Delhi District Court
Gajanan Fabrics vs Love Stich Apparell on 11 March, 2026
Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell
IN THE COURT OF JUDICIAL MAGISTRATE FIRST CLASS (NI
ACT-02), SOUTH EAST DISTRICT, SAKET COURT COMPLEX,
NEW DELHI
(Presided over by Ms. Shruti Sharma-I)
DLSE020026182014
Criminal Complaint No. 617526/2016
Gajanan Fabrics ....................... Complainant
Vs.
Love Stich Apparell .......................Accused
Sr.No Particulars Details
A. Name and address of the Sh. Brij Mohan S/o Mohinder Sharma,
Complainant: Proprietor of Gajanan Fabrics, R/o 3-4,
Saroorpur Industrial Area, Sohna Road,
Faridabad-121004.
B. Name and address of the Sh. Binu Kunnummal, Proprietor of Love Stich
Accused. Apparell S/o T.P. Karunakaran R/o C-4/4082,
Vasant Kunj, New Delhi.
Also at:
R/o Shiv Durga Vihar, Lakkarpur, Faridababd,
Haryana.
C. Offence complained of U/s 138 NIAct
D. Plea of the accused Pleaded not guilty.
E. Final order CONVICTION
F. Date of institution 30.10.2014
G. Date of pronouncement 11.03.2026
Digitally signed
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SHRUTI SHARMA
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JUDGMENT
1. This Court, by the present detailed judgment, adjudicates the complaint instituted by Sh. Brij Mohan Sharma proprietor of the complainant Gajanan Fabrics (hereinafter "Complainant"). The complaint targets Sh. Binu Karuna Karan proprietor of accused Love Stich ( hereinafter "Accused"), for offence punishable under Section 138 Negotiable Instruments Act, 1881 ("NI Act"). The prosecution stems from the dishonour of two cheques issued by the Accused in purported discharge of a legally enforceable debt: Cheque No. 051616 dated 15.06.2014 for Rs. 37,10,448/- and cheque No. 051645 dated 28.06.2014 for Rs. 7,50,000/- both drawn on Syndicate Bank, Shakuntala Apartments, New Place, New Delhi. The cheques, handed over as payment of an accumulated liability from purchase of fabrics/goods were presented for encashment via HDFC Bank Ltd., SCO-139, Faridabad but returned unpaid on 02.08.2014 with the bank endorsement "Payment stopped by Drawer". Despite statutory legal demand notice and the Accused's failure to remit payment within the prescribed 15-day window, the cause of action crystallized, warranting invocation of NI Act's penal provisions.
2. The complainant's case, in brief, is that the complainant has dealt in fabrics, dyeing, and printing for the last 15 years. The accused, known to the complainant for 4-5 years, approached him to purchase fabrics. Satisfied with the quality, the accused purchased fabrics via multiple invoices on various dates, as reflected in the account statement of the complainant to Love Stitch Apparel.
3. It is further the case of the complainant that to discharge his liabilities, the accused issued two cheques drawn on Syndicate Bank, Shakuntala Apartments, Nehru Place, New Delhi-110019, in favor of the complainant: Cheque No. 051616 dated 15.06.2014 for Rs. 37,10,448/- and Cheque No. 051645 dated 28.06.2014 for Rs. 7,50,000/-. The accused assured that the cheques would be encashed upon presentation. The complainant presented these cheques to his bankers, HDFC Bank Digitally signed Page no.2/22 SHRUTI by SHRUTI SHARMA SHARMA Date: 2026.03.11 16:52:42 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell Ltd., SCO-139, 1st Floor, Sector-14, Faridabad, on 27.08.2014 and 15.09.2014 respectively.
4. To the Complainant's profound dismay, both cheques were returned unpaid with the remarks "PAYMENT STOPPED BY DRAWER ". The complainant attempted to contact the accused, who initially did not answer calls and later blocked the complainant's phone number, thereby avoiding and evading him.
5. Adhering scrupulously to Section 138 NI Act, the Complainant's counsel dispatched a comprehensive legal demand notice dated 26.09.2014 via speed post to the Accused's declared addresses. The notice categorically demanded repayment of the cheque amount within 15 days of receipt. Postal receipts confirm dispatch, with deemed service thereafter. The Accused's resounding silence, no payment, no rebuttal, fortified the presumption of liability under Section 139 NI Act.
6. It is the case of the complainant that the deliberate issuance of cheques foreseeably unbacked by funds, their dishonour for payment stopped by drawer, and defiant non- compliance post-notice collectively constitute wilful default. This sequence repudiates any defence of bona fides, portraying calculated circumvention of a proven commercial obligation, squarely indictable under Section 138 NI Act. The Complainant's unimpugned averments and documents establish the foundational ingredients: a cheque issued in debt discharge, dishonour for payment stopped by drawer, and failed notice redressal.
7. Upon a careful perusal of the material placed on record along with the complaint, and after due examination of the complainant by way of pre-summoning evidence in accordance with the mandate of Section 200 of the Code of Criminal Procedure, this Court was satisfied that a prima facie case was made out against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The evidence adduced at the pre-summoning stage sufficiently disclosed the existence of a legally enforceable liability and the issuance Digitally signed by SHRUTI SHARMA Page no.3/22 SHRUTI Date:
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of the cheque in question by the accused towards its discharge, followed by its dishonour due to payment stopped by drawer. Accordingly, vide order dated 02.06.2015, this Court was pleased to take cognizance of the offence and summoned the accused to face trial for the alleged dishonour of cheques issued in discharge of a debt or liability, as contemplated under the statutory scheme of the NI Act.
8. The accused appeared with counsel on 16.10.2017. On 04.12.2017, accused was granted bail and subsequently, upon satisfaction that a prima facie case existed warranting trial, this Court proceeded to frame notice under Section 251 of the Code of Criminal Procedure, 1973 (CrPC), which was duly served upon the accused on 19.03.2018. Upon being apprised of the substance of accusation, including the specific allegations pertaining to issuance and dishonour of the cheque in question, the accused pleaded not guilty and claimed trial, thereby necessitating the recording of evidence in the matter in accordance with law.
9. In support of his case, the complainant tendered his pre-summoning by way of evidence affidavit. Complainant relied on the following documents in support of his case:-
Sr. Exhibits Particulars
No.
1. Ex.CW-1/1 Evidence by way of Affidavit
2. Ex.CW-1/A Account statement of complainant to accused
from 01.01.2013 to 12.04.2014.
3. Ex.CW-1/B and Original Cheques No. 051616 dated
Ex.CW-1/C 15.06.2014 for Rs. 37,10,448/- and Cheque
No. 051645 dated 28.06.2014 for Rs.
7,50,000/-.
4. Ex.CW-1/D Cheque return memos with remarks
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"Payment stopped by drawer"
5. Ex.CW-1/E Copy of legal notice dated 26.09.2014.
6. Ex.CW-1/F Postal receipts
10. The complainant was not cross examined by the defense as no opportunity was sought.
11. Thereafter the accused was examined and cross examined as DW-1 by the Ld. Counsel for complainant and got discharged on 28.05.2019. His statement u/s 313 CrPC was recorded on 27.08.2019 where accused denied the allegations levelled by the complainant on him. In support of his defense, accused also brought DW-2 Ms Janami Goyari, Manager, Canara Bank where she produced Ex.DW-2/B(Colly.) which was the statement of account of Love Stich Apparel from 01.01.2014 to 31.12.2014. She was examined in chief and thereafter, was cross examined by the Ld. Counsel for complainant.
12. Thereafter defense evidence was closed vide order dated 24.11.2022, and the matter was accordingly directed to proceed to the stage of final arguments.
Final Arguments
13. The matter was taken up for hearing of final arguments, and detailed oral submissions on behalf of the complainant were duly addressed and concluded on 19.12.2025. Thereafter, an adjournment was sought on behalf of the accused for advancing arguments; however, the said request was declined by this Court, considering the stage of the proceedings and the prior opportunities already granted. Nevertheless, in the interest of justice and to ensure that no prejudice is caused, liberty was granted to the accused to file written arguments. Pursuant thereto, written arguments have been filed on behalf of the accused, which have been carefully perused and duly considered by this Court while proceeding further in the matter. Digitally signed by SHRUTI SHARMA SHRUTI Date:
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14. Counsel for the complainant submits that the complainant has been engaged in the business of fabrics, dyeing and printing and had longstanding commercial dealings with the accused, who is the proprietor of M/s Love Stitch Apparel. It is submitted that in discharge of a legally enforceable liability arising out of such transactions, the accused issued cheque bearing No. 051616 dated 15.06.2014 for a sum of Rs. 37,10,448/-, which upon presentation was dishonoured with the remark "payment stopped by drawer". It is further submitted that a legal demand notice was duly issued within the statutory period and, despite service, the accused failed to make payment within the prescribed time, thereby completing all ingredients of the offence under Section 138 of the Negotiable Instruments Act.
15. Counsel contends that statutory presumptions under Sections 118(a) and 139 of the Act operate in favour of the complainant and the accused has failed to rebut the same by any cogent or credible evidence. It is argued that the accused has taken contradictory stands, inasmuch as he denied issuance and signatures on the cheque, yet admitted having issued stop payment instructions, thereby establishing knowledge and control over the cheque. It is further submitted that bank witnesses have confirmed that dishonour was not on account of signature mismatch but due to stop payment instructions. Counsel also submits that even if the cheque was signed by a co-authorized signatory, the accused, being the proprietor, remains liable. The plea of lost cheque is stated to be an afterthought, unsupported by any contemporaneous complaint or intimation. It is thus contended that the complainant has duly proved issuance, dishonour, service of notice and non-payment, and the accused is liable to be convicted.
16. Per Contra, counsel for the accused submits that the present complaint is not maintainable either on facts or in law. It is contended that this Court lacks territorial jurisdiction in view of Section 142(2) of the Negotiable Instruments Act, as the complainant's bank account where the cheque was presented is situated outside the jurisdiction of this Court. It is further submitted that the mandatory requirement of Digitally signed by SHRUTI Page no.6/22 SHRUTI SHARMA SHARMA Date:
2026.03.11 16:52:49 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell service of legal demand notice has not been fulfilled, as the notice was not duly served, one of the envelopes was returned on account of incomplete address, and no proof of delivery such as tracking report or acknowledgment has been filed. Counsel submits that the accused has consistently denied receipt of any legal notice. On merits, it is argued that the cheque in question was neither issued nor signed by the accused and the complainant has failed to prove the authorship of the signatures by examining competent bank officials. It is further contended that no legally enforceable debt or liability has been proved, as no invoices, bills or supporting documents such as income tax returns have been placed on record, and the statement of account relied upon by the complainant is inadmissible for want of certificate under Section 65B of the Indian Evidence Act.
17. Counsel further submits that the cheque was presented beyond its validity period and had become stale, thereby not attracting Section 138 of the Act. It is also argued that dishonour on account of "stop payment" does not by itself establish insufficiency of funds, and the complainant has failed to prove the same. It is contended that payments, if any, were made through cash or RTGS and not by cheque, and that the cheque in question has been misused. It is thus urged that the complainant has failed to establish the ingredients of the offence beyond reasonable doubt and the accused is entitled to acquittal.
Legal Analysis & Findings:-
18. I have heard at considerable length the detailed arguments advanced by the learned counsel appearing for the complainant as well as the learned counsel representing the accused. Their respective submissions have been carefully analysed in the context of the factual matrix and the legal principles applicable to the case. This Court has also undertaken a thorough and meticulous scrutiny of the entire judicial record, which includes the contents of the complaint, the affidavits and supporting documents annexed thereto, the oral testimonies of the complainant's and the defence witnesses, if any, recorded during the course of trial, and all exhibits relied Digitally signed Page no.7/22 SHRUTI by SHRUTI SHARMA SHARMA Date: 2026.03.11 16:52:51 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell upon by the respective parties. Each piece of evidence has been examined individually as well as in conjunction with the other evidence on record so as to assess its evidentiary value, credibility, and probative strength. The rival submissions have been objectively evaluated against the backdrop of the statutory framework and the well-settled legal position governing proceedings under Section 138 of the Negotiable Instruments Act, 1881. The Court has, therefore, endeavored to reach a reasoned and just determination by adopting a holistic and balanced appreciation of the evidence and circumstances presented before it.
19. Before embarking upon a discussion on the merits of the present case, it is considered apposite to first delineate the legal framework governing the offence of dishonour of cheque, as encapsulated under Section 138 of the Negotiable Instruments Act, 1881. The legislative intent behind enacting Section 138 is to instill greater financial discipline and sanctity in contractual obligations by deterring the issuance of cheques without sufficient funds or without adequate arrangements with the banker. The provision prescribes penal consequences in the event of dishonor of a cheque on grounds of insufficiency of funds or if the amount exceeds the arrangement with the bank, thereby recognizing the cheque as a legitimate instrument of payment in the eyes of the law.
20. In order to fasten criminal liability upon an accused under Section 138 of the Negotiable Instruments Act, 1881, it is incumbent upon the complainant to plead and prove the existence of certain foundational ingredients through the averments made in the complaint and the evidence led during the course of trial. The essential ingredients that must be cumulatively satisfied are as follows:
a. That the accused must have drawn a cheque on an account maintained by him with a banker, for the payment of a certain sum of money to another person, and such payment must have been intended for the discharge, in whole or in part, of a legally enforceable debt or other liability;Digitally signed by SHRUTI SHARMA
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b. That the said cheque must have been presented to the bank within a period of three months from the date on which it was drawn, or within the period of its validity, whichever is earlier;
c. That upon such presentation, the cheque must have been returned unpaid by the bank, either due to insufficiency of funds in the drawer's account or because the amount exceeded the arrangement made by the drawer with the bank;
d. That the payee or the holder in due course of the cheque must have issued a written statutory demand notice to the drawer, seeking payment of the cheque amount, within 30 days from the date of receipt of information from the bank regarding the return of the cheque unpaid;
e. That the drawer of the cheque, despite the receipt of such legal notice, failed to make payment of the cheque amount to the payee or holder in due course within 15 days from the date of such receipt.
21. Only upon proof of the aforementioned ingredients does the offence under Section 138 stand attracted, subject to the operation of statutory presumptions under Sections 118 and 139 of the NI Act. These presumptions, however, are rebuttable and impose a reverse burden upon the accused to dislodge the same on a preponderance of probabilities.
22. It is also pertinent to note that, as per the Explanation appended to Section 138 of the Negotiable Instruments Act, the expression "debt or other liability" refers exclusively to a legally enforceable debt or other liability. This legal clarification is of critical significance, as it makes clear that mere issuance of a cheque is not sufficient to attract penal liability under the statute. The dishonoured cheque must have been issued in discharge of a debt or liability which is subsisting and legally enforceable at the time of its issuance. A cheque issued as a gift, donation, or towards a time-barred or non-existent liability will not fall within the purview of Digitally signed Page no.9/22 by SHRUTI SHARMA SHRUTI Date:
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Section 138. Thus, the complainant must establish that at the time the cheque was drawn, there existed a valid and enforceable obligation in law for which the cheque was issued.
23. It is well-settled in law that the aforementioned ingredients must co-exist and be satisfied cumulatively in order to constitute the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The absence or non-fulfilment of even one of these statutory requirements is fatal to the prosecution's case and would disentitle the complainant from invoking penal liability against the drawer of the cheque.
24. CW-1, Sh. Brij Mohan Sharma, the proprietor of the complainant and had examined himself at the stage of pre-summoning evidence. The accused was not granted the opportunity to cross-examine CW-1, as the Court, after considering the defence disclosed by the accused at the stage of framing of notice under Section 251 Cr.P.C. did not grant the permission to the accused to cross examine CW-1. The said order declining cross-examination of CW-1 has remained unchallenged till date and has consequently attained finality.
25. Insofar as the statutory ingredients (b), (c), (d), and (e) under Section 138 of the Negotiable Instruments Act are concerned namely, (b) the presentation of the cheque within its validity period, (c) its dishonour by the bank due to insufficiency of funds, (d) the issuance of a legal demand notice within 30 days of receiving intimation of dishonour, and (e) the drawer's failure to make payment within 15 days of receipt of the said notice this Court finds that the complainant has successfully discharged the burden of proof in respect thereof. These facts stand duly established through unimpeached documentary evidence placed on record, which includes the original cheque, the cheque return memo, the legal demand notice, the postal receipts confirming dispatch. There is no rebuttal to the presumption of service, and hence, the requirements under clauses (b) to (e) of Section 138 stand conclusively fulfilled. Digitally signed by SHRUTI SHRUTI SHARMA Page no.10/22 SHARMA Date:
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26. It is also not in dispute that the accused failed to make payment of the cheque amount to the complainant within the statutory period of 15 days from the date of receipt of the legal demand notice. The record clearly reflects that the notice was dispatched to the accused, as evidenced by the postal receipts placed on record. Significantly, the accused, during his statement recorded under Section 313 CrPC, admitted that the notice was issued at the correct address of the accused. Hence, service of the legal notice stands proved. Despite being afforded the statutory opportunity under the mandate of Section 138 of the NI Act, the accused did not tender the cheque amount within the prescribed period of 15 days, thereby fulfilling the last statutory condition for attracting penal liability under the said provision.
27. The Court shall now proceed to examine the most crucial ingredient under Section 138 of the Negotiable Instruments Act, 1881, which constitutes the very foundation of the present prosecution namely, whether the impugned cheque was issued by the accused in discharge of a legally enforceable debt or other liability. This aspect is of paramount significance, as the existence of such a liability is the sine qua non for attracting the statutory presumption under Section 139 of the NI Act.
28. In this background, this Court now undertakes a detailed and careful evaluation of the rival contentions and the evidence on record, to determine whether the said essential ingredient stands proved to the requisite standard in the present matter.
29. It is well-settled that once the complainant establishes that the cheque was drawn by the accused and that it was returned unpaid, a presumption arises under Sections 118(a) and 139 of the Act that the cheque was issued for the discharge of a legally enforceable debt or liability. The initial burden upon the complainant is merely to prove the foundational facts namely, the execution and dishonour of the cheque. Once this is done, the burden shifts upon the accused to rebut the presumption. Such rebuttal may be established either by leading positive evidence or by pointing out inconsistencies, improbabilities, or material contradictions in the complainant's Digitally signed by SHRUTI SHARMA SHRUTI Date:
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case, which may raise a reasonable doubt as to the existence of the alleged liability.
30. For ready reference, the relevant provisions are reproduced as under:
Section 118(a), NI Act - "Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made: (a) of consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."
Section 139, NI Act - "Presumption in favour of holder: It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
31. This presumption, though statutory, is rebuttable in nature. The law places the initial evidentiary burden upon the accused to dislodge this presumption by raising a probable defence. It is now well-settled that the accused is not required to rebut the presumption beyond reasonable doubt; rather, the standard of rebuttal is that of preponderance of probabilities. The accused may discharge this burden either by adducing direct evidence or by relying on material inconsistencies, improbabilities, or contradictions in the complainant's case, elicited during cross-examination or otherwise. However, unless such rebuttal is successfully established, the presumption continues to operate in favour of the complainant.
32. This is a classic illustration of the principle of 'reverse onus' in operation, wherein the statutory scheme obligates the accused to rebut the presumption in favour of the complainant by leading what may be termed as 'negative evidence'. The accused is not required to affirmatively prove a particular fact; rather, he must bring on record material to demonstrate the non-existence of a legally enforceable debt or liability.
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33. Since this reverse burden deviates from the general principle of criminal jurisprudence namely, the presumption of innocence in favour of the accused the law has correspondingly tempered the standard of rebuttal. Recognizing the inherent difficulty in leading negative evidence, the standard prescribed is not that of proof beyond reasonable doubt, but of preponderance of probabilities. As held by the Hon'ble Supreme Court in Sangappa v. Mohan, (2010) 11 SCC 441, the accused need not conclusively disprove the existence of consideration or liability; it is sufficient if he can raise a probable defence which renders the existence of such liability doubtful or improbable in the mind of the Court.
34. In order to discharge the burden cast upon him under the reverse onus clause, the accused is required to either prove the non-existence of the alleged liability or demonstrate that the existence of such liability is so improbable or doubtful that a prudent person would conclude that no such obligation existed. This can be achieved by the accused either by leading direct evidence or relying upon circumstantial evidence in his defence. Alternatively, the accused may choose to effectively challenge the complainant's case by eliciting material contradictions or inconsistencies during cross-examination, thereby undermining the credibility of the prosecution's version.
35. If the accused succeeds in creating such a doubt, the burden then shifts back to the complainant, who must establish the existence of liability independent of the statutory presumptions. In such a scenario, the presumptions under Sections 118(a) and 139 of the NI Act would cease to operate in favour of the complainant and cannot be relied upon as conclusive proof. The complainant would then have to establish the liability on the strength of his own evidence.
36. In the light of the foregoing statutory provisions and the settled principles of law governing the operation and rebuttal of presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, this Court shall now proceed to critically examine the defence set up by the accused. The pivotal issue for consideration at Digitally signed Page no.13/22 SHRUTI by SHRUTI SHARMA SHARMA Date: 2026.03.11 16:53:04 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell this stage is whether the defence raised by the accused is plausible, probable, and legally sustainable such as would be sufficient to rebut the presumption regarding the existence of a legally enforceable debt or liability.
37. The defence may be founded either on direct evidence adduced by the accused or may emerge from material inconsistencies, omissions, or inherent improbabilities discernible within the complainant's version, particularly as elicited during cross- examination. However, to succeed, the defence must be cogent enough to inspire confidence and must raise a credible doubt regarding the true purpose behind the issuance of the impugned cheque. In this context, the Court now undertakes a holistic and careful analysis of the defence evidence on record, as well as the explanations tendered by the accused, to assess whether the statutory presumption stands effectively rebutted in the present case.
38. It is an admitted position on record that the cheque in question pertains to the bank account of the accused. This fact stands acknowledged by the accused himself during the his statement recorded u/s 313 CrPC. Once the ownership of the cheque is admitted, the statutory presumption under Sections 118(a) and 139 of the Negotiable Instruments Act automatically comes into play. The law mandates that the court shall presume, unless the contrary is proved, that the cheque was issued for the discharge, in whole or in part, of a legally enforceable debt or liability. Thus, by his own admission of ownership, the accused is deemed to have drawn the cheque in favour of the complainant towards satisfaction of an existing liability, and the initial burden of proof shifts upon him to rebut the said presumption by leading cogent, credible, and convincing evidence. Mere denial or ipse dixit assertions are legally insufficient to discharge this onus.
39. Despite having admitted the owner of the cheque in question, the accused has sought to rebut the statutory presumption under Section 139 of the Negotiable Instruments Act by projecting the defence which has been examined in the light of his statement Digitally signed by SHRUTI SHRUTI SHARMA Page no.14/22 SHARMA Date:
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40. Upon notice under Section 251 Cr.P.C., the accused pleaded not guilty and claimed trial. In his defence, he stated that although he is an authorized signatory of M/s Love Stitch Apparel, the cheques in question were not signed by him and he had no liability towards the impugned cheques. He further stated that he did not remember whether he had received the legal demand notice.
41. In his statement recorded under Section 313 Cr.P.C. read with Section 281 Cr.P.C., the accused admitted that he had issued instructions for stop payment of the cheque in question, however, he denied having issued the cheque itself. He further denied receipt of the legal demand notice, though he admitted that the addresses mentioned therein were his correct residential and official addresses at the relevant time. The accused also denied that he had failed to make payment of the cheque amount and stated that the present case is false and that he has no liability towards the cheque in question.
42. DW-1, namely the accused himself, entered the witness box and deposed on oath that he is the proprietor of M/s Love Stitch Apparel and that the cheques in question do not bear his signatures and were never issued by him to the complainant. He stated that upon presentation of the cheques, he was informed by the bank and thereafter instructed stop payment of the same. He further deposed that he had no prior knowledge regarding the alleged loss of the cheques and had not taken any action in that regard, and that upon learning about their presentation, he contacted the complainant and requested return of the cheques, which the complainant allegedly assured but failed to do. He further stated that he became aware of the present proceedings only after a lapse of 2-3 years and that he had never received any legal demand notice.
Digitally
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43. During cross-examination, DW-1 admitted that he is one of the authorized signatories of the proprietorship concern and that his father is also an authorized signatory. He further admitted that there existed business dealings with the complainant and that payments were made through cash as well as RTGS, though he expressed inability to recall whether any payment was made by cheque. He also admitted that proper ledger accounts were maintained in the ordinary course of business. Upon being shown the cheques in question, the accused denied that the signatures thereon were his and stated that he was unable to identify whose signatures appeared on the cheques, including whether they belonged to his father, and denied the suggestion that the cheques were signed by him or that he was deposing falsely.
44. DW-2, Janami Goyari, Manager, Canara Bank was also examined at the behest of the defense. She had produced the bank account statement of the firm of the accused for the period 01.01.2014 till 31.12.2014. She was cross examined at length by the Counsel for the complainant.
45. The accused has primarily contended that the cheque in question was neither issued nor signed by him. This defence, upon careful scrutiny, appears inherently contradictory and devoid of credibility. The accused, both in his statement under Section 313 Cr.P.C. and in his deposition as DW-1, has admitted that he had issued instructions to the bank to stop payment of the cheque. Such conduct unmistakably reflects prior knowledge of, and control over, the cheque in question. If the cheque had not been issued by him or was not within his knowledge, there would have been no occasion for him to instruct the bank to stop its payment. This admission, therefore, strikes at the very root of the defence of non-issuance.
46. Further, the dishonour memo on record categorically records the reason for return as "payment stopped by drawer" and not "signature differs", thereby indicating that the bank did not find any discrepancy in the signatures on the cheque. This circumstance lends further corroboration to the fact that the cheque bore valid and Page no.16/22 Digitally signed SHRUTI by SHRUTI SHARMA SHARMA Date: 2026.03.11 16:53:09 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell authorised signatures. Additionally, the accused has admitted that he is one of the authorised signatories of the proprietorship concern, and that his father is also an authorised signatory. Even assuming, for the sake of argument, that the cheque was signed by the co-authorised signatory, the liability of the proprietorship concern, and consequently that of the accused being its proprietor, remains unaffected in law.
47. Significantly, the accused has not taken any contemporaneous steps such as lodging a police complaint regarding alleged loss or misuse of the cheque, nor has any prior intimation been given to the bank alleging unauthorised issuance. The absence of such precautionary measures renders the plea of "lost cheque" or non-issuance a mere afterthought, raised only to evade liability. The defence, therefore, fails to probabilise the plea of non-issuance or absence of authority and does not rebut the statutory presumptions operating in favour of the complainant.
48. Another limb of argument advanced by the accused is that the complainant has failed to prove the existence of a legally enforceable debt or liability on account of non-production of invoices or supporting documents, and further that the statement of account is not accompanied by a certificate under Section 65B of the Indian Evidence Act. This contention, upon closer scrutiny, does not merit acceptance. The accused, in his cross-examination, has candidly admitted that there existed regular business dealings with the complainant, that payments were made both in cash as well as through RTGS, and that proper ledger accounts were maintained in the ordinary course of business. These admissions are significant, as they unequivocally establish the existence of a commercial relationship and a running account between the parties.
49. Significantly, despite admitting that ledger accounts were maintained by his firm, the accused has failed to produce the said records before the Court. The ledger accounts, being the best evidence to reflect the true state of financial dealings between the parties, were within the exclusive possession and control of the accused.
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The failure to produce such material, without any plausible explanation, warrants drawing of an adverse inference to the effect that had the same been produced, they would not have supported the defence and would have instead corroborated the complainant's case.
50. At the cost of repetition, it is reiterated that once the execution of the cheque and the signatures thereon stand admitted or are otherwise proved, the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act come into operation, compelling the Court to presume that the cheque was issued in discharge of a legally enforceable debt or liability. The evidentiary burden then shifts upon the accused to rebut this presumption by raising a probable defence. In the present case, the accused has failed to discharge this burden. He has neither produced his own books of accounts nor any documentary material to demonstrate absence of liability or discharge thereof.
51. It is well settled that mere suggestions put to a witness during cross-examination, or a bald denial of liability, do not constitute rebuttal evidence. In the absence of any substantive material to the contrary, the statutory presumption continues to operate in favour of the complainant. As regards the objection under Section 65B of the Evidence Act, the said provision pertains to the admissibility of electronic evidence. The present case does not rest solely or substantially upon electronic records; rather, it is founded upon the cheque, the dishonour memo, and oral as well as documentary evidence independent of any electronic record. Therefore, the absence of a certificate under Section 65B does not materially affect the case of the complainant. Accordingly, this contention raised by the accused is devoid of merit and stands rejected.
52. The next contention raised on behalf of the accused is that the mandatory requirement of service of statutory legal demand notice has not been complied with. However, this contention does not withstand scrutiny. It is an admitted position emerging from the record, including the statement of the accused under Section 313 Digitally signed Page no.18/22 SHRUTI by SHRUTI SHARMA SHARMA Date: 2026.03.11 16:53:13 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell Cr.P.C., that the addresses mentioned on the legal demand notice were correct and pertained to the accused at the relevant time. Once it is established that the notice was dispatched through registered or speed post at the correct address, a presumption of due service arises under Section 27 of the General Clauses Act.
53. In the present case, the accused has merely taken a bald plea of non-receipt of notice, without leading any cogent or reliable evidence to rebut the statutory presumption. No material has been placed on record to demonstrate that the notice was not delivered, that the postal article was returned undelivered for reasons attributable to the complainant, or that the address mentioned was incorrect. The mere fact that one of the envelopes may have been returned does not, by itself, demolish the presumption of service, particularly when the accused admits the correctness of the address and fails to furnish any explanation for non-receipt.
54. It is well settled that a bare denial of receipt is insufficient to displace the presumption of due service when the notice is sent to the correct address through a recognised mode. In the absence of any substantive evidence to the contrary, the statutory presumption must operate. Accordingly, this Court holds that the requirement of service of legal demand notice stands duly satisfied, and the contention raised by the accused in this regard is liable to be rejected.
55. The accused has further contended that the cheque in question had become stale, having been presented beyond the prescribed validity period of three months. This contention is devoid of merit. The cheque in question is dated 15.06.2014, and the testimony of the bank witness clearly establishes that the cheque reached the drawee bank on 15.09.2014. Thus, the cheque was presented within the statutory validity period.
56. The argument of the accused that there is a marginal delay of one day is hyper-
technical and does not advance the defence in any meaningful manner. Once the cheque is presented through the banking channel within the permissible period, any Digitally signed Page no.19/22 by SHRUTI SHARMA SHRUTI Date:
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minimal variation arising out of inter-bank clearing processes cannot be attributed to the complainant. Such technical objections cannot be permitted to defeat the substantive object of Section 138 of the Negotiable Instruments Act, which is to enhance the credibility of commercial transactions and ensure promptitude in financial dealings.
57. Significantly, the cheque was not dishonoured on the ground of being stale. The return memo does not record "stale cheque" or "outdated instrument" as the reason for dishonour. On the contrary, the dishonour was for reasons attributable to the drawer, thereby clearly indicating that the cheque was treated as valid by the banking system at the time of presentation. In these circumstances, the contention raised by the accused is found to be meritless and is accordingly rejected.
58. The argument that dishonour on account of "stop payment" does not attract Section 138 of the Act is also misplaced. It is now well settled that dishonour of cheque on account of stop payment instructions falls within the ambit of Section 138, provided the cheque was issued towards a legally enforceable debt or liability. In the present case, once issuance and liability are presumed and not rebutted, the reason for dishonour being "stop payment" does not absolve the accused.
59. The accused has also sought to contend that the present complaint is not maintainable on account of improper array of parties. This contention is equally devoid of merit. The accused himself has admitted that he is the proprietor of the concern in question. It is a settled principle of law that a proprietorship concern does not possess a separate legal identity distinct from its proprietor. The business and the proprietor are one and the same in the eyes of law, and the proprietor is personally liable for all acts and liabilities of the concern.
60. The principal defence raised on behalf of the accused pertains to lack of territorial jurisdiction of this Court in view of Section 142(2) of the Negotiable Instruments Act. However, this contention does not merit acceptance. It is an admitted position Digitally signed by SHRUTI Page no.20/22 SHRUTI SHARMA SHARMA Date:
2026.03.11 16:53:17 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell on record that the present complaint was instituted prior to the amendment of the year 2015 and the accused had already been summoned before the said amendment came into force. Thus, the proceedings had attained a certain stage prior to the statutory change and the matter has proceeded without any objection at the initial stage. It is a settled position of law that once cognizance has been taken and trial has progressed, such objection cannot be permitted to defeat the proceedings at a belated stage, particularly when no failure of justice is demonstrated. The accused has failed to establish any prejudice caused on this account. Accordingly, the objection as to territorial jurisdiction stands rejected.
61. It is further pertinent to note that no effective cross-examination of the complainant was undertaken by the accused so as to dislodge the complainant's case or to challenge the foundational facts forming the basis of the present complaint. The accused, despite having been afforded opportunity, failed to meaningfully confront the complainant on material aspects such as the transaction, issuance of cheque, and existence of liability.
62. In a criminal trial, cross-examination is a vital tool available to the defence to test the veracity, credibility, and reliability of the witness. The failure to utilise this opportunity, particularly on crucial aspects of the case, permits the Court to draw an inference that the version of the complainant has remained substantially uncontroverted. The testimony of the complainant, therefore, stands unrebutted on material particulars and inspires confidence. This omission on the part of the accused not only weakens the defence sought to be projected but also lends additional strength to the case of the complainant, as the foundational facts have gone largely unchallenged.
63. Upon an overall and holistic appreciation of the evidence on record, this Court finds that the complainant has successfully established all the foundational ingredients required for constituting an offence under Section 138 of the Negotiable Instruments Act. It stands duly proved that the cheque in question was issued in discharge of a Digitally signed by SHRUTI Page no.21/22 SHRUTI SHARMA SHARMA Date:
2026.03.11 16:53:19 +0530 Ct case no. 617526/2016 Gajanan Fabrics Vs. Love Stich Apparell legally enforceable debt or liability, that the said cheque was dishonoured upon presentation, that a statutory legal demand notice was issued within the prescribed period and is deemed to have been duly served upon the accused, and that despite such notice, the accused failed to make payment within the stipulated statutory period.
64. The statutory presumptions under Sections 118(a) and 139 of the NI Act operate in favour of the complainant and continue to hold the field. The accused has failed to rebut these presumptions by raising a defence that is probable, credible, or supported by cogent evidence. The defence taken is not only inconsistent and self- contradictory but is also unsupported by any documentary or reliable oral evidence. The explanations offered are neither convincing nor sufficient to displace the presumption of legally enforceable liability.
65. In these circumstances, the defence fails to create any reasonable doubt in the case of the complainant. Consequently, this Court holds that all the essential ingredients of the offence under Section 138 of the Negotiable Instruments Act stand proved beyond reasonable doubt against the accused.
Conclusion
66. In the light of the aforementioned discussion, accused Sh. Binu Kunnummal is hereby held guilty and stand convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
67. The judgment duly digitally signed be uploaded on CIS and and a copy of the judgment be given dasti to the convict free of cost forthwith.
Announced in the open
on 11.03.2026 Digitally signed
SHRUTI by SHRUTI
SHARMA
SHARMA
(Shruti Sharma-I)
Date: 2026.03.11
16:53:21 +0530
JMFC (NI Act)-02, South-East,
Saket Courts, New Delhi 11.03.2026
Certified that this judgment contains 22 pages and each page bears my signature.
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