Delhi District Court
Mohd Kashif vs Mohd Azam Khan on 27 March, 2025
IN THE COURT OF SH. ABHISHEK GOYAL, ADDITIONAL
SESSIONS JUDGE-03, CENTRAL DISTRICT, TIS HAZARI
COURTS, DELHI
CNR No.: DLCT01-008682-2023
CRIMINAL APPEAL No.: 145/2023
MOHD. KASHIF,
S/o. Mohd. Aqil,
R/o. 2668, Baradari,
Sher Afghan, Ballimaran,
Delhi-110006. ... APPELLANT
VERSUS
MOHD. AZAM KHAN,
S/o. Late Sh. Haji Mohd. Ishaq,
R/o. 140, Katra Gokul Shah,
Matia mahal, Jama Masjid,
Delhi-110006. ... RESPONDENT
Date of Institution : 04.07.2023
Date when judgment was reserved : 03.01.2025
Date when judgment is pronounced : 27.03.2025
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 06.06.2023 (hereinafter
referred to as ‘impugned judgment’), passed by learned
Metropolitan Magistrate (NI Act)-02/Ld. MM(NI Act)-02,
Central, Tis Hazari Courts, Delhi (hereinafter referred to as the
‘Ld. Trial Court/Ld. MM Court’) in case bearing; ‘Mohd. Azam
Khan v. Mohd. Kashif, CC No. 540191/2016’, convicting the
appellant for the offence punishable under Section 138 Negotiable
Instrument Act (hereinafter referred to as ‘NI Act‘) and the
consequent order of sentence dated 09.06.2023 (hereinafter
referred to as ‘impugned order’), passed by the Ld. Trial Court,
awarding the appellant; simple imprisonment for a period of 03
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by ABHISHEK
ABHISHEK GOYAL
GOYAL Date:
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(three) months and fine of Rs. 5,00,000/- (Rupees Five Lakhs
only), i.e., the amount of cheque in question along with interest, to
be computed at the rate of 9% (nine percent) per annum on the said
amount, from the date of filing of the complaint ( i.e., from
22.09.2016) before the Ld. Trial Court till the date of the impugned
judgment to be paid by the appellant to the
respondent/complainant as compensation. Correspondingly, the
impugned order directs that in default of payment of the said
fine/compensation amount, the appellant would be liable 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. Succinctly, the present proceedings emanate from a
complaint, filed by the respondent/complainant before the Ld.
Trial Court in terms of the provisions under Section 138 of NI Act.
Markedly, under the said complaint, the respondent inter alia
contended that the appellant/accused and the respondent were
known to each other and that in the month of February, 2016, the
appellant approached the respondent for a friendly loan of Rs.
5,00,000/- (Rupees Five Lakhs only) and promised to return the
same within a period of six months. As per the respondent,
believing on the words of the appellant, the respondent advanced a
friendly loan of Rs. 5,00,000/- (Rupees Five Lakhs only) in cash
on 03.02.2016 to the appellant. Subsequently, in the month of July,
2016, when the respondent is asserted to have asked the appellant
for the refund/return of the loan amount, the appellant is stated to
have issued cheque bearing no. 873983 dated 18.07.2016 for a sum
of Rs. 5,00,000/- (Rupees Five Lakhs only), drawn on State Bank
of India, Hauz Qazi, Delhi-100006 branch (hereinafter referred to
as the ‘dishonoured cheque/cheque in question’). The respondent
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GOYAL
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further avowed under his complaint that when the said cheque
would be presented in the bank for encashment, same would be
honoured. Ergo, as per the assurances of the appellant, the
respondent is proclaimed to have presented the said cheque with its
banker, bearing; Oriental Bank of Commerce, Chawri Bazar,
Delhi-11006 branch. However, the said cheque, returned
dishonored vide return memo dated 26.07.2016 ( hereinafter
referred to as the ‘return memo’) under the remarks, “Funds
Insufficient”. Consequently, the respondent is asserted to have
contacted the appellant, seeking appropriate action, which the
appellant is proclaimed to have flatly refused to return the loan
amount. Ergo, the respondent issued a demand notice dated
08.08.2016 (hereinafter referred to as the ‘legal demand
notice/demand notice’) to the appellant in terms of the provisions
under Section 138 NI Act, however, no payment was made by the
appellant, despite due service thereof. Ergo, under such
circumstances, the respondent filed the aforenoted complaint in
terms of the provisions under Section 138 NI Act.
2.1. Notably, consequent upon pre-summoning evidence
by way of affidavit (Ex. CW1/A) having been tendered by the
respondent and thereupon, Ld. Trial Court’s taking cognizance of
the offence on 30.09.2016, summons were issued by the Ld. Trial
Court to the appellant/accused. Subsequently, upon the appellant’s
entering appearance before the Ld. Trial Court, notice under
Section 251 Cr.P.C. was framed against him vide order dated
10.11.2017, to which, the appellant plead not guilty and claimed
trial. Relevantly, during the course of trial, the respondent
examined himself as CW-1, while adopting his pre-summoning
evidence/ evidence by way of affidavit ( Ex. CW1/A) as well as,
relying upon the documents, i.e., cheque in question/cheques
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GOYAL Date: 2025.03.27
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bearing No. bearing no. 873983 dated 18.07.2016 for a sum of Rs.
5,00,000/- (Rupees Five Lakhs only), drawn on State Bank of
India, Hauz Qazi, Delhi-100006 (Ex. CW1/2); legal demand
notice dated 08.08.2018 (Ex. CW1/3); postal receipts (Ex. CW1/4
and Ex. CW1/5); tracking receipt (Ex. CW1/6); and
acknowledgment (Ex. CW1/7). Subsequently, on conclusion of
respondent’s evidence, and recording of statement of the appellant
under Section 313/281 Cr.P.C. on 09.01.2020, appellant’s
application under Section 315 Cr.P.C., seeking permission to
adduce himself as witness in his defence was allowed by the Ld.
Trial Court vide order dated 01.09.2021. However, subsequently,
on the submissions made by/on behalf of the appellant, appellant’s
right to lead defence evidence/DE was closed by the Ld. Trial
Court vide order dated 16.03.2022. Consequently, upon arguments
having been addressed by/on behalf of the appellant as well as the
respondent, 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. Learned Counsel for the appellant 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
copious voids in the case put forth by the respondent and that the
respondent’s story does not inspire any confidence, nor appeals to
the senses of a prudent man. Further, as per the Ld. Counsel, the
Ld. Trial Court did not consider the contradiction in the evidence
put forth by the respondent. As per the Ld. Counsel, case of the
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GOYAL Date: 2025.03.27
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respondent is replete with contradictions and variations, which
have not been considered by the Ld. Trial Court while convicting
and sentencing the appellant. In this regard, Ld. Counsel outrightly
asserted that the respondent, while under his complaint, alleged
that he given friendly loan of Rs. 5,00,000/- (Rupees Five Lakhs
only), in cash to the appellant on 03.02.2016, which the appellant
promised to return within six months, however, under his cross-
examination dated 21.09.2019, the respondent deposed that the
cheque was given by the accused, “when I had given the loan on
the same day i.e. on 18.07.2016”. Further, as per the Ld. Counsel,
the respondent under his cross examination dated 28.11.2019,
further asserted, “I went to the house of the accused on 18.07.2016
who has given me the subject cheque” , belying the case put forth
under his/respondent’s complaint. Correspondingly, as per the Ld.
Counsel, there are variations regarding the alleged date of return of
the loan amount and further that despite specific assertion of the
respondent under his cross examination on 21.09.2019 that he
maintained good relations with the father of the accused/appellant,
the reasons for non-examination of appellant’s father as one of the
witnesses on behalf of the complainant is not comprehensible,
especially when the complainant avowed that the loan was
disbursed in the presence of appellant’s father. Further, as per the
Ld. Counsel, the respondent even failed to prove his financial
capacity in granting loan to the appellant before the Ld. Trial
Court. In this regard, Ld. Counsel further fervently asserted that
the version put forth by the respondent regarding his source of
funds to tender the alleged ‘loan amount’ to the appellant is also
not beyond a pale of doubt, in the absence of any source of
arrangement of said fund forthcoming on the record of the Ld.
Trial Court. It was further submitted that the allegations that the
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GOYAL Date:
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complainant/respondent that he and the appellant were known to
each other is also falsified from the respondent’s declaration under
his cross that he was not aware of the appellant’s profession and
further, as per the Ld. Counsel, the complainant even failed to
establish any acquaintance between him and the appellant, belying
his case.
3.1. Ld. Counsel for the appellant further vehemently
argued that the impugned judgment and order resulted in causing
miscarriage of justice as the Ld. Trial Court convicted the
appellant merely on the basis of suggestions given on behalf of the
appellant as well as statements of the appellant recorded under
Section 281 read with Section 313 Cr. P.C., which, as per settled
law, cannot form the basis of conviction. Even otherwise, as per
the Ld. Counsel, statement of accused was not property recorded
as per the mandate of the provisions under Section 313 Cr.P.C. and
settled judicial precedents, entitling the appellant to be acquitted
on this sole ground. It was further contended that the Ld. Trial
Court also failed to appreciate that the in the respondent’s cross-
examination, 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. Ld. Counsel further submitted that apart from the
testimony of complainant, and a rough ledger, there is nothing on
record to corroborate the assertion of the complainant that any loan
was given by him to the accused/appellant. Further, as per the Ld.
Counsel, the respondent even failed to bring sufficient documents
on record to prove that the cheque in question was issued by the
appellant to discharge a legal liability towards him/the respondent.
Even otherwise, as per the Ld. Counsel, there is neither any
independent witness nor any sound documentary evidence on
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ABHISHEK GOYAL
GOYAL Date:
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record to prove the alleged transaction. Accordingly, Ld. Counsel
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 offence, especially when the respondent failed to
prove its case, beyond reasonable doubt against the appellant.
Even otherwise, as per the Ld. Counsel, the impugned order on
sentence was passed by the Ld. Trial Court, inconsiderate of the
correct factual scenario, passing exorbitant sentence and order of
compensation against the appellant. Consequently, the Ld.
Counsel inter alia prayed that the present appeal be allowed, and
the impugned judgment and order be set aside, and the appellant be
acquitted of the alleged charges. In support of the said contentions,
reliance was placed upon the decision in; Raj Kumar @ Suman v.
State (NCT of Delhi), 2023 (5) SCR 754; Sri. Dattatraya v.
Sharanappa, Crl. Appeal No. 3257/2024, dated 07.08.2024 (SC);
Shivaji Chintappa Patil v. State of Maharashtra, Crl. Appeal No.
1348/2013, dated 02.03.2021 (SC); Naresh Kumar v. State, Crl.
Appeal No. 1751/2017, dated 08.07.2024 (SC); Nar Singh v. State
of Haryana, MANU/SC/1004/2014; Vijay v. Laxamn 2013 (V)
AD (SC) 243; John K. Abraham v. Simon C. Abraham 2014 (1)
CCC (SC) 161; Kulvinder Singh v. Kafeel Ahmad, 2013 SCC
OnLine Del 34; Javed v. Kalusingh, 2021 ((66)) LAWDIGITA.IN
0603; Pradeep Kumar Verma v. Aparna Mehra, CrlLP 102/2014,
dated 21.01.2015 (DHC); Kulvinder Singh v. Gulam Moinuddin,
Crl. Appeal No. 122/2018, dated 11.10.2022 (DHC); Jagdish
Kumar Bajaj v. State, Crl.LP No. 587/2016, dated 07.09.2022
(DHC); Mrs. Omwati Tokas v. Ram Gopal Sharma, Crl. Appeal
No. 171/2022, dated 31.01.2023 (DHC); Ajay Singhania v. CBI,
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Crl. MC 2163/2024, dated 18.03.2024 (DHC); Ashok Kumar v.
State, Station House Officer, CRR No. 51/2014, dated 07.05.2024
(Hon’ble J&K HC); Raju J. Vylattu v. PV Alexander & Anr., Crl.
Rev. Pet 3007/2011, dated 09.10.2023 (Hon’ble HC of Kerala);
M/s. SS Diamond International v. Nameeta Sharma, (2018) 5 DEL
CK 0092; and M/s. Century Steel Traders v. M/s. Polaris Steel
Castings Pvt. Ltd., (2019) 1 CCC 635.
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.
In this regard, Ld. Counsel outrightly asserted that the appellant
had admitted in the notice framed under Section 251 Cr.P.C. as
well as in his statement under Sections 281/313 Cr.P.C. that the
cheque in question bear his signatures. Further, the cheque in
question was drawn on the account of the appellant, leading to the
raising of presumption under Sections 118/139 NI Act, which the
appellant failed to rebut. Ld. Counsel further submitted that at no
point in time during the trial, the appellant disputed his signatures
on the cheque in question or of the receipt of the legal demand
notice. On the contrary, the appellant, despite receipt of the said
notice, deliberately opted not to reply to the same or to make
payment to the appellant against the due amount. Correspondingly,
it was asserted by the Ld. Counsel that the appellant took
contradictory defence during the trail and failed to even clarify
whether he was the purchaser or broker of the ‘so called property’,
as asserted by the appellant. Even otherwise, no agreement against
the alleged property transaction between the respondent and his
brother-in-law/jija has been placed on record by the appellant,
despite being afforded opportunity by the Ld. Trial Court. It was
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further contended by the Ld. Counsel that the testimony of the
complainant/CW-1/respondent has not only been consistent,
rather, unblemished as well as lucidly points towards the only
inference of guilt of the appellant. It was concomitantly averred
that the respondent clarified his source of loan amount in his cross
examination. Ld. Counsel 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. Accordingly,
Ld. Counsel for the State submitted that the present appeal
deserves to be dismissed at the outset, as grossly malicious and
devoid of merits. In support of the said contentions, reliance has
been placed upon the decision in Mandvi Cooperative Bank Ltd. v.
Nimesh B. Thakore, AIR 2010 SC 1402; Sumeti Vij v. Paramount
Tech Sab Industries, AIR 2021 SC 1281; and Rangappa v. Sri
Mohan, (2010) 11 SCC 441.
5. The arguments of Ld. Counsel for the appellant as
well as that of Ld. Counsel for the respondent have been heard and
the record(s), including the Trial Court Record, case laws relied
upon by the parties as well as the written submissions/arguments,
placed on record have been thoroughly perused.
6. At the outset, this Court deems it apposite to
enunciate the scope of jurisdiction of this Court in the present
proceedings, i.e., in appeal. In this regard, this Court it is pertinent
to make a reference to the decision of the Hon’ble Supreme Court1
in Atley v. State of U.P., 1955 SCC OnLine SC 51, at the outset,
wherein the Hon’ble Court, while delving into the ‘scope an ambit’
of appellate court’s jurisdiction inter alia noted as under;
1
Reference further made to; Padam Singh v. State of U.P., (2000) 1 SCC 621.
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“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 as 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
1
State of Gujarat v. Bhalchandra Laxmishankar Dave, (2021) 2 SCC 735.
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accused. Needless to reemphasize that the appellate court is to be
further wary of fact that presumption 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 forCA No. 145/2023 Mohd. Kashif v. Mohd. Azam Khan Page No. 11 of 42
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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)
10. At the outset, this Court observes that the objective
behind the introduction of the provision(s) under Section 138
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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
proving to be inadequate to curb the menace on the part of
unscrupulous persons and a 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 imminent 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 our 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 in1
Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305.
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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;
“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:
1
N. Doraisamy v. Archana Enterprises, 1995 SCC OnLine Mad 25
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(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 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
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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, (Supra.), 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.
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
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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 a presumption
that there exists a legally enforceable debt or liability at the time of
such drawing. Indisputably1, 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
presumptions2, “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 settled3 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 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;
1
Rajaram v. Maruthachalam, 2023 SCC OnLine SC 48.
2
Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106.
3
Kishan Rao v. Shankargouda, (2018) 8 SCC 165.
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“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)
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. Ergo, being cognizant of the
aforenoted principles/judicial dictates, this Court would now
1
Kundan Lal Rallaram v. Custodian, Evacuee Property, 1961 SCC OnLine SC 10.
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proceed with the assessment of the rival contentions of the
appellant and the respondent. Pertinent in this regard to outrightly
note that the appellant by means of the present appeal, challenged
the financial capacity of the respondent to lend the loan of Rs.
5,00,000/- (Rupees Five Lakhs only) to the appellant, as specified
under the complaint. Notably, no such assertion/averment was
raised by/on behalf of the appellant before the Ld. Trial Court
during the cross examination of the respondent or even during the
arguments, as noted from a conscientious perusal of the case
records. Needless to mention that the appellant even deliberately
opted not to reply to the legal demand notice dated 08.08.2016,
making any such assertion, as raised before this Court for the first
time in the present proceedings. Nevertheless, in this regard this
Court deems it apposite to note that it is wary of the settled law 1
that it is not obligatory on the part of the complainant to first assert
his financial capacity in cheque dishonour case(s), unless the
accused sets up a case regarding the 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
1
APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers, (2020) 12 SCC 724; and K.
Ilayarajalingam v. K. Karthikeyan, Crl. R.C. No. 1123 of 2017, dated 20.06.2022 (Madras HC).
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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)
16. Clearly, law does not require the complainant to
prove/to initially lead evidence to show that he had the financial
capacity, unless a case is set up in the reply notice to the statutory
notice sent averring that such a complainant did not have the
wherewithal. As a corollary, it is only when an accused puts up a
defence of lack of financial capacity on the part of such
complainant, it becomes obligatory on the complainant to
demonstrate his financial soundness to lend the amount or to
encumber an accused with debt or liability as asserted under his
complaint. However, as aforenoted, 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
dated 08.08.2016 (Ex. CW1/3) nor at the time of framing of notice
on 10.11.2017 or during the trial, rather, as noted herein, 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, the appellant is
precluded to do so at this stage in light of the aforenoted judicial
dictate.
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17. Noticeably, Ld. Counsel for the appellant has further
assailed the impugned judgment and order on the ground that the
Ld. Trial Court did not comply with the provisions under Section
313 Cr.P.C. In particular, as per the Ld. Counsel for the appellant,
the statement of the appellant recorded under Section 313 Cr.P.C.
on 09.01.2020 is vague and could not have formed the basis of
conviction of the appellant. However, in this regard, this Court
notes at the outset that the superior courts 1 have persistently
avowed that mere defective/improper examination under section
313 Cr.P.C. is no ground for setting aside the conviction of the
accused, unless it is shown that such error or omission has, in fact,
resulted in prejudice to the accused. Reference in this regard is
made to the decision of the Hon’ble Apex Court in Paramjeet
Singh @ Pamma v. State of Uttarakhand, 2010 (10) SCC 439 ,
wherein the Hon’ble Court unambiguously observed in this regard,
as under;
“31. Thus, it is evident from the above that the
provisions of Section 313 Cr.P.C make it obligatory
for the court to question the accused on the evidence
and circumstances against him so as to offer the
accused an opportunity to explain the same. But, it
would not be enough for the accused to show that he
has not been questioned or examined on a particular
circumstance, instead he must show that such non-
examination has actually and materially prejudiced
him and has resulted in the failure of justice. In other
words, in the event of an inadvertent omission on the
part of the court to question the accused on any
incriminating circumstance cannot ipso facto vitiate
the trial unless it is shown that some material
prejudice was caused to the accused by the omission
of the court.”
1
Reference is made to the decision in Shobhit Chamar & Ors. v. State of Bihar, MANU/SC/0181/1998 ,
wherein the Hon’ble Apex Court inter alia noted, “20. We have perused all these reported decisions relied
upon by the Learned Advocates for the parties and we see no hesitation in concluding that the challenge to the
conviction based on non compliance of Section 313 Cr.P.C. first time in this appeal cannot be entertained
unless the appellants demonstrate that the prejudice has been caused to them. In the present case as indicated
earlier, the prosecution strongly relied upon the ocular evidence of the eye witnesses and relevant questions
with reference to this evidence were put to the appellants. If the evidence of these witnesses is found
acceptable, the conviction can be sustained unless it is shown by the appellants that a prejudice has been
caused to them. No such prejudice was demonstrated before us and, therefore, we are unable to accept the
contention raised on behalf of the appellants.” (Emphasis supplied)
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(Emphasis supplied)
18. Correspondingly, the Hon’ble Supreme Court in Nar
Singh v. State of Haryana, (Supra.), wherein the Hon’ble Court
iterated the law in the following terms;
“16. Undoubtedly, the importance of a statement
Under Section 313 Code of Criminal Procedure,
insofar as the accused is concerned, can hardly be
minimised. The statutory provision is based on the
rules of natural justice for an accused, who must be
made aware of the circumstances being put against
him so that he can give a proper explanation to meet
that case. If an objection as to Section 313 Code of
Criminal Procedure statement is taken at the earliest
stage, the Court can make good the defect and record
additional statement of the accused as that would be in
the interest of all. When objections as to defective
Section 313 Code of Criminal Procedure statement is
raised in the appellate court, then difficulty arises for
the prosecution as well as the accused. When the trial
court is required to act in accordance with the
mandatory provisions of Section 313 Code of
Criminal Procedure, failure on the part of the trial
court to comply with the mandate of the law, in our
view, cannot automatically enure to the benefit of the
accused. Any omission on the part of the Court to
question the accused on any incriminating
circumstance would not ipso facto vitiate the trial,
unless some material prejudice is shown to have been
caused to the accused. Insofar as non-compliance of
mandatory provisions of Section 313 Code of
Criminal Procedure, it is an error essentially
committed by the learned Sessions Judge. Since
justice suffers in the hands of the Court, the same has
to be corrected or rectified in the appeal.
*** *** ***
20. The question whether a trial is vitiated or not
depends upon the degree of the error and the accused
must show that non-compliance of Section 313 Code
of Criminal Procedure has materially prejudiced him
or is likely to cause prejudice to him. Merely because
of defective questioning Under Section 313 Code of
Criminal Procedure, it cannot be inferred that any
prejudice had been caused to the accused, even
assuming that some incriminating circumstances in
the prosecution case had been left out . When
prejudice to the accused is alleged, it has to be shown
that accused has suffered some disability or detriment
in relation to the safeguard given to him Under
Section 313 Code of Criminal Procedure Such
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prejudice should also demonstrate that it has
occasioned failure of justice to the accused. The
burden is upon the accused to prove that prejudice has
been caused to him or in the facts and circumstances
of the case, such prejudice may be implicit and the
Court may draw an inference of such prejudice. Facts
of each case have to be examined to determine
whether actually any prejudice has been caused to the
Appellant due to omission of some incriminating
circumstances being put to the accused.”
(Emphasis supplied)
19. Ergo, in backdrop of the aforenoted judicial dictates,
when the records of the Ld. Trial Court are scrupulously perused, it
is noted that the Ld. Trial Court, at the time of recording of the
statement of the appellant on 09.01.2020, made reference to the
material/evidence brought on record against the appellant as well
as specifically brought to the notice of the appellant accused,
documents Ex. CW1/A, being the evidence by way of affidavit of
the complainant/respondent as well as the documents, Ex. CW1/1
to Ex. CW1/7, whereupon the following was recorded under the
appellant’s statement before the Ld. Trial Court;
“…All the incriminating circumstances appearing
in evidence against the accused alongwith documents
Ex. CW-1/A, Ex. CW-1/1 to Ex. CW-1/7 have been
put to him and he has been asked to explain the same.
He has replied as under:
I am innocent. I admit my signature on cheque in
question. I also admit that I did receive the legal
notice. Complainant had entered into an agreement
with me for sale of a property belonging to his
brother-in-law (jija). The agreement was oral and I
was not aware that the property was not in his name.
The cheque in question was issued to the complainant
at the time of agreement as consideration. Property
documents were not shown to me at that time.
Thereafter, my cheque was presented for encashment.
As the documents were not shown to me, so I did not
deposit the requisite amount in my bank account. I had
issued three cheques in total including the present one
to the complainant. All the cheques were amounting
to Rs. 5 lac each. I had also instructed to the
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encashment. However, the complainant has misused
the cheques by manipulation and presented the same.
Q. Do you want to lead defence evidence.?
A. Yes…”
(Emphasis supplied)
20. Conspicuously, from an evaluation of above, it is
noted that the appellant not only tendered his explanation to the
evidence/material placed on record against him before the Ld.
Trial Court, rather, also opted to lead defence evidence at the stage
of recording of his statement under Section 281/313 Cr.P.C. on
09.01.2020. However, as aforenoted, the appellant later on elected
not to lead any defence witness/evidence in his support, despite his
application under Section 315 Cr.P.C., having been allowed by the
Ld. Trial Court vide order dated 01.09.2021, leading to the closure
of DE on 16.03.2022. Nonetheless, nowhere before the Ld. Trial
Court, any plea of any prejudice as to violation/non-compliance of
the provisions under Section 313 Cr.P.C. was raised by/on behalf
of the appellant. Correspondingly, even under the ground of instant
appeal, the appellant did not aver/plead non-compliance of the
provisions under Section 313 Cr.P.C., rather, merely asserted that
his conviction could not have been premised on his admissions
made therein. In fact, it was only during the course of arguments in
the present appeal and in the written submissions filed by the
appellant before this Court, such an argument was raised for the
first time. Nonetheless, despite repeated queries from this Court,
Ld. Counsel for the appellant has failed to aver/assert/allege to the
slightest, prejudice caused to the appellant on the alleged non-
compliance of the provisions under Section 313 Cr.P.C. However,
as aforenoted, law is trite that challenge to the conviction based on
non-compliance of Section 313 Cr.P.C. first time in this appeal
cannot be entertained, unless the appellants demonstrate that the
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prejudice has been caused to them, which as aforenoted, the
appellant/Ld. Counsel for the appellant, in the considered opinion
of this Court, failed to do so/demonstrate. Needless to reiterate that
neither any assertion of prejudice forthcoming under the
arguments by/on behalf of the appellant, nor is the same
observable by this Court from the material placed on record. On
the contrary, such assertion, in the considered opinion of this
Court, appears to be nothing other than a mere frail endeavor on
the part of the appellant to circumvent the operation of impugned
judgment and order on this feeble plea, which clearly does not
resonate with this Court.
21. In so far as the contention of the Ld. Counsel for the
appellant pertaining to the alleged contradictions in the cross
examination of the complainant/respondent and the complaint are
concerned, this Court deems it pertinent to iterate and explore the
judicial precedents governing the law of contradictions in the
testimony of the witness. In this regard, this Court deems it apt to
outrightly make a reference to the decision of the Hon’ble
Supreme Court in State of U.P. v. M.K. Anthony, (1985) 1 SCC
505, wherein the Hon’ble Court inter alia observed as under;
“10. While appreciating the evidence of a witness,
the approach must be whether the evidence of the
witness read as a whole appears to have a ring of truth.
Once that impression is formed, it is undoubtedly
necessary for the court to scrutinise the evidence more
particularly keeping in view the deficiencies,
drawbacks and infirmities pointed out in the evidence
as a whole and evaluate them to find out whether it is
against the general tenor of the evidence given by the
witness and whether the earlier evaluation of the
evidence is shaken as to render it unworthy of belief.
Minor discrepancies on trivial matters not touching
the core of the case, hyper-technical approach by
taking sentences torn out of context here or there from
the evidence, attaching importance to some technical
error committed by the investigating officer not going
to the root of the matter would not ordinarily permit
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rejection of the evidence as a whole. If the court
before whom the witness gives evidence had the
opportunity to form the opinion about the general
tenor of evidence given by the witness, the appellate
court which had not this benefit will have to attach due
weight to the appreciation of evidence by the trial
court and unless there are reasons weighty and
formidable it would not be proper to reject the
evidence on the ground of minor variations or
infirmities in the matter of trivial details. Even honest
and truthful witnesses may differ in some details
unrelated to the main incident because power of
observation, retention and reproduction differ with
individuals. Cross-examination is an unequal duel
between a rustic and refined lawyer. Having examined
the evidence of this witness, a friend and well-wisher
of the family carefully giving due weight to the
comments made by the learned counsel for the
respondent and the reasons assigned to by the High
Court for rejecting his evidence simultaneously
keeping in view the appreciation of the evidence of
this witness by the trial court, we have no hesitation in
holding that the High Court was in error in rejecting
the testimony of witness Nair whose evidence appears
to us trustworthy and credible.”
(Emphasis supplied)
22. Similarly, in this regard, the Hon’ble Apex Court in
Rammi v. State of M.P., (1999) 8 SCC 649, noted as under;
“24. When an eyewitness is examined at length it
is quite possible for him to make some discrepancies.
No true witness can possibly escape from making
some discrepant details. Perhaps an untrue witness
who is well tutored can successfully make his
testimony totally non-discrepant. But courts should
bear in mind that it is only when discrepancies in the
evidence of a witness are so incompatible with the
credibility of his version that the court is justified in
jettisoning his evidence. But too serious a view to be
adopted on mere variations falling in the narration of
an incident (either as between the evidence of two
witnesses or as between two statements of the same
witness) is an unrealistic approach for judicial
scrutiny.”
(Emphasis supplied)
23. Evidently, from the conspectus of the above, it is
clearly deduced that minor discrepancies, which do not go into the
root of the matter and shake the basic version of the witnesses,
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cannot be permitted to be annexed with any undue weight. In fact,
it is trite law1, the discrepancies which do not shake the basic
version of the prosecution and those which emanate due to normal
errors of perception or observation should not be given importance
and must necessarily be discarded. The rationale behind the same
is quite obvious, as elucidated by the Hon’ble Supreme Court in
State of U.P. v. Naresh, (2011) 4 SCC 324, inter alia recording as
under;
“30. In all criminal cases, normal discrepancies are
bound to occur in the depositions of witnesses due to
normal errors of observation, namely, errors of
memory due to lapse of time or due to mental
disposition such as shock and horror at the time of
occurrence. Where the omissions amount to a
contradiction, creating a serious doubt about the
truthfulness of the witness and other witnesses also
make material improvement while deposing in the
court, such evidence cannot be safe to rely upon.
However, minor contradictions, inconsistencies,
embellishments or improvements on trivial matters
which do not affect the core of the prosecution case,
should not be made a ground on which the evidence
can be rejected in its entirety. The court has to form its
opinion about the credibility of the witness and record
a finding as to whether his deposition inspires
confidence.
“9. Exaggerations per se do not render the
evidence brittle. But it can be one of the factors to
test credibility of the prosecution version, when
the entire evidence is put in a crucible for being
tested on the touchstone of credibility.” [Ed.: As
observed in Bihari Nath Goswami v. Shiv Kumar
Singh, (2004) 9 SCC 186, p. 192, para 9.]
Therefore, mere marginal variations in the
statements of a witness cannot be dubbed as
improvements as the same may be elaborations of the
statement made by the witness earlier. The omissions
which amount to contradictions in material particulars
i.e. go to the root of the case/materially affect the trial
or core of the prosecution’s case, render the testimony
of the witness liable to be discredited…”
(Emphasis supplied)
1
Appabhai v. State of Gujarat, 1988 Supp SCC 241
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24. Ergo, to recapitulate, in order to disregard the
testimony of a witness, it is imperative that the same is replete with
material improvements, contradictions and variation. In contrast,
law provides for due concession to marginal variations and normal
discrepancies in the statement/testimony of a witness, which are
bound to occur due to normal errors of observation, namely, errors
of memory due to lapse of time or due to mental disposition etc.
Consequently, when the testimony/deposition of the
complainant/respondent/CW-1 in the instant case is analyzed,
mindful of aforenoted revered principles, this Court finds itself
difficult to be convinced with the contention of the Ld. Counsel for
the appellant that the variation in the cross examination of CW-1
on 28.11.2019 asserting that the loan amount was to be returned in
five months, in variation to the complainant’s/respondent’s
assertion under its complaint that the loan term was six months is
sufficient to discredit the version put forth by the complainant.
Correspondingly, the assertion of the Ld. Counsel for the appellant
that the complainant deposed on 21.09.2019 in his cross
examination regarding disbursal of the loan on the date specified
under the cheque by averring, “cheque was given by the accused
when I had given the loan on the same day i.e. on 18.07.2016”, in
variation to the loan disbursal being specified under the
respondent’s complaint in February, 2016, fails to convince this
Court, as well. In this regard, it is noted by this Court that, firstly,
there is no confrontation of the complainant/respondent regarding
his earlier assertion and the ‘so called contradiction’ under the
complaint and the version put forth in CW-1’s cross examination,
as aforenoted. Even otherwise, when the entire cross examination
of the respondent/CW-1 is conscientiously evaluated, this Court
fails to concur that the respondent anywhere tried to imply that the
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GOYAL
GOYAL Date: 2025.03.27
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cheque in question was issued co-terminus with the loan disbursal.
On the contrary, it is specifically noted under the respondent’s
cross examination on 21.09.2019, as under;
“…When I has received the cheque from the
accused till then, there was no document pertaining to
this loan was reduced in writing at any point in
time…”
(Emphasis supplied)
25. Clearly, the above assertion of the
complainant/respondent rules out any concurrence between the
date of issuance of cheque and the loan disbursal, denoting two
separate occasions thereof. Congruently, the subsequent cross
examination of the complainant/respondent/CW-1 further
explicates a distinction between the date of disbursal of loan and
that of the issuance of cheque in question, wherein it has been inter
alia recorded as under;
“XXXXXX by Sh. ***, Ld. Counsel for accused.
At the time of handing over the loan amount no
written receipt was was received by me from the
accused. Neither any document was got executed at
the relevant time. Five month was settled between me
and the accused for the return of the loan amount. I
had asked the accused to return the amount in the
month of July, 2016 because it was settled to return
after 5 months. I got understood the contents of my
complaint as well as my affidavit Ex. CW1/A. It is
correct that in my complaint as well as in my affidavit
I had stated that the loan amount has to be returned
within 6 months. It is wrong to suggest that no
demand in the month of July 2016 was made to return
the loan amount as loan was never given. I went to the
house of the accused on 18.07.2016 who has given me
the subject cheque…”
(Emphasis supplied)
26. Ergo, this Court reiterates that from a conjoint
reading of the entire material placed on record and of the cross
examination of the complainant/respondent/CW-1, this Court
finds itself difficult to concede with the contention of Ld. Counsel
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ABHISHEK GOYAL
GOYAL Date: 2025.03.27
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for the appellant that the respondent contradicted himself in so far
as the dates of disbursal of loan and issuance of cheque is
concerned. Needless to reiterate that there is no confrontation of
the complainant by/on behalf of the appellant before the Ld. Trial
Court in his/complainant’s/respondent’s cross-examination in so
far as the alleged variation is concerned. Even otherwise, as noted
herein, a conjoint reading of the entire cross-examination of
CW-1/respondent, belies the plea/assertion raised by the appellant
before this Court.
27. Reverting to the merits of the present case, it is noted
at the outset that the appellant at the time of framing of notice
under Section 251 Cr.P.C. before the Ld. Trial Court asserted as
under;
“…Q. Do you plead guilty or have any defence to
make?
A. I do not plead guilty and claim trial. My plea of
defence is as under;
I admit my signatures on cheque in question. I also
admit that I did receive the legal notice. Complainant
had entered into an agreement with me for sale of a
property belonging to his brother-in-law (jija). The
agreement was oral and I was not aware that the
property was not in his name. The cheque in question
was issued to the complainant at the time of
agreement as consideration. Property documents were
not shown to me at that time. Thereafter, my cheque
was presented for encashment. As the documents were
not shown to me, so I did not deposit the requisite
amount in my bank account. I had issued three
cheques in total including the present one to the
complainant. All the cheques were amounting to Rs. 5
lac each…”
(Emphasis supplied)
28. Pertinently, it is noted from above that the appellant
admitted to his signatures on the cheque in question as well as the
receipt of the legal notice/legal demand notice. Correspondingly,
the appellant also admitted to the issuance of the dishonoured
cheque along with two other cheques to the
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ABHISHEK GOYAL
GOYAL Date:
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complainant/respondent. Ergo, under such circumstances,
presumption under Section 118/139 NI Act would lie against the
appellant. However, as noted above, the appellant pleaded that the
cheque in question was issued to the complainant/respondent
against the sale of property, belonging to the respondent’s brother-
in-law/jija and that the said agreement was oral, besides that he/the
appellant was not aware that the property was not in the name of
the complainant/respondent. Markedly, similar plea was taken by
the appellant at the time of recording of his statement under
Section 281/313 Cr.P.C. In fact, as aforenoted, the appellant went
ahead to assert that along with the dishonoured cheque, two other
cheques were issued by him/the appellant to the respondent and
that he had instructed the complainant/respondent, not to present
any cheque for encashment, despite which, the complainant
misused the cheques by manipulating and presenting the same.
Nevertheless, it is seen that it is not the case of the appellant that he
ever requested the respondent for the return of the dishonoured
cheque from the respondent or ever lodged any complaint against
the respondent before any authority against such alleged misuse. In
fact, the respondent did not even produce/place on record, the
particulars of other two cheques, stated to have been issued by him
to the respondent along with the cheque in question. On the
contrary, during the cross-examination of the respondent on
28.11.2019, the appellant raised an altogether different defence by
suggesting to the respondent as under;
“XXXXXX by Sh. ***, Ld. Counsel for accused.
…It is correct that Afzal Meer is my brother-in-law
(jija). It is wrong to suggest that my jija Afzal Meer
along with my son Hammad Khan were indulged in
selling property/flats. It is wrong to suggest that my
jija and son were in dealings of five flats constructed
from ground floor to 5th floor at building no. 2943-47
with the accused. It is also wrong to suggest that there
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ABHISHEK GOYAL
GOYAL Date:
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was settlement between my jija, son and accused, the
accused could get the sale deed in favour of the parties
brought by him for those flats. It is wrong to suggest
that I was being the active participant in those deals
and all the sale deeds pertaining to those on ground to
5th floor were got done for the consideration on Rs. 65
lacs except the 4th floor. It is wrong to suggest that out
of those Rs.65 lacs some cash and three cheques were
given including the subject cheque which were
handed over to me. Vol. I have no concern or
knowledge about the aforesaid property deals, hence I
am not aware any kind of transactions between my
jija, son and accused. It is wrong to suggest that when
the accused came to know that the aforesaid property
does not belongs to me or my son then the dispute
arose with respect to the consideration amount already
paid. It is wrong to suggest that accused made demand
of those three cheques which were refused by me. It is
further wrong to suggest that the subject cheque
thereafter misused by me in order to file a false
complaint against the accused…”
(Emphasis supplied)
29. Quite lucidly, in light of the foregoing, this Court is in
concurrence with the observation of the Ld. Trial Court that
appellant portrayed himself as the buyer of the property at one
stage of proceedings, while asserting that he was involved in the
transaction of sale of property along with the respondent’s
jija/brother-in-law and son, whereby the appellant was able to get
the sale deed in favour of the parties brought by the appellant for
those flats. Ergo, this Court concurs with the observation of the Ld.
Trial Court that when the appellant asserts himself as the broker for
the said transaction, there would be any occasion for the appellant
to handover any cheques to the respondent. Needless to mention
that the said suggestion contradicts with the defence of the
appellant at the time of framing of notice as well as at the time of
recording of his statement in terms of the provisions under
Sections 281/313 Cr.P.C. Correspondingly, though the appellant
further asserted that he asked for return of cheque in question from
the respondent, however, no date, time or other particulars of said
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ABHISHEK GOYAL
GOYAL Date:
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demand is forthcoming, besides, as aforenoted, nothing has been
placed on record to demonstrate that the appellant made any
complaint to any authority or asked for return of cheque in
question in writing from the respondent.
30. Apropos the present discourse, this Court deems it
pertinent to deal with the contention of the Ld. Counsel for the
appellant at this stage to the effect that the appellant has been
successful in rebutting the presumption under law/NI Act on the
ground that the respondent produced no proof of him having any
license to lend any amount to anyone. As aforenoted, Ld. Counsel
for the appellant vehemently asserted that without any license, the
respondent could not engage himself in the business of money
lending and since the respondent admitted that he was not in
possession of such license, no legally recoverable due or liability
can be attributed against the appellant herein. However, in this
regard, it is observed that the appellant failed establish that the
respondent was moneylender by profession. In fact, from a
scrupulous analysis of the records of the Ld. Trial Court, it is noted
that the respondent nowhere admitted in his complaint or cross
examination that he/respondent had lent money/loan to different
persons on interest. Clearly, mere admission on the part of the
respondent under his cross examination that he had given loan to
one Mahender Kumar Sehgal, to a tune of Rs. 6,70,000/- (Rupees
Six Lakhs Seventy Thousand only); Kishan Raghav, to a tune of
Rs. 30,000/- (Rupees Thirty Thousand only) as well as to one,
Kishan Kumar Sharma of Rs. 1,60,000/- (Rupees One Lakh Sixty
Thousand only), would not, in the considered opinion of this
Court, sufficient to establish that the respondent was a money
lender by profession and had initiated the instant complaint
proceedings to extort money from the appellant/accused. In this
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GOYAL Date: 2025.03.27
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regard, this Court deems it pertinent to refer to the decision of the
Hon’ble High Court of Delhi in Guddo Devi v. Bhupender Kumar,
MANU/DE/0458/2020, wherein the Hon’ble Court in akin terms,
noted as under;
“12. In the present case, there is no material to
conclude that the respondent was carrying on the
business of advancing loans. Merely because the
respondent had lent money to three or four persons,
did not lead to the inference that the respondent had
been carrying out the activity of money lending as a
business. The respondent had also expressly denied
that he had given any loan on interest to public
persons.
13. The contention that the debt owed by the
petitioner was rendered unenforceable by virtue of the
provisions of the Income Tax Act, 1961 is also
unmerited.
14. Section 269SS of the Income Tax Act, 1961
prohibits making of any payment in cash above a sum
of Rs. 20,000/-. Thus, any person violating the same
would attract imposition of penalties under the said
Act. However, the same does not render the said debt
un-enforceable or precludes the lender from
recovering the same.”
(Emphasis supplied)
31. Even otherwise, presuming for the sake of argument
that the respondent was not in possession of a valid license as
mandated under law, same would not be a bar to the initiation of
proceeding under Section 138 NI Act, as repeatedly avowed by
superior courts. Reference in this regard is made to the decision in
Hansraj Bansal v. State & Ors., MANU/DE/6248/2023 , wherein
the Hon’ble High Court of Delhi, remarked as under;
“12.5. It is acceptable proposition of law that
section 3 of Punjab Registration of Money Lenders
Act, 1938 does not limit operation of section 138 of
the Act and both are independent and mutually
exclusive to each other. If a person advances a loan
even without having a valid money lending licence or
certificate he can institute and prosecute complaint
under section 138 of the Act on basis of cheques and
he has to satisfy only the mandatory requirements of
section 138 of the Act.”
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ABHISHEK GOYAL
GOYAL Date:
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(Emphasis supplied)
32. Needless to mention that this Court further concurs
with the finding of the Ld. Trial Court that Section 269SS of the
Income Tax Act, 1961 prohibits making of any payment in cash
above a sum specified therein, attracting imposition of penalties on
violation thereof. However, noted hereinabove, law is settled that
the same would not render such a debt unenforceable or precludes
the lender from recovering the same. Further, this Court is further
not convinced with the submission of Ld. Counsel for the appellant
that the premise of appellant’s conviction was the statement of the
appellant recorded under Sections 281/313 Cr.P.C. is belied from
the records of the Ld. Trial Court and the impugned order, which
records that the appellant has not been able to raise any reasonable
probable defence either from the cross examination of the
respondent or from the assertion/plea of defence raised by the
appellant even at the initial stage of framing of notice under
Section 251 Cr.P.C., as mandated under law. Needless to reiterate
that the appellant further opted not to lead any evidence in his
defence despite being afforded an opportunity by the Ld. Trial
Court. Lastly, this Court is further not convinced with the
submission of Ld. Counsel for the appellant that simply because
that the respondent asserted during his cross-examination that he
was not aware of the profession of the appellant, it cannot be
presumed that the appellant and respondent were known to each
other. On the contrary, it is seen from record that the appellant
specifically asserted that he visited the appellant’s house to both
lend the amount as well as to receive the cheque in question from
the appellant. Correspondingly, the respondent asserted that he
maintained good relations with the appellant’s father and that he
knew that appellant’s father was engaged in the business of pipes.
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Further, the respondent also affirmed during his cross examination
that he knew the mobile number of the appellant and that the said
mobile number was saved in the respondent’s mobile phone. Ergo,
under such circumstances, it is reiterated that the factum of
appellant and respondent being known to each other cannot, in the
considered opinion of this Court, be denied. Lastly, in so far as the
contention raised on behalf of the appellant before the Ld. Trial
Court regarding variation in the handwriting on name of the
respondent in the cheque and the amount written in words on the
dishonoured cheque is concerned, it is noted that law is trite 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). Reference in this regard is
made to decision in Bir Singh v. Mukesh Kumar, (2019) 4 SCC
197, wherein the Hon’ble Supreme Court observed 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 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
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ABHISHEK GOYAL
Date:
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absence of any cogent evidence to show that the
cheque was not issued in discharge of a debt.”
(Emphasis supplied)
33. Markedly, under the present situation, when the
appellant affirmed his signatures on the cheque in question and of
him handing over the same to the respondent, the contention of the
Ld. Counsel for the appellant that there is discrepancy in
handwriting as aforenoted, would not come to any aid/rescue of
the appellant, in view of the aforenoted judicial dictates. Even
otherwise, it is noted that the appellant made no endeavor to
produce any evidence in support of his said contention before the
Ld. Trial Court.
34. Conclusively, in conspectus of the above and inter
alia keeping in view consistent testimony of the
respondent/complainant/CW-1 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 are
not only unworthy and uninspiring confidence, rather,
irreconcilable as well as self-destructive. Accordingly, this Court
has no hesitation in reasonably reaching a conclusion that the
complainant 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.
35. Appreciably, 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-
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conviction, as well as cautioned1 that mere long pendency of case
is no ground to award lesser sentence. In fact, 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)
36. 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 the1
State of M.P. v. Ghanshyam Singh, (2003) 8 SCC 13.
2
H. Pukhraj v. D. Parasmal, (2015) 17 SCC 368.
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ABHISHEK GOYAL
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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 criminal 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
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ABHISHEK GOYAL
GOYAL Date:
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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 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)
37. Ergo, wary of the aforenoted judicial dictates, facts
and circumstances of the present case as well as the arguments
addressed by the Ld. Counsel 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
compassionate sentence of 03 (three) months and compensation to
the tune of double the cheque amount, i.e., Rs. 5,00,000/- (Rupees
Five Lakhs only) along with interest, as aforenoted, to be paid by
the appellant to the respondent/complainant, and in default of
payment of compensation, appellant to further undergo simple
imprisonment for a further period of 03 (three) months, under the
impugned order/order of sentence dated 09.06.2023. Needless to
mention that in the instant case, substantial time has lapsed since
the initiation of the complaint proceedings by the respondent in the
year, 2016, culminating in its adjudication in the present appeal,
the respondent being embroiled in litigation for dishonoured
cheque during the interregnum. 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. 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 this Court, while
determining the present appeal, as the sentence awarded to the
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ABHISHEK GOYAL
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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. Further,
it is pertinent to reiterate that though, this Court holds highest
regard for the decision(s) relied upon by the Ld. Counsel for the
appellant in support of his/the appellant’s case, however, none of
the said decision(s) would come to the aid of the appellant, as the
facts and circumstances of the present case are clearly
distinguishable.
38. Conclusively, in view of the above discussion, the
present appeal deserves to be rejected/dismissed and is hereby
dismissed. The judgment dated 06.06.2023, passed by Ld. MM (NI
Act)-02, Central, Tis Hazari Courts, Delhi in case bearing; ‘Mohd.
Azam Khan v. Mohd. Kashif, CC No. 540191/2016′, convicting
the appellant for the offence punishable under Section 138 of the
NI Act and the consequent order of sentence dated 09.06.2023,
passed by the Ld. Trial Court, awarding the appellant; simple
imprisonment for a period of 03 (three) months and fine of Rs.
5,00,000/- (Rupees Five Lakhs only), i.e., the amount of cheque in
question along with interest, to be computed at the rate of 9% (nine
percent) per annum on the said amount, from the date of filing of
the complaint (i.e., from 22.09.2016) before the Ld. Trial Court till
the date of the impugned judgment, to be paid by the appellant to
the respondent/complainant as compensation, are hereby upheld.
Appellant is directed to surrender before the Ld. Trial Court within
a period of seven days from today for serving the
sentence/remainder period thereof.
39. Trial Court Record be sent back along with a copy of
this order/judgment, with direction to proceed against the
appellant as per law. Copy of this order/judgment be also given
CA No. 145/2023 Mohd. Kashif v. Mohd. Azam Khan Page No. 41 of 42
Digitally signed
by ABHISHEK
ABHISHEK GOYAL
Date:
GOYAL 2025.03.27
16:08:03
+0530
dasti to the Ld. Counsel for the appellant, considering that the
appellant has joined the proceeding through video conferencing
mode.
40. Appeal file be consigned to record room after due
compliance.
Digitally signed by ABHISHEK ABHISHEK GOYAL Date: GOYAL 2025.03.27 16:08:07 +0530 Announced in the open Court (Abhishek Goyal)
on 27.03.2025. ASJ-03, Central District,
Tis Hazari Courts, Delhi
CA No. 145/2023 Mohd. Kashif v. Mohd. Azam Khan Page No. 42 of 42
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