Delhi District Court
K Narayana Rao vs Neha Malhotra on 30 April, 2025
IN THE COURT OF MS. SURBHI SHARMA, JUDICIAL
MAGISTRATE FIRST CLASS (N.I. ACT)- 02, PATIALA HOUSE
DISTRICT COURT: NEW DELHI
CC No.12713/2018
K Narayan Rao
S/o Late Sh. K. Samba Murty
r/o C-5, Grand Vasant, Plot No.23,
Ground Floor, Vasant Kunj,
New Delhi. ... Complainant
Versus
Neha Malhotra
s/o Sh. Anil Malhotra
r/o 5208, Basant Road,
Paharganj, Swami Ram Tirth Nagar,
Central, Delhi.
...Accused
Offence Complained of: 138 of the
NI Act
Plea of the Accused: Not guilty
Date of Institution: 03.08.2023
Arguments Heard On: 02.04.2025
Date of Judgment: 30.04.2025
Decision: Acquitted
Digitally
CC No.12713/2018 signed by
SURBHI
K. Narayan Rao vs. Neha Malhotra Page no.1 of15 SURBHI SHARMA
SHARMA Date:
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TABLE OF CONTENTS
Version of the complainant
Version of the Accused
Proceedings in the case
Evidences led by the parties
Decision thereon
•The said cheque was blank in all its particulars except signature and
was never handed over to complainant.
· Whether, at the time of presentation of cheque in question, there
existed any legally enforceable debt or liability against the
accused?
JUDGMENT
1. The present complaint was filed by the complainant under Section 138 of Negotiable Instrument Act, 1882 (hereinafter referred to as NI Act for the sake of brevity). Vide this judgment, this court shall dispose off the said complaint.
VERSION OF THE COMPLAINANT
2. Accused, being clinic manager, contacted complainant in the last week of January, 2018 to discuss weight reduction treatment being given at 'Rediscover Clinic Private Ltd.' It was told to complainant that with CC No.12713/2018 Digitally K. Narayan Rao vs. Neha Malhotra Page no.2 of15 signed by SURBHI SURBHI SHARMA SHARMA Date:
2025.04.30 04:59:48 +0530 the said treatment there would be guaranteed weight reduction of 15 kgs in a period of 8 to 10 weeks. On assurance of accused, complainant got himself enrolled for the said treatment which was for a fee of Rs.1,50,000/-. With respect to the payment of fee, complainant handed over two undated cheques of Rs. 75,000/- each to accused however it was agreed that the said cheques will be presented only after achieving definite weight reduction of at-least 10 kgs. Despite the said agreement, the cheques of the complainant were encashed by accused just within a period of 10 days from the start of treatment. When the complainant protested against the same, the accused gave one cheque bearing no.660499 for Rs. 1,50,000/- dated 01.05.2018 drawn on Syndicate Bank to him. The said cheque was given with understanding that if guaranteed weight reduction of 15 kgs was not achieved within a period of 8 to 10 weeks then complainant would be entitled to present the cheque in question for refund of fees so paid by him. At the same time, a performance guarantee dated 26.02.2018 was also executed by accused containing the above-mentioned assurances. However, since even after that period, weight reduction was merely 2 kgs, the complainant presented the cheque in question in his bank i.e., Kotak Mahindra Bank Ltd, Vasant Vihar but the same was returned dishonoured with the remarks "Funds Insufficient" vide cheque return memo dated 02.05.2018. Thereafter, complainant contacted accused and informed her about fact of dishonour thereof after which complainant was reassured that the cheque will be honoured on re-presentment. Then, complainant again presented the cheque in question in his bank but still Digitally signed by CC No.12713/2018 SURBHI SURBHI SHARMA K. Narayan Rao vs. Neha Malhotra Page no.3 of15 SHARMA Date:
2025.04.30 04:59:56 +0530 the same was returned dishonoured with the remarks "Funds Insufficient" vide cheque return memo dated 01.06.2018. Thereafter, a legal demand notice dated 21.06.2018 was sent by the complainant to the accused but despite the same, the accused did not pay the amount due upon her and hence the present complaint.
VERSION OF THE ACCUSED
3. As per accused, she was merely an employee of "Rediscover Clinic Private Ltd." working as a slimming manager until April, 2018. Dr. Harish Kukreja was the owner of the said clinic. She had merely given her blank signed cheque to the above-mentioned company as the company had assured her that she will be given another cheque in its place. It is also stated that the complainant never made any payment into her personal account and the same was made in the account of the above- mentioned clinic. Thus, she never received any amount from the complainant and thus owes no liability to him.
PROCEEDINGS IN THE CASE
5. The present complaint was filed on 06.08.2018.
6. The accused was served with the notice of offence under Section 138 NI Act on 15.10.2022.
7. The complainant examined only one witness i.e. complainant himself. Accused cross-examined the witness and thereafter CE was closed on 15.04.2023.
8. Statement of accused was recorded on 04.05.2024.
SURBHI
SHARMA
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9. The accused stated that she does not intend to lead any defence evidence and her statement to that effect was got recorded on 16.10.2024.
EVIDENCES LED BY THE PARTIES Complainant : The complainant relied upon the following documents :
SI Particulars Exhibit
No.
1 Cheques Ex.CW1/1
2 Original Performance Guarantee dated 26.02.2018 Ex.CW1/2
3 Original Deposit Slip dated 01.05.2018. Ex.CW1/3 4 Original cheque return memo dated. 02.05.2018 Ex.CW1/4 5 Copy of email dated 01.05.2018 Ex.CW1/5 6. Original Cheque. Ex.CW1/6
7. Original deposit slip Ex.CW1/7
8. Original cheque return memo Ex.CW1/8 9. Copy of email. Ex.CW1/9
10. Certificate u/s 65B with regard to email. Ex.CW1/10
11. Legal demand notice Ex.CW1/11
12. Speed post receipt Ex.CW1/12
13. Original courier receipt Ex.CW1/13
14. Tracking report Ex.CW1/14
15. Evidence affidavit. Ex.CW1/A Digitally signed by SURBHI SURBHI SHARMA SHARMA Date:
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DECISION THEREON
10. The ingredients of an offence under Section-138 NI Act are as fol- lows:
· First ingredient, cheque is issued in discharge of any legally en- forceable debt or other liability.
· Second ingredient, on presentation, the cheque has been returned unpaid.
· Third ingredient, despite service of legal demand notice on the drawer of the cheque, he has failed to make payment within a pe- riod of 15 days from the date of receipt of such notice. Applying the ingredients of the offence to the present case, this Court finds that:
11. FIRSTLY, the cheque Ex. CW1/6 which was admittedly signed by accused and is of an amount of Rs. 1,50,000/- was in possession of the complainant and was presented by the complainant in his bank. As per Section-139 of the NI Act it shall be presumed that the holder of the cheque received the cheque in discharge of any debt or liability, unless contrary is proved. Thus, as per law it shall be presumed that the cheque was issued by the Accused in favour of the Complainant for the dis- charge of any debt or liability. However, the said presumption is a rebut- table presumption and the onus its on the accused to rebut the same. Fur- ther, the standard of proof required required for rebutting the said pre- sumption is "preponderance of probabilities".
Digitally signed by SURBHI SURBHI SHARMA SHARMA Date:
2025.04.30 05:00:29 +0530 CC No.12713/2018 K. Narayan Rao vs. Neha Malhotra Page no.6 of15 Thus, now what has to be seen from the facts of the case is whether or not the Accused has been able to dispel the presumption un- der Section-139 of the NI Act.
11.1 The said cheque was blank in all its particulars except signature and was never handed over to complainant: Before proceeding further, let us first peruse Section-20 of NI Act which squarely covers this point and is reproduced as under:
"20. Inchoate stamped instruments.--Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount: provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
Further, it was also held in the case of Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 by Hon'ble Supreme Court of India that, "36.
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Even a blank leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section-139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt".
In the present case, accused, during the stage of framing of notice and recording of statement u/s 313 CrPC, has admitted that she had signed the cheque in question which was blank in all other particulars however she refutes that the same was handed over to complainant. Per contra, it is stated by complainant that the cheque in question was handed over to him by accused herself. To prove this point, complainant has placed on record: one performance guarantee dated 26.02.2018 and one handwritten letter dated 06.03.2018. Both of the said documents have been allegedly signed by accused and bear similar signatures to that of admitted signatures of accused on the cheque in question. The said documents have neither been objected to by accused and nor has any suggestion been put during cross-examination of the complainant to rebut their genuineness. Furthermore, the accused also did not lead any evidence to disprove the said documents. Therefore, the said documents have remained unrebutted and can be deemed to be admitted. Now, in the performance guarantee it is categorically mentioned that accused will give a cheque to complainant and details of the cheque in question have also been filled in the said guarantee and then signed by accused. Further, even letter dated 06.03.2018 mentions that the complainant is to receive a return cheque and the letter is also Digitally signed by SURBHI CC No.12713/2018 SURBHI SHARMA SHARMA Date:
K. Narayan Rao vs. Neha Malhotra Page no.8 of15 2025.04.30 05:00:44 +0530 written and signed by accused. Therefore, in such circumstances it can be said that the cheque in question was in fact handed over by accused to complainant, however the same maybe at the behest of the clinic.
So now, even if a blank cheque was given by accused, it means that she had himself expressly or impliedly given the complainant the authority to fill in the rest of the particulars of the cheque. Thus, even if the particulars of the cheque were filled by the complainant, it still is a valid negotiable instrument until and unless the amount so filled was not so intended by the accused to be paid to the complainant. So, just giving of blank signed cheque is not sufficient to rebut the presumption under Section-139 NI Act. The accused has to bring some cogent evidence to prove that the amount so mentioned in the cheque does not represent a legally enforceable debt.
11.2 Therefore, what has to be seen is whether, at the time of presenta-
tion of cheque in question, there existed any legally enforceable debt or liability against the accused? It is stated by accused that she was merely an employee of "Rediscover Clinic Private Ltd." working as a slimming manager and Dr. Harish Kukreja was the owner of the said clinic. It is also stated that the complainant never made any payment into her per- sonal account and the same was made in the account of the above-men- tioned clinic. The complainant has also admitted that the accused was working as a Manager in the said clinic. The complainant has placed on record one email dated 01.05.2018 Ex. CW1/5 addressed to one Mr. Digitally signed by SURBHI SURBHI SHARMA CC No.12713/2018 SHARMA Date:
2025.04.30 K. Narayan Rao vs. Neha Malhotra Page no.9 of15 05:00:51 +0530 Harish Kukreja wherein he has categorically stated that "Ms. Neha Mal- hotra (accused), working as Manager in your clinic". The complainant has further admitted that the two undated cheques given by him with re- spect to fee of Rs. 1,50,000/- were given in the name of "Rediscover Clinic Pvt Ltd." The said fact has been admitted by complainant during his cross-examination and he has also placed on record one letter dated 08.02.2018 Ex. CW1/1 wherein he has given details of the said cheques being given in the name of "REDISCOVER". The said letter is also stated to be signed by accused "for REDISCOVER". Furthermore, the cheque in question was got issued with respect of refund of the said fee and the said fact is not disputed by the parties. As per complainant, since weight reduction as guaranteed was not so achieved he was liable to be refunded the fees of Rs. 1,50,000/- and since the accused has not led any evidence or put any suggestion with regard to rebuttal of this fact, it can be also said that the said fact is undisputed by the parties. Therefore, what stands proved is that the "Rediscover Clinic Pvt Ltd" owed a sum of Rs. 1,50,000/- to the complainant.
So now the pertinent question is, if the amount of fee is owed by the clinic (which is a private limited company) to the complainant, then is accused, who is an employee of the company, liable to repay the said amount?
For this we will have to peruse Section-141 of NI Act which is repro- duced as below:
"141. Offences by companies.--(1) If the person committing an offence under section 138 is a company, every person who, at the time the Digitally signed by CC No.12713/2018 SURBHI SURBHI SHARMA K. Narayan Rao vs. Neha Malhotra Page no.10 of15 SHARMA Date:
2025.04.30 05:00:59 +0530 offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly ....
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly......"
As per Section-141(2) of the Act if the offence has been committed with the consent, connivance or neglect of any officer of the company, then even such officer is deemed guilty of the offence. In the present case, ac- cused was working as slimming manager in the clinic and assured com- plainant of guaranteed weight reduction which was eventually not achieved and thereby as per agreement the clinic was liable to refund the fee so paid by the complainant for the treatment. The cheque was indeed handed over by accused, as employee of the company, to the com- plainant for such refund of fees which was returned unpaid. Thus, it can be said that the offence was committed with the consent or connivance of accused. SURBHI SHARMA Digitally signed by SURBHI SHARMA CC No.12713/2018 Date: 2025.04.30 K. Narayan Rao vs. Neha Malhotra Page no.11 of15 05:01:06 +0530 However, for a prosecution to be maintained u/s 141 of NI Act, the com- pany should also have been arraigned as an accused. The same was held by Hon'ble Supreme Court of India in the case of Aneeta Hada v. Godfa- ther Travels & Tours Pvt Ltd. AIR 2012 SC 2795. The relevant observa- tion of the Apex Court is reproduced below:
"43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself."
Therefore, in such circumstances when the company has not been ar- raigned as an accused, then prosecution against the accused for debt of the company cannot be so maintained. In such circumstances, it can be said that that the cheque in question does not represent legally enforce- able debt or liability at the time of presentation of cheque with respect to the accused.
12. SECONDLY, the cheque so issued was returned unpaid by the Bank with remarks "Funds Insufficient" vide Return Memo Ex.CW1/8.
13 THIRDLY, demand notice dated 21.06.2018 Ex. CW1/11 seeking repayment of cheque amount was served upon the Accused. Now, the receipt of demand notice has been denied by the accused however, she Digitally signed by CC No.12713/2018 SURBHI SURBHI SHARMA K. Narayan Rao vs. Neha Malhotra Page no.12 of15 SHARMA Date:
2025.04.30 05:01:13 +0530 stated that the address mentioned therein is the office address of "Redis- cover Clinic Pvt Ltd." For this, let us first peruse Section-27 of General Clauses Act, 1877 which is reproduced as below:
"27. Meaning of service by post.--Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
It was also held by Hon'ble Supreme Court of India in the case of CC Alavi Haji v. Palapetty Muhammed & Ors 2007(3) RCR (Criminal) 185 that:-
"13. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until SURBHI SHARMA CC No.12713/2018 Digitally signed by K. Narayan Rao vs. Neha Malhotra Page no.13 of15 SURBHI SHARMA Date: 2025.04.30 05:01:20 +0530 the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of busi- ness..."
The accused has admitted that the address mentioned in the de- mand notice is the clinic address however she stated that she had left the clinic in the month of April, 2018 however the demand notice is dated June, 2018. First of all, accused has admitted that she was working at the clinic and as per documents placed on record by complainant it can be said that she was dealing with the complainant (the documents have not been rebutted by accused). So, the complainant rightly sent the demand notice at the clinic address and he cannot be expected to either know the residential address of accused or have knowledge of the fact of the fact that she has left the clinic in April, 2018. Moreover, the accused has also not placed on record any document such as resignation letter which proves that she had actually left the clinic in the month of April, 2018. In such circumstances, the presumption under Section-27 of General Clauses Act can safely be raised and it can be presumed that the demand notice was hence received by accused. Since, the accused has not led any evidence to rebut this presumption it can be said that despite the service of demand notice the accused failed to make the payment within stipu- lated period of 15 days after which the present complaint was filed by the Complainant.
14. In view of the above observations and analysis, it is concluded that the complainant has utterly failed to prove his case beyond reasonable Digitally signed by CC No.12713/2018 SURBHI SURBHI SHARMA K. Narayan Rao vs. Neha Malhotra Page no.14 of15 SHARMA Date:
2025.04.30 05:01:28 +0530 doubt, while the accused has successfully demolished its case and has tilted the scales in their favour.
15. In view of the aforesaid discussion, since the first ingredient of the offence u/s 138 NI Act is not so proved therefore the accused Neha Mal- hotra is hereby acquitted of the offence under Section 138 read with Sec-
Digitally signed by tion 141, Negotiable Instruments Act, 1881. SURBHI SURBHI SHARMA SHARMA Date:
2025.04.30 05:01:34 +0530 (Surbhi Sharma) JMFC (NI Act)-02/PHC/ND 30.04.2025 Announced in open Court.
Note: This judgment contains 15 pages and each page has been signed by me.
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