b) as to date: that every negotiable instrument
bearing a date was made or drawn on such date;
(c) as to time of acceptance: that every accepted
bill of exchange was accepted within a reasonable
time after its date and before its maturity;
(d) as to time of transfer: that every transfer of
negotiable instrument was made before its
maturity;
(e) as to order of indorsement: that the
indorsements appearing upon a negotiable
instrument were made in the order in which they
appear thereon;
(f) as to stamp: that a lost promissory note, bill of
exchange or cheque was duly stamped;
(g) that holder is a holder in due course: that the
holder of a negotiable instrument is a holder in
due course:
Provided that, where the instrument has been
obtained from its lawful owner, or from any person
in lawful custody thereof, by means of an offence or
fraud, or has been obtained from the maker or
acceptor thereof by means of an offence or fraud or
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for unlawful consideration, the burden of proving
that the holder is a holder in due course lies upon
him.
*** *** ***
138. Dishonour of cheque for insufficiency, etc.,
of funds in the account-Where any cheque drawn by
a person on an account maintained by him with a
banker for payment of any amount of money to
another person from out of that account for the
discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either
because of the amount of money standing to the
credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be
paid from that account by an agreement made with
that bank, such person shall be deemed to have
committed an offence and shall, without prejudice to
any other provision of this Act, be punished with
imprisonment for a term which may extend to two
years, or with fine which may extend to twice the
amount of the cheque, or with both:
Provided that nothing contained in this section
shall apply unless-
(a) the cheque has been presented to the bank
within a period of six months from the date on
which it is drawn or within the period of its
validity, whichever is earlier;
(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for
the payment of the said amount of money by
giving a notice in writing, to the drawer of the
cheque, within thirty days of the receipt of
information by him from the bank regarding the
return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the
payment of the said amount of money to the
payee or as the case may be, to the holder in due
course of the cheque within fifteen days of the
receipt of the said notice.
Explanation-For the purposes of this section,
“debt or other liability” means a legally enforceable
debt or other liability.
139. 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.”
(Emphasis supplied)
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ABHISHEK GOYAL
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10. At the outset, this Court observes that the objective
behind the introduction of the provision(s) under Section 138
under the NI Act, by virtue of amendment/insertion in the year
1989, is to inculcate faith in the efficacy of banking operations
and credibility in transacting business on negotiable instrument.
Notably, at the time of introduction of the said provision(s), the
executive was cognizant of the fact that the civil remedies were
found to be inadequate to curb the menace on the part of
unscrupulous persons and an imminent need was felt for
introduction of a penal provision to cease the propensity on the
part of dishonest persons to exploit negotiable instruments for
personal gains. Consequently, being wary of the impending
requirement for a penal provision to bring about faith in
monetary transactions, Chapter XVII was introduced in the NI
Act, comprising of the provisions from Sections 138 to 148. In
particular, penal provisions under Section 138 NI Act were
designed to1, “safeguard the faith of the creditor in the drawer of
the cheque, which is essential to the economic life of a
developing country like India. The provision has been introduced
with a view to curb cases of issuing cheques indiscriminately by
making stringent provisions and safeguarding interest of
creditors”. Notably, the Hon’ble Supreme Court in Goa Plast (P)
Ltd. v. Chico Ursula D’Souza, (2004) 2 SCC 235 , while inter alia
analyzing the intent of introduction of Section 138 NI Act as well
as scope and objective of the said provision(s) observed as under;
“26. The object and the ingredients under the
provisions, in particular, Sections 138 and 139 of the
Act cannot be ignored. Proper and smooth
functioning of all business transactions, particularly,
of cheques as instruments, primarily depends upon
the integrity and honesty of the parties. In our1
Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305.
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country, in a large number of commercial
transactions, it was noted that the cheques were
issued even merely as a device not only to stall but
even to defraud the creditors. The sanctity and
credibility of issuance of cheques in commercial
transactions was eroded to a large extent.
Undoubtedly, dishonour of a cheque by the bank
causes incalculable loss, injury and inconvenience to
the payee and the entire credibility of the business
transactions within and outside the country suffers a
serious setback. Parliament, in order to restore the
credibility of cheques as a trustworthy substitute for
cash payment enacted the aforesaid provisions. The
remedy available in a civil court is a long-drawn
matter and an unscrupulous drawer normally takes
various pleas to defeat the genuine claim of the
payee.”
(Emphasis supplied)
11. Relevantly, in order to attract culpability under the
provisions of 138 NI Act, the prosecution is inter alia required to
prove1; (a) that the cheque was issued/drawn by a person on an
account maintained by him for payment of any sum of money to
another person from out of that account; (b) the cheque must
have been issued against the discharge, either in whole or in part,
of any debt or other liability, though, in the absence of proof to
the contrary, it shall be presumed that it was issued for the same;
and (c) the cheque was returned by the bank unpaid either
because the amount of money standing to the credit of that
account is insufficient to honour the cheque; or because it
exceeds the amount arranged to be paid from the account by an
agreement with that bank. Reference in this regard is further
made to the decision of Hon’ble Supreme Court in Kusum Ingots
& Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC
745, wherein the Hon’ble Court, while conscientiously analyzing
the provisions under Section 138 NI Act inter alia explicated the
ingredients of the said provision/offence, as under;
1
N. Doraisamy v. Archana Enterprises, 1995 SCC OnLine Mad 25.
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“10. On a reading of the provisions of Section
138 of the NI Act it is clear that the ingredients
which are to be satisfied for making out a case under
the provision are:
(i) a person must have drawn a cheque on an
account maintained by him in a bank for payment
of a certain amount of money to another person
from out of that account for the discharge of any
debt or other liability;
(ii) that cheque has been presented to the bank
within a period of six months from the date on
which it is drawn or within the period of its
validity, whichever is earlier;
(iii) that cheque is returned by the bank unpaid,
either because the amount of money standing to
the credit of the account is insufficient to honour
the cheque or that it exceeds the amount arranged
to be paid from that account by an agreement
made with the bank;
(iv) the payee or the holder in due course of the
cheque makes a demand for the payment of the
said amount of money by giving a notice in
writing, to the drawer of the cheque, within 15
days of the receipt of information by him from
the bank regarding the return of the cheque as
unpaid;
(v) the drawer of such cheque fails to make
payment of the said amount of money to the
payee or the holder in due course of the cheque
within 15 days of the receipt of the said notice.”
(Emphasis supplied)
12. Here, it is further pertinent to observe that the
statute/NI Act also provides for raising of a
presumption/statutory presumption, casting/permitting a reverse
burden on an accused and requiring the accused to prove the non-
existence of the presumed fact. Quite evidently, Section 139 NI
Act provides for/creates one such exception(s) to the general rule
as to the burden of proof and shifts the onus on an accused to
rebut the presumption envisaged under law, against him. Another
such presumption under law being, under Section 118 NI Act.
Reference in this regard, is made to the decision of the Hon’ble
Supreme Court in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148 ,
wherein the Hon’ble Court noted in regard the foregoing as
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under;
“33. The NI Act provides for two presumptions:
Section 118 and Section 139. Section 118 of the Act
inter alia directs that it shall be presumed, until the
contrary is proved, that every negotiable instrument
was made or drawn for consideration. Section 139 of
the Act stipulates that “unless the contrary is proved,
it shall be presumed, that the holder of the cheque
received the cheque, for the discharge of, whole or
part of any debt or liability”. It will be seen that the
“presumed fact” directly relates to one of the crucial
ingredients necessary to sustain a conviction under
Section 138…
34. Section 139 of the NI Act, which takes the
form of a “shall presume” clause is illustrative of a
presumption of law. Because Section 139 requires
that the Court “shall presume” the fact stated therein,
it is obligatory on the Court to raise this presumption
in every case where the factual basis for the raising
of the presumption had been established. But this
does not preclude the person against whom the
presumption is drawn from rebutting it and proving
the contrary as is clear from the use of the phrase
“unless the contrary is proved”…”
(Emphasis supplied)
13. Strikingly, the Hon’ble Supreme Court in Rangappa
v. Sri Mohan, (2010) 11 SCC 441, while painstakingly evaluating
the intent and purpose behind the introduction of Section 139
under the Statute books/NI Act, observed as under;
“26. In light of these extracts, we are in
agreement with the respondent claimant that the
presumption mandated by Section 139 of the Act
does indeed include the existence of a legally
enforceable debt or liability. To that extent, the
impugned observations in Krishna Janardhan Bhat
[(2008) 4 SCC 54: (2008) 2 SCC (Cri) 166] may not
be correct. However, this does not in any way cast
doubt on the correctness of the decision in that case
since it was based on the specific facts and
circumstances therein. As noted in the citations, this
is of course in the nature of a rebuttable presumption
and it is open to the accused to raise a defence
wherein the existence of a legally enforceable debt or
liability can be contested. However, there can be no
doubt that there is an initial presumption which
favours the complainant.
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27. Section 139 of the Act is an example of a
reverse onus clause that has been included in
furtherance of the legislative objective of improving
the credibility of negotiable instruments. While
Section 138 of the Act specifies a strong criminal
remedy in relation to the dishonour of cheques, the
rebuttable presumption under Section 139 is a device
to prevent undue delay in the course of litigation.
However, it must be remembered that the offence
made punishable by Section 138 can be better
described as a regulatory offence since the bouncing
of a cheque is largely in the nature of a civil wrong
whose impact is usually confined to the private
parties involved in commercial transactions. In such
a scenario, the test of proportionality should guide
the construction and interpretation of reverse onus
clauses and the defendant-accused cannot be
expected to discharge an unduly high standard or
proof.”
(Emphasis supplied)
14. Markedly, it is observed from above that the
presumption envisioned under Section 139 NI Act not only
pertains to the fact that the cheque in question was drawn in
discharge of debt or liability, rather, also includes 1 a presumption
that there exists a legally enforceable debt or liability at the time
of such drawing. Indisputably2, the burden to rebut the
presumption lies on an accused, by establishing probable
defence. Needless to further observe here that, though, in order to
rebut the statutory presumptions3, “an accused is not expected to
prove his defence beyond reasonable doubt as is expected of the
complainant in a criminal trial” , however, the law is settled 4 that
a bare denial of the passing of the consideration or of existence
of debt/liability by an accused, would not serve the purpose or
come to the aid/rescue of an accused. In fact, law is well settled
that under such circumstances, it is expected from an accused to
1
S. Natarajan v. Sama Dharman, (2021) 6 SCC 413.
2
Rajaram v. Maruthachalam, 2023 SCC OnLine SC 48.
3
Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106.
4
Kishan Rao v. Shankargouda, (2018) 8 SCC 165.
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bring ‘something which is probable’, on record for getting the
burden of proof shifted to the complainant. Reference in this
regard is made to the decision in Kumar Exports v. Sharma
Carpets, (2009) 2 SCC 513, wherein the Hon’ble Apex Court,
explicated the law in regard the foregoing as under;
“20. The accused in a trial under Section 138 of
the Act has two options. He can either show that
consideration and debt did not exist or that under the
particular circumstances of the case the non-
existence of consideration and debt is so probable
that a prudent man ought to suppose that no
consideration and debt existed. To rebut the statutory
presumptions an accused is not expected to prove his
defence beyond reasonable doubt as is expected of
the complainant in a criminal trial. The accused may
adduce direct evidence to prove that the note in
question was not supported by consideration and that
there was no debt or liability to be discharged by
him. However, the court need not insist in every case
that the accused should disprove the non-existence of
consideration and debt by leading direct evidence
because the existence of negative evidence is neither
possible nor contemplated. At the same time, it is
clear that bare denial of the passing of the
consideration and existence of debt, apparently
would not serve the purpose of the accused.
Something which is probable has to be brought on
record for getting the burden of proof shifted to the
complainant. To disprove the presumptions, the
accused should bring on record such facts and
circumstances, upon consideration of which, the
court may either believe that the consideration and
debt did not exist or their non-existence was so
probable that a prudent man would under the
circumstances of the case, act upon the plea that they
did not exist. Apart from adducing direct evidence to
prove that the note in question was not supported by
consideration or that he had not incurred any debt or
liability, the accused may also rely upon
circumstantial evidence and if the circumstances so
relied upon are compelling, the burden may likewise
shift again on to the complainant. The accused may
also rely upon presumptions of fact, for instance,
those mentioned in Section 114 of the Evidence Act
to rebut the presumptions arising under Sections 118
and 139 of the Act.”
(Emphasis supplied)
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15. Further, Section 118(a) NI Act provides for a
presumption in favour of the complainant1 inter alia to the effect
that the negotiable instrument or the endorsement was made or
endorsed for consideration. Concomitantly, it is further apposite
to make a reference to the presumption visualized under Section
118(e) NI Act at this stage, which pertains to the endorsement
appearing upon negotiable instruments, being genuine.
Relevantly, it is trite law that the said presumption operates in
favour of the holder in due and in case an accused intends to
rebut such presumption, he would be required to lead evidence,
rather than a mere denial of his signatures on the cheque.
Significantly, the Hon’ble Supreme Court in Ajitsinh Chehuji
Rathod v. State of Gujarat, (2024) 4 SCC 453 , while assessing
the provisions under Section 118(e) NI Act, remarked as under;
“13. Section 118 sub-clause (e) of the NI Act
provides a clear presumption regarding indorsements
made on the negotiable instrument being in order in
which they appear thereupon. Thus, the presumption
of the indorsements on the cheque being genuine
operates in favour of the holder in due course of the
cheque in question which would be the complainant
herein. In case, the accused intends to rebut such
presumption, he would be required to lead evidence
to this effect.
14. Certified copy of a document issued by a
bank is itself admissible under the Bankers’ Books
Evidence Act, 1891 without any formal proof
thereof. Hence, in an appropriate case, the certified
copy of the specimen signature maintained by the
bank can be procured with a request to the court to
compare the same with the signature appearing on
the cheque by exercising powers under Section 73 of
the Evidence Act, 1872.”
(Emphasis supplied)
16. Ergo, being cognizant of the aforenoted principles,
this Court would now proceed with the assessment of the rival
contentions of the appellant and the respondent. Pertinently, the
1
Kundan Lal Rallaram v. Custodian, Evacuee Property, 1961 SCC OnLine SC 10.
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Ld. Amicus Curiae for the appellant has outrightly contended that
the particulars of the cheque such as the name of the payee,
amount in words and figures, etc., were neither filled by the
appellant nor the same were in his handwriting so as to attract
culpability against him. In this regard, Ld. Amicus Curiae for the
appellant has referred to the appellant’s response to Q.1 and Q.4
at the time of recording of statement of the appellant, in terms of
the provisions under Section 313 Cr.P.C., on 14.07.2022, wherein
the appellant specifically asserted that he had not filled in other
particulars on the cheque, though, admitted his signatures on the
cheque in question. Strikingly, under such factual scenario, Ld.
Amicus Curiae for the appellant has ardently contended that no
liability under Section 138 NI Act can be attributed to/attracted
against the appellant, especially when (as per the appellant) the
particulars appearing on the dishonoured cheque was not filled
by the appellant. However, the said contention does not find
favour with this Court. In fact, in this regard, this Court is
conscious of the settled law that filling of particulars of cheque
by any person, other than the drawer does not invalidate the
cheque and the liability under Section 138 NI Act/presumption
under Section 139 NI Act would still be attracted under such
situation(s), when the signatures on the cheque in question is
duly admitted by the drawer/accused. Reference in this regard is
made to decision in Bir Singh v. Mukesh Kumar, (2019) 4 SCC
197, wherein the Hon’ble Supreme Court in an akin context,
remarked as under;
“33. A meaningful reading of the provisions of
the Negotiable Instruments Act including, in
particular, Sections 20, 87 and 139, makes it amply
clear that a person who signs a cheque and makes it
over to the payee remains liable unless he adduces
evidence to rebut the presumption that the cheque
had been issued for payment of a debt or in discharge
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of a liability. It is immaterial that the cheque may
have been filled in by any person other than the
drawer, if the cheque is duly signed by the drawer. If
the cheque is otherwise valid, the penal provisions of
Section 138 would be attracted.
34. If a signed blank cheque is voluntarily
presented to a payee, towards some payment, the
payee may fill up the amount and other particulars.
This in itself would not invalidate the cheque. The
onus would still be on the accused to prove that the
cheque was not in discharge of a debt or liability by
adducing evidence.
*** *** ***
36. Even a blank cheque leaf, voluntarily signed
and handed over by the accused, which is towards
some payment, would attract presumption under
Section 139 of the Negotiable Instruments Act, in the
absence of any cogent evidence to show that the
cheque was not issued in discharge of a debt.”
(Emphasis supplied)
17. Markedly, under the present situation, when both the
appellant and the respondent affirm that the cheque in
question/dishonoured cheque was signed and handed over by the
appellant to the respondent, the contention of the Ld. Amicus
Curiae for the appellant that the cheque in question was not filled
in the appellant’s handwriting, i.e., the date of cheque and/or the
payee’s details thereon were not filled by the appellant, albeit
only subsequent, would not, in the considered opinion of this
Court, come to any aid/rescue of the appellant, in view of the
aforenoted judicial dictate(s). Needless to reiterate that the law is
well settled that even when a signed blank cheque is voluntarily
presented to a payee, towards some payment, the payee may fill
up the amount and other particulars and that the same would not,
in itself, invalidate the cheque. On the contrary, even under such
circumstances, presumption under Section 139 NI Act would be
attracted, burden lying on the drawer of cheque to rebut the same
as per law/by preponderance of probabilities.
18. Apropos the present discourse, this Court now
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deems it apposite to deal with the contention of the Ld. Amicus
Curiae for the appellant at this stage inter alia to the effect that
the notice/legal demand notice, as mandated under the provisions
envisaged under Section 138 NI Act was not received by the
appellant. In this regard, it is apposite to reproduce the relevant
extracts from the notice under Section 251 Cr.P.C. framed against
the appellant by the Ld. Trial Court vide order dated 01.08.2018,
as under;
“…Q. Do you have any defence to make, if yes,
what is your plea of defence?
Ans. I had not received the legal demand notice
and my liability is less than the cheque amount since
I had borrowed only Rs. 50,000/- from
complainant…”
(Emphasis supplied)
19. Reference in respect of the foregoing is further made
to the statement of the appellant, recorded on 14.07.2022 in terms
of the provisions under Section 313 Cr.P.C., wherein the
appellant further inter alia, proclaimed as under;
“…Q. 3. It is in evidence against you that despite
service of legal demand notice U/S. 138 of the NI
Act Ex. CW1/D (corresponding postal receipt which
is Ex. CW1/E, you failed to make payment. What do
you have to say?
Ans. I have not received the legal notice. The
address on the legal notice is correct…”
(Emphasis supplied)
20. Markedly, it is observed from a conjoint reading of
the above that, though, the appellant denied the receipt of legal
notice/legal demand notice from respondent as per the mandate
of Section 138 NI Act, however, the address mentioned on the
legal demand notice was affirmed by the appellant to be his.
Quite palpably, except for a bare denial of receipt of legal
demand notice/notice dated 23.09.2017 (Ex. CW1/D), the
appellant has opted neither to lead any affirmative evidence in
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support of his said assertion nor is anything forthcoming from the
cross examination of any of the complainant’s/respondent’s
witnesses, including the complainant, that the legal demand
notice was not issued and/or received by him, as mandated under
law. In order to appreciate the said contention, this Court deems
it prudent to outrightly make a reference to the provisions under
Section 94 of the NI Act, which provides as under;
“94. Mode in which notice may be given-Notice
of dishonour may be given to a duly authorized agent
of the person to whom it is required to be given, or,
where he has died, to his legal representative, or,
where he has been declared an insolvent, to his
assignee; may be oral or written; may, if written, be
sent by post; and may be in any form; but it must
inform the party to whom it is given, either in
express terms or by reasonable intendment that the
instrument has been dishonoured, and in what way,
and that he will be held liable thereon; and it must be
given within a reasonable time after dishonour, at the
place of business or (in case such party has no place
of business) at the residence of the party for whom it
is intended.
If the notice is duly directed and sent by post and
miscarries, such miscarriage does not render the
notice invalid.”
(Emphasis supplied)
21. Correspondingly, reference is made to Section 27 of
the General Clauses Act, 1897 (hereinafter referred to as the ‘GC
Act‘), which provides as under;
“27. Meaning of service by post-Where any
Central Act or Regulation made after the
commencement of this Act authorizes or requires any
document to be served by post, whether the
expression “serve” or either of the expressions “give”
or “send” or any other expression is used, then,
unless a different intention appears, the service shall
be deemed to be effected by properly addressing,
pre-paying and posting by registered post, a letter
containing the document, and, unless the contrary is
proved, to have been effected at the time at which the
letter would be delivered in the ordinary course of
post.”
(Emphasis supplied)
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22. Consequently, upon a conscientious analysis of the
aforesaid provisions, further in light of the provisions under
Section 1141 of the Indian Evidence Act, 1872 (hereinafter
referred to as the ‘Evidence Act‘), this Court unwaveringly
reaches a conclusion that once notice is sent by registered post by
correctly addressing to the drawer of the cheque, the service of
notice is deemed to have been affected under law. However, it is
only upon a drawer, under such circumstances, to rebut this
presumption by leading evidence to the contrary. Reference in
this regard is made to the decision of the Hon’ble Supreme
Court2 in N. Parameswaran Unni v. G. Kannan & Ors.,
MANU/SC/0327/2017, wherein the Hon’ble Court, whilst
confounded with an akin situation, remarked as under;
“13. It is clear from Section 27 of the General
Clauses Act, 1897 and Section 114 of the Indian
Evidence Act, 1872, that once notice is sent by
registered post by correctly addressing to the drawer
of the cheque, the service of notice is deemed to have
been effected. Then requirements under proviso (b)
of Section 138 stands complied, if notice is sent in
the prescribed manner. However, the drawer is at
liberty to rebut this presumption.”
(Emphasis supplied)
23. Apposite in this regard to further make a reference
to the decision in C.C. Alavi Haji v. Palapetty Muhammed &
Ors., MANU/SC/2263/2007, wherein the Hon’ble Apex Court, in
the context of foregoing, earlier, observed as under;
1
“114. Court may presume existence of certain facts-The Court may presume the existence of any fact
which it thinks likely to have happened, regard being had to the common course of natural events, human
conduct and public and private business, in their relation to the facts of the particular case….”
2
Reference is further made to the decision in Ajeet Seeds Ltd. v. K. Gopala Krishnaiah,
MANU/SC/0630/2014, wherein the Hon’ble Apex Court, iterated, “10. It is thus clear that Section 114 of
the Evidence Act enables the Court to presume that in the common course of natural events, the
communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives
rise to a presumption that service of notice has been effected when it is sent to the correct address by
registered post. It is not necessary to aver in the complaint that in spite of the return of the notice unserved,
it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless
and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the
time at which the letter would have been delivered in the ordinary course of business.” (Emphasis supplied).
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15. As noticed above, the entire purpose of
requiring a notice is to give an opportunity to the
drawer to pay the cheque amount within 15 days of
service of notice and thereby free himself from the
penal consequences of Section 138. In Vinod
Shivappa (supra), this Court observed:
One can also conceive of cases where a well-
intentioned drawer may have inadvertently
missed to make necessary arrangements for
reasons beyond his control, even though he
genuinely intended to honour the cheque drawn
by him. The law treats such lapses induced by
inadvertence or negligence to be pardonable,
provided the drawer after notice makes amends
and pays the amount within the prescribed period.
It is for this reason that Clause (c) of proviso to
Section 138 provides that the section shall not
apply unless the drawer of the cheque fails to
make the payment within 15 days of the receipt of
the said notice. To repeat, the proviso is meant to
protect honest drawers whose cheques may have
been dishonoured for the fault of others, or who
may have genuinely wanted to fulfil their promise
but on account of inadvertence or negligence
failed to make necessary arrangements for the
payment of the cheque. The proviso is not meant
to protect unscrupulous drawers who never
intended to honour the cheques issued by them, if
being a part of their modus operandi to cheat
unsuspecting persons.
16. It is also to be borne in mind that the
requirement of giving of notice is a clear departure
from the rule of Criminal Law, where there is no
stipulation of giving of a notice before filing a
complaint Any drawer who claims that he did not
receive the notice sent by post, can, within 15 days of
receipt of summons from the court in respect of the
complaint under Section 138 of the Act, make
payment of the cheque amount and submit to the
Court that he had made payment within 15 days of
receipt of summons (by receiving a copy of
complaint with the summons) and, therefore, the
complaint is liable to be rejected. 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 contrary under Section 27 of the
G.C. Act and Section 114 of the Evidence Act. In our
view, any other interpretation, of the proviso would
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defeat the very object of the legislation. As observed
in Bhaskarans case (supra), if the giving of notice in
the context of Clause (b) of the proviso was the same
as the receipt of notice a trickster cheque drawer
would get the premium to avoid receiving the notice
by adopting different strategies and escape from legal
consequences of Section 138 of the Act.”
(Emphasis supplied)
24. Ergo, in light of the foregoing and considering the
objective of mandating the issuance of legal demand notice, i.e.,
“protect honest drawers whose cheques may have been
dishonoured for the fault of others, or who may have genuinely
wanted to fulfil their promise but on account of inadvertence or
negligence failed to make necessary arrangements for the
payment of the cheque”, this Court is in concurrence with the
finding of the Ld. Trial Court that the averment of the Ld.
Amicus Curiae for appellant/appellant regarding non-receipt of
demand notice/legal demand notice by him would not come to
the aid and rescue of the appellant in the instant case. Needless to
reiterate that the appellant not only admitted the address specified
on the legal demand notice/notice dated 23.09.2017 (Ex.
CW1/D), as his correct address, rather, even failed to fulfil his
obligation/make payment within a period of 15 (fifteen) days of
service of summons on him, as per the dictate in C.C. Alavi Haji
v. Palapetty Muhammed (Supra.). Clearly, the appellant is
precluded to take advantage of his own wrong. Needless to
reiterate that in light of the aforenoted judicial dictates, legal
provisions as well as the facts and circumstances hereinunder
noted, the contention of the appellant of ‘alleged’ non-receipt of
legal notice dated 23.09.2017 would not come to his rescue, in
the considered opinion of this Court.
25. Proceeding with the contention of the Ld. Amicus
Curiae for the appellant/appellant that the cheque in question was
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 26 of 44
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
16:43:32 +0530
issued as security to the complainant/respondent and that the
appellant had taken loan of Rs. 50,000/- (Rupees Fifty Thousand
only) from the respondent, which he/the appellant duly paid, this
Court deems it apt to reproduce the relevant extracts from the
statement of the accused, recorded on 14.07.2022 in terms of the
provisions under Section 313 Cr.P.C., as under;
“Q. 4 It is in evidence against you that you took a
friendly loan in the sum of Rs. 2,25,000/- from the
complainant and also executed receipt-cum-
undertaking dated 10/08/2016 Ex. CW1/A regarding
receipt of the amount. That in consideration of the
above mentioned amount, you issued the cheque in
question, which got dishoboured. What do you have
to say?
Ans. It is correct. I had taken a loan of Rs.
50,000/- from the complainant. The cheque in
question was given as security. I have repaid the said
amount to the complainant. I admit my signatures on
the document Ex. CW1/A but the same were taken on
blank paper…”
(Emphasis supplied)
26. Unmistakably, it is noted from above that the
appellant admitted his signatures on the cheque in question as
well as of issuance of the same to the respondent. However, it
was asserted by the appellant that the said cheque/dishonoured
cheque was issued by him to the respondent as blank signed
security cheque. Quite evidently, except for asserting that the
cheque in question was issued as security and subsequently,
misused by the respondent, the appellant did not raise any plea to
aver/contend that the cheque in question was ever sought to be
returned by the appellant from respondent in writing or that the
appellant, had, at any point in time made any complaint/initiated
any proceedings against the respondent against the alleged non-
return/misuse of the cheque in question. Even otherwise, this
Court deems it apposite here to note that even as general
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 27 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:43:36 +0530
proposition of law1, repeated affirmed by superior courts, the
question whether a post-dated cheque is for ‘discharge of debt or
liability’ or a mere ‘security deposit’, depends on the nature of
the transaction. Consequently, where on the date of the cheque,
liability or debt exists or the amount has become legally
recoverable, the provisions under Section 138 NI Act would be
attracted in an instant case, otherwise not. Reference in this
regard is further made to the recent dictate of the Hon’ble
Supreme Court in Sripati Singh, through his Son Gaurav Singh v.
State of Jharkhand & Ors., MANU/SC/1002/2021, wherein the
Hon’ble Court, while revaluating the issue regarding the
maintainability of the proceedings under Section 138 NI Act in
the event of dishonour of security cheque(s), noted as under;
“16. A cheque issued as security pursuant to a
financial transaction cannot be considered as a
worthless piece of paper under every circumstance.
‘Security’ in its true sense is the state of being safe
and the security given for a loan is something given
as a pledge of payment. It is given, deposited or
pledged to make certain the fulfilment of an
obligation to which the parties to the transaction are
bound. If in a transaction, a loan is advanced and the
borrower agrees to repay the amount in a specified
timeframe and issues a cheque as security to secure
such repayment; if the loan amount is not repaid in
any other form before the due date or if there is no
other understanding or agreement between the parties
to defer the payment of amount, the cheque which is
issued as security would mature for presentation and
the drawee of the cheque would be entitled to present
the same. On such presentation, if the same is
dishonoured, the consequences contemplated Under
Section 138 and the other provisions of N.I. Act
would flow.”
(Emphasis supplied)
27. Clearly, it is only when legal debt or liability exists
against a drawer on the date of presentation of cheque, which
eventually gets dishonoured, provisions under Section 138 NI
1
Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 28 of 44
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
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Act would be attracted in a case. As a corollary, no liability can
be attributed to a drawer where a security cheque is presented
prior to the loan or installment maturing for repayment against
which the cheque was issued or where the liability or debt is
discharged prior to such presentation or in the cases of (altered)
understanding in relation to such presentation. Consequently, for
a drawer to avoid its liability under Section 138 of the NI Act on
the basis of ‘security deposit’ defence, is required to demonstrate
that on the date of the cheque, no legally recoverable debt or
liability was under existence. However, in the considered opinion
of this Court, from a conscientious analysis of the material placed
on record, it is quite lucid that the appellant, in the instant case,
has failed to rebut the presumption under Section 139 NI Act,
besides, even from the material put forth by the
complainant/respondent and cross examination of complainant
witnesses, the appellant has failed to demonstrate that no debt or
liability was due and payable by the appellant to the respondent
in the instant case. In fact, in this regard, reference is outrightly
made to the testimony of CW-1/Sh. Lal Babu
Shah/complainant/respondent before the Ld. Trial Court, wherein
he tendered his evidence in form of an Affidavit (Ex. CW1/1),
reiterating the stand taken by him in his complaint, besides
averring that the cheque amount was due and payable by the
appellant to him against the friendly loan disbursed by him/the
respondent to the appellant to a tune of Rs. 2,25,000/- (Rupees
Two Lakhs Twenty Five Thousand only). Markedly, in order to
prove the factum of receipt of said loan by the appellant, the
respondent has further produced/proved original receipt-cum-
undertaking, asserted to be executed on 10.08.2016 (Ex. CW1/A)
inter alia recording as under;
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 29 of 44
Digitally signed
ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:43:46 +0530
“…I, DHARAM SINGH S/o Sh. Chunni Lal R/o
H. No. 1200, Gali No 5/6, Near Hanuman Mandir
Sangam Vihar, Wazirabad, Burari, Delhi-110084
today on 10th August, 2016 borrowed and received
Rs.2,25,000/- (Rupees Two Lakhs & Twenty Five
Thousand only) as a friendly loan from SH. LAL
BABU SHAH S/o Shri Ram lakhan Shah R/o Khasra
No. 29/16/2, Gali No. 9, Surender Colony Part-II,
Jharoda Mazra, Burari, Delhi-110084, without any
interest for one year. I promise or undertake that I
shall pay the said loan amount on or before
31/08/2017 to SHRI LAL BABU SHAH. I further
promise that if I fail in fulfill my above promise to
return the said loan amount on or before 31/08/2017
then I shall paid the interest on said principal amount
i.e. Rs.2,25,000/- from today till the repayment of the
said amount @ 12% per annum as compensation or
damages to SHRI LAL BABU SHAH. It is also upon
to SHRI LAL BABU SHAH to recover the said
principal amount with interest from the date of
31/08/2017 @ 12% per annum through Court of
Law, if I will fail to repay the said amount on or
before 31/08/2017…”
(Emphasis supplied)
28. Pertinently, CW-1 in respect of the foregoing
specifically asserted that at the time of disbursal of the aforesaid
loan amount, the appellant further executed the receipt-cum-
undertaking dated 10.08.2016 (Ex. CW1/A), whilst, the said
transaction happened in the presence of Mr. Ramnath, who was
his/respondent’s neighbour as well as Mr. Neeraj, tenant of
respondent. In particular, in respect of disbursal of the loan
amount, the respondent, under his cross examination by/at the
behest of the appellant specially asserted that he had, “..given the
money in my office at Khasra No./141/16, Main Pusta Road,
Milan Vihar, Burari, Delhi in the presence of Mr. Ramnath who is
my neighbourer and Mr. Neeraj was a tenant at that time…”
Correspondingly, CW-1/respondent further denied the suggestion
that the receipt-cum-undertaking (Ex. CW1/A) was signed by the
appellant on blank paper and the cheque in question was given by
the appellant as security purpose(s). Strikingly, reference in
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 30 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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respect of the foregoing is further made to the deposition of
CW-2/Mr. Ramnath, who specifically asserted and proved his
Affidavit of evidence (Ex. CW2/A), wherein CW-2, specifically
proclaimed that the document, “exhibited as Ex. CW1/A which is
a receipt-cum-undertaking dated 10/08/2017 was executed by the
accused Dharam Singh in my presence and I had signed on this
document as Witness at point ‘A’ in document Ex. CW1/A. That
the accused Dharam Singh signed on this document in my
presence with their own free will without any pressure or fear…”
Remarkably, CW-2/Mr. Ramnath further reaffirmed in his
testimony of the appellant signing the receipt-cum-undertaking,
dated 10.08.2016 (Ex. CW1/A) in his/CW-2’s presence, besides
also affirmed that the said document bore his/CW-2’s signatures
at point ‘A’ thereof. Apposite at this stage to further reproduce the
relevant extracts from cross-examination of CW-2 as under;
“XXXX by Sh. ***, counsel for accused.
I am 6th class pass. I cannot read English
language. My counsel has not told about the contents.
I do not know about the facts mentioned in my
affidavit. The signature at points A and B belongs to
me in affidavit Ex.CW2/A. I am a property dealer. I
know the complainant from last 15-20 years. The
complainant had given an amount of Rs.2,25,000/- to
accused in cash in my presence. One other person
who was tenant of the complainant was also present
at the time of said deal. The said deal was executed
on August, 2016 at about 3-4 p.m. in the office of the
complainant which is situated at Milan Vihar, Buari,
Delhi. I do not know the exact date. The already Ex.
CWI/A had been signed by me at point A. I do not
the know the exact date when I had signed on Ex.
CWI/A at point A. I do not know whether the money
given by the complainant to the accused was on
interest or not. I do not know about the correct date
mentioned on Ex. CWI/A. It is incorrect to suggest
that no deal was executed on August, 2016 at about
3-4 p.m. in the office of the complainant situated at
Milan Vihar, Buari, Delhi in my presence. It is wrong
to suggest that I am deposing falsely…”
(Emphasis supplied)
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
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29. Quite evidently, it is seen from above that CW-2
even in his cross examination corroborated the version of the
respondent/CW-1 that the amount/loan of Rs. 2,25,000/- (Rupees
Two Lakhs Twenty Five Thousand only) was disbursed by the
respondent to the appellant in his presence and the presence of
another person, as well as reaffirmed that receipt-cum-
undertaking, dated 10.08.2016 (Ex. CW1/A) was signed by
him/CW-2. Needless to mention that nothing is forthcoming from
the cross examination of either CW-1/respondent/complainant or
CW-2/Sh. Ramnath, whereby the appellant has been able to rebut
their consistent stand. On the contrary, even while adducing
himself as defence witness/DW-1, the appellant though asserted
that he had obtained loan of Rs. 50,000/- (Rupees Fifty Thousand
only) from the respondent on 10.08.2016, however, he/the
appellant paid of the entire amount in installments to the
respondent. Correspondingly, under his evidence, DW-1/the
appellant asserted that he had given blank cheque and also signed
blank papers at the time of disbursal of such loan. Markedly,
under his cross examination, the appellant/DW-1 asserted as
under;
“XXXXX by Sh. ***, counsel for complainant.
I know the complainant as a neighbourer. I am
retired person.
At this stage, witness is shown document Ex.
CW1/A and asked to identify his signature. Witness
admit his signature at point A. I cannot say whether
thumb impression at point B on Ex. CW1/A is
related with me or not but complainant took the
thumb impression on blank paper.
I do not remember the date when I had returned
the amount to the complainant. The complainant did
not used to give the receiving of my repayment. I had
asked him for the receipt and he told that he will give
the same later. I did not send any notice to the
complainant or filed any police complaint against the
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 32 of 44
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
16:44:07 +0530
complainant for not returning cheque and blank
papers.
My sister Sunita was present every time when I
made payments to the complainant. I cannot tell the
exact date or month when I made payments to the
complainant but I had made the payments between
the period 2016 to 2017. It is wrong to suggest that I
do not remember the date of payment nor do I have
any receipt of the same because no such payment
was made the complainant. I know Ram Nath Singh
and he used to work in the office of the complainant.
It is correct that Ram Nath Singh was present when
complainant had given loan to me. Ram Nath Singh
was not present during any of the time when I made
payments to the complainant. It is wrong to suggest
that I am still liable to pay Rs. 2,25,000/- to the
complainant and that I have not returned any amount
to him. It is correct that I had signed Ex. CW1/A at
the time of taking the loan from the complainant. It is
wrong to suggest that I am deposing falsely…”
(Emphasis supplied)
30. Appreciably, it is noted form above that even the
appellant/DW-1 under his cross examination affirmed that the
receipt-cum-undertaking (Ex. CW1/A) bore his/DW-1’s
signatures, however, proclaimed that his signatures were obtained
on blank paper by the respondent. Correspondingly,
DW-1/appellant acknowledged that he had issued no notice or
made any complaint against the respondent for the return of
cheque in question or alleged blank paper, when the same were
not returned by the respondent to the appellant. Further, quite
evidently, the appellant despite proclaiming that he had repaid the
entire loan amount to the respondent, failed to produce any
receipts against such payments or to even recollect the dates of
such alleged repayment, except for mere oral assertion in this
regard. Ominously, another striking aspect of DW-1’s cross
examination is that he/the appellant conceded that
Ramnath/CW-2 was present at the time when loan was disbursed
by the respondent to him/the appellant. Apropos the present
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:44:12 +0530
discourse to refer to the deposition of DW-2/Ms. Sunita, who
inter alia asserted in her Evidence by way of Affidavit ( Ex.
DW2/A) as under;
“…2. That I state that my brother namely Dharam
Singh had taken Rs. 50,000/- (Rupees Fifty
Thousand only) from the complainant namely Lal
Babu Shah as a friendly loan on dated 10.08.2016 for
one year without interest.
3. That I state that in front of me the complainant
Lal Babu Shah had taken the blank cheque as a
security and blank signing paper in lieu of Rs.
50,000/- (Rupees Fifty Thousand only) from my
father on 10.08.2016.
4. That in the office of the complainant, the
brother of deponent had returned the whole amount
of Rs. 50,000/- with interest by way of cash in
several installments in front of me hence there my
brother has no liability towards the said loan…”
(Emphasis supplied)
31. Noticeably, in her cross examination, DW-2/Ms.
Sunita proclaimed as under;
“XXXXX by Sh. *** counsel for complainant.
I have studied till 8th class. I do not know the
contents of Ex. DW2/A. Accused is son of my
maternal aunt. Accused had taken Rs. 50,000/- from
the complainant and only I, accused and complainant
was present at that time. The amount was given at the
office of the complainant at Jharoda but I do not
know the exact address. I do not remember the exact
date but it was in the year 2016. At the time of taking
the loan the accused had only given blank signed
cheque to the complainant and no receipt
/acknowledgment was signed. It is wrong to suggest
that I have not met the complainant after
advancement of loan. I do not remember the date or
month when repayments were made to the
complainant. I had handed over the repayments in
cash by my own hands. It is wrong to suggest that
accused was not present at the time of repayment.
Vol. He was always present when repayments were
made to the complainant. I had asked for the receipt
of repayments from the complainant, but he told me
that once the payment was complete, he will return
the cheque. I had come to depose today on the asking
of accused. It is wrong to suggest that I am deposing
the facts as asked by accused. had told my counsel
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 34 of 44
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date: 2025.03.03
16:44:16 +0530
that I had given the money by my own hands It is
wrong to suggest that I was not present when the loan
advanced by the complainant nor I was present at the
time alleged repayments. It is wrong to suggest that I
do not remember the date or month of repayment
because no such payment was made by the accused
and because I have come to depose falsely at the
instance of accused. The accused had his godown of
tyres. At present it is closed. I cannot say if I know a
person namely Ram Nath as I cannot remember at
present. Again said Ram Nath may be the employee /
servant of the complainant. It is correct that he was
present at the time of signing of the receipt
/acknowledgement by the accused. Vol. Ram Nath
was sitting outside. It is wrong to suggest that I am
deposing falsely…”
(Emphasis supplied)
32. Significantly, it is noted from above that though,
DW-2 also asserted that the appellant obtained loan of Rs.
50,000/- (Rupees Fifty Thousand only) from the respondent,
which was repaid by the appellant in installments to the
respondent, however, there are material contradictions in the
testimonies of DW-1 and DW-2, besides there are variation in the
version propounded by DW-2, itself, making her unworthy of
credit. In this regard, this Court outrightly notes that while, DW-2
proclaimed in her cross examination that at the time of disbursal
of loan, only she/DW-2, the appellant/DW-1 and the respondent
were present, however, as aforenoted, DW-1 acknowledged the
presence of CW-2/Ramnath at time of such disbursal. However,
even subsequently, in her cross examination, DW-2 gave varying
versions regarding the presence of CW-2/Ramnath at the time of
loan disbursal by initially asserting that she could not state
whether she/DW-2 knew Ram Nath. However, again said that
Ramnath, “may be the employee / servant of the complainant. It
is correct that he was present at the time of signing of the
receipt /acknowledgement by the accused…” Concomitantly,
while DW-2 in her cross examination asserted that she/DW-2
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
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made repayments to the respondent of the alleged installment
against the loan. However, as aforenoted, DW-1 proclaimed that
such alleged repayments were made by him. Needless to
mention/reiterate that both, DW-1 and DW-2 did not depose
regarding the exact dates, times or places where such
installments were paid to the respondent by the appellant.
Needless to further mention that in her cross examination, DW-2
merely declared that only blank signed cheque was handed by the
appellant to the respondent and that no receipt/acknowledgement
was signed. Clearly, DW-2 nowhere avowed under her cross
examination regarding any blank signed paper or the return
thereof by the respondent to the appellant, as otherwise
proclaimed by DW-1 in his cross examination. The same is
despite the fact that DW-2 in her cross examination merely
proclaimed that she had, “…asked for the receipt of repayments
from the complainant, but he told me that once the payment was
complete, he will return the cheque…”
33. Conspicuously, in light of the foregoing, this Court
unambiguously observes that the defence of the appellant
pertaining to the dishonoured cheque being issued for security or
there being no liability as the alleged loan amount of Rs. 50,000/-
(Rupees Fifty Thousand only) was repaid by the appellant to the
respondent in installments, does not appeal to the senses of this
Court. On the contrary, the said defence not only, in considered
opinion of this Court, an afterthought, flimsy and insubstantial,
rather, unbelievable, and unconvincing. Needless to reiterate that
the appellant has been unable to rebut the consistent stand of the
witnesses adduced by the respondent, including that of
CW-2/Ramnath, who proclaimed regarding disbursal of loan
amount of Rs. 2,25,000/- (Rupees Two Lakhs Twenty Five
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ABHISHEK GOYAL
Date:
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+0530
Thousand only) by the respondent to the appellant in his
presence, besides also asserted regarding the factum of
appellant’s executing a receipt cum undertaking (Ex. CW1/A) in
his presence in lieu of said disbursal. On the contrary, as
aforenoted, the evidence of the appellants is replete with
contradictions, variations, and improvements, besides does not
even appeal to the sense of prudent man. Needless at this stage to
further reiterate that in order to rebut the statutory presumption
under Section 118/139 NI Act, it is not expected from an
accused/appellant herein to prove his defence ‘ beyond reasonable
doubt’ and that the same may be done by bringing ‘ something
which is probable’ on record for getting the burden of proof
shifted to the complainant. However, in the instant case, the
appellant has failed to bring forth any such facts and
circumstances, upon consideration of which, this Court may
either believe that the consideration and debt did not exist, or its
non-existence was so probable that a, “prudent man would under
the circumstances of the case, act upon the plea that it did not
exist.” On the contrary, as aforenoted, the inherent
inconsistencies and discordances in the various version put forth
by the appellant in his defence, make the same highly
implausible and trifling. Congruently, this Court concurs with the
finding of the Ld. Trial Court that the appellant has not been able
to rebut the initial presumption raised against him.
34. In as much as the contention of the Ld. Amicus
Curiae for the appellant/appellant pertaining to respondent’s lack
of financial capacity to lend the loan of Rs. 2,25,000/- (Rupees
Two Lakhs Twenty Five Thousand only) is concerned, it is
outrightly observed that the law in aspect is trite 1 that it is not
1
APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers, (2020) 12 SCC 724; and K.
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ABHISHEK by ABHISHEK
GOYAL
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obligatory on the complainant to first assert his financial capacity
in the case of cheque dishonour, unless an accused sets up a case
regarding such complainant’s wherewithal. Reference in this
regard is made to the decision of the Hon’ble Supreme Court in
Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735,
wherein the Hon’ble Court expounded the law regarding the
foregoing as under;
“10. The trial court and the first appellate court
have noted that in the case under Section 138 of the
NI Act the complainant need not show in the first
instance that he had the capacity. The proceedings
under Section 138 of the NI Act is not a civil suit. At
the time, when the complainant gives his evidence,
unless a case is set up in the reply notice to the
statutory notice sent, that the complainant did not
have the wherewithal, it cannot be expected of the
complainant to initially lead evidence to show that he
had the financial capacity. To that extent, the courts
in our view were right in holding on those lines.
However, the accused has the right to demonstrate
that the complainant in a particular case did not have
the capacity and therefore, the case of the accused is
acceptable which he can do by producing
independent materials, namely, by examining his
witnesses and producing documents. It is also open
to him to establish the very same aspect by pointing
to the materials produced by the complainant
himself. He can further, more importantly, achieve
this result through the cross-examination of the
witnesses of the complainant. Ultimately, it becomes
the duty of the courts to consider carefully and
appreciate the totality of the evidence and then come
to a conclusion whether in the given case, the
accused has shown that the case of the complainant is
in peril for the reason that the accused has
established a probable defence”
(Emphasis supplied)
35. However, in the instant case, it is noted form the
material placed on record that the appellant, nowhere before the
Ld. Trial Court, challenge the financial capacity of the
respondent either by issuing any reply to legal demand notice
Ilayarajalingam v. K. Karthikeyan, Crl. R.C. No. 1123 of 2017, dated 20.06.2022 (Madras HC).
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 38 of 44
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ABHISHEK GOYAL
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(Ex. CW1/D) nor at the time of framing of notice on 01.08.2018
or during the trial, rather, it is only during the present stage of
appeal, the appellant has sought to raise the said defence of
respondent’s alleged financial incapacity, without any basis or
background thereof, which, as aforenoted, the appellant is
precluded to do so at this stage.
36. Conclusively, in conspectus of the above and inter
alia keeping in view consistent testimony of the
complainant/respondent/CW-1 and CW-2/Sh. Ramnath as well as
the documents placed on record, the only conclusion which can
be arrived at in the facts and circumstances brought forth pertains
to the guilt of the appellant for the commission of the offence
under Section 138 NI Act. Needless to mention that the defence
raised by the appellant and the evidence/witnesses produced
by/on behalf of the appellant are not only unworthy and
uninspiring confidence, rather, irreconcilable as well as unworthy
of credence. Accordingly, this Court has no hesitation in
reasonably reaching a conclusion that the
complainant/respondent has proved its case ‘beyond reasonable
doubt’ against the appellant for the offence under Section 138 NI
Act. On the contrary, the appellant has failed to raise a probable
defence/defence by ‘preponderance of probabilities’ in his favour
for the reasons hereinunder noted.
37. Significantly, in as much as the aspect of sentence
awarded to the appellant by the Ld. Trial Court is concerned, this
Court, at the outset, notes that the superior courts have
persistently cautioned towards the grant of just and appropriate
sentence, post-conviction, as well as cautioned 1 that mere long
pendency of case is no ground to award lesser sentence. In fact,
1
State of M.P. v. Ghanshyam Singh, (2003) 8 SCC 13.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 39 of 44
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ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:44:35 +0530
in the instances of cheque dishonour cases, law is settled 2 that the
sentence imposed must be such as to give proper effect to the
object of the legislation and to dissuade unscrupulous drawers of
such negotiable instruments from taking advantage of their own
wrongs. In this regard, reference is made to the decision in
Suganthi Suresh Kumar v. Jagdeeshan, (2002) 2 SCC 420,
wherein the Hon’ble Apex Court unswervingly opined as under;
“12. The total amount covered by the cheques
involved in the present two cases was Rs 4,50,000.
There is no case for the respondent that the said
amount had been paid either during the pendency of
the cases before the trial court or revision before the
High Court or this Court. If the amounts had been
paid to the complainant there perhaps would have
been justification for imposing a flea-bite sentence as
had been chosen by the trial court. But in a case
where the amount covered by the cheque remained
unpaid it should be the lookout of the trial
Magistrates that the sentence for the offence under
Section 138 should be of such a nature as to give
proper effect to the object of the legislation. No
drawer of the cheque can be allowed to take
dishonour of the cheque issued by him light-
heartedly. The very object of enactment of provisions
like Section 138 of the Act would stand defeated if
the sentence is of the nature passed by the trial
Magistrate. It is a different matter if the accused paid
the amount at least during the pendency of the case.”
(Emphasis supplied)
38. Correspondingly, the Hon’ble Supreme Court in R.
Vijayan v. Baby, (2012) 1 SCC 260 , while fervently professing
towards the grant of reimbursement of the loss by way of
compensation to the complainant/victim in cheque dishonour
cases, avowed as under;
“17. The apparent intention is to ensure that not
only the offender is punished, but also ensure that the
complainant invariably receives the amount of the
cheque by way of compensation under Section
357(1)(b) of the Code. Though a complaint under
Section 138 of the Act is in regard to criminal2
H. Pukhraj v. D. Parasmal, (2015) 17 SCC 368.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 40 of 44
Digitally signed
ABHISHEK by ABHISHEK
GOYAL
GOYAL Date: 2025.03.03
16:44:39 +0530
liability for the offence of dishonouring the cheque
and not for the recovery of the cheque amount
(which strictly speaking, has to be enforced by a civil
suit), in practice once the criminal complaint is
lodged under Section 138 of the Act, a civil suit is
seldom filed to recover the amount of the cheque.
This is because of the provision enabling the court to
levy a fine linked to the cheque amount and the usual
direction in such cases is for payment as
compensation, the cheque amount, as loss incurred
by the complainant on account of dishonour of
cheque, under Section 357(1)(b) of the Code and the
provision for compounding the offences under
Section 138 of the Act. Most of the cases (except
those where liability is denied) get compounded at
one stage or the other by payment of the cheque
amount with or without interest. Even where the
offence is not compounded, the courts tend to direct
payment of compensation equal to the cheque
amount (or even something more towards interest) by
levying a fine commensurate with the cheque
amount. A stage has reached when most of the
complainants, in particular the financing institutions
(particularly private financiers) view the proceedings
under Section 138 of the Act, as a proceeding for the
recovery of the cheque amount, the punishment of
the drawer of the cheque for the offence of
dishonour, becoming secondary.
18. Having reached that stage, if some
Magistrates go by the traditional view that the
criminal proceedings are for imposing punishment on
the accused, either imprisonment or fine or both, and
there is no need to compensate the complainant,
particularly if the complainant is not a “victim” in the
real sense, but is a well-to-do financier or financing
institution, difficulties and complications arise. In
those cases where the discretion to direct payment of
compensation is not exercised, it causes considerable
difficulty to the complainant, as invariably, by the
time the criminal case is decided, the limitation for
filing civil cases would have expired. As the
provisions of Chapter XVII of the Act strongly lean
towards grant of reimbursement of the loss by way of
compensation, the courts should, unless there are
special circumstances, in all cases of conviction,
uniformly exercise the power to levy fine up to twice
the cheque amount (keeping in view the cheque
amount and the simple interest thereon at 9% per
annum as the reasonable quantum of loss) and direct
payment of such amount as compensation. Direction
to pay compensation by way of restitution in regard
to the loss on account of dishonour of the cheque
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 41 of 44
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
16:44:42 +0530
should be practical and realistic, which would mean
not only the payment of the cheque amount but
interest thereon at a reasonable rate. Uniformity and
consistency in deciding similar cases by different
courts, not only increase the credibility of cheque as
a negotiable instrument, but also the credibility of
courts of justice.”
(Emphasis supplied)
39. Ergo, wary of the aforenoted judicial dictates, facts
and circumstances of the present case as well as the arguments
addressed by the Ld. Amicus Curiae for the appellant as well as
the respondent, this Court unswervingly observes that the Ld.
Trial Court has acted quite leniently with the appellant by
awarding sentence/simple imprisonment for a period of 01 (one)
month and fine to a tune of Rs. 3,55,000/- (Rupees Three Lakhs
Fifty Five Thousand only) along with simple interest to be
computed at the rate of 9% (nine percent.) per annum as quantum
of loss and reasonable amount if litigation cost suffered by the
prosecution for more than six years, to be paid as compensation
by the appellant to respondent/complainant, under the impugned
order/order of sentence 24.01.2024. Needless to further mention
that the appellant has failed to demonstrate any mitigating factor,
convincing this Court to grant any relaxation in favour of the
appellant. On the contrary, from a perusal of the records of the
Ld. Trial Court and this Court, it is observed that the conduct of
the appellant has been grossly dilatory and recalcitrant, delaying
the proceedings, both, before the Ld. Trial Court as well as this
Court by repeated deliberate non-appearance and non-compliance
of the directions passed by the Ld. Trial Court as well as this
Court, besides violating the undertaking given to the respondent
as well as this Court. Clearly, under such circumstances, this
Court is of the considered opinion that no interference in the
quantum of sentence awarded by Ld. Trial Court is warranted by
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 42 of 44
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
16:44:46 +0530
this Court, while determining the present appeal, as the sentence
awarded to the appellant by the Ld. Trial Court not only
corresponds with the crime involved, rather, falls in tandem with
the resolute declarations of the superior courts, as hereinunder
noted. However, it is apposite to note here that during the
proceedings before this Court, a sum of Rs. 70,000/- (Rupees
Seventy Thousand only) was paid by/on behalf of the appellant to
the respondent on 05.06.2024, which requires due
consideration/adjustment, while determining the quantum of
fine/compensation directed to be paid by the appellant in the
instant case. Needless to mention that the appellant deliberately
opted not to deposit 20% (twenty percent) of the fine amount, in
terms of the provisions under Section 148 NI Act, as directed by
this Court on 23.02.2024, leading to this Court vacating the order
of stay of operation of the impugned order of sentence on
01.08.20241.
40. Conclusively, in view of the above discussion, the
present appeal deserves to be rejected/dismissed and is hereby
dismissed. The judgment dated 11.12.2023 and the consequent
order of sentence dated 24.01.2024, passed by the learned
Metropolitan Magistrate-05/Ld. MM-05 (NI Act), Central, Tis
Hazari Courts, Delhi in case bearing; ” Lal Babu Shah v. Dharam
Singh, CC No. 13519/2017″, convicting the appellant for the
offence punishable under Section 138 Negotiable Instrument Act
and awarding the appellant, in the manner as hereinunder noted,
are hereby upheld.
41. Trial Court Record be sent back along with a copy
of this order/judgment with directions to proceed against the
appellant as per law. Needless to mention, the appellant has1
In terms of the decision in Gulshan Arora v. State (NCT of Delhi, 2023 SCC Online Del. 2616.
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 43 of 44
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
2025.03.03
16:44:50 +0530
deliberately opted not to appear before this Court since
23.09.2024, despite repeated notices as hereinunder observed and
this Court had appointed Ld. Amicus Curiae, to represent the
appellant in the present case, considering that persistent absence
of the appellant and the change of counsel. Needless to reiterate,
arguments on the present appeal have been duly addressed by Ld.
Amicus Curiae as well as by the Ld. Counsel for the respondent.
Copy of this order/judgment be also given dasti to Ld. Amicus
Curiae for the appellant.
42. Appeal file be consigned to record room after due
compliance. Digitally signed
by ABHISHEK
GOYAL
ABHISHEK
Date:
GOYAL 2025.03.03
16:44:55
+0530
Announced in the open Court (Abhishek Goyal)
on 03.03.2025. ASJ-03, Central District,
Tis Hazari Courts, Delhi
CA No. 62/2024 Dharam Singh v. Lal Babu Shah. Page No. 44 of 44
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