Delhi District Court
B.D. Sharma vs Raj Kumar on 26 September, 2025
IN THE COURT OF SH. LOVLEEN, ADDITIONAL SESSIONS
JUDGE-03, SAKET COURTS, NEW DELHI
DLSE010040872024
CRL. APPEAL No. 151/2024
B.D. SHARMA
S/O LATE SHRI. HANUMAN PRASAD SHARMA
RESIDENT OF
HOUSE NO. 1200,
NEW JANTA COLONY,
NIT FARIDABAD-121001.
....Appellant
versus
RAJ KUMAR
S/O LATE SHRI KRISHAN CHAND
RESIDENT OF: K-15, SOUTH EXTENSION
PART-I, NEW DELHI-110049.
...Respondent
Date of institution : 24.04.2024
Date of Reserving judgment : 30.08.2025
Date of Pronouncement : 26.09.2025
Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 1/29
JUDGMENT
1. This is an appeal under section 374(3) Cr.P.C. preferred by the appellant against the impugned judgment dated 06.12.2023 and order on sentence dated 18.12.2023 passed by Court of Ld. Metropolitan Magistrate-01 (NI Act), South East District in CC No. 37840/2019 titled Raj Kumar Vs. B D Sharma, whereby the appellant/ convict was convicted of the offence punishable under Section 138 of Negotiable Instruments Act and was directed to pay the compensation of Rs.15,00,000/- to the complainant within one month from the date of judgment. In default of payment of compensation, convict is to undergo 01 month simple imprisonment. For the sake of convenience, the appellant/ convict herein shall be referred to as 'accused' and the respondent herein shall be referred to as 'complainant'.
BRIEF FACTS
2. The facts of the case put forth by the complainant against the accused have been correctly noted by the Ld. Magistrate in his impugned judgment. The relevant paragraphs are reproduced hereinafter for ready reference:-
".............................................................................. ...............................................................................
2. The case of the complainant is that he is the owner of the building situated on plot No. 165, Sector-1, Manesar, Distt. Gurugram and as per agreement, the said building comprises of basement, ground floor, first floor, second floor, and built up 17 bed rooms with attached washroom and kitchen with all fittings and fixtures, etc which was let out to the accused. It is further Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 2/29 stated that accused is a bad pay master in paying the rent in time and as such the accused failed to remit the amount of rent therefore, all the times accused remained in arrears of rent. consequently the lease deed stand automatically terminated as per the terms of lease agreement and tenancy stands terminated thereby and thereafter the accused is liable to pay damages by way of illegal usage and illegal occupation @ Rs. 1,50,000/- per month as agreed upon in the lease agreement clause 24. Further, as per terms of lease agreement, the accused is also liable to pay interest @24% per annum on arrears of rent. Complainant reduced the rate of interest from 24 % to 18 % per annum and thus the accused is liable to pay Rs. 6,76,850/-as being the amount of arrears of rent and Rs. 2,03,055/- as interest totalling to Rs. 8,79,905/- from June, 2017 to November, 2017 and again the accused has rendered himself liable to pay Rs. 2,26,000/- as arrears of rent and Rs. 27,120/-towards interest thereon which comes to Rs. 2,53,120/- for the period of April, 2018 to February, 2019 in discharge of his legally enforceable liability, accused issued two cheques bearing No. 674958 dt. 08.07.2019 for Rs. 8,79,905/- and cheque bearing No. 674957 dt. 08.07.2019 for Rs. 2,53,120/- both drawn on Canara Bank, Manesar, Haryana. It is further stated by the complainant that aforesaid cheques were presented for its encashment but the aforesaid cheque were returned unpaid with the remarks "funds insufficient" vide return memo dt. 09.07.2019. Thereafter, complainant again asked the accused for making the payment of the aforesaid cheques but to no avail. Thereafter, compelled by the circumstances, complainant sent a legal notice Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 3/29 dated 19.07.2019 u/s 138 NI Act calling upon the accused to make the payment within 15 days of the receipt of the legal notice as prescribed u/s 138 of the N.I. Even after the expiry of 15 days stipulated period from the date of eceipt of notice, the accused did not make the payment. It is further stated that thereafter, accused issued one cheque bearing No. 909569 dt. 20.07.2019 for Rs. 1,19,790/- drawn on Canara Bank, Manesar, Haryana. It is further stated by the complainant that aforesaid cheques were presented for its encashment but the aforesaid cheque were returned unpaid with the remarks "Drawers signature not as per mandate" vide return memo dt. 23.07.2019. Thereafter, complainant again asked the accused for making the payment of the aforesaid cheques but to no avail. Thereafter, compelled by the circumstances, complainant sent a legal notice dated 29.07.2019 u/s 138 NI Act calling upon the accused to make the payment within 15 days of the receipt of the legal notice as prescribed u/s 138 of the N.I. Even after the expiry of 15 days stipulated period from the date of receipt of notice, the accused did not make the payment and hence, the present case was filed by the complainant. .................................................................................. .................................................................................."
TRIAL
3. Vide order dated 04.09.2019, the Ld. Magistrate concerned summoned the accused to face trial u/s 138 NI Act. On 22.10.2020, a notice u/s 251 Cr.P.C. was framed upon the accused wherein he admitted his signatures on the cheques in question. He also admitted the issuance of cheques in question in favour of the complainant. He denied the service of Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 4/29 legal demand notice. In defence, accused submitted that:- " I had taken property of the complainant on rent for running a PG and I have issued 36 blank cheques to the complainant for rent. The amount of rent was regularly paid by me from my bank account the bank account of the complainant directly. When the complainant have presented the cheque of Rs.8,79,905/-, I called up the complainant that why they had presented the cheque for such amount. On this, the complainant replied that the amount of Rs. 8,79, 905/ is due upon me towards the rent which have not been paid by me. I demanded back the said cheque with the option to pay the amount in cash, however, despite my demand, the cheque was not handed over to me. "
4. During trial, the complainant examined himself as CW-1 in support of his allegations against the accused in this case. Statement of accused was recorded u/s 313 Cr.P.C. In defence, accused examined himself as DW-1 and Ms. Nitika Arora, Bank witness as DW-2. Upon the conclusion of trial, accused was convicted of the offence punishable u/s 138 NI Act vide the impugned judgment dated 06.12.2023.
GROUNDS OF APPEAL
5. The grounds cited by the accused against the impugned judgement are as under :
A. Because the basic statutory right of due representation of his case has been violated in the present matter vide the impugned order dated 25.10.2023 wherein the right of final argument was closed by the Ld. Trial Court without any fault on the part of the Appellant.
B. Because grave injustice has been caused to the Appellant herein by convicting him u/s 138 of the Negotiable Instruments Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 5/29 Act, 1881 without giving due opportunity of final arguments to the Appellant.
C. Because the Ld. Trial Court went on to violate the statutory right of due representation in a case by keeping the trial court records with itself and not even letting the Counsel for the Accused to get the certified copy of the trial record for the sake of at least filing the written arguments in the present matter which was allowed by the Ld. Trail Court itself vide order dated 25.10.2023 and despite repeated requests from the counsel for the Appellant, the Ld. Trial Court continued to possess the trial court record thereby intentionally prejudicing the statutory right of due representation.
D. Because the adjournments taken before 25.10.2023 on behalf of the Appellant were never directed by the Appellant but only because the earlier counsel for the Appellant namely Shri Amarjeet Yadav was not available to represent the case of the Appellant as he had one or the other personal difficulty, one of the key reason was he was contesting the elections for the post of President at the District Bar Council of Gurugram. That it is well settled law that Petitioner should not be made to suffer for the mistake/negligence of the Advocate. That in the matter of Ashok Kumar vs. New India Assurance Co. Ltd.; Civil Appeal No. 4758 of 2023; the Hon'ble Supreme Court vide judgement dated 31.07.2023 observed that;
"8) The said complaint was withdrawn by the advocate of the complainant on the pretext of the case being prolonged by the advocate of the Insurance Company, without having express instructions for withdrawal of the said complaint. However, for the fault of the advocate, the complainant cannot be made to suffer.
E. Because after realizing that the existing counsel of the Appellant was not in a position to represent him before the Ld. Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 6/29 Trial Court, he immediately took steps and appointed a new counsel to represent his case.
F. That the Ld. Trial Court, despite knowing that the new counsel has been appointed in the matter and she neither had the case file of the matter nor was acquainted with the facts and circumstances of the present matter, arbitrarily closed accused's right of final arguments and granted only opportunity to file written submissions which was also taken away by not even allowing the new counsel to get the trial court records in the present matter.
6. It is prayed that the impugned judgment dated 06.12.2023 and the order on sentence dated 18.12.2023 may be set aside. Written submissions have been filed on behalf of the accused.
SUBMISSIONS OF COMPLAINANT
7. On the other hand, Ld. Counsel for the complainant has argued that the accused has been correctly convicted by the Ld. Magistrate. He prays for dismissal of the appeal filed by the accused. Written submissions have been filed on behalf of complainant as well.
DISCUSSION
8. This Court has considered the oral submissions as well as the records.
9. Recently, the Hon'ble Supreme Court was pleased to define the contours of the law relating to the provision u/s 138 of Negotiable Instruments Act in Rajesh Jain Vs. Ajay Singh 2023 INSC 888. The relevant extracts of the observations are reproduced below for ready reference:-
Section 138 of the NI Act - Necessary Ingredients
25. Essentially, in all trials concerning dishonour of Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 7/29 cheque, the courts are called upon to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act.
26. In Gimpex Private Limited vs. Manoj Goel (2022) 11 SCC 705 , this Court has unpacked the ingredients forming the basis of the offence under Section 138 of the NI Act in the following structure:
(1) The drawing of a cheque by person on do account maintained by him with the banker for the payment of any amount of money to another from that account;
(i) The cheque being drawn for the discharge in whole or in part of any debt or other liability;
(iii) Presentation of the cheque to the bank arranged to be paid from that account,
(iv) The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount
(v) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and
(vi) The drawer of the cheque failing to make Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 8/29 payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.
27. In K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 this Court had summarised the constituent elements of the offence in fairly similar terms by holding:
"14. The offence Under Section 138 of the Act can be completed only with the concatenation of a number of acts.The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (3) failure of the drawer to make payment within 15 days of the receipt of the notice."
28. The five (5) acts as set out in K Bhaskaran's case (supra) are, generally speaking, matters of record and would be available in the form of documentary evidence as early as, at the stage of filing the complaint and initiating prosecution. Apart from the above acts, it is also to be proved that cheque was issued in discharge of a debt or liability (Ingredient no. (ii) in Gimpex's case). The burden of proving this fact, like the other facts, would have ordinarily fallen upon the complainant. However, through the introduction of a presumptive device in Section 139 of the NI Act, the Parliament has sought to overcome the general norm as stated in Section 102 of the Evidence Act and has, thereby fixed the onus of proving the same on the Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 9/29 accused. Section 139, in that sense, is an example of a reverse onus clause and requires the accused to prove the non-existence of the presumed fact, i.e., that cheque was not issued in discharge of a debt/liability.
Burden of Proof and Presumptions: Conceptual
Underpinnings
29. There are two senses in which the phrase 'burden of proof' is used in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One is the burden of proof arising as a matter of pleading and the other is the one which deals with the question as to who has first to prove a particular fact. The former is called the 'legal burden' and it never shifts, the latter is called the 'evidential burden' and it shifts from one side to the other. [See Kundanlal v. Custodian Evacuee Property (AIR 1961 SC 1316)]
30. The legal burden is the burden of proof which remains constant throughout a trial. It is the burden of establishing the facts and contentions which will support a party's case. If, at the conclusion of the trial a party has failed to establish these to the appropriate standards, he would lose to stand. The incidence of the burden is usually clear from the pleadings and usually, it is incumbent on the plaintiff or complainant to prove what he pleaded or contends. On the other hand, the evidential burden may shift from one party to another as the trial progresses according to the balance of evidence given at any particular stage; the burden rests upon the party who would fail if no evidence at Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 10/29 all, or no further evidence, as the case may be is adduced by either side (See Halsbury's Laws of England, 4th Edition para 13). While the former, the legal burden arising on the pleadings is mentioned in Section 101 of the Evidence Act, the latter, the evidential burden, is referred to in Section 102 thereof. [G.Vasu V. Syed Yaseen (AIR 1987 AP139) affirmed in Bharat Barrel Vs. Amin Chand [(1999) 3 SCC 35] ]
31. Presumption, on the other hand, literally means "taking as true without examination or proof". In Kumar Exports v. Sharma Exports (2009) 2 SCC 513, this Court referred to presumption as "devices by use of which courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence."
32. Broadly speaking, presumptions are of two kinds, presumptions of fact and of law. Presumptions of fact are inferences logically drawn from one fact as to the existence of other facts. Presumptions of fact are rebuttable by evidence to the contrary. Presumptions of law may be either irrebuttable (conclusive presumptions), so that no evidence to the contrary may be given or rebuttable. A rebuttable presumption of law is a legal rule to be applied by the Court in the absence of conflicting evidence (Halsbury, 4th Edition paras 111, 112]. Among the class of rebuttable presumptions, a further distinction can be made between discretionary presumptions ('may presume') and Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 11/29 compulsive or compulsory presumptions ('shall presume'). [G. Vasu V. Syed Yaseen (Supra)]
33. The Evidence Act provides for presumptions, which fit within one of three forms: 'may presume' (rebuttable presumptions of fact), 'shall presume' (rebuttable presumption of law) and conclusive presumptions (irrebuttable presumption of law). The distinction between 'may presume' and 'shall presume' clauses is that, as regards the former, the Court has an option to raise the presumption or not, but in the latter case, the Court must necessarily raise the presumption. If in a case the Court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved, [G.Vasu V. Syed Yaseen (Supra)] Section 139 NI Act-Effect of Presumption and Shifting of Onus of Proof
34. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that 'unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability'. It will be seen that the 'presumed fact' directly relates to one of the crucial ingredients necessary to sustain a conviction under Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 12/29 Section 138.
35. Section 139 of the NI Act, which takes the form of a 'shall presume' clause is illustrative of a presumption of law. Because Section 139 requires that the Court 'shall presume' the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase 'unless the contrary is proved'.
36. The Court will necessarily presume that the cheque had been issued towards discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel Vs. Amin Chand] [(1999) 3 SCC 35]
37. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that 'a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar (2019) 4 SCC 197]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 13/29 sufficient to trigger the presumption.
38. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.
39. John Henry Wigmore12 on Evidence states as follows:
"The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule."
40. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of 'preponderance of probabilities', similar to a defendant in a civil proceeding. [Rangappa vs. Mohan (AIR 2010 SC 1898)] Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 14/29
41. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words 'until the contrary is proved' occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513]25
42. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non- existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty one to forty nine and arising out of the entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 statement or at the trial Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 15/29 as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was 'no debt/liability'. [Kumar Exports and Sharma Carpets, (2009) 2 SCC 513]
43. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundanlal's case- (supra) when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non- existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Section Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 16/29 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well.
45. Therefore, in fine, it can be said that once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no debt/liability in the manner pleaded in the complaint or the demand notice or the affidavit-evidence, the burden shifts to the complainant and the presumption 'disappears' and does not haunt the accused any longer. The onus having now shifted to the complainant, he will be obliged to prove the existence of a debt/liability as a matter of fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441].
EXISTENCE OF STATUTORY PRESUMPTIONS
10. Trial court record reflects that at the time of framing of notice u/s 251 Cr.P.C, the accused admitted that the cheques in question belong to him and also bear his signatures. At that stage, accused also admitted the issuance of the same in favour of the complainant. Admittedly, the cheques in question were dishonored upon being presented for encashment by the complainant. Legal notices were then sent by the complainant to the accused by Registered AD Post demanding the amount due under the Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 17/29 cheques in question. Service of the said legal notices was denied by the accused at the time of framing of notice u/s 251 CrPC. However, it is not denied that the said legal notices were forwarded to the admitted address of the accused. As such, this Court safely assume the service of same upon the accused. Admittedly, the accused did not make any payment demanded vide the said legal notices within the period prescribed u/s 138 of NI Act. All the above facts are sufficient to invoke the presumptions available to the complainant u/s 118 NI Act and u/s 139 NI Act. As such, the evidential burden stood transferred upon the accused to prove that the cheques in question were not issued towards discharge of any liability. Until the said evidential burden is discharged by the accused, the presumptions available against the accused u/s 118 NI Act and u/s 139 NI Act will have to be assumed to be true, without expecting the complainant to do anything further. The said burden could be discharged by the accused either by leading defence evidence to conclusively establish that the cheques were not issued in discharge of a debt / liability or by proving the non existence of debt / liability on preponderance of probabilities by referring to the particular circumstances of the case. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence. Once the accused produces such evidence, the burden shifts back to the complainant and the above mentioned presumptions disappear.
REBUTTAL OF STATUTORY PRESUMPTIONS
11. Now, the question left to be decided is whether the said presumptions have been successfully rebutted by the accused or not. In order to adjudicate the same, this Court must deal with the facts adduced on record by the accused during the cross-examination of complainant or during the defence evidence.
Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 18/29
12. The said adjudication requires an understanding of the respective stands taken by the parties.
13. Complete details of the complainant's version have been correctly narrated by the Ld. Magistrate in the impugned judgment and the same have been reproduced in para no. 2 of this judgment. Bereft of unnecessary details, it is the case of the complainant that accused rented an immoveable property belonging to the complainant but he failed to pay the rent fixed mutually and in order to discharge his liability to clear arrears of rent and other agreed charges, the cheques in question were issued by the accused in favour of the complainant. Complainant examined himself as a witness in support of above allegations.
14. On the other hand, the accused denies any such liability and claims, in response to notice framed upon him u/s 251 Cr.P.C, that "I had taken property of the complainant on rent for running a PG and I have issued 36 blank cheques to the complainant for rent. The amount of rent was regularly paid by me from my bank account the bank account of the complainant directly. When the complainant have presented the cheque of Rs.8,79,905/-, I called up the complainant that why they had presented the cheque for such amount. On this, the complainant replied that the amount of Rs. 8,79, 905/ is due upon me towards the rent which have not been paid by me. I demanded back the said cheque with the option to pay the amount in cash, however, despite my demand, the cheque was not handed over to me. " (emphasis supplied). In his statement recorded u/s 313 Cr.PC, the accused has pleaded that "I had given 36 blank signed cheques to the complainant. I had taken the building of the complainant on rent. The complainant used to present my cheque in his bank for the purpose of rent. My lease agreement with the complainant was for 03 years. For 02 years, Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 19/29 the complainant presented my cheques and the payment of the rent was also cleared. Thereafter, the rent which was due was only Rs. 1,19,790/- whereas the complainant presented the cheque for amount of rs. 8,79,905/-. My cheques have been misused by the complainant." In defence, accused examined himself as DW-1 and Ms. Nitika Arora (Bank Manager) as DW-2.
15. Now, we delve into the oral testimony of complainant, who examined himself as CW-1. CW-1 deposed in line with the facts mentioned in the afore-going paragraphs. He was duly cross-examined on behalf of the accused. The record of cross examination of CW-1 reflects that complainant has admitted that initially the immoveable property concerned was rented out to accused in the year 2015 vide a registered Lease Deed. Subsequently, a second Lease Deed was executed in the year 2017 in respect of the said immoveable property in favour of the accused. A copy of the said second Lease Deed was placed on record by the complainant. The said document contains a reference to an "Annexure-A", which deals with the post dated cheques issued by accused towards rent for the lease duration. However, said Annexure-A was not placed on record by the complainant. Rather the original of the second Lease Deed, bearing the said Annexure-A, came on record as Ex.DW1/A during the cross- examination of accused (please see cross-examination dated 11.01.2023). A copy of Ex.DW1/A, bearing Annexure-A as well, was placed on record by complainant himself in a connected case Ct No. 91/2021 titled Raj Kumar Vs. B D Sharma (a statutory appeal arising out of the said CT No. 91/2021 has been disposed of by this Court today only). That being so, the complainant could not be permitted to deny the document Ex.DW1/A nor could he be permitted to deny Annexure-A annexed with Ex.DW1/A, Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 20/29 which annexure has not been placed on record by the complainant for reasons best known to himself. As per Annexure-A, accused has handed over as many as 36 post dated cheques to the complainant towards monthly rent payable in respect of the said immoveable property. The recitals of same are reproduced below for ready reference:-
"In pursuance of the Lease agreement dt:- day of November, 2017 following postdated cheques towards payment of monthly rent has been handed over by me Bhram Dutt Sharma (lessee) to Mr. Raj Kumar (Lessor). I ensure and guarantee that the cheque as and when presented to the bank on the due date shall be encashed. I further undertake and guarantee that I shall not give any "Stop Payment" Instructions, or close the account or cause any hindrance in the encashment of these cheques and shall maintain the required balance for encashment of the said cheques on presentation.
a) Cheques drawn on Canara Bank bearing No's 394917 to 394920 and 395086 to 395093 for Rs. 1,10,000/- each towards the payment of rent for the first year.
b) Cheques drawn on Canara Bank bearing No's 674951 to 674962 for Rs. 1,21,000/- each towards the payment of rent for the second year.
c) Cheques drawn on Canara Bank bearing Nos 909568 to 909579 for Rs. 133100/- each towards the payment of rent for the third year."
(emphasis supplied)
16. It is apparent from the recitals of 'Annexure A' that the cheques in question (bearing No. 674957 and 674958) belong to the series / bunch of 12 cheques bearing numbers 674951 to 674962 for a sum of Rs. 1,21,000/- each towards payment of rent for the 'second year'. During the course of his cross-examination, CW-1 has admitted that he did not take any permission from the accused before filling the amounts in the said two cheques. Rather CW-1 claims that he was not required to take such a permission from the accused. Apparently, complainant has failed to take any permission from the accused before filling the amount in the said two cheques. Now, the question arising before this Court is - what is the effect Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 21/29 of the said act and conduct of complainant.
17. This query was answered by the Hon'ble Gujarat High Court in Nikhil P. Gandhi Vs. State of Gujarat 2016:GUJHC:18945 in the following manner:-
".............................................................................. ...............................................................................
43. If it is only a signed blank cheque leaf that was handed over it cannot be said to be a paper stamped in accordance with law relating to the negotiable instruments. As such the contention that, whether it is wholly blank or filled up partly making it an incomplete document and that handing over of the same would give authority to the holder thereof to make or complete the instrument as the case may be for any amount specified therein and not exceeding the amount covered by the stamp, cannot be sustained. So far as a cheque is concerned, if it is a signed blank cheque leaf it may be filled up showing any amount without any restriction what so ever and if that be so, how Section 20 of the N.I. Act can be applied to a case of cheque. But if it is a paper stamped, it can be filled up showing the amount not exceeding the amount covered by the stamp. That is the rationale behind why Section 20 is specifically made applicable to the stamped documents/instruments.
44. It has been held by a Division Bench of the Kerala High Court in C.T. Joseph v. I.V. Philip [AIR 2001 Kerala 300] that Section 20 of the N.I. Act would not apply to a cheque. I may quote the observations in paras 14 and 15 as under:
"14. Learned counsel for the plaintiff then argued that even the case of the fourth defendant is that he had entrusted cheque duly signed by the fourth (defendant) and the fourth defendant was authorised to issue the cheque on behalf of the Firm. He relied on Section 20 of the Negotiable Instruments Act and contended that on the basis of that the defendants are estopped from denying their liability under the cheque. So far as Section 20 of the Negotiable Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 22/29 Instruments Act is concerned, according to us, it does not apply because Section 20 applies only with regard to inchoate negotiable instruments. So far as the cheques are concerned, they don't require any stamp under the Stamp Act in force.
15. The Lahore High Court in Dower v. Sohan Lal, AIR 1937 Lahore 816 have held that insofar as the cheque do not require to be stamped, Section 20 of the Negotiable Instruments Act is not applicable. Learned counsel for the plaintiff then submitted that even if the principles under Section 20 of the Negotiable Instruments Act do not apply, the general principles of law of estoppel will apply. Learned counsel also cited some decisions to show that the general principles of law of estoppel will apply. But according to us, for the application of such principles, it is highly necessary that the cheque was issued and filled up as authorised.."
45. It can be argued that when a person takes a bill in an incomplete form, he cannot be a bonafide holder for value since it can only be said that he has taken a piece of blank paper and not a bill and that he can take it as a bill only under the authority given to his transferor. Section 20 of the Act would make it clear that there can be no material alteration of a cheque leaf only for the reasons that it was subsequently filled up. But at the same time it cannot be said that when ever a signed blank cheque leaf is given, it gives authority to the holder to fill up the same according to his whims and fancies. Filling up of a signed blank cheque leaf may not attract section 87 of the N.I. Act, for, there was no insertion, interlineation, erasure, alteration etc, because there was no completed negotiable instrument within the meaning of sections 5, 6 and 13 of the N.I. Act. Therefore, neither section 20 nor section 87 applies to a blank signed cheque leaf. If so, the question must turn round to the actual execution of the instrument.
47 If a principal or employer deputes his agent or employee to Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 23/29 purchase an article and if the dealer fills up that signed blank cheque leaf showing the exact amount covered by the bill showing the price of the article sold then it cannot be said that what was handed over by the drawer of the cheque is only a signed blank cheque leaf. In such cases an implied authority to the trader/seller of the article to fill up the cheque leaf can certainly be inferred. Similarly, there may also be cases where at the time of settlement of the accounts, a particular amount was found payable by the drawer of the cheque to the other party and if a signed blank cheque entrusted to be filled up later is filled up in tune with the accounts, showing the actual amount payable by the drawer of the cheque to the other party, then also it can be said that there was the implied authority to fill up the signed blank cheque leaf. There may be such instances where the sum is ascertainable and the signed blank cheque leaf is given to fill up the same after ascertaining the same. In such cases there would be no difficulty to infer an implied authority given by the drawer. Simply because the cheque is seen filled up or written in the hand writing of another person it cannot lead to a conclusion that only a signed blank cheque leaf was given. The person signing the cheque may have difficulty due to many reasons to write the cheque and it might have been filled up by the payee or by another. In such cases it cannot be said that what was handed over was only a signed blank cheque leaf. In all such cases the ultimate conclusion may depend upon the proof of the transaction and execution of the instrument. It must also be held that when it is a case that only a signed blank leaf was handed over by the accused, then he must offer satisfactory explanation as to the circumstances under which the signed blank cheque happened to be handed over. Considering the totality of the evidence and circumstances, it is for the court to draw the inference as to whether it was given with an implied authority to fill up the same showing the amount ascertained or ascertainable to discharge the debt or liability. Therefore, there may be such cases where Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 24/29 implied authority can be inferred. But the contention that when a signed blank cheque leaf is handed over, it can never be filled up and that if it is filled up it would amount to a material alteration within the meaning of using Section 87 of the N.I. Act, does not stand to rhyme or reason. Similarly, the contention that Section 20 of the N.I. Act is applicable to an unfilled or blank cheque leaf also cannot be accepted. It would depend upon the facts of each case. Therefore, it is neither a case which attracts Section 87 of the N.I. Act nor is it a case where the complainant can rely upon Section 20 of the N.I. Act and contend that as a signed blank cheque leaf is given it gives an authority to fill up the same according to the whim and fancy of the payee. [See : P. Purushothaman Nair v. K. Sreekantan Nair, 2013 (4) ILR (Ker) 115] .............................................................................. ........................................................................ 93 Before concluding, I may only say that, whenever a blank cheque or postdated cheque is issued, a trust is reposed that the cheque will be filled in or used according to the understanding or agreement between the parties. If there is a prima facie reason to believe that the said trust is not honoured, then the continuation of prosecution under Section 138 of the N.I. Act would be the abuse of the process of law. It is in the interest of justice that the parties in such cases are left to the civil remedy."
(emphasis supplied)
18. This very line of reasoning has been followed by Hon'ble High Court of Delhi in Ramesh Goyal Vs. State & Anr. Crl. A. 128/2017 dated 31.05.2017. The relevant extracts are as under:-
"................................................................................. ...................................................................................
17. Even if the theory of blank cheque were to be accepted for the sake of consideration, the burden is on the accused to justify it by cogent reasons. There is no law that a person drawing the cheque Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 25/29 must necessarily fill it up in his own hand writing. Once the signatures on the cheque are admitted, the liability arising therefrom cannot be evaded on the specious plea that the contents were not filled up by the drawer of the cheque. When a blank cheque is signed and handed over, it only implies that the person signing it, and handing it over, has given implied authority to the holder of the cheque to fill up the blank portions, it being a matter of legitimate presumption that he would understand the consequences of doing so. Undoubtedly, it is inherent in handing over of a blank cheque that the drawer reposes trust in the person receiving such instrument for the blanks to be filled in as per mutual understanding. Evidence can be adduced to demonstrate breach of such trust in the event of blank cheque being mis-used but such evidence necessarily would involve material concerning the conduct of the person to whom the drawer claims to have handed over the cheque. In taking this view, this court adopts the opinion expressed by a judgment of the Supreme Court in Suryalakshmi Cotton Mills Ltd. Vs. Rajvir Industries Ltd. (2008) 13 SCC 678 and by a learned single judge of this court in Vijender Singh Vs. M/s. Eicher Motors Limited and Anr., 2011 SCC Online Del. 2095. Similar view was taken by learned single Judges of Gujarat High Court in cases reported as Hitenbhai Parekh Proprietor
- Parekh Enterprises vs. State of Gujarat, 2009 (3) GLH 742 and Nikhil P. Gandhi Vs. State of Gujarat & 2, 2016 SCC Online Guj. 1856."
(emphasis supplied)
19. The law crystallized in the above citations is that a blank cheque has to be filled in by the payee in accordance with the mutual understanding or agreement of the parties. Admittedly, the 'mutual understanding' of the parties with respect to the amount to be filled up in the cheque in question is reflected in 'Annexure-A' of Lease Deed Ex.DW1/A (reproduced in the aforegoing paragraphs). As per said understanding, the said two cheques Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 26/29 (bearing No. 674957 and 674958) could be filled with a sum of Rs. 1,21,000/- only. This Court has already ruled in the aforegoing paragraphs that complainant failed to seek the permission of accused to fill any sum beyond the stipulated sum of Rs.1,21,000/- in the said two cheques. As such, the said act and conduct of complainant renders the said two cheques void. Consequently, all the statutory presumptions operating in favour of complainant disappear. Prosecution of accused for the dishonour of the said two cheques is liable to fail on account of the said reasons. Therefore, accused B.D. Sharma is liable to be acquitted as far as the allegations regarding the dishonour of said two cheques are concerned. Ordered accordingly.
20. However, the situation takes a different turn as far as the prosecution of accused for the dishonour of third cheque bearing No. 909569 is concerned. Reason being the fact that the amount filled in the said cheque is less than the 'mutual understanding' between the parties as per Annexure-A of Lease Deed Ex.DW1/A. As per complainant, the said cheque has been issued for the payment of rent for the month of July 2019. The said assertion of complainant has gone unrebutted and unchallenged as no suggestion contrary to same was put to complainant at the time of his cross-examination. In fact, this Court finds it appropriate to observe here that accused has admitted, at the stage of recording of his statement u/s 313 Cr.P.C., that rent to the tune of Rs. 1,19,790/- was due and outstanding. This is the exact same amount filled in the cheque bearing No. 909569. That being so, in the considered opinion of this Court, it could be safely held that the accused has not been able to rebut the statutory presumptions operating against him during the course of cross-examination of CW1.
21. Proceeding further, this Court notes that accused has examined Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 27/29 himself as DW-1 in his defence. His detailed oral testimony relates majorly to his claim that complainant filled the amounts in the cheques in question beyond their mutual understanding. The said assertion of accused has already been dealt by this Court in the aforegoing paragraphs. This court notes that the oral testimony of DW-1 does not bear any reference to or rebuttal of the assertion of complainant to the effect that the cheque bearing No. 909569 has been issued for the payment of rent for the month of July 2019. As such, this Court could safely hold that accused has not been able to rebut statutory presumptions operating against him qua the said cheque bearing No. 909569 through his oral testimony.
22. DW-2 Ms. Nitika Arora, Manager, Canara Bank has produced the account statement Ex.DW2/A pertaining to the complainant. But the same does not seem to be relevant for deciding the present matter, particularly in view of the repeated failure of accused to rebut the assertion of complainant to the effect that the cheque bearing No. 909569 has been issued for the payment of rent for the month of July 2019.
23. In the considered opinion of this Court, the accused has miserably failed to rebut the statutory presumptions through the evidence led by him in defence qua the prosecution related to cheque bearing No. 909569.
DECISION
24. Apparently, all the statutory presumptions available to the complainant remain unrebutted and intact as far as the prosecution of accused is related to cheque bearing No. 909569. All the ingredients of the offence punishable u/s 138 NI Act are available against the accused with respect to the dishonour of cheque bearing No. 909569. Consequently, it has to be held that accused was correctly convicted u/s 138 NI Act by the Ld. Magistrate concerned with respect to the dishonour of cheque bearing Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 28/29 No. 909569. For the afore-going reasons, the impugned judgment dated 06.12.2023 is hereby affirmed and upheld in that respect only.
SENTENCE
25. Admittedly, the cheque bearing No. 909569 was issued for discharge of the rent pertaining to July 2019. Admittedly, the complainant has been running from pillar to post to recover the said amount. In the facts and circumstances of this case, the accused is sentenced to pay a fine of Rs. 2,38,000/-, all of which shall go to the complainant as compensation. In default, accused shall undergo simple imprisonment for 01 month. Order on sentence dated 18.12.2023 passed by the Ld. Magistrate is accordingly modified. Benefit of Section 428 Cr.P.C. be given to the accused.
26. Appeal filed by accused therefore stands disposed of in above terms.
27. TCR be sent back alongwith copy of this judgment.
28. Appeal file be consigned to Record Room as per rules.
Digitally
signed by
LOVLEEN
Announced & Dictated in the LOVLEEN Date:
2025.09.27
Open Court today i.e. 26.09.2025 10:08:11
+0530
(Lovleen)
ASJ-03 (South East)
Saket Courts, Delhi
Crl. Appeal no: 151/2024 B D Sharma Vs. Raj Kumar 29/29