Delhi District Court
In Time Garments Pvt Ltd vs Thought Bubble Consultind India Pvt Ltd on 8 April, 2025
IN THE COURT OF JMFC (NI ACT)-01, SOUTH
EAST, SAKET COURTS, DELHI
M/s IN TIME GARMENTS PVT LTD
1107, Gali No 10 Govind Puri
New Delhi-110019
Also At:
Plot No. 12, New DLF Industrial Area
Phase-I, Faridabad, Haryana ......... Complainant
VERSUS
1. M/s THOUGHT BUBBLE CONSULTING INDIA PVT
LTD
Plot No. 540, Udyog Vihar, Phase-V
Gurgaon, Haryana
2. SANDEEP WALIA (Director)
M/S Thought Bubble Consulting India Pvt Ltd
Plot No. 540, Udyog Vihar, Phase-V
Gurgaon, Haryana .......Accused Persons
Complainant Case no. 136/2017
CNR No. DLSE02-000047-2017
Title M/s In Time Garments Pvt Ltd.
Vs. M/s Thought Bubble
Consulting India Pvt. Ltd.
Name of Complainant M/s In Time Garments Pvt. Ltd
Name of accused M/s Thought Bubble Consulting
India Pvt. Ltd.
Date of registration of complaint 06.01.2017
Date of arguments 25.02.2025
Date of pronouncement 08.04.2025
Offence complained of Under Section 138 NI Act
Offence charged with Under Section 138 NI Act
Plea of the accused Pleaded not guilty
Final order Acquitted
Digitally
signed by
ABHITESH
CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 1/14 ABHITESH KUMAR
KUMAR Date:
2025.04.08
16:37:49
+0530
JUDGMENT
1. Briefly stated facts of this case are that the complainant company, a garment manufacturer offering computerized embroidery services, received orders from M/s Thought Bubble Consulting India Pvt. Ltd (Accused No. 1) for exporting ready-made garments and embroidery work. Specifically, under Purchase Order No. WCO 3963, the company was tasked with manufacturing and supplying Sacaya Jackets. After inspecting and approving the jackets on 17.10.2016, the accused acknowledged an outstanding balance of Rs. 9,02,561/-. To partially settle this debt, the accused issued a cheque bearing no. 226208 dated 18.10.2016 for Rs. 2,27,716/-, drawn on Axis Bank Ltd. However, upon presentation, the cheque was returned unpaid due to a "payment stopped by drawer" instruction, as indicated in the return memo dated 25.10.2016. Following this, the complainant sent a legal notice on 16.11.2016, which was delivered to the accused, but no payment was made. Consequently, a complaint was filed against the accused under Section 138 of the Negotiable Instruments Act (hereinafter "NI Act"), implicating M/s Thought Bubble Consulting India Pvt. Ltd (Accused No. 1), Sandeep Walia (Accused No. 2), and Sonia Arora (Accused No. 3).
PROCEEDINGS BEFORE COURT:
2. Pursuant to the pre-summoning evidence, the court issued summons to Accused No. 1, M/s Thought Bubble Consulting India Pvt. Ltd, and Accused No. 2, Sandeep Walia, for their alleged offence under Section 138 of the Negotiable Instruments Act. Accused Sandeep Walia acknowledged that he represents Accused No. 1, M/s Thought Bubble Consulting India Pvt. Ltd, in his capacity as one of Digitally CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 2/14 signed by ABHITESH ABHITESH KUMAR KUMAR Date:
2025.04.08 16:37:56 +0530 the directors of the company. After receiving a notice under Section 251 of the Code of Criminal Procedure (hereinafter "CrPC"), he pleaded not guilty and claimed trial. In defense, the accused stated that, as the authorized signatory and Director of Accused No. 1, he had issued the impugned cheque in exchange for the complainant's promise to supply goods. However, the accused alleged that the goods were never delivered. He claimed to have personally filled in the cheque details and acknowledged receiving the legal notice, to which he responded. On 05.02.2019, accused was permitted to cross examine the complainant.
3. To establish its case, the complainant has adduced a combination of oral and documentary evidence during the trial, the details of which are as follows:
ORAL EVIDENCE Sr. No. Name of witness CW-1 Mr. Gurpreet Singh/ complainant CW-2 Mr. Daipayan Chaudhary, Axis Bank, Branch Udyog Vihar DOCUMENTARY EVIDENCE Sr. No. Name of Documents Ex.CW1/1 Certificate of incorporation Ex.CW1/2 Board Resolution Ex.CW1/3 Final Inspection Report Ex.CW1/4 Ledger Account 01.04.2015 to 11.11.2016 Ex.CW1/5 (colly.) Invoice-Cum-Challan Ex.CW1/6 Cheque in question Ex.CW1/7 Return Memo Ex.CW1/8 Notice Digitally CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 3/14 signed by ABHITESH ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:02 +0530 Ex. CW1/9-11 Speed Post Receipt Ex. CW1/12-14 Tracking Report Ex. CW1/15 Reply of legal demand notice Ex. CW1/D1 Purchase order WC03963 dated 30.06.2016 Ex. CW1/D2 Invoice IN/TB/008/2016-17 Dated 18.10.2016 Ex. CW1/D3 (Colly.) E-mail Correspondence Ex. CW1/X Board Resolution dated 25.05.2019 Ex.CW1/A Affidavit (Post-Summoning Evidence of Gurpreet Singh) Ex.CW2/1(Colly) Account opening form of accused no. 1 company Ex.CW2/2 Letter dtd 13.11.2017 addressed to concerned Magistrate regarding authority letter from Axis Bank Mark A Email correspondence Ex.CW1/PA (Colly) Email correspondence
4. CW-1 was examined, cross examined and discharged. Accordingly, complainant evidence was closed on 18.01.2023. Statement of accused was recorded under Section 313 of CrPC read with Section 281 of CrPC on 14.02.2023 & 29.01.2025. On putting incriminating evidences, Accused No. 1 (the company) and Accused No. 2 (Sandeep Walia) maintained their innocence, claiming they were falsely implicated in the case. They acknowledged that the cheque in question belonged to them and bore their signature. However, they disputed the purpose of the cheque, stating it was not issued for partial payment of an outstanding amount as alleged by the complainant. According to the accused, complications arose during their business dealings with the complainant, specifically regarding the delivery of Digitally signed by CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 4/14 ABHITESH ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:08 +0530 goods against invoice Ex.CW1/3. They claimed to have issued the cheque as a result of these issues, not for settling an outstanding balance. The cheque was not cleared because the complainant allegedly altered the invoice amount and refused to deliver the goods. The accused asserted that they had already made a payment of Rs. 5,25,000 to the complainant. The accused has opted to lead Defence Evidence (DE).
5. To establish their defense, the accused persons presented both oral testimony and documentary evidence. The evidence they submitted includes the following:
ORAL EVIDENCE Sr. No. Name of witness DW-1 Ms. Sonia Arora DOCUMENTARY EVIDENCE Sr. No. Name of documents Mark DB(Colly) Email correspondence Mark DC(colly) E-advice of HSBC Bank Ex.DW1/C1 Handwritten note.
Ex.DW1/C2 Copy of cheque bearing no.
198228
Ex.DW1/C3 Copy of Invoice No
IN/CSB/040/2016-17 dtd
17.10.2016
Ex.DW1/C4 Copy of invoice no.
IN/TB/008/2016-17 dtd
18.10.2016
6. After hearing the final arguments presented by both parties, this court has carefully considered the submissions made by the learned counsels for both sides and thoroughly reviewed the entire case record.
Digitally signed by ABHITESH CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 5/14 ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:12 +0530
7. The learned counsel for the complainant reaffirmed the allegations made in the complaint and argued that the accused failed to effectively rebut the presumption under Section 139 read with Section 118(a) of the Negotiable Instruments Act. Consequently, the counsel urged the court to convict the accused for the offense under Section 138 of the NI Act. Written argument is part of record.
8. In contrast, the learned counsel for the accused argued that the accused persons bear no liability towards the complainant. The counsel further contended that the complainant had misused the cheque in question. Based on this, the counsel for the accused submitted that the complaint is unfounded and therefore, the accused persons are entitled to an acquittal.
INGREDIENTS OF OFFENCE AND DISCUSSION:
9. Prior to examining the facts of the present case, it is pertinent to outline the requisite legal standards that both parties must satisfy. To successfully establish an offense under Section 138 of the NI Act, the complainant must fulfill all the fundamental elements of the offense.
An analysis of the provision reveals the following essential ingredients:
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of money and the same is presented for payment within a period of 3 months from the date on which it is drawn or within the period of its validity;
Digitally
CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 6/14 signed by
ABHITESH
ABHITESH KUMAR
KUMAR Date:
2025.04.08
16:38:17
+0530
Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank;
Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank;
Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
10. The drawer of the cheque can be held liable for an offense under Section 138 of the NI Act only if all the aforementioned ingredients are cumulatively satisfied. The guilt of the accused under Section 138 NI Act can be established solely when the complainant proves all the necessary ingredients concurrently. Furthermore, the conditions prescribed under Section 142 of the NI Act must also be met. APPRECIATION OF EVIDENCE:
11. The accused persons have acknowledged signature on the cheque in question and confirmed receipt of the statutory demand notice. Furthermore, the cheque was presented for encashment within Digitally signed by ABHITESH CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 7/14 ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:23 +0530 its validity period. Consequently, the sole remaining issue to be determined is whether the cheque was provided to the complainant in satisfaction of a legally enforceable debt?
12. As per the scheme of the NI Act, once the accused admits signature on the cheque in question or it is proved that cheque in question is signed by the accused, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is enumerated in Section 139 of NI Act. The provision lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
13. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved. Reliance is placed upon the judgment of the Hon'ble Supreme Court, Hiten P. Dalal vs. Bratindranath Banerjee reported as (2001) 6 SCC 16.
14. The Hon'ble Supreme Court in Kumar Exports vs. Sharma Carpets reported as (2009) 2 SCC 513, while discussing the contours of section 118(a) r/w 139 of the NI Act, has held interalia the following:
"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature Digitally signed by CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 8/14 ABHITESH ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:29 +0530 referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and 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. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
15. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability.
Digitally
signed by
CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 9/14 ABHITESH
ABHITESH KUMAR
KUMAR Date:
2025.04.08
16:38:34
+0530
16. Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan reported as (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa reported as (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of Digitally signed by ABHITESH CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 10/14 ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:39 +0530 probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence.
Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
17. In the present case, the complaint alleges that the cheque in question was issued to settle a partial liability. According to the running account, the accused company is liable to pay Rs. 9,02,561. The complainant presented invoices (Ex. CW1/5) as evidence, which the accused disputed, claiming they were false and lacked corresponding purchase orders. Notably, during cross-examination, CW1 testified that the cheque was issued against Purchase Order No. WCO3963 (Ex. CW1/D1), and admitted that goods were not delivered against this order. The complainant failed to provide evidence of purchase order that corresponds to the invoices Ex. CW1/5 (colly.) filed in this case. This inconsistency reveals a contradictory narrative presented by the complainant regarding the accused's liability.
18. Now, this case focuses on five key documents: Ex. CW1/D1 (Purchase Order No. WCO3963), Ex. CW1/3 (Final Inspection Report), Ex. DW1/C3 (Invoice No. IN/CSB/040/2016-17 dated 17.10.2016), Ex. DW1/C4 and Ex. CW1/D2 (Invoice No. IN/TB/008/2016-17 dated 18.10.2016. The accused's defense is that Digitally signed by ABHITESH CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 11/14 ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:44 +0530 goods were not supplied for PO No. WCO3963, despite a specific "FOB" agreement, and that multiple invoices were issued for the same PO No. WCO3963. In support of this claim, the accused presented testimony from DW1 (Sonia Arora), a director of Accused No. 1 company.
19. It is acknowledged by the complainant that goods were not delivered for PO No. WCO3963. During cross-examination, DW1 testified that the agreed terms required the goods to be inspected by the team of the accused and then handed over to a freight forwarder for export. Payment for the export value of the goods, in US dollars, was to be made by the accused upon receipt of documentation from the forwarder. The complainant claimed to be facing a funding limitation and, despite this agreement, obtained a cheque for Rs. 4,90,367 from the accused for this purchase order. The payment terms described by DW1 were not disputed by the complainant. Documentary evidence, including Ex. CW1/D1 and a debit note dated 12.07.2016, corroborates the accused's claim. CW1 also acknowledged in cross-
examination that the accused had likely paid around Rs. 4,90,000 for fabric purchases from Italy. The debit note, specifically referring PO No. WCO3963, further supports the accused's position. Additionally, a review of Ex. CW1/D1 reveals that the purchase order was made on a "FOB" (Free on Board) condition, which is consistent with the accused's claims. Furthermore, the complainant was unable to satisfy this court as to why three separate invoices, each with different amounts and currencies, were issued for the same purchase order.
20. Based on the above discussion, it is clear that the complainant was obligated to deliver the goods to the freight forwarder before Digitally signed by CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 12/14 ABHITESH ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:50 +0530 claiming payment. However, the complainant failed to meet two critical conditions: (1) it did not adhere to the agreed-upon timeline for preparing the goods for inspection and delivery, and (2) it failed to deliver the goods to the freight forwarder. Further, accused already paid Rs. 4,90,367 for the raw materials. As a result, the complainant is not entitled to claim the invoice amount.
21. The discrepancies highlighted above cast significant doubt on the version of the complainant regarding the liability, specifically the cheque amount. The accused successfully rebutted the presumptions by presenting a plausible defense and challenging the version of the complainant on the balance of probabilities. By exposing the loopholes in the case of the complainant, the accused has effectively raised circumstances that counter the presumptions.
22. The version of the complainant is replete with weaknesses, and their failure to provide evidence to rectify these shortcomings is detrimental to its case. This court is of the view that the accused has successfully rebutted the presumption established under Section 139 of the NI Act. As a result, it is evident that no legal liability exists in favor of the complainant regarding the cheque amount.
23. As a matter of law, it is imperative to establish all the essential elements of the offense under section 138 of the NI Act. The omission of even a single ingredient renders the case of the complainant untenable.
CONCLUSION:
24. To summarize, the accused has presented a credible defense, satisfying the standard of preponderance of probabilities, and has successfully rebutted the presumptions arising under Sections 118 and Digitally CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 13/14 signed by ABHITESH ABHITESH KUMAR KUMAR Date:
2025.04.08 16:38:56 +0530 139 of the NI Act. This defense has effectively demonstrated that the accused does not bear any liability towards the complainant and that, in fact, the complainant has misused the cheque in question. Pursuant to a meticulous examination of the case, the Accused No. 1, M/s Thought Bubble Consulting India Pvt. Ltd, and Accused No. 2, Sandeep Walia, is hereby declared not guilty and is acquitted of the offense punishable under Section 138 of the NI Act.
Pronounced in open court on 08.04.2025 Digitally signed ABHITESH by ABHITESH KUMAR KUMAR Date: 2025.04.08 16:39:04 +0530 ABHITESH KUMAR JMFC (NI ACT)-01, South East Saket,New Delhi/08.04.2025 This Judgment contains fourteen pages (14) and all pages bears my Digitally signed ABHITESH by ABHITESH digital signature. KUMAR KUMAR Date: 2025.04.08 16:39:08 +0530 ABHITESH KUMAR JMFC (NI ACT)-01, South East Saket, New Delhi/08.04.2025 CT No.136/2017 M/s Intime Garments Pvt. Ltd. Vs. M/s Thought Bubble Consulting India Pvt. Ltd & ORs Page No 14/14