Delhi District Court
Ms M R Apparels Pvt vs Vivek Sharma on 13 August, 2025
In The Court of Sh. Divyam Lila, Municipal Magistrate, East, Delhi
JUDGEMENT
DLET020022832015 CC NI ACT/48468/2016 Date of Filing : 15-12-2015 Date of Registration : 19-12-2015 Date of Disposal : 13-08-2025 ____________________________________________________________ (Complainant): M/s M.R. Apparels Pvt. Ltd.
represented through its authorized signatory Sh. Sangram Singh Digitally
signed by
DIVYAM
Versus DIVYAM LILA
LILA Date:
(Accused) Sh. Vivek Sharma, 2025.08.13
16:23:19
+0530
Designated partner of VTS IT Solutions LLP.
_______________________________________________________________ Advocate appearing for Complainant: Sh. Abhay Mani Tripathi Advocate appearing for the Accused: Sh. Naveen Singhla Offence punishable under : Section 138 of Negotiable Instruments Act, 1881 Final Order : Acquittal under Section 138 NI Act ________________________________________________________________
-:Index of Judgment:-
1. Introduction:-.................................................................................................. 2
2. Brief Facts of the Case:-................................................................................. 2
3. Notice Framed on the Accused and Plea of the Accused.............................3
4. Issues for Determination:............................................................................... 3
5. Evidence on Record........................................................................................ 4
6. Legal Position:.................................................................................................8
7. Arguments of the parties:.............................................................................10
8. Analysis and Findings:................................................................................. 14
10. Conclusion and Reason for decision:........................................................ 27
11. Order:...........................................................................................................28 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
1. Introduction:-
a. This judgement arises out of a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") by the complainant against the accused for dishonour of cheque based on the sale deed deferred payment as debt.
2. Brief Facts of the Case:-
a. This case arises from two connected Complaints Nos. 48468/2016 (for cheque bearing no. Nos. 000007 dated 15.09.2015 for Rs. 75,00,000/-) and 57831/2016 (for cheque bearing no.000008 dated 15.03.2016 for Rs. 70,00,000/-, and 000010 dated 16.03.2016 for Rs. 8,40,000/-) filed under Section 138 of the Negotiable Instruments Act, 1881, by complainant M/s M.R. Apparels Pvt.
Ltd., represented through its authorized signatory Sh. Sangram Singh, against accused Sh. Vivek Sharma.
b. In the present case the complainant alleged dishonor of three post-dated cheques bearing Nos. 000007 dated 15.09.2015 for Rs. 75,00,000/-, 000008 dated 15.03.2016 for Rs. 70,00,000/-, and 000010 dated 16.03.2016 for Rs. 8,40,000/- issued as part payment for the sale of an industrial leasehold property bearing Plot No. D-247/1, Sector-63, Noida, Uttar Pradesh, executed via a Transfer Deed cum Sale Deed dated 18.03.2015 for a total consideration of Rs. 6.5 Crores.
c. This case pertains to the cheque no.Nos. 000007 dated 15.09.2015 for Rs. 75,00,000/- (hereinafter called as "cheque(s) in question"). The complainant asserts that these cheques, dishonored with the remark "Payment stopped by drawer,"
represent a legally enforceable debt, supported by demand notices.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 2/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi The legal demand notice remained unpaid. Hence the present case came to be filled.
d. The cognizance in the present matter was taken, and the accused was summoned for the purpose of trial.
3. Notice Framed on the Accused and Plea of the Accused a. The accused was served notice under Section 251 Cr.P.C and pleaded "not guilty".
b. The accused admitted that the cheques were issued to the complainant, however stated that the property was taken by the complainant on rent. The accused also stated that the complainant removed fixtures, AC etc and payment of Rs 15,00,000/- by RTGS to the complainant.
c. The accused denied receiving legal notice from the complainant.
4. Issues for Determination:
a. The cheque was issued in discharge of a legally enforceable debt or liability.?
b. The cheque was presented within the period of validity of three months?.
c. The cheque was dishonoured for insufficiency of funds.? d. A legal notice was duly served.?
e. The accused failed to make payment within the prescribed period. f. Whether the case is maintainable without impleading the LLP firm of the accused Vivek Sharma on whose account the cheque is issued?
g. The accused has successfully rebutted the statutory presumption under Sections 118 and 139 of the NI Act.?
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 3/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
5. Evidence on Record a. Complainant's Evidence:
i. In support of his case, the complainant examined himself as CW-1 by way of affidavit, wherein he reiterated the averments made in the complaint. During cross-examination conducted on 24.07.2017 and 30.10.2018, CW-1, CW-1 admitted that the Agreement (Ex. CW1/X1) required supplying documents listed in Schedule A, and acknowledged receiving an email from the accused demanding these, but provided no proof of compliance. He confirmed handing over possession in a well-furnished condition post-Transfer Deed (Mark-X), but admitted taking three floors (Basement, Ground, First) on rent from the accused on 10.04.2015, vacating by May 2015. He claimed rent payments were made in cash without receipts or acknowledgments. CW-1 initially stated this cheque was issued at the time of the sale deed, but later contradicted himself, saying it was handed over 4-5 days after registration. He claimed it as lump-sum interest on Rs. 1.45 Crores with no fixed rate or written document, and admitted not mentioning it in the initial demand notice (Ex. CW1/4) for CC No. 48468/2016, though referenced in CC No. 57831/2016. CW-1 acknowledged Rs. 15,00,000/- via RTGS from the accused's father to Sanjay Singh Rana, but denied it as sale consideration adjustment, offering no explanation for its purpose. He admitted filing an application with Noida Authority to cancel the Transfer Memorandum, but claimed CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 4/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi no knowledge of related outcomes. CW-1 denied having any knowledge of emails demanding documents, issued security/rent cheques (Nos. 014791 & 014792) to the accused without clarifying liability, and denied fixture removal despite vacating the rented floors.
b. Statement of accused: The statement of the accused under Section 313 Cr.P.C. was recorded wherein accused admitted issuing the impugned cheques (Nos. 000007 dated 15.09.2015 for Rs.
75,00,000/- and 000008 dated 15.03.2016 for Rs. 70,00,000/-) as part payment for the purchase of the industrial leasehold property (Plot No. D-247/1, Sector-63, Noida) from the complainant for Rs. 6.5 Crores. He confirmed the dishonor with the remark "Payment stopped by drawer" (Ex. CW1/3) and receipt of the demand notice dated 04.11.2015 (Ex. CW1/4), to which he claimed to have replied. The accused justified the stop payment, stating that the complainant failed to perform its obligations under the Agreement to Transfer Leasehold Rights dated 30.01.2015 (Ex. CW1/X1), including non-delivery of essential documents (e.g., Completion Certificate, SSI Certificate, Functional Certificate, Sanctioned Map). He opted to lead defense evidence to substantiate his claims. c. Defence Evidence: The accused examined 4 witness on his behalf, one being himself as DW-1, DW-2 and DW-3 being independent witnesses and DW-4 being a bank witness:
i. DW1 stated that the property was shown in January 2015 as under construction but "as is" basis by agents Sonu Sharma and Swadesh Sharma. An Agreement to Transfer was executed on 30.01.2015 for Rs. 8.95 Crores (reduced to Rs. 6.5 Crores in Transfer Deed dated 18.03.2015, Mark-X). Rs. 3 Crores was paid to release documents from DHFL, but key CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 5/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi documents (Completion Certificate, SSI, Functional Certificate, Sanctioned Map) were missing despite promises.
Transfer Memorandum (TM) was issued on 17.03.2015. A Rent Agreement dated 10.04.2015 (Ex. DW1/8) leased three floors (Basement, Ground, First) to the complainant's sister concern (Future World Green Homes Pvt. Ltd.) with a 36-month lock-in and Rs. 2.16 Lakhs monthly rent. The Disputes arose when lessee denied access to upper floors, failed to upgrade electricity load and did not pay rent. Lessee vacated prematurely in May-June 2015, removing fixtures (e.g., workstations, ACs, glass partitions, false ceiling) worth over Rs. 50 Lakhs, deploying gunmen to block entry. Police complaint lodged on 16.05.2015. Rent Agreement canceled on 05.06.2015. Additional Rs. 15 Lakhs paid via RTGS on 23.09.2015 (Ex. DW1/2-3) to Sanjay Singh Rana for documents, but only partial compliance. Stop payment instructed on 14.09.2015 (email/letter, Ex. DW1/9-11) due to breaches. Noida Authority issued show-cause for TM cancellation on 07.04.2016 (influenced by complainant, Ex. DW1/4; rejected). Civil suit filed for stay (granted 16.10.2015). FIR u/s 420/506 by complainant (bail granted). Had sufficient funds in joint account (Ex. DW1/12). Exhibited: Loss summary/bills (Ex. DW1/5), rent loss (Mark DW1/6), photos (Ex. DW1/7), Rent Agreement (Ex. DW1/8), stop payment docs (Ex. DW1/9-11), bank form (Ex. DW4/A). Claimed no liability due to misuse and breaches. In cross-examination (various dates), DW1 admitted purchasing "as is" under construction but clarified three floors were furnished. Confirmed self-obtainment of CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 6/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi documents, Rs. 8.4 Lakhs for load (Rent Clause 9), no recovery suit as amounts adjusted. Denied concoction; reiterated TM issued with complainant's support but later sought cancellation.
ii. Evidence of DW2 (Sh. Raghunandan Sharma) testified that in April 2015, the accused approached for security at the property (Sector-63, Noida). He surveyed the fully furnished building and provided an estimate for 24-hour guards in shifts. Guards were deployed from 19.05.2015. Upon arrival, the office was damaged; lights, AC units, false ceiling, and glass work were removed. During duty, persons removed glass partitions and cabin work; attempts to stop failed. Complaint security (including gunmen) was present initially but left after removal. He was informed by supervisor Veerpal Singh Chauhan (DW3) telephonically but did not witness personally. In cross-examination, DW2 admitted no written security agreement or inventory produced, no personal witnessing of removal, no vehicle details or names noted, no photos taken, and no police complaint filed by him or staff.
iii. Evidence of DW3 (Sh. Veerpal Singh Chauhan) stated he was deployed alone from 19.05.2015 and found the office damaged: lights/ACs/false ceiling/glass work removed. 2 or 3 days later, persons (from Sh. Sangram Singh, including gunman Murari Singh) removed glass partitions, cabins, and AC copper pipes in two small trucks. He informed DW2 telephonically; DW2 visited after 45 minutes but left. Maintained a register (not produced) with details but couldn't recall specifics. No call to the accused or police. In CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 7/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi cross-examination, DW3 admitted no prior visit before 19.05.2015, no proof of deputation (e.g., documents/photos/vehicle numbers), and no police complaint.
iv. Evidence of DW4 (Ms. Monika Rathore) produced the joint bank account opening form in the name of Vivek Sharma and Dulari Sharma (Ex. DW4/A, colly), confirming the accused as joint holder. She testified that the account had sufficient funds at the time of dishonor, as per the statement (Ex. DW1/12).
6. Legal Position:
a. In order to constitute an offence under Section 138 of the Negotiable Instruments Act, 1881, the following essential elements must be satisfied as per the judgement in Kusum Ingots & Alloys Ltd. Vs. Pennar Peterson Securities Ltd. AIR 2000 SC 954 ,both in the complaint and the evidence presented by the complainant:
i. Drawing of the Cheque: The accused must have drawn a cheque on an account maintained by them, for the payment of a legally enforceable debt or liability to another person. ii. Timely Presentation: The cheque must be presented to the bank for payment within three months from the date on which it was drawn, or within the period of its validity, whichever is earlier.
iii. Dishonour of the Cheque: The cheque must be dishonoured by the bank due to either insufficient funds in the account or because the amount exceeds the arrangement made with the bank.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 8/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi iv. Notice of Demand: The payee or holder of the cheque must issue a written demand for payment to the drawer, within 30 days of receiving information from the bank regarding the dishonour.
v. Failure to Pay: The drawer must fail to make payment within 15 days of receiving the notice of demand.
b. Additionally, the provisions of Sections 139 and 118 of the Act further strengthen the case for the complainant. Section 139 creates a presumption in favour of the holder of the cheque, mandating that the court shall presume, unless proven otherwise, that the cheque was issued for the discharge of a debt or other liability. Section 118, on the other hand, provides that there is a presumption that every negotiable instrument, including a cheque, was made for consideration, and that it was transferred for consideration. c. In the case of Basalingappa v. Mudibasappa (2019) 5 SCC 418;, the Hon'ble Supreme Court has laid down that once the execution of the cheque is admitted, Section 139 imposes a rebuttable presumption in favour of the complainant, establishing that the cheque was issued for the discharge of a debt or liability. The presumption is rebuttable and the accused has the opportunity to raise a probable defence. The standard of proof for rebutting this presumption is based on the preponderance of probabilities. d. The court further held that it is not mandatory for the accused to enter the witness box to prove their defence. They may rely on the evidence presented by the complainant or any other available materials. The onus to rebut the presumption lies on the accused, but it is important to note that this is an evidentiary burden, not a persuasive one.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 9/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi e. Thus, Section 138 operates on the principle of reverse onus of proof - once the complainant proves the essential elements of dishonour, the burden shifts to the accused to raise a plausible defence. The presumption of guilt is strong, but not irrebuttable, and the accused is entitled to challenge it through a preponderance of evidence.
f. In the backdrop of legal position as enunciated above, it is to be examined by this Court that whether the accused on a scale of preponderance of probabilities has been able to rebut the presumption which has been raised against him and in favour of the complainant, or has been able to demolish the case of the complainant to such extent so as to shift the onus placed upon the accused again on the complainant. As held by Hon'ble Supreme Court of India in case of Kumar Exports vs Sharma Carpets (2009) 2 SCC 513, the accused can either prove the non−existence of the consideration and debt by direct evidence or by bringing on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt either did not exist or their non−existence was so probable that a prudent man may act upon the plea that they did not exist. If the Court comes to the conclusion that the accused has not been able to rebut the presumption raised against him by failing to bring on record direct evidence or by even failing to sufficiently perforate the case of the complainant, the complainant is entitled to a decision in his favour.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 10/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
7. Arguments of the parties:
a. Arguments by Ld. Counsel for the Complainant: The learned counsel for the complainant submitted that the case is squarely covered under Section 138 of the Negotiable Instruments Act, 1881, and the accused is liable for the dishonour of the cheque. The counsel for the complainant has also filed a set of written arguments. The key arguments advanced by the counsel urged the court to convict the accused, are as follows:
i. Legally Enforceable Debt Established by Documentary Evidence: The complainant asserts that the impugned cheques (Nos. 000007, 000008, and 000010) were issued in discharge of a legally enforceable debt arising from the sale of the industrial property for Rs. 6.5 Crores, as explicitly recorded in the Transfer Deed cum Sale Deed dated 18.03.2015 (Mark-X). The deed lists the cheques as part of the consideration, invoking the presumption under Section 139 NI Act that they were for a valid debt. CW-1's affidavit and testimony confirmed all obligations were met, including document supply per Schedule A (Ex. CW1/X2) and vacant possession handover (Mark-X Clause 3). Demand notices (Ex. CW1/4) were served, and non-payment within 15 days triggered liability.
ii. Rebuttal to Defense of Security Cheques and Fixture Removal : The accused's claim that the cheques were for security and that fixtures were removed is falsified by Mark-X Clauses 3 and 5, which state vacant possession was handed over with no plant/machinery installed, indicating an "as is" sale under construction. No prior communication or CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 11/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi evidence supports fixture claims; the defense is an afterthought raised post-notice.
iii. Rs. 15 Lakhs RTGS Not an Adjustment to Sale Consideration: The Rs. 15 Lakhs transfer was from the accused's father to Sanjay Singh Rana personally, not to the complainant company or as official adjustment. No prior communication or document links it to the sale; CW-1 denied it as consideration. The accused testimony lack corroboration, and Sanjay Singh's non-examination is irrelevant as the burden lies on the accused to rebut S.139 presumption.
iv. Rs. 8.4 Lakhs Cheque Issued as Interest on Deferred Payment: The cheque (No. 000010) was for interest on the deferred Rs. 1.45 Crores, issued at the time of the Transfer Deed. No complainant obligation for electricity load existed post-sale; the Rent Agreement (Ex. DW1/8) was with a separate entity (Future World), and Clause 9 placed load upgrade on the lessee. CW-1's testimony confirmed lump-sum interest; omission in initial notice (Ex. CW1/4) was clerical, referenced in the second. The accused's load claim lacks evidence.
v. Failure to Prove Sufficient Funds Attracts Adverse Presumption: The accused claimed sufficient funds but produced only a joint personal account statement (Ex. DW1/12), not the LLP's (drawer). This withholding attracts adverse presumption under S.114(g) Evidence Act, implying insufficiency.
vi. Complaint Maintainable Against Accused as Designated Partner: The accused is arrayed as designated partner who CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 12/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi signed the cheques; S.26 LLP Act makes partners agents for firm business, allowing prosecution without impleading the LLP.
b. Arguments by Ld. Counsel for the Accused : The learned counsel for the accused vehemently argued that the complainant has failed to prove the existence of a legally enforceable debt, and the case is based on a fabricated narrative to extort money. The counsel for the accused has also filed a set of written arguments. The key arguments advanced by the counsel, while praying for the acquittal of the accused, are as follows:
i. Non-Joinder of LLP Vitiates Complaint Under S.141 NI Act:
Cheques issued by VTS IT Solutions LLP; accused only partner arrayed without LLP impleaded or noticed. S.141 requires conjoint prosecution; failure fatal and Complaint unsustainable at threshold.
ii. No Personal Debt; Transaction Firm-Specific: No averment of personal debt; cheques LLP-issued for property purchase (Transfer Deed Mark-X). LLPs are separate entities; vicarious liability under S.141 fails without firm. iii. No Enforceable Debt Due to Adjustments and Part-Payments: Rs. 15 Lakhs RTGS (Ex. DW1/2-3) to Sanjay Singh adjusts Rs. 1.45 Crores debt; CW-1 admitted receipt but unexplained purpose (adverse inference S.114(g) Evidence Act). Unendorsed cheques unenforceable for full amount (Dashrathbhai Trikambhai Patel, 2022). Further adjustments: delay penalties (Rs. 51.77 Lakhs, Agreement Clause 6e), rent loss (Rs. 18.79 Lakhs, unproved cash claims), fixture damages (Rs. 74.33 Lakhs, Ex. DW1/5,7). Total exceeds debt, creating negative liability.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 13/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi iv. Breaches in Agreements Justify Stop Payment: Non-delivery of Schedule A documents (CW-1 admission of email; self-obtained Ex. DW1/4); breaches S.6 Agreement. Possession not vacant. Rent non-payment (cash unproved; breach Clause 3/17). Rs. 8.4 Lakhs for load (Rent Clause 9; no interest clause in agreements). Emails (Ex. DW1/9-11) notify breaches pre-dishonor. Presumption rebutted by contractual non-performance.
v. Bona Fide Intent and Sufficient Funds Proven: Delayed stop payment shows good faith despite breaches. Joint account funds proved (Ex. DW1/12, DW-4); LLP statement absence irrelevant as stop justified, not insufficiency. vi. CW-1 Admissions/Contradictions Support Acquittal:
Admissions: Documents due, email, furnished possession, Rs. 15 Lakhs, TM filing. Contradictions: Rs. 8.4 Lakhs timing/omission in notice. Sanjay Singh's non-examination fatal. Rebuts S.139 beyond probabilities.
8. Analysis and Findings:
a. Issue 1 - Issuance of Cheque: This ingredient pertains to the issuance of the cheque in question itself. The Accused, in his notice of accusation has admitted his signature on the cheque in question and that the cheque has been drawn on the account of the Accused himself. Having admitted the basic ingredient, the presumption is drawn against the accused and now the accused would have to prove that the cheque in question was not issued by him; by way of rebuttal of the presumption drawn against him. Whether the accused was able to successfully rebut the adverse presumption is dealt in detail in the issue no. 7; However, the issue no. 1 is decided CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 14/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi in favour of the complainant and the presumption is drawn against the accused.
b. Issue 2 - Presentation within Validity: This ingredient stands satisfied on a bare perusal of the cheque in question and the return memo being presented within the period of validity. The cheque is also not dishonoured with the remark "instrument stale"; as the cheque has been returned dishonoured with a return memo noting the reason for return as "'Payment stopped by drawer". The defence has led no evidence to contradict the same and hence, this ingredient stands fulfilled as against the accused. Hence, this issue is also decided in favour of the complainant and the cheque has been proved to be dishonoured within the period of validity. c. Issue 3 - Dishonour of Cheque: The bank return memo records state that the cheque in question has been returned dishonoured for the reason "Payment stopped by Drawer". The defence has led no evidence to controvert the same and hence, this ingredient also stands satisfied as against the accused. Hence, this issue is also decided in favour of the complainant and the cheque has been proved to be dishonoured.
d. Issue 4 - Legal Notice: Service of the legal notice is the legal fiction which constitutes the major ingredient of the offence u/s-138 NI Act. The objective of serving legal demand notice to the Accused before filing the case is to allow the accused to make the payment. As regards the service of legal demand notice, the Complainant has sent the same to the accused. That the Accused has denied receiving the legal demand notice in his notice of accusation u/s 251 Cr.P.C. However accused admitted receiving the legal notice in the statement of accused u/s 313 CrPC and sending a reply to the same. Thus, in absence of any evidence against the CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 15/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi presumption of service and admission of the accused with respect to receipt of the legal notice; this issue is also decided in favour of the complainant and the service of legal notice has been proved. e. Issue 5 - Non-Payment within 15 Days: In the present case, after the issue no. 4 is against the accused, the case of the accused is that he does not have any liability towards the complainant and his cheque was misused. Hence, it is an admitted position that no payment for the cheque in question was made and thus this ingredient of non-payment within 15 days also stands satisfied. Hence, this issue is also decided in favour of the complainant and the cheque has been proved to be not paid by the accused despite service of notice.
f. Issue 6 - Maintainability of case without arraying the LLP firm of the accused Vivek Sharma:
i. The accused has vehemently argued against the maintainability of the case without arraigning the LLP as the accused and the partner/ designated partner as the accused persons. On other hand, the complainant has argued that the case is maintainable as the firm and the partners are not separate entities, and the firm and the partner are agents of each other; hence even if the firm is not arrayed the same is not fatal to the case.
ii. It is an admitted position that the cheque(s) in question is issued on the account of the firm 'VTS IT Solutions LLP'. Under Section 2(1)(d) of the Limited Liability Partnership Act, 2008, an LLP is a "body corporate" with perpetual succession and a separate legal personality distinct from its partners. This makes it analogous to a company rather than a general partnership firm.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 16/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi iii. Section 141 imposes vicarious liability on persons (including partners) who were in charge of and responsible for the conduct of the business of the "company" at the time of the offence. The Explanation to Section 141 defines "company" to include any "body corporate," which encompasses LLPs. For such entities, the Hon'ble Supreme Court in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661 held that the company (or body corporate) must be impleaded as the primary accused for vicarious liability to attach to its officers/directors/partners. Without arraigning the entity, proceedings against individuals cannot proceed, as the offence is committed by the entity, and individual liability is derivative.
iv. In the Judgment of P. Dhanasingh v. K. Chandrasekar & Anr., decided on July 14, 2025 by Hon'ble Supreme Court, It clarified that for general partnership firms (governed by the Indian Partnership Act, 1932), complaints under Section 138 can proceed against partners alone without impleading the firm, as partnerships lack separate legal personality and partners have joint and several liability. However, It explicitly distinguishes partnerships from incorporated entities like companies, where the entity must be prosecuted first. Even if the cheque was signed by one partner, their liability is vicarious and depends on the LLP being held accountable.
v. In the present case, the drawer of the cheque is an LLP firm, and the cheque has been signed by the accused Vivek Sharma as designated partner of the firm. The underlying transaction of transfer of lease deed, rent agreement and the CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 17/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi agreement to lease deed were all executed between the LLP firm and the complainant company. It is not the case of the complainant that the cheque was issued by the accused vivek sharma to discharge the debt of the personal transaction. The legal notice is also not issued to the principal drawer being LLP firm nor the same has been arrayed as accused in this case. The law is clear, the LLP being a separate juristic person and a body corporate is covered in the principle of Aneeta Hada judgement. Hence, with the above observations of the law on this aspect, this court finds weightage in the arguments of the counsel for the accused and finds that the present complaint is not maintainable. The LLP firm is a body corporate and separate juristic entity, and non impleadment of the LLP itself is fatal to the complainant's case and therefore this court does not find itself in agreement to the arguments of the counsel for complainant. This issue is decided in favour of the accused and against the complainant, and held that this complaint is not maintainable on failure to array the LLP firm of the accused on whose account the cheque(s) in question has been drawn and who was party to the said underlying transaction.
9. Issue 7 : Defence of the Accused and Rebuttal of Presumption: The above ingredients being satisfied, the court would have to look at the defence brought out by the accused by way of cross examination of the complainant's evidence and the rebuttal by way of defence evidence. In the present case, the accused had made following attempts towards rebuttal of the statutory presumption against him; and with the following observations, it is held that the issue no. 7 is decided against the complainant and in favour of the accused:
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 18/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi a. Existence of Black Money and Cash Transactions Admitted Through the Agreement Undermines the Complainant's Case:
On perusal of the testimony and the documentary evidence it has come to light that the complainant has suppressed critical details about the transaction's financial structure, including cash components and discrepancies that suggest unaccounted money/ cash involvement. Under Section 138 NI Act, the complainant must prove a legally enforceable debt beyond the mere issuance of cheques, and any suppression of facts that could alter the case's outcome erodes credibility and rebuts the presumption under Section 139. Here, the complainant's affidavit and cross-examination (CW-1) omit explanations for cash dealings, creating reasonable doubt and shifting the evidential burden back. This suppression not only conceals potential illegality but also prevents the court from assessing the true enforceability of the debt. CW-1 claimed in cross-examination of rent payments in cash without receipts or acknowledgments, claiming monthly payments for the leased-back floors. However, no bank records, ledgers, or witnesses (e.g., Sanjay Singh Rana) were produced to substantiate this. This suppression is material, as cash rent could disguise the true nature of the transaction. A glaring suppression is the unexplained reduction in sale consideration from Rs. 8.95 Crores in the Agreement to Transfer Leasehold Rights dated 30.01.2015 (Ex. CW1/X1) to Rs. 6.5 Crores in the Transfer Deed dated 18.03.2015 (Mark-X) being a gap of Rs. 2.45 Crores. CW-1's affidavit and cross-examination offer no explanation for this discrepancy. The Agreement to Transfer (Clause 6) conditions the deferred payment of Rs. 1.45 Crores of NBFC financing securitized against "actual rent" from three leased-back floors. CW-1 suppressed any CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 19/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi explanation for abandoning NBFC (fallback to cheques) or the circular rent flow, which could mask unaccounted cash flow/ transaction. This unexplained structure suggests intent to conceal underlying transactions tied to a benami-like lease-back (same director). The complainant's pattern of suppression of unexplained cash rent, price gap, NBFC abandonment indicates deliberate concealment of underlying and actual transaction. CW-1's contradictions and admissions (cash rent without proof, Rs. 15 Lakhs receipt unexplained) attract adverse inference, fracturing credibility. The complainant's suppression of cash components, price gaps, and NBFC details conceals potential black money, opaque financing structures, eroding credibility and fracturing the case.
b. Complicated Sale-Leaseback Transaction Resulting in Civil Dispute Rebuts Presumption of Enforceable Debt: The underlying transaction is a sale of the industrial leasehold property for Rs. 6.5 Crores followed by an immediate lease-back of three floors to the complainant's sister entity exemplifies a complicated sale-leaseback structure that has resulted in multiple civil disputes. The transaction began with the Agreement to Transfer Leasehold Rights dated 30.01.2015 (Ex. CW1/X1), setting a consideration of Rs. 8.95 Crores (reduced unexplained to Rs. 6.5 Crores in the Transfer Deed cum Sale Deed dated 18.03.2015, Mark-X). Clause 6 of the Agreement conditioned the deferred Rs. 1.45 Crores on NBFC financing securitized against "actual rent" from three floors (Basement, Ground, First). Immediately post-sale, the Rent Agreement dated 10.04.2015 (Ex. DW1/8) leased these floors back to the complainant's sister entity (Future World Green Homes Pvt.
Ltd., sharing director Sanjay Singh Rana) for 60 months with a CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 20/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi 36-month lock-in, at Rs. 2.16 Lakhs/month (totaling Rs. 1.43 Crores over 5 years). The Rent Agreement's 36-month lock-in (Clause 17) was breached by early cancellation on 05.06.2015, just two months after commencement, violating the commitment and undermining the "actual rent" basis for NBFC financing (Agreement Clause 6). Clause 9 required the lessee to upgrade the electricity load from 5KW to 100KW, but this was not done, further frustrating the financing model and rendering the space unrentable (DW-1 testimony; rent loss Ex. DW1/6). CW-1 admitted renting back the floors (cross-examination 30.10.2018), contradicting the vacant possession claim in the Transfer Deed (Clause 3), which escalated to possession fights, including gunmen deployment by the complainant (DW-1, DW-2, DW-3 testimony; police complaint 16.05.2015). These breaches created a bona fide dispute, as the lease-back was integral to the sale's economics. The Sale Lease Back's collapse led to multiple disputes in the form of possession fights (gunmen blocking entry, fixture removal causing damage), TM cancellation attempts by complainant (Ex. DW1/4, dated 07.04.2016, rejected), and property damage (false ceiling, pipes), Accused obtained civil stay on 16.10.2015 against interference (Suit No. 1456/15), complainant's FIR u/s 420/506 IPC (bail granted to accused), and Noida show-cause influenced by complainant. These indicate a genuine contractual dispute, not evasion. This complexity, combined with breaches and parallel litigations, rebuts the statutory presumption under Section 139 NI Act that the impugned cheques were issued in discharge of a legally enforceable debt.
c. Non-Existence of Any Clause for Interest on the Rs. 8,40,000 Cheque Indicates No Enforceable Liability: In the present case, CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 21/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi the Rs. 8,40,000 cheque (No. 000010 dated 16.03.2016) is central to the alleged debt, claimed by the complainant as interest on the deferred Rs. 1.45 Crores sale consideration. Neither the Agreement to Transfer Leasehold Rights dated 30.01.2015 (Ex. CW1/X1) nor the Transfer Deed cum Sale Deed dated 18.03.2015 (Mark-X) contains any provision for interest on deferred payments via a separate cheque. The Transfer Deed is silent on interest and lists the cheques as pure consideration, without qualifiers. CW-1 (complainant witness) admitted in cross-examination that there was no written document or specific rate for the Rs. 8,40,000 as "lump-sum interest," and it was omitted from the initial demand notice (Ex. CW1/4) in CC No. 48468/2016, though referenced in the second. This admission underscores the lack of contractual support, rendering the claim post-facto and unsubstantiated. The accused's defense is consistent across testimony /DW-1, emails (Ex. DW1/11), and written submissions that ties the cheque to electricity load upgrade per Clause 9 of the Rent Agreement dated 10.04.2015 (Ex. DW1/8), which obligated the lessee (complainant's sister entity) to upgrade from 5KW to 100KW. Clause 9 of the Rent Agreement explicitly requires the lessee to "apply and pay for upgradation of sanctioned load to 100 KW on behalf of the LESSOR," with reimbursement by the lessor (accused) by 21.10.2015. The accused's emails (Ex. DW1/11) corroborated by DW-1's testimony that the lessee's non-compliance of no upgrade amid broader breaches in the property transaction justified stop payment. The lessee's failure to do so frustrated the transaction, and the cheque's purpose aligns with this clause, not interest. CW-1's contradictions (initially claiming issuance at sale, later 4-5 days post-registry) further erode CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 22/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi credibility, as no evidence rebuts the accused's version. The absence of an interest clause means the cheque does not discharge a "specified liability," failing the S.138 requirement. On thorough examination of the underlying agreements, evidence, and CW-1's testimony reveals no contractual clause supporting this interest claim. This absence, coupled with the cheque's linkage to electricity load upgrade in the Rent Agreement and the complainant's vague assertions, rebuts the presumption under Section 139 NI Act that the cheque was issued for a legally enforceable debt.
d. Payment of Rs. 15,00,000 by the Accused Remains Unexplained by the Complainant, Adjusting the Debt: The payment of Rs. 15,00,000 was made via RTGS on 23.09.2015 from the account of the accused's father (Chandra Prakash Sharma) to Sanjay Singh Rana's personal account, as proved by the bank statement and RTGS details (Ex. DW1/2-3). The accused's testimony claim this was an adjustment towards obtaining missing documents post-DHFL loan release, as per the Agreement to Transfer Leasehold Rights dated 30.01.2015 (Ex. CW1/X1, Clause 6b requiring document release). The said transfer has not been denied by the complainant as CW-1 admitted the receipt in cross-examination dated 30.10.2018, confirming: "Sanjay Singh was one of the directors in the complainant company. I do not know whether accused had transferred Rs.15,00,000/- (Fifteen lacs only) by way of RTGS from account of his father into the account of Sh. Sanjay Singh... It is wrong to suggest that the aforesaid payment of Rs.15,00,000/- was made with respect to execution of sale deed Mark-X." This admission establishes the payment but denies its linkage to the sale, without explanation for its purpose.
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 23/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi CW-1 denied it as sale adjustment but offered no alternative purpose creating a vacuum that implies deliberate concealment. Sanjay Singh Rana, the recipient and key director involved in the transaction was not examined as a witness, despite being the a key witness for clarifying the payment's nature. This non-examination attracts adverse inference under Section 114(g) of the Indian Evidence Act, 1872, presuming the evidence would be unfavorable to the complainant. The Rs. 15,00,000 reduces the alleged debt from Rs. 1.45 Crores to Rs. 1.3 Crores, as claimed in the accused's testimony (intended for documents post-DHFL). No endorsement on the cheques reflects this adjustment, violating Section 56 NI Act, which requires part-payments to be noted on the instrument. The accused rebutted S.139 by proving the payment and its adjustment purpose, shifting burden to the complainant. The Rs. 15,00,000 payment, admitted but unexplained, adjusts the debt, violating S.56 and rebutting S.139.
e. Complainant's Failure to Prove Supply of Documents as per Annexure A of the Agreement: Clause 6 of the Agreement (Ex. CW1/X1) mandates the complainant to supply all documents listed in Schedule A (Ex. CW1/X2) upon payment of Rs. 3 Crores (to release from DHFL) and before Transfer Deed execution. Schedule A enumerates 20 specific documents, including: Allotment Letter, Lease Deed, Possession Letter, Functional Certificate, Completion Certificate, SSI Registration, Sanctioned Building Plan/Map, and corporate records (e.g., Director changes, Forms 32/7B). Clause 6f allows revocation/refund if inconsistencies arise, and Clause 6g places onus on the complainant for Transfer Memorandum (TM) documents. This makes document supply a condition precedent to the deferred Rs. 1.45 Crores payment (Clause 6i), tying it to NBFC CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 24/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi financing or cheques. CW-1 claimed in affidavit and examination that documents were supplied, but provided no proof of the same. In cross-examination CW-1 admitted: "It is correct that as per schedule-A of the agreement Ex. CW1/X1(colly for 7 pages) the complainant had to be supplied all the documents which are mentioned in schedule A of the agreement... It is correct that the accused had sent a email to the complainant company for the said purpose." Despite this, CW-1 produced no evidence of compliance, vaguely stating documents were supplied without specifics and proofs. This highlights the complainant's failure to fulfill, breaching Clause 6. The lack of proof infers suppression, attracting adverse inference under Section 114(g) of the Indian Evidence Act, 1872. The emails (Ex. DW1/9), detailing non-delivery of Completion Certificate, Sanction Map, etc. and testimony (DW-1) assert repeated demands unmet. The complainant's unproved supply, amid admissions and withholding, breaches Clause 6, rebutting S.139.
f. Non-Payment of Rent by the Complainant and Unproved Cash Payments Further Rebut Debt Enforceability: The Rent Agreement dated 10.04.2015 (Ex. DW1/8) was executed between the accused's firm, VTS IT Solutions LLP (lessor), and the complainant's sister entity, Future World Green Homes Pvt. Ltd. (lessee, sharing director Sanjay Singh Rana), leasing three floors (Basement, Ground, First) for 60 months with a mandatory 36-month lock-in period. The agreed rent was Rs. 2.16 Lakhs per month, totaling approximately Rs. 1.43 Crores over five years, while Clause 17 imposed a lock-in from 21.04.2015 to 20.04.2018, restricting early termination. However, the lessee failed to honor this commitment. The DW-1's testimony detailed non-payment CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 25/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi from April to December 2015, calculating a loss of Rs. 18.79 Lakhs. The agreement was canceled prematurely on 05.06.2015, breaching the lock-in, as corroborated by emails (Ex. DW1/9-11) linking this to broader disputes over possession and document non-supply. DW-1 further testified that the lessee's refusal to pay rent, coupled with fixture removal and access denial, rendered the premises unrentable. CW-1 claimed in cross-examination that rent was paid in cash, asserting: "I had paid the rent in cash... I had not taken any acknowledgement from the accused for payment of rent." However, no receipts, bank statements, ledgers, or other records were produced to substantiate this, despite the substantial sum involved. Moreover, Sanjay Singh Rana, the lessee's director and signatory to the Rent Agreement, was not examined as a witness, despite his pivotal role in managing the sister entity and receiving rent-related instructions. This non-examination attracts an adverse inference under Section 114(g) of the Evidence Act, presuming the evidence would be unfavorable to the complainant. The complainant's counsel has argued that the non-payment of rent by the future world company has no bearing on the transaction between the complainant company and the accused. This court does not agree with the contention of the counsel for the complainant as the agreement to transfer lease specifically referred to deferred payment subject to NBFC financing on the basis of "actual rent of three floors". The subsequent leasing/ renting by the sister concern of the said three floors reflect that the leasing agreement was an integral part of the whole sale/ lease transfer agreement. Therefore non payment of rent has bearing on the underlying transaction itself irrespective of the transaction being entered by sister concern. The early cancellation of the Rent CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 26/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi Agreement breached36-month lock-in, a material violation rendering the lessee prima facie liable for rent. DW-1's testimony detailed non-payment, with the accused suffering a loss of Rs. 18.79 Lakhs remained unrefuted by the complainant. Here, the Rs. 18.79 Lakhs loss, combined with other adjustments raises dispute of civil liability and uncrystallized debt creating no enforceable liability. The non-payment of rent, unproved cash claims, and breaches rebut S.139 presumption.
g. Sufficient Funds Proven in Joint Account: The accused demonstrated sufficient funds through a joint bank account with his mother, Dulari Sharma, as evidenced by the account statement (Ex. DW1/12) and account opening form (Ex. DW4/A, tendered by DW-4, Ms. Monika Rathore, HDFC Bank Manager). The complainant argued that the accused failed to produce the LLP's account statement, attracting adverse presumption under Section 114(g) of the Indian Evidence Act, 1872. However, this is irrelevant, as the stop payment was not due to insufficient funds but abovemention breaches.
10.Conclusion and Reason for decision:
a. The Issue no. 1, 2, 3, 4 and 5 were decided in favour of the complainant and the presumption was drawn against the accused. However, In the issue no. 6 and 7, The accused was tacitly able to rebut the presumption drawn against him by fracturing the case of the complainant by rigorous cross examination to expose the latent defects, whereas the complainant has failed to discharge the burden of proving that the accused owed a legally enforceable debt or that the cheque was issued to discharge such a liability. The issue no. 6 CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 27/ 29 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi and 7 are proved against the complainant. The accused is able to cross the threshold of preponderance of probabilities to prove his innocence and the complainant is unable to shift back the burden. Hence, the benefit of doubt has to be extended to the accused, and thus the case of the complainant does not survive the rigours of trial, despite having statutory presumption against the accused.
11.Order:
a. The accused has raised a probable defence and successfully rebutted the presumption under Sections 118 and 139 of the NI Act. The complainant has failed to prove his case beyond reasonable doubt. Hence, the accused Sh. Vivek Sharma is acquitted of the offence under Section 138 NI Act. b. The bail bonds of the accused and the sureties (in any), that are already filed in the court for the purpose of bail, are retained for the purpose of section 437 A Cr.P.C for the period of six months from today.
c. The signed copy of the judgement be uploaded on the CIS immediately.
d. Let the file be consigned to the record room, after due compliance. e. Pronounced in open court and in presence of both the parties/ or their Counsels. Digitally signed by (DIVYAM LILA) DIVYAM DIVYAM LILA Municipal Magistrate, East District LILA Date:
2025.08.13 Karkardooma Court/Delhi
16:23:41
+0530
Date: 13.08.2025
CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 28/ 29
In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi ___________________________end of the document_____________________ CC NI ACT/48468/2016 M R Apparels vs Vivek Sharma page 29/ 29