Delhi District Court
Rajinder Satija vs Sandeep Tandon on 15 January, 2025
IN THE COURT OF SH. ANKIT SOLANKI : JMFC NI
DIGITAL COURT NUMBER 01, WEST DISTRICT, TIS
HAZARI COURTS COMPLEX
RAJINDER SATIJA
Vs.
SANDEEP TANDON
CC NI ACT No. 1849/2021
U/S 138 Negotiable Instruments Act, 1881
1. CC NI Act number : 1849/2021
2. Name of the complainant : Rajinder Satija
3. Name of the accused : Sandeep Tandon
4. Offence complained of or proved : U/S 138 of Negotiable Instruments
Act, 1881
5. Plea of the accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : Acquittal
7. Date of judgment/order : 15.01.2025
Date of Institution: 30.06.2021
Date of Reserving Judgment/Order: 04.01.2025
Date of Pronouncement of Judgment/Order : 15.01.2025
JUDGMENT
1. Vide this Judgment, this court shall dispose of the present
complaint filed by Rajinder Satija (hereinafter referred to as ‘the
complainant’) against Sandeep Tandon (hereinafter referred to
as ‘the accused’) U/S 138 of Negotiable Instruments Act, 1881
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
16:59:52
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
1 Out of 42
r/w Section 142 Negotiable Instruments Act, 1881 (hereinafter
referred to as ‘NI Act‘).
Brief facts:
2. It is the case of the complainant, that the complainant is a sole
Proprietor of firm M/s Swarn Plastic Industries and is engaged in
trading and manufacturing of raw material(s) and various types
of rubber and plastic components etc., at the address mentioned
in his complaint. Due to his adherence to a high degree of
prefessionalism and business ethics, the complainant is enjoying
an impeccable trade reputation and unblemished business
goodwill in the even trade and business. On the other hand,
accused as a sole proprietor of firm M/s Tandon Electricals is
carrying out trade and manufacturing of various types of
electrical appliances and components at his above captioned
address. Since the past financial years, the accused and his
representatives approached the complainantt about named at his
above mentioned address and upon thorough inspection of the
goods, as per his/their requirements and technical specifications
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
16:59:56
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
2 Out of 42
and followed by price negotiations, ordered him for supply ofvarious types of plastic Grannuals etc. for his business purposes.
While placing the aforenoted orders to complainant at his above
mentioned address, accused as well as his representative(s)
vehemently assured the former for making timely payment(s)
against such purchase(s). Accordingly complainant pursuant to
the aforesaid understanding supplied accused entire quantity(s)
of materials as per his business requirements, instructions and in
consonance with the orders placed by accused. All the said
supplies were made to the accused against respective invoices
and the same strictly as per his requirement and satisfaction with
no complaints regarding quality or time schedule etc. Upon
receipt of the aforesaid goods the same were duly appropriated
by the accused. Complainant comprehensively incorporated all
the above said transactions with the accused, including the part
payments remitted, in running statements of account maintained
in the normal course of his business. Off late, it was noted by
complainant that as per his running statement of accounts
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:00
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
3 Out of 42
maintained in the normal course of business with respect to the
instant transaction(s) with the accused, a whopping amount of
Rs.14,09,906/- was outstanding against the accused. Needless to
mention, the aforesaid outstandings were staggering and were
causing immense business hardships to the complainant, as such
the complainant time and again approached and requested the
accused to settle his aforesaid outstanding dues at the earliest.
However, no need heed was paid to above said requests of the
complainant. Nevertheless, pursuant to the repeated requests and
reminders of complainant, accused, in order to discharge his
legally enforceable liability towards the former issued following
cheques, duly signed by accused, respectively as lump-sum/on
-account/part payment, with the assurances that the said cheques
would be duly encashed upon presentation. The details of the
respective cheques so issued by the accused are hereunder:-
Cheque No. Dated Amount Drawn at
864640 15.02.2021 4,84,980/- Syndicate
Bank, West
Punjabi
Bagh, Central
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:05
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
4 Out of 42
Market, New
Delhi-110026
727880 17.03.2021 4,83,860/- Syndicate
Bank,
Punjabi Bagh
Branch, New
Delhi-
110026.
863070 24.03.2021 6,00,000/- Syndicate
Bank, West
Punjabi
Bagh, Central
Market, New
Delhi-110026
3. As per the assurance of the accused that the cheques in
question will be encashed as and when presented, the
complainant presented the cheques in question to his banker
State Bank of India, Jawala Heri, New Delhi-110063 for
encashment but the cheques were returned for giving the reason
“Funds Insufficient” vide returning memos dated 07.04.2021,
02.04.2021 and 17.04.2021 respectively. Thereafter, complainant
many times requested the accused to make the payment but the
accused failed to make the payment on one pretext or the other.
The complainant after receipt of said dishonoured cheques, sent
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:09
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
5 Out of 42
a separate ‘Legal Notices’ dated 01.05.2021 to the accusedthrough his counsel, but despite receiving of the notice the
accused did not bother to pay back his outstanding dues to the
complainant. The accused had failed to pay the cheque amount to
the complainant within stipulated time of 15 days, hence this
complaint U/S 138/142 NI Act.
Proceedings before the Court:
4. The complaint was received by assignment in this Court. After
perusing the complaint and hearing the arguments of the
complainant on the point of summoning of the accused, prima
facie it appeared that the offence U/S 138 NI Act, has been
committed. Hence, cognizance of the offence U/S 138 NI Act
was taken against the accused on 26.11.2021 and summons were
issued to the accused.
5. Notice U/S 251 Cr.P.C. was framed against the accused on
19.02.2022 to which the accused pleaded not guilty and claimed
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:14
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
6 Out of 42
trial. Thereafter, considering the defence stated at the time offraming of notice by the accused, this court decided to allow
cross examination of the complainant as per 145(2) NI Act, and
the case was tried as a summons case. During complainant
evidence, complainant has examined himself as sole witness as
CW-1. After due cross examination of CW-1 by the Ld. Counsel
for the accused, CE was closed in the present case on
25.08.2022. Statement of the accused U/S 313 CrPC was
recorded on 17.11.2022 wherein the accused has opted to lead
defence evidence, as such, the case was fixed for defence
evidence. In defence evidence, the accused examined himself as
DW1 and thereafter, vide separate statement of accused dated
20.12.2022, DE stands closed and the case was listed for final
arguments. On 21.02.2023, application u/s 311 Cr.P.C. was
allowed and last and final opportunity was granted to the accused
to cross-examine the complainant again. On 04.01.2025, final
arguments were heard on behalf of the complainant and accused
and the case was reserved for judgment.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:18
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
7 Out of 42
Evidence:
6. To prove his case, complainant had examined himself as CW1
and has led his evidence by way of evidence affidavit.
7. Complainant had not examined any other witness in this case.
8. The accused had examined himself as DW1 and vide separate
statement of accused dated 20.12.2022 DE stood closed.
Arguments of both parties:
9. Ld. counsel for the complainant while reiterating the contents
of the complaint has argued that all the requirements of Section
138, NI Act have been fulfilled by the complainant in the
present case. He argued that the cheques in question were
issued by the accused towards his legally enforceable liability.
He further argued that when the cheques were presented before
the bank for encashment, the same were dishonored on
presentation vide return memos dated 07.04.2021, 02.04.2021
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:23
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
8 Out of 42
and 17.04.2021 for reasons ‘Funds Insufficient’. Thereafter thelegal notice dated 01.05.2021 was sent to the accused to make
the payment within the 15 days stipulated period, but no
payment was made by the accused. Thus, all the ingredients of
section 138 NI Act, have been duly satisfied and thus
presumption U/S 139 NI Act, has been validly raised against the
accused. Ld. Counsel submits that the accused has failed to
raise any probable defence to disprove the case of complainant
and to rebut the presumption U/S 139 NI Act.
Appreciation of evidence:
10. I have heard counsels on behalf of both the sides, perused the
record as well as relevant provisions of law.
11. Before appreciating the facts of the case in detail for the
purpose of decision, let relevant position of law be discussed
first. Section 138, NI provides as under:
“Section 138.- Dishonour of cheque for insufficiency, etc., of
funds in the account.-
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:26
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
9 Out of 42
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 provisions of this Act, be punished with
imprisonment for a term which may be extended 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.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:30
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
10 Out of 42
12. It is well settled position of law that to constitute an offence
under Section 138, NI Act, the following ingredients are required
to be fulfilled:
I. drawing of the cheque by a person on an account maintained
by him with a banker,II. The cheque was issued for payment to another person for
discharge in whole/part any debt or liability;
III. 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. RBI in its notification
DBOD.AML BC.No.47/14.01.001/2011-12 has reduced the
aforesaid period from 6 months to 3 months.
IV. Returning of the cheque unpaid by the drawee bank for want
of sufficient funds to the credit of the drawer or any arrangement
with the banker to pay the sum covered by the cheque;
V. Giving notice in writing to the drawer of the cheque within 30
days of the receipt of information by the payee from the bank
regarding the return of the cheque as unpaid demanding payment
of the cheque amount;
VI. Failure of the drawer to make payment to the payee or the
holder in due course of the cheque, of the amount covered by the
cheque within 15 days of the receipt of the notice.
The offence under Section 138, NI Act is made out against the
drawer of the cheque, only when all the aforementioned
ingredients are fulfilled.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:35
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
11 Out of 42
13. In the present case at hand, the complainant has filed on
record the original cheques, i.e., bearing no.864640 dated
15.02.2021 drawn on Syndicate Bank, West Punjabi Bagh,
Central Market, New Delhi-110026, 727880, dated 17.03.2021
drawn on Syndicate Bank, Punjabi Bagh Branch, New Delhi-
110026 and 863070 dated 24.03.2021 drawn on Syndicate Bank,
West Punjabi Bagh, Central Market, New Delhi-110026. In
notice under Section 251 CrPC, the accused has admitted to
issuing the cheque in question to the complainant and admitted
the signatures on the cheques. Therefore, ingredient number I
stands fulfilled in the present case.
14. As per the RBI guidelines, it is essential for the cheque in
question be to presented within a period of three months from
the date on which they are drawn and the same be returned as
unpaid by the drawee bank for want of sufficient funds to the
credit of the drawer or any arrangement with the banker to pay
the sum covered by the cheque. In the case at hand, the cheques
in question were returned vide return memo dated 07.04.2021,
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:39
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
12 Out of 42
02.04.2021 and 17.04.2021 due to the reason “FundsInsufficient.” By implication thereof, the cheques were presented
within three months and the same were returned for Drawer
Signature Differ. Therefore, Ingredient number III & IV
stand fulfilled in the present case.
15. The legal notice was sent within 30 days of return of the
bank memo indicating cheque in question being unpaid. The fact
that the legal demand notice has made a clear and unambiguous
demand for payment of the cheque in question is not disputed.
The accused has admitted to the receipt of legal demand notice
in notice u/s 251 CrPC, the ingredient number V stands
discharged by virtue of giving of legal demand notice within
30 days from the bank return memo.
16. Moving on, it is not disputed that the accused has not made
the payment of the cheque amount within 15 days of the receipt
of legal demand notice. Therefore, ingredient number VI also
stands fulfilled in the present case.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:43
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
13 Out of 42
17. Let us now move on to ingredient number II,
17.1. The NI Act raises two presumptions in favour of the holder
of the cheque, i.e., complainant; firstly, with regard to the
issuance of cheque for consideration, as contained in Section
118(a) and secondly, with regard to the fact that the holder of
cheque received the same for discharge, in whole or in part, of
any debt or other liability, as contained in Section 139 of the Act.
17.2. Analysing all the concerned provisions of law and various
pronouncements in this regard, the Hon’ble Apex Court in the
case of Basalingappa v. Mudibasappa [AIR 2019 SC 1983] held
that:
I. Once the execution of cheque is admitted, Section 139 of the
Act mandates that a presumption be drawn that the cheque in
question was for the discharge of any debt or other liability.
II. The presumption under Section 139 is a rebuttable
presumption and the onus is on the accused to raise the probable
defence. The standard of proof for rebutting the presumption is
that of preponderance of probabilities.
III. To rebut the presumption, it is open for the accused to rely on
evidence led by him or accused can also rely on the materials
submitted by the complainant in order to raise a probable
defence. Inference of preponderance of probabilities can be
drawn not only from the materials brought on record by
reference to the circumstances upon which they rely.
IV. That it is not necessary for the accused to come in the witness
box in support of his defence. Section 139 imposes an
evidentiary burden and not a persuasive burden.
It is therefore implied that the law regarding the presumption for
the offence under Section 138, NI Act, the presumptions under
Section 118(a) and Section 139 have to be compulsorily raised as
soon as the execution of cheque by the accused is admitted or
Digitally signed
by ANKIT
SOLANKI
ANKIT Date:
SOLANKI 2025.01.15
17:00:47
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
14 Out of 42
proved by the complainant and thereafter the burden is shifted
upon the accused to prove otherwise.
17.3. These presumptions shall end only when the contrary is
proved by the accused, that is, the cheque was not issued for
consideration and in discharge of any debt or liability etc. The
Hon’ble Apex Court in Kumar Exports v. Sharma Carpets
[(2009) 2 SCC 513], has laid down the benchmark for the burden
of proof that the accused has to raise a doubt as to the
presumption under Section 139, NI Act.
“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
Digitally signed
by ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:51 +0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
15 Out of 42
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. The accused has
also an option to prove the non-existence of consideration and
debt or liability either by letting in evidence or in some clear
and exceptional cases, from the case set out by the complainant,
that is, the averments in the complaint, the case set out in the
statutory notice and evidence adduced by the complainant
during the trial. Once such rebuttal evidence is adduced and
accepted by the court, having regard to all the circumstances of
the case and the preponderance of probabilities, the evidential
burden shifts back to the complainant and, thereafter, the
presumptions under Sections 118 and 139 of the Act will not
again come to the complainant’s rescue.”
17.4. To put in a nutshell, the intent behind the NI Act is to
prevent financial frauds and affect the socio-economic well-
being of the country. If the burden is placed on the complainant
to prove the existence of liability against the accused, that would
be too harsh as most of these transactions are in the nature of
“friendly loan” and the accused would, in a normal
circumstance, always deny the liability. Therefore, the legislation
is drafted in a way so as to discharge the complainant from
proving the liability and a presumption is raised by virtue of
Section 139 read with Section 118(a) of the Act that the cheque
if issued by the accused, then the same is deemed to be in
discharge of some legally enforceable debt in favour of the
complainant. The presumption is rebuttable and the accused
“may” either prove that no legally enforceable debt existed or
punch holes in the story of the complainant and give rise to a
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:00:55
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
16 Out of 42
probable defence to rebut the presumption. As per the law
discussed above, the burden of proof on the accused to raise a
probable defence is that of “preponderance of probabilities”, and
not “beyond reasonable doubt.” Once a probable defence is
raised, then the onus is shifted to the complainant to establish
that a legally enforceable liability existed in his favour and the
burden of proof on complainant in this case is that of “beyond
reasonable doubt.”
17.5. The accused can rebut the presumption as raised under the
NI Act by (a) putting forth his defence at the time of framing of
notice u/s 251 CrPC; (b) cross-examining the complainant; (c)
when statement of accused is recorded u/s 313 CrPC; (d) or by
leading defence evidence, thereby demolishi15 ptng the case of
the complainant. It is amply clear that the accused does not need
to discharge his or her liability beyond the shadow of reasonable
doubt. He just needs to create holes in the case set out by the
Complainant.
18. In light of the above discussions since the accused has
admitted to issuance of cheque, admitted the signature on the
cheque and the legal demand notice what is left to be seen is
whether the accused has been able to rebut the presumption
against himself and that whether he has been able to raise a
probable defence in his favor or not.
19. It is correct that there is a presumption under Section 139 of
Negotiable Instruments Act, 1881 that “it shall be presumed,
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:00
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
17 Out of 42
unless the contrary is proved, that the holder of a chequereceived the cheque of the nature referred to in section 138 for
the discharge, in whole or in part, of any debt or other liability”.
20. There is a statutory presumption under section 139 of the act
which arises in the favour of the complainant. This presumption
is rebuttable and the accused is required to raise a probable
defence. Burden of proof is hence upon the accused in such
cases. Reliance can be placed on the decision of the Hon’ble
Supreme Court in the case of In M.S Narayana Menon Vs. State
of Kerala, (2006) 6 SCC 39, the Apex Court dealing with the
statutory presumption under Sections 118(a) and 139 of the N. I.
Act inter alia held as under:
“29. In terms of Section 4 of the Evidence Act
whenever it is provided by the Act that the Court
shall presume a fact, it shall regard such fact as
proved unless and until it is disproved. The words
“proved” and “dis-proved” have been defined in
Section 3 of the Evidence Act (the interpretation
clause)……
30. Applying the said definitions of “proved” or
“disproved” to the principle behind Section 118(a)
of the Act, the Court shall presume a negotiable
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:04
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
18 Out of 42
instrument to be for consideration unless and
until after considering the matter before it, it
either believes that the consideration does not
exist or considers the nonexistence of the
consideration so probable that a prudent man
ought, under the circumstances of the particular
case, to act upon the supposition that the
consideration does not exist. For rebutting such
presumption, what is needed is to raise a probable
defence. Even for the said purpose, the evidence
adduced on behalf of the complainant could be
relied upon.
32. The standard of proof evidently is
preponderance of probabilities. Inference of
preponderance of probabilities can be drawn not
only from the materials on record but also by
reference to the circumstances upon which he
relies. Therefore, the rebuttal does not have to be
conclusively established but such evidence must
be adduced before the Court in support of the
defence that the Court must either believe the
defence to exist or consider its existence to be
reasonably probable, the s standard of
reasonability being that of the ‘prudent man’.”
21. In the present case, at the stage of final arugments, Ld.
Counsel for the complainant had contended that:
(i) It is an admitted fact that the accused had approached the
complainant for supply of goods.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:09
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
19 Out of 42
(ii) The entries in the Ledger Accounts of the accused are wrong.
Closing balance of the complainant as on 31.03.2019 is 1752931
and opening balance as on 01.04.2019 is Rs.1,50,000/-. There is
a difference of Rs.1602931/- and the accused has no explanation
about the same.
(iii) The accused has nowhere stated in his reply that the goods
delivered to him were defective.
(iv) The cheque in question was filled in presence of the accued,
therefore, he was aware of his liability to pay.
(v) At the stage of notice framing, the accused had stated that he
had given signed security cheques but the same has not been
stated in his reply.
(vi) The accused has alleged that he has paid the complete
amount to the complainant. But there is no proof of the same.
There is no cash record. Also there is no entry of any payment in
the ledger accounts also thereof.
(vii) The accused alleges that the cheques in question were given
for security purpose, then why did he not inform the bank for not
encashing the same and he also, never asked the complainant to
return the cheques in question.
(viii) There are two different entities, one is Swarn Plastic and
antoerh namely HUF Sh. Hardev. The accused used to deal with
both as they belong to the complainant only. The accused had
paid Rs.90,000/- to the HUF and not to the complainant.
Therefore, there is no record of any repayment made to the
present complainant.
(ix) The accused was well aware of the transactions taking place
with the HUF, but he has denied the same at the stage of
recording of SA. This goes to show that the accused is framing a
story altogether. Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:13
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
20 Out of 42
(x) The accused has made some remarks on document marked on
page no.7 and 9. It is not allowed as per law.
(xi) The accused was confronted with document exhibited as
Ex.DW1/1 and asked who had put those remarks on it, to which
he replied that he is not aware of it.
(xii) The WhatsApp chat exhibited as Ex.DW1/1 should be
discarded as there are marks on the same.
(xiii) It is mentioned in WhatsApp chats that payment was made
on 05.12.2020 whereas in the mark, it is made on 07.12.2020.
(xiv) The accused states that he had already paid the complete
amount to the complainant, but why would he give signed
cheques to the complainant if he had already made complete
payment to the complainant?
(xv) All ingredients of Section 138 have been fulfilled.
Therefore, the accused be convicted of the abovementioned
offence.
22. In support of his contentions, Ld. Counsel for the
complainant has relied upon the following judgments:
23. In case of Bir Singh vs. Mukesh Kumar (2019) 4 SCC 197,
it has been held that:-
18. The Appellate Court affirmed the aforesaid
factual findings. The Trial Court and the
Appellate Court arrived at the specific
concurrentfactual finding that the cheque had
admittedly been signed by therespondent-accused.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:17CC NI ACT No. 1849/2021
+0530Rajinder Satija Vs. Sandeep Tandon
21 Out of 42
The Trial Court and the Appellate Court rejected
the plea of the respondent-accused that the
appellant-complainant had misused a blank
signed cheque made over by the respondent-
accused to the appellant-complainant for deposit
of Income Tax, in view of the admission of the
respondent-accused that taxes were paid in cash
for which the appellant-complainant used to take
payment from the respondent in cash.
19. It is well settled that in exercise of revisional
jurisdictionunder Section 482 of the Criminal
Procedure Code, the High Court doesnot, in the
absence of perversity, upset concurrent factual
findings. It isnot for the Revisional Court to re-
analyse and re-interpret the evidenceon record.
20. As held by this Court in Southern Sales and
Services andOthers vs. Sauermilch Design and
Handels GMBH2,it is a wellestablished principle
of law that the Revisional Court will not
interfereeven if a wrong order is passed by a court
having jurisdiction, in the absence of a
jurisdictional error. The answer to the first
question istherefore, in the negative.
24. Presumption of innocence is undoubtedly a
human right ascontended on behalf of the
respondent-accused, relying on the judgments of
this Court in Ranjitsing Brahmajeetsing Sharma
vs. State ofMaharashtra and Anr5and Rajesh
Ranjan Yada @ Pappu Yadavvs. CBI through its
Director6. However the guilt may be established
by recourse to presumptions in law and
presumptions in facts, as observed above.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:22
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
22 Out of 42
25. In Laxmi Dyechem vs. State of Gujarat &
Ors.7,this Court reiterated that in view of Section
139, it has to be presumed that a cheque was
issued in discharge of a debt or other liability but
the presumption could be rebutted by adducing
evidence. The burden of proof was however on the
person who wanted to rebut the presumption. This
Court held “however, this presumption coupled
with the object of Chapter XVII of the Act leads to
the conclusion that by countermanding payment
of a post dated cheque, a party should not be
allowed to get away from the penal provision of
Section 138 of the Act”.
32. In the aforesaid case this Court affirmed an
acquittal under Section 138 of the Negotiable
Instrument Act, in the peculiar factsand
circumstances of the case where several civil suits
between the parties were pending”.
33. In Krishna Janardhan Bhat vs. Dattatraya G.
Hegde13,cited on behalf of the respondent-
accused, this Court reaffirmed that Section 139 of
the Act raises a presumption that a cheque duly
drawnwas towards a debt or liability. However,
keeping in view the peculiar facts and
circumstances of the case, this Court was of the
opinion that the courts below had approached the
case from a wholly different angleby wrong
application of legal principles.
34. It is well settled that a judgment is a precedent
for the issue of law which is raised and decided. It
is the ratio decidendi of the case which operates
as a binding precedent. As observed by this Court
in State of Punjab & Ors. vs. Surinder Kumar &
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:25
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
23 Out of 42
Ors.14, what is binding on all courts is what the
Supreme Court says under Article 141 of the
Constitution, which is declaration of the law and
not what it does under Article 142 to do complete
justice.”
24. Ld. Counsel for the complainant has also relied upon the
judgment of R Pramod Vs. Gangadhariah Criminal Appeal
No.2000 of 2022 of Hon’ble High Court of Karnataka.
25. On the other hand, Ld. Counsel for the accused, at the stage
of final arguments, argued that:
(i) There is no delivery note of the goods annexed with the
complaint. Apart from that, the invoices have not been filed by
the complainant along with the complaint in order to prove that
goods were delivered to the accused.
(ii) As per page 175 that is Ledger Accounts of the complainant,
there were four cheques submitted in his account for total of
Rs.18.6 Lacs. However, in the complaint, the complaint has only
mentioned 3 cheques.
(iii) In the legal demand notice, the complainant has stated that
the total outstanding liabilities is of Rs. 1952931/-, whereas the
cheques in question are of different amounts and therefore there
is no clarity as to the total outstanding liability.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:30
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
24 Out of 42
(iv) There was a regular practice of giving security cheques to
the complainant and the cheques in question have also been
issued as a security.
(v) The cheques in question have not been filled by the accused.
(vi) The accused has already repaid the amount to the complaint
in cash.
(vii) With respect to the aspect of marking remarks on exhibits,
Ld. Counsel for the accused had submitted that those marks were
for personal reference and it was a bonafide mistake, therefore,
those chats should not be discarded.
(viii) Cconcept of HUF was introduced by the complaint in
2024. Prior to that there is no mentioning about either in the
complaint or in the evidence affidavit.
(ix) Ingredients of Section 138 have not been made out.
Therefore, the accused should be acquitted of all the charges.
26.Ld. Counsel for the accused has relied upon the judgment of
Indus Airways Pvt. Ltd. & Ors. Vs. Magnum Aviation Pvt. Ltd.
& Ors. Cr. Appeal No.830 of 2014 decided by Hon’ble Supreme
Court of India and Mahdoom Bawa Bahrudeen Noorul Vs.
Kaveri Plastic CRL.MC 2164 of 2022 & CRL.MA 9155 of 2022
decided by Hon’ble High Court of Delhi.
27. After hearing both the parties at length, this court is of the
considered opinion that from the cross-examination of CW1 on
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:34
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
25 Out of 42
06.04.2024, it is clear that there were two concerns with whichaccused used to deal namely Swarn Plastic and Sh. Hardev HUF.
In his cross-examination, the complainant had stated that the
HUF and the other concern namely Swarn Plastic used to prepare
same bills as the HUF did not have a separate GST number.
Therefore, it is clear that trading used to take place between the
complainant and the accued by both the concerns and a single
bill was prepared. Complainant had also stated that ‘bills were
generated only for Swarn Plastic Industry as it is registered and
having its own GST number.’ Therefore, it can be considered that
the dealings used to take place in a combined form with both the
concerns i.e. Swarn Plastic Industry and the HUF.
28. After that the complaint was confronted with WhatsApp
chats and asked whether he is aware of the receipts of
Rs.49,000/- twice from the accused or not; to which he replied
that the payments made were with respect to the HUF. Therefore,
the complainant had admitted that certain payments have been
made by the accused to the complainant. It is also corroborated
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:38
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
26 Out of 42
from document exhibited as Ex.CW1/XB, where entry of receiptof Rs.49,000/- has been recorded by the complainant on
07.12.2020 and 15.12.2020. Therefore, it is clear that the
complaint has received Rs.98,000/- from the accused and the
remaining outstanding liability as reflected in Ex.CW1/XB is
Rs.15,23,400/-. The complainant has alleged that it was received
with respect to the goods supplied by the HUF. Now, the onus
shifts from the accused to the complaint to prove that the
payment was made for HUF and not for Swarn Plastic Industries.
29. The complainant has not placed on record any document to
prove that the payment of Rs.98,000/- was for HUF. Also, it has
already been discussed that there are no document on record to
prove that a separate chain of transactions was going on with
respect to the HUF and Swarn Plastic Industries. Apart from that
a common bill for both the concerns was prepared. Therefore, in
absence of any proof from the complainant that the payment of
Rs.98,000/- received from the complainant was with respect to
the HUF and not Swarn Plastic Industries, it may be presumed
Digitally signed
by ANKIT
SOLANKI
ANKIT Date:
SOLANKI 2025.01.15
17:01:43
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
27 Out of 42
that combined transactions used to take place between theaccused and the two concerns of the complainant namely HUF
Sh. Hardev and Swarn Plastic Industries. The complainant has
not been able to prove that the payment of Rs.98,000/- was vis-a-
vis the HUF and not for Swarn Plastic Industry.
30. Now as per Ex.CW1/XB, taking into account the payment of
Rs.98,000/- received by the complainant from the accused on
two dates i.e. 07.12.2020 and 15.12.2020, the total outstanding
liability of the accused was of Rs.15,23,400/-. It is clear that the
payment of Rs.98,000/- was made by the accused to the
complainant prior to issuance of the cheques in question.
31. The amount of outstanding liability as per Ex.CW1/B is
Rs.15,23,400/- and the amount of the cheques in question is
Rs.15,68,840/-. Therefore, the amount of the cheques is greater
than the outstanding liability. The complainant has not been able
to prove that he has a legally enforceable debt of Rs.15,68,840/-
i.e. the amount of the cheques in questions. Since part payment
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:48
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
28 Out of 42
of Rs.98,000/- has been paid by the accused, notice given by thecomplaint for an amount of Rs.15,68,840/- is not vailid.
32.In the case of Dashrathbhai Trikambhai Patel vs Hitesh
Mahendrabhai Patel on 11 October, 2022, Hon’ble Supreme
Court of India has dealt with a similar aspect. It is pertinent to
discuss the judgment in detail.
33. Brief facts of the case are as under:
On 10 April 2014, the appellant issued a statutory notice under
Section 138 of the Act to the first respondent-accused. It was
alleged that the first respondent borrowed a sum of rupees
twenty lakhs from the appellant on 16 January 2012 and to
discharge the liability, issued a cheque dated 17 March 2014
bearing cheque No. 877828 for the said sum. It was further
alleged that the cheque when presented on 2 April 2014 was
dishonoured due to insufficient funds. The appellant issued the
notice calling the first respondent to pay the legally enforceable
debt of Rs. 20,00,000:
“Therefore, my client hereby calls upon you to make
payment of Rs.20,00,000/- towards the legally
enforceable debt due and payable by you within a
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:52
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
29 Out of 42
period of 15 days from the date of receipt of this
particular notice, […]”
On 25 April 2014, the first respondent addressed a response to
the statutory notice where he alleged the following:
(i) The first respondent and the appellant are related to
each other. The appellant’s son married the first
respondent’s sister;
(ii) The appellant lent the first respondent a loan of
rupees forty lakhs. There was an oral agreement
between the parties that the first respondent would pay
rupees one lakh every three months by cheque and
rupees eighty thousand in cash to the appellant. Two
cheques were given to the appellant for security. It was
agreed that the appellant would return both the
cheques when the sum lent was paid in full;
(iii) The appellant’s son-initiated divorce proceedings
against the respondent’s sister. However, the dowry
that was given at the time of marriage is still in the
possession of the appellant; and
(iv) The cheques that were issued for security have
been misused by the appellant.
4. On 12 May 2014, the appellant filed a criminal complaint
against the first respondent for the offence under Section 138 of
the Act. On 19 May 2014, the first respondent issued another
reply to the legal notice. By the said reply, the earlier reply to the
legal notice was sought to be amended by replacing the
acknowledgment of having received a loan of rupees forty lakhs
to rupees twenty lakhs.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:01:57
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
30 Out of 42
5. By a judgment dated 30 August 2016, the Trial Court
acquitted the first respondent of the offence under Section 138
on the ground that the first respondent paid the appellant a sum
of rupees 4,09,3015 between 8 April 2012 and 30 December
2013 partly discharging his liability in respect of the debt of
rupees twenty lakhs. The split up of the payments is set out
below:
Date Amount
18.04.2012 Rs. 49,315/-
05.10.2012 Rs. 1,20,000/-
15.01.2013 Rs. 60,000/-
10.07.2013 Rs. 1,20,000/-
30.12.2013 Rs. 60,000/-
Total Rs. 4,09,315/-
The Trial Court observed that the appellant has failed to prove
that he was owed a legally enforceable debt of rupees twenty
lakhs:
“Therefore, the plaintiff’s complaint proved that the accused has
paid Rs, 4,09,315 out of the amount due as per fact. So that on
the day the plaintiff deposited in the bank to recover a legal
amount of Rs, 20,00,000/- The court believes that the
prosecution has failed to prove that fact.”
Relevant paras of the judgment reads as:
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:04
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
31 Out of 42
“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 8 [a term which may
be extended 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; andDigitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:08
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
32 Out of 42
(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 of other
liability” means a legally enforceable debt or other liability.
(emphasis supplied)
10. Section 138 of the Act provides that a drawer of a cheque is
deemed to have committed the offence if the following
ingredients are fulfilled:
(i) A cheque drawn for the payment of any amount of
money to another person;
(ii) The cheque is drawn for the discharge of the
‘whole or part’ of any debt or other liability. ‘Debt or
other liability’ means legally enforceable debt or other
liability; and
(iii) The cheque is returned by the bank unpaid
because of insufficient funds.
However, unless the stipulations in the proviso are fulfilled the
offence is not deemed to be committed. The conditions in the
proviso are as follows:
(i) The cheque must be presented in the bank within
six months from the date on which it was drawn or
within the period of its validity;
(ii) The holder of the cheque must make a demand for
the payment of the ‘said amount of money’ by giving a
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:13
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
33 Out of 42
notice in writing to the drawer of the cheque within
thirty days from the receipt of the notice from the bank
that the cheque was returned dishonoured; and
(iii) The holder of the cheque fails to make the
payment of the ‘said amount of money’ within fifteen
days from the receipt of the notice.
It must be noted that when a part-payment is made after the
issuance of a post-dated cheque, the legally enforceable debt at
the time of encashment is less than the sum represented in the
cheque. A part-payment or a full payment may have been made
between the date when the debt has accrued to the date when the
cheque is sought to be encashed. Thus, it is crucial that we refer
to the law laid down by this Court on the issuance of post-dated
cheques and cheques issued for the purpose of security. In Indus
Airways Private Limited v. Magnum Aviation Private Limited,
the issue before a two-Judge Bench of this Court was whether
dishonour of post-dated cheques which were issued by the
purchasers towards ‘advance payment’ would be covered by
Section 138 of the Act if the purchase order was cancelled
subsequently. It was held that Section 138 would only be
applicable where there is a legally enforceable debt subsisting on
the date when the cheque is drawn. In Sampelly Satyanarayana
Rao v. Indian Renewable Energy Development Agency Limited,
the respondent advanced a loan for setting up a power project
and post-dated cheques were given for security. The two cheques
were dishonoured and a complaint was instituted under Section
138. Distinguishing Indus Airways (supra), it was held that the
test for the application of Section 138 is whether there was a
legally enforceable debt on the date mentioned in the cheque. It
was held that if the answer is in the affirmative, then the
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:18
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
34 Out of 42
provisions of Section 138 would be attracted. In Sripati Singh v.
State of Jharkand, this Court observed that if a cheque is issued
as security and if the debt is not repaid in any other form before
the due date or if there is no understanding or agreement
between the parties to defer the repayment, the cheque would
mature for presentation:
“17. A cheque issued as security pursuant to a financial
transaction cannot be considered as a worthless piece
of paper under every circumstance. ‘Security’ in its
true sense is the state of being safe and the security
given for a loan is something given as a pledge of
payment. It is given, deposited or pledged to make
certain the fulfillment of an obligation to which the
parties to the transaction are bound. If in a transaction,
a loan is advanced and the borrower agrees to repay
the amount in a specified time frame 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.
18. When a cheque is issued and is treated as ‘security’
towards repayment of an amount with a time period
being stipulated for repayment, all that it ensures is
that such cheque which is issued as ‘security’ cannot
be presented prior to the loan or the instalment
maturing for repayment towards which such cheque is
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:22
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
35 Out of 42
issued as security. Further, the borrower would have
the option of repaying the loan amount or such
financial liability in any other form and in that manner
if the amount of loan due and payable has been
discharged within the agreed period, the cheque issued
as security cannot thereafter be presented. Therefore,
the prior discharge of the loan or there being an altered
situation due to which there would be understanding
between the parties is a sine qua non to not present the
cheque which was issued as security. These are only
the defences that would be available to the drawer of
the cheque in a proceedings initiated under Section
138 of the N.I. Act. Therefore, there cannot be a hard
and fast rule that a cheque which is issued as security
can never be presented by the drawee of the cheque. If
such is the understanding a cheque would also be
reduced to an ‘on demand promissory note’ and in all
circumstances, it would only be a civil litigation to
recover the amount, which is not the intention of the
statute. When a cheque is issued even though as
‘security’ the consequence flowing therefrom is also
known to the drawer of the cheque and in the
circumstance stated above if the cheque is presented
and dishonoured, the holder of the cheque/drawee
would have the option of initiating the civil
proceedings for recovery or the criminal proceedings
for punishment in the fact situation, but in any event, it
is not for the drawer of the cheque to dictate terms
with regard to the nature of litigation.” (emphasis
supplied) Based on the above analysis of precedent,
the following principles emerge:
(i) Where the borrower agrees to repay the loan within
a specified timeline and issues a cheque for security
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:26
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
36 Out of 42
but defaults in repaying the loan within the timeline,
the cheque matures for presentation. When the cheque
is sought to be encashed by the debtor and is
dishonoured, Section 138 of the Act will be attracted;
(ii) However, the cardinal rule when a cheque is issued
for security is that between the date on which the
cheque is drawn to the date on which the cheque
matures, the loan could be repaid through any other
mode. It is only where the loan is not repaid through
any other mode within the due date that the cheque
would mature for presentation; and
(iii) If the loan has been discharged before the due date
or if there is an ‘altered situation’, then the cheque
shall not be presented for encashment.
This Court in NEPC Micon Ltd. v. Magna Leasing Ltd. held that
the Courts must interpret Section 138 with reference to the
legislative intent to suppress the mischief and advance the
remedy. The objective of the Act in general and Section 138
specifically is to enhance the acceptability of cheques and to
inculcate faith in the efficacy of negotiable instruments for the
transaction of business.7 Section 138 criminalises the dishonour
of cheques. This is in addition to the civil remedy that is
available. Through the criminalisation of the dishonour of
cheques, the legislature intended to prevent dishonesty on the
part of the drawer of a negotiable instrument.8 The interpretation
of Section 138 must not permit dishonesty of the 6 AIR 1995 SC
1952 7 Sunil Sodhi v. State of Gujarat, Criminal Appeal No.
1446 of 2021 8 M/s Electronics Trade and Technology
Development Corporation Ltd., 1996(3) Crimes 82 (SC) drawee
of the cheque as well. A cheque is issued as security to provide
the drawee of the cheque with a leverage of using the cheque in
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:30
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
37 Out of 42
case the drawer fails to pay the debt in the future. Therefore,
cheques are issued and received as security with the
contemplation that a part or the full sum that is addressed in the
cheque may be paid before the cheque is encashed.
The High Court while dismissing the appeal against acquittal
held that the notice issued by the appellant is an omnibus notice
since it does not represent a legally enforceable debt. Relying on
the judgment of this Court in Rahul Builders Vs. Arihant
Fertilizers & Chemicals, it was held that the legal notice was not
issued in accordance with proviso (b) to Section 138 since it did
not represent the ‘correct amount’. The appellant has contended
that the requirement under Section 138 is to send a notice
demanding the ‘cheque amount’. It was contended that the
offence under Section 138 was made out since the appellant in
the statutory notice demanded the payment of rupees twenty
lakhs which was the ‘cheque amount’.
Section 138 of the Act stipulates that if the cheque is returned
unpaid by the bank for the lack of funds, then the drawee shall be
deemed to have committed an offence under Section 138 of the
Act. However, the offence under Section 138 of the Act is
attracted only when the conditions in the provisos have been
fulfilled. Proviso (b) to Section 138 states that a notice
demanding the payment of the ‘said amount of money’ shall be
made by the drawee of the cheque.
It was also observed that the question of whether the notice
demanding an amount higher than the cheque amount is valid
would depend on the language of the notice:
“8. It is a well-settled principle of law that the notice
has to be read as a whole. In the notice, demand has to
be made for the “said amount” i.e. the cheque amount.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:38
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
38 Out of 42
If no such demand is made the notice no doubt would
fall short of its legal requirement. Where in addition to
the “said amount” there is also a claim by way of
interest, cost etc. whether the notice is bad would
depend on the language of the notice. If in a notice
while giving the break-up of the claim the cheque
amount, interest, damages etc. are separately specified,
other such claims for interest, cost etc. would be
superfluous and these additional claims would be
severable and will not invalidate the notice. If,
however, in the notice an omnibus demand is made
without specifying what was due under the
dishonoured cheque, the notice might well fail to meet
the legal requirement and may be regarded as bad.”
Section 138 creates a deeming offence. The provisos prescribe
stipulations to safeguard the drawer of the cheque by providing
them the opportunity of responding to the notice and an
opportunity to repay the cheque amount. The conditions
stipulated in the provisos need to be fulfilled in addition to the
ingredients in the main provision of Section 138. It has already
been concluded above that the offence under Section 138 arises
only when a cheque that represents a part or whole of the legally
enforceable debt at the time of encashment is returned by the
bank unpaid. Since the cheque did not represent the legally
enforceable debt at the time of encashment, the offence under
Section 138 is not made out.
In view of the discussion above, we summarise our findings
below:
(i) For the commission of an offence under Section
138, the cheque that is dishonoured must represent a
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:42
+0530CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
39 Out of 42
legally enforceable debt on the date of maturity or
presentation;
(ii) If the drawer of the cheque pays a part or whole of
the sum between the period when the cheque is drawn
and when it is encashed upon maturity, then the legally
enforceable debt on the date of maturity would not be
the sum represented on the cheque;
(iii) When a part or whole of the sum represented on
the cheque is paid by the drawer of the cheque, it must
be endorsed on the cheque as prescribed in Section 56
of the Act. The cheque endorsed with the payment
made may be used to negotiate the balance, if any. If
the cheque that is endorsed is dishonoured when it is
sought to be encashed upon maturity, then the offence
under Section 138 will stand attracted;
(iv) The first respondent has made part-payments after
the debt was incurred and before the cheque was
encashed upon maturity. The sum of rupees twenty
lakhs represented on the cheque was not the ‘legally
enforceable debt’ on the date of maturity. Thus, the
first respondent cannot be deemed to have committed
an offence under Section 138 of the Act when the
cheque was dishonoured for insufficient funds; and
(v) The notice demanding the payment of the ‘said amount of
money’ has been interpreted by judgments of this Court to mean
the cheque amount.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:47
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
40 Out of 42
34. Having regard to the judgment, in the present matter also the
accused had made payments of Rs.49,000/- twice to the
complainant on 07.12.2020 and 15.12.2020 and the cheques in
question were drawn on 15.02.2021, 17.03.2021 and 24.03.2021,
i.e. after the payment of Rs.98,000/- to the complainant.
Therefore, the outstanding liability of the accused as on the date
of issuance of the cheques in question as per Ex.CW1/XB, which
is a complainant’s document was Rs.15,23,400/-. However, the
cumulative amount of the cheques in question is 15,68,840/-.
The amount in the cheques in question is greater than the
outstanding liability of the accused. Part payment has been made
by the accused to the complainant in discharge of his liability
and the same has not been reflected in the complaint, therefore,
ingredients of Section 138 NI Act are fulfilled.
35. On the basis of the discussion, this Court is of the opinion
that the complainant has not been able to prove his case on the
basis of preponderance of probabilities.
Digitally
signed by
ANKIT
ANKIT SOLANKI
SOLANKI Date:
2025.01.15
17:02:51
+0530
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
41 Out of 42
36. Ingredients of sec. 138 NI Act have not been fulfilled and
accordingly I return the finding of the acquittal of the accused
Sandeep Tandon in the present case.
37. Copy of the Judgment be supplied free of cost to both the
parties.
File be consigned to Record Room, after due compliance of
formalities.
Announced in open Court Digitally signed
by ANKIT
SOLANKI
ANKIT
Today on this 15.01.2025. Date:
SOLANKI 2025.01.15
17:02:56
+0530(Ankit Solanki)
Judicial Magistrate First Class
(NI ACT) Digital Court No.1
Tis Hazar Courts, West, Delhi.
CC NI ACT No. 1849/2021
Rajinder Satija Vs. Sandeep Tandon
42 Out of 42