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Delhi District Court
Hemant Handa vs Bhagwan Chaudhary on 11 June, 2025
THE COURT OF MS. SURABHI SETHI
JUDICIAL MAGISTRATE FIRST CLASS (NI ACT- 02),
WEST DISTRICT, TIS HAZARI COURTS, NEW DELHI
Hemant Handa
S/o Sh. Vijay Handa
R/o H.no. 2/49, 2nd Floor, Subhash Nagar,
New Delhi. ..... Complainant
Vs.
Mr. Bhagwan Chaudhary
Prop. M/s M.N Enterprises,
22-D, Ravi Enclave, Vikaspuri, Delhi
Also At:
G-2, Bharti Chamber (Basement)
Near PVR Vikaspuri, Opp. McDonald, Delhi-110018 ..... Accused
Complaint Case number : 12615/2016
Date of Institution of Complaint : 31.07.2014
Offence Complained of : Section 138 NI Act
Plea of Accused : Not Guilty
Final order : Acquittal
Date of Decision : 11.06.2025
Digitally
signed by
SURABHI
SURABHI SETHI
SETHI Date:
2025.06.11
17:17:29
+0530
1
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
JUDGMENT
1. The present complaint has been filed by Sh. Hemant Handa, (hereinafter
referred to as ‘complainant’), against Sh. Bhagwan Chaudhary (hereinafter
referred to as ‘accused’), under Section 138 of Negotiable Instruments Act, 1881
(hereinafter referred to as ‘NI Act‘) for dishonour of cheques bearing numbers
917752 dated 13.04.2014 drawn on Syndicate Bank, Rani Jhansi Road, Delhi,
000066 dated 23.05.2014 drawn on Kotak Mahindra Bank, Vikas Puri, New
Delhi and 917753 dated 28.05.2014 drawn on Syndicate Bank, Rani Jhansi
Road, Delhi for an amount of Rs. 1,82,000/-, Rs. 2,80,000/- and Rs. 1,55,000/-
respectively (hereinafter referred to as ‘cheques in question’).
A. BRIEF FACTS:-
2. (a) The complainant has alleged that the accused had sought financial
assistance from him to the tune of Rs. 6,17,000/- for payment to his creditors.
The complainant has alleged to have transferred Rs. 4,60,000/- to the account of
the accused, under the name of M.N. Enterprises through RTGS on 13.04.2013
and a further amount of Rs. 1,57,000/- by cash on the same date, against the
execution of receipt and promissory note (Ex. CW-1/2). It is further alleged that
to discharge this liability, the accused issued the cheques in question (Ex. CW-
1/4, Ex. CW1/5 and Ex. CW1/6) to the complainant and the same were
dishonoured upon presentation, vide return memo dated 02.06.2014 (Ex. CW-
1/7) with remarks “Insufficient Funds”.
(b) Thereafter, the complainant sent a legal demand notice dated 19.06.2014
(Ex.CW-1/8) to the accused through his Counsel. However, the accused
allegedly failed to pay the cheque amount within the statutory period, despite
such notice, and therefore, the present complaint has been filed.
3. Per contra, the stance of the accused is that the complainant was running
Digitally
signed by
SURABHI
SURABHI SETHI
SETHI Date:
2025.06.11
2
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+0530CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
a chit fund committee. The accused has admitted issuing blank signed security
cheques to the complainant for the purpose of such committee and the same are
alleged to have been misused by the complainant. The accused has alleged that
the promissory note (Ex. CW-1/2) is forged and fabricated and is not signed by
him. It has been further alleged by the accused that the complainant had taken a
loan of Rs. 4,60,000/- and to return the same, the said amount has been
transferred into his account by the complainant.
B. PRE-SUMMONING EVIDENCE AND NOTICE:-
4. At the stage of pre-summoning evidence, the complainant examined
himself as CW1 and led his evidence by way of affidavit Ex. CW-1/A. The
complainant relied upon documents Ex. CW-1/1 to Ex. CW-1/10 in his pre-
summoning evidence. Upon finding a prima facie case, the accused was
summoned to face trial vide order dated 18.12.2014. On entering appearance,
the accused was served with the notice of accusation under Section 251, Code
of Criminal Procedure, 1973 (hereinafter referred to as ‘Cr.P.C.’) on
04.02.2016, to which he pleaded not guilty and claimed trial.
5. Thereafter, the accused moved an application under Section 145(2), NI
Act which was allowed vide order dated 04.02.2016 and the accused was
allowed to cross-examine the complainant.
C. COMPLAINANT’S EVIDENCE:-
6. During the trial, the complainant was duly examined, cross-examined and
discharged. The following oral and documentary evidence was led by the
complainant to prove his case against the accused beyond reasonable doubt.
Digitally
signed by
SURABHI
SURABHI SETHI
SETHI Date:
2025.06.11
17:17:44
+05303
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
ORAL EVIDENCE
CW-1 Sh. Hemant Handa
(tendered his evidence by way of affidavit)DOCUMENTARY EVIDENCE
CW-1/1 Copy of transfer by RTGS
CW-1/2 and Receipt and promissory note
CW1/3
CW-1/4 Cheque bearing no. 000066 dated
23.05.2014 for Rs. 2,80,000/-
CW-1/5 Cheque bearing no. 917753 dated
28.05.2014 for Rs. 1,55,000/-
CW-1/6 Cheque bearing no. 917752 dated
19.04.2014 for Rs. 1,82,000/-
CW-1/7 Return memo dated 02.06.2014
CW-1/8 Legal Notice dated 19.06.2014 sent to the
accused.
CW-1/9 Postal receipts of legal notice
CW-1/10 Tracking reports of legal notice
D. STATEMENT OF ACCUSED:-
7. Thereafter, in order to allow the accused to personally explain the
circumstances appearing in evidence against him, his statement under Section
313, Cr.P.C. was recorded without oath.
8. The accused led defence evidence and examined himself as DW-2. The
complainant did not cross-examine the accused after availing several
opportunities for the same and his right to cross-examine the accused was thus
Digitallyclosed vide order dated 22.05.2024.
signed by
SURABHI
SURABHI SETHI
SETHI Date:
2025.06.11
17:17:56
+05304
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
9. Thereafter, the matter was listed for final arguments. No arguments were
addressed on behalf of the complainant despite several opportunities and
consequently, his right for the same was closed vide order dated 31.07.2024. I
have heard the Ld. Counsel for the accused and have perused the file and given
my thoughtful consideration to the material on record.
10. Ld. Counsel for the accused has argued that the complainant has filed a
false and frivolous complaint against the accused. He has argued that the
complainant runs a chit fund committee and the cheques in question were
handed over to him by the accused as security for the same. He has further
argued that the accused had paid 13 installments of the committee to the
complainant, for which the complainant had transferred Rs. 4,60,000/- through
RTGS into his bank account, however, he failed to pay the remaining amount of
the committee to the accused. He has further argued that the cheques in question
given to the complainant as security have been misused by him and hence, the
accused owes no liability towards the complainant and be acquitted of the
offence under Section 138, NI Act.
E. INGREDIENTS OF OFFENCE AND DISCUSSION:-
11. Before delving into the facts of the present case, it is essential to examine
the law governing the offence under Section 138, NI Act. Bare reading of the
provision shows that in order to establish the offence under Section 138, NI Act,
the complainant must establish the following ingredients:
i. Cheque is drawn by the accused on an account maintained by him
with a banker for payment of any amount of money to another
person for discharge, in whole or in part, of any debt or other
liability.
ii. The debt or other liability against which the cheque was issued is
legally enforceable.
SURABHI
SETHI
Digitally signed by
SURABHI SETHI5
Date: 2025.06.11
17:18:03 +0530CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
iii. Said cheque is returned unpaid by the bank either due to
insufficiency of funds in the account of the accused to honour the
cheque or because it exceeds the amount arranged to be paid from
that account by an agreement made with that bank.
iv. The cheque must have been presented to the bank within a period of
03 months from the date on which it is drawn or within the period of
its validity.
v. A demand of the said amount is made by the payee or the holder in
due course of the cheque by a notice in writing given to the drawer
within 30 days of the receipt of information of dishonour from the
bank.
vi. Drawer of the cheque fails to make the payment of the said amount
to the payee or holder in due course of cheque within 15 days of said
notice.
12. In addition to the above, the conditions stipulated under Section 142, NI
Act must be fulfilled by the complainant. Therefore, in a complaint under
Section 138, NI Act, the complainant is required to prove that the cheque was
drawn by the drawer (accused) for the discharge of a legally enforceable debt or
other liability.
13. It is a well settled principle of criminal jurisprudence that a criminal trial
proceeds on the presumption of innocence of the accused, until proven guilty.
Thus, the initial burden to establish the guilt of the accused lies upon the
complainant. However, in the trial of an offence under Section 138, NI Act,
once the accused admits his signatures on the cheque in question, certain
presumptions arise in favour of the complainant under the scheme of the Act.
These presumptions result in shifting of onus on the accused. Here, it is apposite
to refer to Section 118(a) and Section 139 of the NI Act. Section 118(a) of the
NI Act provides that unless the contrary is proved, a drawn up negotiable
instrument, if accepted, has to be presumed to be for consideration. Further,
Section 139 of the NI Act provides that unless the contrary is proved, the holder
of a cheque shall be presumed to have received the same in discharge of any
Digitally signed
6
by SURABHI
SURABHI SETHI
SETHI Date:
2025.06.11
17:18:08 +0530CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
debt or other liability. Therefore, these two provisions raise a rebuttable
presumption in favour of the complainant that the cheque in question was drawn
for consideration and was issued by the accused in discharge of a debt or other
liability.
14. It was held by Hon’ble Apex Court in Hiten P. Dalai v. Bratindra Nath
Bannerjee, (2001) 6 SCC 16, that it is obligatory on the part of the court to raise
presumption under Sections 118 and 139 of NI Act in every case where factual
basis for raising of the presumption has been established. In Rangappa v. Sri
Mohan, (2010) 11 SCC 441, Hon’ble Apex Court held that where the signature
on the cheque is acknowledged, a presumption has to be raised regarding the
existence of a legally enforceable debt or liability, however, this presumption is
of a rebuttal nature and the onus is then on the accused to raise a probable
defence.
15. In order to rebut the presumption under Section 139 NI Act, the standard
of proof is that of preponderance of probabilities, by which the accused is liable
to raise a probable defence. To rebut the presumption, it is open to the accused
to rely on evidence led by him/her or to rely on the materials submitted by the
complainant or the circumstances upon which the parties rely in order to raise a
probable defence (Basalingappa v. Mudibasappa, (2019) 5 SCC 418). Further,
it was held by the Hon’ble Supreme Court in Kumar Exports v. Sharma
Carpets, (2009) 2 SCC 513 that to rebut the statutory presumption, the accused
should bring on record such facts and circumstances, upon consideration of
which, the court may either believe that the consideration or debt did not exist,
or their non-existence was so probable that a prudent man, under the
circumstances of the case, would act upon the plea that they did not exist.
16. Now, coming to the facts of the present case, it is the case of the
complainant that he had advanced a friendly loan of Rs. 6,17,000/- to the SURABHI
SETHI
Digitally signed by
SURABHI SETHI
Date: 2025.06.11
17:18:16 +0530
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CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
accused on 13.04.2013, for the repayment of which, the accused has issued the
cheques in question (Ex. CW-1/4, Ex. CW-1/5 and Ex.CW-1/6) in his favour.
The accused has admitted his signatures on the cheques in question. It is also
not in dispute that the cheques in question were presented within the period of
their validity and were dishonoured on presentation. The accused has denied the
receipt of legal notice from the complainant in his statement under Section 313,
Cr.P.C.
17. However, so far as the service of legal demand notice is concerned,
perusal of record reveals that the summons issued to the accused at G-2, Bharti
Chamber (Basement), Near PVR Vikaspuri, Opp. McDonald Delhi-110018,
was received back duly served. This is the same address as is mentioned in the
memo of parties and on which the legal demand notice (Ex. CW-1/8) was
allegedly sent to the accused. In view of the same, the presumption of due
service of legal demand notice is drawn under Section 27 of the General
Clauses Act, which provides that where the notice is sent to the correct address,
the same shall be presumed to have been duly served. Hence, the plea of the
accused that he has not received the legal demand notice at the given address is
not tenable.
18. In the landmark decision of “C. C. Alavi Haji vs. Palapetty Mohd. &
Anr.” (2007) 6 Supreme Court Cases 555, the Hon’ble Apex Court held that as
under:-
“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
complaint Under Section 138 of the Act, make the payment of the
cheque amount and submit to the court that he had made the payment
within 15 days of the receipt of summons (by receiving a copy of
complaint with the summons) and, therefore, the complainant is liable to SURABHI
SETHI
be rejected. A person who does not pay within 15 days of receipt of Digitally signed by
SURABHI SETHI
Date: 2025.06.11
17:18:32 +05308
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
summons from the court along-with the copy of 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 G. C. Act and
114 of the Evidence Act.”
19. The present complaint has been filed within the period of limitation. It is
thus clear that factual basis for raising the presumption u/s 118(a) NI Act and
Section 139 NI Act is established in the present case. Accordingly, the
mandatory presumptions under Section 118(a) and Section 139 of NI Act are
raised that the cheque in question was issued in discharge of a legally
enforceable debt or other liability.
20. Further, Section 118(g), NI Act also lays down a presumption in favour of
the complainant. It states that the holder of the cheque is presumed to be the
holder in due course. Hence, the onus now shifts to the accused to rebut the
presumptions and to establish a probable defence that the cheques in question
(Ex. CW-1/4, Ex. CW-1/5 and Ex. CW1/6) were not issued in discharge of any
legally enforceable debt/ liability.
21. The defence of the accused is that the complainant was running a chit
fund committee and the cheques in question (Ex. CW-1/4, Ex. CW-1/5 and Ex.
CW1/6) were handed over to him as security for the same. It has been alleged
by the accused that he had paid 13 installments of the committee, for which he
had received an amount of Rs. 4,60,000/- from the complainant by way of
RTGS into his account. It has also been admitted by the complainant in his
cross-examination that the amount of Rs. 4,60,000/- was transferred into the
account of M.N. Enterprises, the firm of the accused. Further, it has been
alleged by the accused that the complainant failed to pay the remaining price
money of the chit fund committee to him.
SURABHI
SETHI
Digitally signed by
SURABHI SETHI
Date: 2025.06.11
17:18:37 +0530
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CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
22. It is also the defence of the accused that the promissory note (Ex. CW-
1/3) is a forged and fabricated document and the same was never signed by him.
In order to substantiate this defence, it has been brought on record by the
accused through the cross-examination of the complainant that the particulars of
the promissory note (Ex. CW-1/3) were filled by the complainant himself, in
the presence of the accused and his son, Sh. Vivek Chaudhary. The complainant,
in his cross-examination, has further stated that the promissory note (Ex. CW-
1/3) was also signed by a person as a witness, however, he has failed to state the
name of such person and has also failed to examine him as a witness, in order to
prove the execution of the promissory note (Ex. CW-1/3) by the accused.
Further, the complainant has also failed to offer an explanation as to why the
son of the accused did not sign the promissory note (Ex. CW-1/3) as a witness,
even though the same was admittedly executed by the accused in his presence.
23. It is also the defence of the accused that the cheques in question (Ex.
CW-1/4, Ex. CW-1/5 and Ex. CW1/6) were handed over to the complainant as
security for the chit fund committee and the same have been misused by the
complainant. It has been alleged by the accused in his statement under Section
313, Cr.P.C. that he had paid 13 installments of the chit fund committee run by
the complainant, however, the complainant had paid only Rs. 4,60,000/- through
RTGS into his bank account and had failed to pay the remaining price money of
the committee to him. It has also been alleged by the accused that he had
handed over 11 cheques as security to the complainant and the same were
presented for encashment, however, only 5 of such cheques were dishonoured
and the remaining cheques were dishonoured for being outdated.
24. Perusal of the return memo (Ex. CW-1/7) reveals that a total of 11
cheques were dishonoured vide the aforesaid bank return memo. The accused
has thus tried to establish that certain cheques, other than the cheques in
SURABHI
question, were also handed over to the complainant as security for the SETHI
Digitally signed by
SURABHI SETHI
Date: 2025.06.11
17:18:44 +0530
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CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
installments of his chit fund committee, and not for the repayment of any loan
to him. This establishes the bona fide of the accused and also probabilises the
defence raised by him, as all the 11 cheques dishonoured by the return memo
(Ex. CW-1/7) appear to be of the same series and can be presumed to have been
issued from the same cheque book. Further, no evidence has been led on behalf
of the complainant to prove anything to the contrary.
25. As regards a cheque given as security, the Hon’ble Apex Court in Sripati
Singh v. State of Jharkhand and Anr. (2021 SCC OnLine SC 1002) has held
that a cheque issued way of security, if dishonoured, would attract the
provisions of the NI Act, if the same is issued in consequence of a legally
enforceable debt or other liability, which has become recoverable at the time of
its presentation. It has been held that:
“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.”
26. It has been admitted by the accused that the cheques in question (Ex.
CW-1/4, Ex. CW-1/5 and Ex. CW1/6), bearing his signatures, were issued by
him to the complainant as security cheques in respect of the chit fund committee
run by the complainant. In view of the same, the dishonour of the said cheques
would entail consequences under the NI Act, unless such debt/ liability was not
SURABHI
legally enforceable on the date on which the cheques were drawn or on which SETHI
Digitally signed
by SURABHI
SETHI
Date: 2025.06.11
11 17:19:00 +0530
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
they were presented to the bank, or if the amount of the debt/ liability had
already been paid by the accused to the complainant prior to the presentation of
the security cheques for encashment.
27. In order to substantiate the aforesaid defence, the accused, during his
examination-in-chief, has brought on record that he and his son were members
of the chit fund committee run by the complainant and that the price money of
the same was Rs. 16 lacs. The accused has further alleged that he got the price
money of the chit fund committee, of which he received Rs. 4,60,000/- from the
complainant, by way of RTGS into the bank account of his firm, M/s M.N.
Enterprises, and issued 3 blank signed security cheques to the complainant for
the remaining installments of the committee. The accused has further alleged
that his son, Sh. Vivek Chaudhary had also handed over 5-6 blank signed
cheques to the complainant as security for the installments of the chit fund
committee. The accused has also alleged that the complainant failed to pay the
remaining price money of the chit fund committee to him and misused the
cheques in question (Ex. CW-1/4, Ex. CW-1/5 and Ex. CW1/6) handed over
as security to him.
28. It is pertinent to note that the accused was not cross-examined by the
complainant, despite several opportunities. Therefore, the testimony of the
accused has gone unchallenged and unrebutted. In the absence of the cross-
examination of the accused by the complainant, it can be concluded that the
testimony of the accused has been accepted by the complainant. It is settled law
that no cross-examination of a witness implies that the statement of the witness
is not disputed. It was held by the Hon’ble Supreme Court in the case of A.E.G.
Carapiet vs. A.Y. Derderian AIR 1961 Cal 359 that:
“[W]herever the opponent has declined to avail himself of the
opportunity to put his essential and material case in cross- Digitally
signed by
SURABHI
SURABHI SETHI
SETHI Date:
2025.06.11
examination, it must follow that he believed the testimony given 17:19:07
+053012
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
could not be disputed at all. It is wrong to think that this is merely
a technical rule of evidence. It is a rule of essential justice.”
29. In view of the unrebutted testimony of the accused, the complainant has
failed to lead any evidence to disprove the fact that he used to run a chit fund
committee business, of which the accused and his son were members. Further,
no evidence has been led on behalf of the complainant to show that the entire
price money of the said committee was paid to the accused and that the accused
failed to pay all the installments of the committee, giving rise to a legally
enforceable liability, for which the cheques in question (Ex. CW-1/4, Ex. CW-
1/5 and Ex. CW1/6), issued by the accused as security cheques, were presented
for encashment.
30. It is a well settled principle of law that prosecution has to stand on own
legs and prove its case beyond reasonable doubt. Also, it has been held by the
Hon’ble Supreme Court in Rahul Builders vs. Arihant Fertilizers and
Chemicals & Anr. (2008) 2 SCC 321 that NI Act envisages application of the
penal provisions which needs to be construed strictly. Therefore, even if two
views in the matter are possible, the Court should lean in favour of the view
which is beneficial to the accused. This is more so, when such a view will also
advance the legislative intent, behind enactment of this criminal liability.
F. CONCLUSION:-
31. In the backdrop of the above discussion, the complainant has failed to
establish his case against the accused beyond reasonable doubt. The accused,
from the cross-examination of the complainant and from his own unrebutted
testimony, has been able to raise a probable defence so as to rebut the
presumption of the existence of a legally enforceable debt/ liability, raised in
favour of the complainant in the present case. SURABHI
SETHI
Digitally signed by
SURABHI SETHI
Date: 2025.06.11
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CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
32. Accordingly, the accused, Bhagwan Chaudhary hereby stands acquitted
of the offence punishable under Section 138, Negotiable Instruments Act.
Accused is directed to furnish bail bond and surety bond in terms of Section
437-A, Cr.P.C.
33. This judgment contains 14 pages. The judgment has been pronounced by
the undersigned in open Court and each page bears the signature of the
undersigned.
Digitally
signed by
SURABHI
Announced in open SURABHI
SETHI
SETHI
Date:
2025.06.11
17:19:17
+0530
Court on 11.06.2025 (SURABHI SETHI)
JMFC (NI ACT)-02, WEST DISTRICT
TIS HAZARI COURT
14
CC NO. 12615/2016 Hemant Handa vs. Bhagwan Chaudhary
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