Delhi District Court
C.A. Co-Operative Thrift And Credit ... vs Amit Joshi on 29 April, 2025
In The Court of Sh. Divyam Lila, Municipal Magistrate, East, Delhi
JUDGEMENT
CNR no. : DLET02-005039-2017 CT Case 2482/2017 Filing Date: 31-07-2017 Date of Registration: 01-08-2017 Date of Judgement: 29-04-2025 (Complainant):
CA Cooperative TCS Ltd, 2nd floor, D-251/10 Laxmi nagar, Delhi-92 Through AR Masood HUssain VERSUS (Accused) Sh. Amit Joshi, S/o Sh. GP Joshi r/o B-50, Sector-30, Noida-201301 Adv. for appearing for Complainant: Sh. Siddharth Handa Adv. for appearing for the Accused: Sh. Ankur Singhal DIVYAM Offence punishable under :138 of Negotiable Instruments Act, LILA Final Order : Conviction, under Section 138 NI Act Digitally signed by DIVYAM LILA Location: Court Room no. 12, KKD, East, Delhi
-:Index of Judgment:- Date: 2025.04.29 15:36:06 +0530
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:............................................................................... 4
5. Evidence on Record........................................................................................ 4
6. Legal Position:.................................................................................................5
7. Arguments of the parties:...............................................................................8
8. Analysis and Findings:..................................................................................11
10. Conclusion and Reason for decision:........................................................ 20
11. Order:...........................................................................................................21 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 society against the accused for dishonour of cheque based on the commercial loan as debt.
2. Brief Facts of the Case:-
a. The complainant, CA Co-operative Thrift and Credit Society Ltd., a registered society under the Delhi Cooperative Societies Act, has filed this complaint through an authorised representative (hereinafter called as "AR") under Section 138 NI Act against the accused, Sh. Amit Joshi, for the dishonor of a cheque. The case of the complainant is that the Sh. Amit Joshi and his wife Mrs. Sangeeta Joshi enrolled themselves as members of the complainant society, thereafter Smt Sangeeta Joshi applied for two loan of Rs. 10 lacs each, totaling Rs. 20,00,000/- sanctioned on 19.07.2016 and 06.08.2016 by the complainant, and her husband Sh. Amit Joshi stood as surety/ guarantor for the said loan for his wife. The loan was granted after execution of documents, thereafter the accused sought renewal of above loans for a period of 5 months vide letter dated 23.01.2017, and the accused issued 7 cheques including the cheque in question to discharge the liability vide letter dated 23.01.2017. The cheque was presented and the cheque was dishonoured.
b. The present case pertains to the cheque bearing no. 018527 dated 31.05.2017 for Rs. 10,00,000/- drawn on ICICI Bank, Sector-30, Noida. (hereinafter referred to as "cheque in question"). The cheque was returned unpaid on 12.06.2017 with the remark "Funds Insufficient". A statutory demand notice dated 22.06.2017 was CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 2/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi served, which the accused failed to comply with, leading to the present proceedings.
c. The present case is part of bunch of 4 cases filed by the complainant; the facts are similar, similar evidence was recorded, accused persons in all cases being represented by same counsel and both the accused being related to each other as husband and wife; the details of bunch of cases are reproduced here, which are, as follows:
i. CT case 2482/2017- Accused Amit Joshi in capacity of guarantor- cheque no. 18527 for Rs. 10,00,000/-
ii. CT case - 4384/2017 - Accused Amit joshi in capacity of principal borrower- cheque no. 001594 for Rs. 16,01,576/- iii. CT case- 2483/2017 - Accused Amit Joshi in capacity of principal borrower - cheque no. 022826 for Rs. 20,00,000/- iv. CT case - 2481/2017 - Accused Sangeeta Joshi in capacity of principal borrower - cheque no. 018528 for Rs. 10,00,000/- d. Hence, 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 signing the cheque and filling particulars, also admitted issuing the cheque to the complainant against the loan as security.
c. The accused denied filing the date of cheque, he also denied receiving the legal notice, claimed part payments, and asserted that his property documents were with the complainant.
CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 3/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
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. The accused has successfully rebutted the statutory presumption under Sections 118 and 139 of the NI Act.?
5. Evidence on Record a. Complainant's Evidence: Sh. Masood Hussain, the authorized representative (CW-1), testified on oath, adopting his evidence affidavit and relying on documents exhibited as Ex. CW1/A to CW1/M. Key points from his evidence are as follows:
i. He was authorized to represent the complainant vide resolution dated 04.07.2009 (Ex. CW1/A). Loans of Rs. 20,00,000/- were sanctioned to Smt. Sangeeta Joshi, with the accused as guarantor, supported by loan applications (Ex. CW1/D1, CW1/D2) and a mortgage deed (Ex. CW1/D3). ii. The accused issued seven cheques, including the cheque in question, to discharge his liability (Ex. CW1/B). iii. The cheque was dishonored, and a legal notice was served, but no payment was made.
iv. During cross-examination CW-1 admitted deducting 10% as share capital and 2% as loan processing charges from the loan amount. The CW-1 also admitted receiving payments of Rs. 15,00,000/- (28.03.2023) and Rs. 10,00,000/- (04.12.2023) per a Delhi High Court order. He conformed CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 4/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi initiating attachment proceedings against the collateral property (Khasra No. 25, Uttarakhand) under the Delhi Cooperative Societies Rules, 2007. CW-1 could not recall loan tenure, monthly installments, or encashment status of other cheques with explanation that he would have to see the record.
v. CW-1 denied allegations of exorbitant interest, asserting compliance with the loan agreement and an arbitrator's award (Ex. CW1/I). He also denied knowledge of emails sent by the accused (Ex. CW1/D8) or complaints filed against the society (Ex. CW1/D7).
b. Statement of accused: The accused, examined without oath, stated he issued the cheque (Ex. CW1/C), signed it, and filled particulars except the date, claiming it was for security against a loan for his business (Kyari Corbett Resorts). He denied receiving the legal notice, though the address was correct. He claimed payments of Rs. 75,00,000/-, including Rs. 50,00,000/- in February 2025 and Rs. 25,00,000/- in 2023-2024, and stated his property (Khasra No. 25, Uttarakhand) was mortgaged to the complainant (Ex. CW1/D3). He denied liability for the cheque amount.
c. Defence Evidence: The accused did not lead any defence evidence. The accused expressed his wish to lead defence evidence, however later the accused recorded his statement to close down his right to lead defence evidence. Hence the right was closed and final arguments were heard on merits of the case.
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 CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 5/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi 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.
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 CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 6/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi 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.
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, CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 7/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi 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.
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 key arguments advanced by the counsel urged the court to convict the accused, are as follows:
i. No defence evidence: The accused did not lead any evidence with respect to the alleged payments of 75 lakhs or any payment made by them during the loan or after the loan was taken. The accused had an opportunity to lead defence evidence, however, neither the accused stepped into the witness box nor did accused call any witness to prove the evidence of payments made by them during the pendency of loan.
ii. Presumption against the accused: Since the accused did not lead any evidence and did not even state about payments so made, his liability on the loan amount is not reduced. The CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 8/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi accused had admitted that the loans were taken, there is a statutory presumption of valid debt against the accused. iii. Loan sanction and amount not disputed: The accused did not dispute the sanction and factum of loan, the accused did not dispute that he had actually taken the loan from the complainant. No adverse suggestion was given to put that defense.
iv. Admission of accused for signing of cheque, issuing of cheque and transactional relationship: The accused has admitted issuing the cheque to the complainant as security against the loans, accused had admitted signature and filling of the particulars of the cheque. The accused raised the plea that the date was not filled by him has no value as the accused did not ask any question to the complainant's witness with respect to the same and nor did he lead any evidence with respect to the same. Hence, even the cheque issuance is admitted.
v. Ineffective cross examination: The accused did not cross examine the complainant's witness with respect to the outstanding amount, liability of the gurator, and the loan amount so due. The accused did not even suggest or put his defense to the complainant to ask questions about the liability or raise doubt on the outstanding or principal-surety relationship. Further, the accused focused only on the collateral security given to the complainant. Hence, the testimony of the complainant remained un-impeached.
b. Arguments by Ld. Counsel for the Accused : The learned counsel for the accused vehemently argued that the complainant has filed CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 9/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi the case for the purpose of extortion on the basis of security cheque misused without consent to extort money. The key arguments advanced by the counsel, while praying for the acquittal of the accused, are as follows:
i. Security Cheque: The cheque was issued as security, not to discharge a legally enforceable debt, and was misused by the complainant.
ii. Material Suppression: The complainant suppressed material documents, imposed exorbitant interest and processing charges, and failed to adjust payments of Rs. 25,00,000/- received in 2023.
iii. Rebuttal of evidence by the accused: The complainant did not prove the loan or outstanding liability, and the attachment proceedings against the collateral property were wrongful.
iv. Financial distress of the accused: The accused's financial distress due to business losses and payments made should mitigate liability. The accused had informed the complainant and had given intimation about the financial distress of the accused, and further the complainant had misused the said distress to extort money from the accused.
v. Non-compliance of procedural aspect: The accused also argued that the complainant did not serve the accused with the legal demand notice, and hence the complainant did not comply with the mandatory provisions.
vi. No Proof of Loan Transaction: The complainant did not file loan documents with the complaint and only filed the later on, and deliberately did so to misguide the court.
CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 10/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi
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 and the spouse of the accused himself. The accused has also admitted issuance of the cheque to the complainant by admitting that the particulars of the cheque were filled by him. The defence of the accused was that the date on the cheque was not filled by him and the cheque was given as security. The plea of the accused that the date of the cheque in question was not filled by him is of no help; as the signature of the accused on the cheque is not disputed. Reliance can be placed, at this juncture, wherein Hon'ble High Court of Delhi in Ravi Chopra Vs. State and Anr. (2008) 102DRJ147, held: "Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." "A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. There is no provision in the NI Act which defines the difference in the handwriting or the ink pertaining to the material particulars filled up in comparison with CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 11/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi the signature thereon as constituting a 'material alteration' for the pur- poses of Section 87 NI Act. What is essential is that the cheque must have been signed by the drawer." Further, in Bir singh Vs. Mukesh Kumar, (2019) 4 SCC 197 it was held that:-"It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted." Hence, In the present case, Prima facie the ingredient that the cheque was issued to the complainant has been satisfied as the accused admitted his signature on the cheque and the account being maintained by him. 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 for discharge of the liability; 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. 6; However, the issue no. 1 is decided 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 dishonoured with a return memo noting the reason for return as "Funds Insufficient". 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.
CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 12/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi c. Issue 3 - Dishonour of Cheque: The bank return memo records state that the cheque in question has been returned dishonoured for the reason "Funds Insufficient". The defence has led no evidence to contradict 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 in his notice of accusation u/s 251 Cr.P.C denied receiving the legal demand notice and also in the statement of Accused u/s 313 Cr.P.C read with Sec-281 Cr.P.C, however, the accused admitted the address mentioned on legal notice is correct. On perusal of the bail bonds, the accused has filed the address, which is the same as appearing on the legal notice. The accused has also not led any positive evidence to prove that the legal notice was not served on him, nor any evidence to prove that the address on the legal notice is correct. The Sec. 27 of the general clauses act provides for the presumption for the service. At this stage, reliance can be placed on the judgement of the Hon'ble Supreme Court of India in C.C. Alavi Haji Vs. Palapetty Muhammed, 2007 (6) SCC 555 while discussing the true intent behind the service of legal demand notice as a precursor to the launch of prosecution held that the service of summons of the court is opportunity enough for the accused to pay the cheque amount and evade prosecution and any accused who CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 13/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi fails to pay the amount within 15 days of the service of summons, clearly cannot protect himself/herself behind the technical demand of non-service of legal notice. Thus, in the present case, in absence of any evidence against the presumption of service and admission of the accused with respect to address being correct, 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 has suffered financial difficulty and he has paid a certain amount of money in the parallel proceedings. The case of the accused is not for any payments made after the legal notice. 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.
9. Issue 6 : 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 of presumption. 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. 6 is decided against the accused and in favour of the complainant:
a. Admission of Cheque Issuance and Loan: The accused unequivocally admitted issuing the cheque (Ex. CW1/C), signing it, and filling particulars except the date, as per his responses to the CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 14/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi Section 251 CrPC notice and Section 313 CrPC statement. He further admitted the sanction of a Rs. 20,00,000/- loan to his wife, for which he stood as guarantor, as evidenced by loan documents (Ex. CW1/D1, CW1/D2) and a letter listing the cheque (Ex. CW1/B). These admissions establish that the cheque was issued in connection with a legally enforceable debt, as the accused's role as guarantor created a liability to repay the loan upon default by the borrower. The accused's claim that the cheque was for "security" does not negate this liability, as security cheques are covered under Section 138; and the accused's failure to explain alternative circumstances for issuing the cheque reinforces the presumption under Section 139 NI Act.
b. Failure to Challenge the Debt's Existence: The accused did not give any adverse suggestions during cross-examination of CW-1 to dispute the existence of the loan or his liability as guarantor. No questions were posed to suggest that the loan was never sanctioned or that the complainant's records (Ex. CW1/D1, CW1/D2) were fabricated. This omission is critical, as the accused's silence on the loan's validity leaves the complainant's evidence unimpeached. It was held in M/s. Chuni Lal Dwarka Nath v. Hartford Fire Insurance Co. Ltd., AIR 1958 Punjab 440, that If no such questions are put, the court would presume that the witness account has been accepted. In State of UP v. Nahar Singh, 1998-3 SCC 561, the Hon'ble Supreme Court observed as under: "13. It may be noted here that that part of the statement of PW-1 was not cross-examined by the accused. In the absence of cross-examination on the explanation of delay, the evidence PW-1 remained unchallenged and ought to have been believed by the High Court. Section 138 of the Evidence Act confers a valuable CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 15/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi right of cross-examining the witness tendered in evidence by the opposite party.
c. Inadequate Cross-Examination on Outstanding Liability: The accused's cross-examination of CW-1 was conspicuously deficient in challenging the outstanding liability or total debt due. The accused's failure to probe the core issue of the debt's existence or quantum allowed the complainant's testimony and documents to stand unchallenged, solidifying the presumption under Section 139 No questions were asked about:The quantum of the outstanding loan amount, The relationship of guarantee by the accused and the main borrower, and liability towards the complainant or the calculation of the Rs. 10,00,000/- cheque amount as part of the debt. At this stage, reliance can be placed when the Hon'ble Apex Court considered the effect of "no effective cross-examination"
with respect to factum of execution of sale deed spoken to by a witness, in Muddasani Venkata Narsaiah v. Muddasani Sarojana, AIR 2016 SC 2250 (Followed in: Arvind Singh v. State of Maharashtra, AIR 2020 SC 2451, 2021-11 SCC 1). It was held in this decision that the Cross-examination is a matter of substance, not of procedure one. A party is required to put his own version in cross-examination of the opponent. The effect of non-cross-examination is that the statement of the witness has not been disputed. The effect of not cross-examining a witness, on a particular point, has been also considered by the Supreme Court, in Laxmibai v. Bhagwantbuva, AIR 2013 SC 1204, wherein, It is observed as under: "31. Furthermore, there cannot be any dispute with respect to the settled legal proposition, that if a party wishes to raise any doubt as regards the correctness of the statement of a witness, the said witness must be given an opportunity to explain CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 16/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi his statement by drawing his attention to that part of it, which has been objected to by the other party, as being untrue. Without this, it is not possible to impeach his credibility. Such a law has been advanced in view of the statutory provisions enshrined in Sec. 138 of the Evidence Act, 1872, which enable the opposite party to cross-examine a witness as regards information tendered in evidence by him during his initial examination in chief, and the scope of this provision stands enlarged by Sec. 146 of the Evidence Act, which permits a witness to be questioned, inter-alia, in order to test his veracity. Thereafter, the unchallenged part of his evidence is to be relied upon, for the reason that it is impossible for the witness to explain or elaborate upon any doubts as regards the same, in the absence of questions put to him with respect to the circumstances which indicate that the version of events provided by him, is not fit to be believed, and the witness himself, is unworthy of credit. Thus, if a party intends to impeach a witness, he must provide adequate opportunity to the witness in the witness box, to give a full and proper explanation. The same is essential to ensure fair play and fairness in dealing with witnesses."
d. Focus on collateral security: The accused focused on collateral security (Ex. CW1/D3), processing charges (10% share capital, 2% fees), and attachment proceedings, which are irrelevant to the cheque's liability under Section 138. This defense is irrelevant because:
i. The existence of collateral security does not absolve liability under Section 138, which focuses on the cheque's dishonor. The collateral security is not subject matter of the case.
CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 17/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi ii. The accused did not prove that the collateral's value extinguished the debt or that attachment proceedings affected the cheque's liability.
iii. The accused did not prove that the collateral security extinguished or diminished their liability before the cheque was dishonoured.
iv. The alleged payments so made and proceedings so started for recovery appeared to be more recent for the year 2022-2024; which is much beyond the date of cheque dishonour.
e. No Adverse Suggestions on Liability: The accused did not make any suggestions during cross-examination to dispute his liability for the cheque amount. He did not question CW-1 on whether the Rs. 10,00,000/- cheque corresponded to an actual outstanding debt or was inflated. Nor did he challenge the complainant's assertion that the cheque was issued to discharge his guarantor liability (Ex. CW1/B). This lack of adverse suggestions means the accused effectively conceded the existence of a legally enforceable debt, as the burden to rebut the presumption under Section 139 requires active contestation.
f. Failure to Lead Evidence on Alleged Payments: The accused claimed payments of Rs. 75,00,000/-, including Rs. 50,00,000/- in February 2025 and Rs. 25,00,000/- in 2023-2024, to offset his liability. However, he led no evidence such as receipts, bank statements, or witnesses to substantiate these claims. The complainant admitted receiving Rs. 25,00,000/- in 2023 (Ex. CW1/D9) pursuant to a Delhi High Court order (Ex. CW1/H), but the accused did not establish that these payments extinguished the cheque's liability. The alleged Rs. 50,00,000/- payment, claimed to CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 18/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi have occurred in February 2025, lacks corroboration and is not credible given the absence of documentation. The accused's waiver of defense evidence further undermines his claims. g. Admission Without Explanation: The accused admitted issuing the cheque and filling particulars but claimed it was for "security" without explaining the circumstances under which it was issued. He did not provide details of the alleged security arrangement, such as an agreement or understanding with the complainant, nor did he cross-examine CW-1 to establish that the cheque was not intended to discharge a debt. This vague assertion fails to meet the standard of preponderance of probabilities required to rebut Section 139. The accused's admission of the loan and cheque issuance, without a cogent alternative explanation, binds him to the liability. h. Security Cheque Defense: The accused did not raise any real defence except the defense of the cheque being a security cheque. The accused did not bring forth any fact, reason or law suggesting extinguishment of the admitted loan liability. The defense of security cheque coupled with absence of underlying reason extinguishing the actual claim makes the defense itself weak. This defense fails for several reasons:
i. The NI Act does not distinguish between cheques issued for repayment or as security. A cheque issued as security for a legally enforceable debt is covered under Section 138 (Sunil Todi and others Vs. State of Gujarat and another 2021 SCC Online SC 1174). The accused's admission that the cheque was for a loan confirms a debt's existence.
ii. The accused did not explain the circumstances of issuing the cheque as security or provide an alternative purpose. His CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 19/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi vague claim of non-consent for presentation was not supported by evidence or raised during cross-examination. iii. His defense, unsupported by evidence or effective cross-examination, does not rebut the presumption. i. Preponderance of Probabilities: The defence of the accused is that the cheque was issued for security and that the same was put for encashment without his consent; This defense, in absence of actual evidence and lack of effective cross examination of complainant does not meet the standard of the preponderance of probabilities. The evidence of the accused lacks corroborative evidence of the cheque being a security cheque and failure to explain circumstances.
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. The fate of the complainant's case hinged on the ability of the accused to rebut the presumptions drawn against him, and as decided above, the issue no. 6 is decided against the accused, and in favour of the complainant and the following deficiencies are fatal to the accused's defence:
i. The accused's defenses that the cheque was issued as security and presented without consent, fail to meet the standard of preponderance of probabilities due to weak evidence and lack of corroboration ii. Ineffective cross-examination that did not challenge the loan's existence, outstanding liability, or cheque's purpose. iii. Accused's admission of issuing the cheque with particulars.
CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 20/ 21 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi iv. Failure to lead defense evidence, and absence of adverse suggestions on the debt's validity reinforce the statutory presumption under Section 139 NI Act.
v. The accused's partial repayments and collateral security, do not negate criminal liability.
11.Order:
a. The accused, Amit Joshi, has failed to raise a probable defence and failed at rebuttal of the presumption under Sections 118 and 139 of the NI Act. Hence, He is convicted of the offence under Section 138 NI Act.
b. The matter is now listed for the purpose of arguments on the sentence for the convict.
c. The signed copy of the judgement be uploaded on the CIS immediately, and be also provided to the accused d. Pronounced in open court and in presence of both the parties/ or their Counsels. Digitally signed by DIVYAM LILA Location: (DIVYAM LILA) DIVYAM Court Room LILA no. 12, KKD, East, Delhi Municipal Magistrate, East District Date: Karkardooma Court/Delhi 2025.04.29 15:36:15 Date: 29.04.2025 +0530 ___________________________end of the document_____________________ CC no. 2482/2017 CA Co-op Society vs Amit Joshi page 21/ 21