Delhi District Court
Shalimar Paints Ltd vs State on 7 April, 2026
IN THE COURT OF SH. PAWAN KUMAR: LD. ASJ-06,
SOUTH DISTT. SAKET COURT, NEW DELHI
Criminal Appeal No. 351/2025
CNR NO. DLST01-012627-2025
Shalimar Paints Ltd.
Registered Office at:- Stainless Centre,
4th Floor, Plot No. 50,
Sector-32, Gurgaon-122003
Branch Office/Delhi office at:
9A, Philips Building, 2nd Floor,
Above ICICI Bank,
Connaught Place, New Delhi-110001
. . . . Appellant
VERSUS
1. State
2. Kaushik Poddar
Authorized signatory/proprietor of:-
M/S Clean Products
R/o 1st Floor Radhaswami Nagar, Bhatagaon,
Ring Road No.1, Raipur,
Chhattisgarh-492001
. . . . Respondents
Instituted on : 30.08.2025
Reserved on : 26.02.2026
Pronounced on : 07.04.2026 Digitally
signed by
Pawan
Pawan Kumar
Kumar Date:
2026.04.08
15:55:53
JUDGEMENT +0530
CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 1 of 17
01. Vide instant appeal, appellant (hereinafter to be referred as 'the complainant') assails the judgment dated 22.04.2025 passed by Ld. JMFC-01 (NI Act), Digital Court, South District, New Delhi in case bearing CC No. 6019/2022 titled as Shalimar Paints Ltd. Vs. Kaushik Poddar, U/s 138 of the Negotiable Instrument Act.
02. Vide the impugned judgment, Ld. Trial Court (after conclusion of trial) has acquitted the respondent (hereinafter to be referred as 'the accused') for the alleged offence punishable under section 138 NI Act.
03. The Hon'ble Apex Court in the recent judgment titled and reported as Celestium Financial Vs. A. Gnanasekaran: 2025 SCC Online SC 1320, held that judgment of acquittal in complaint case u/s 138 NI Act can be challenged in appeal before Session Court. It is observed that complainant in the case of complaint u/s 138 NI Act is an aggrieved party, who suffered economic loss owing to dishonor of cheque and he is qualified as a 'vicitm' as defined in the provision of Cr.P.C. It is held that the complainant is entitled to the benefit of the provisio to section 372 of Cr.P.C. and he can file appeal against an order of acquittal without seeking leave to appeal u/s 378(4) of Cr.P.C.
04. Brief facts as discernible from Trial Court record may be Pawan Kumar taken note of are that the complainant is a limited company and this Digitally signed by Pawan Kumar Date: 2026.04.08 15:55:59 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 2 of 17 complaint was filed by duly authorized representative of the company. The accused was a dealer of the complainant company and he used to sell the paint products manufactured by the complainant. The accused was doing the business in the name and style of 'Clean Products'. The complainant company supplied its quality paints and other material to the accused and raised the due invoice for sum of Rs. 3,33,916/- for the said supplies. In part discharge of the outstanding liability, the accused had issued a cheque bearing number 002919 dated 29.06.2022 for a sum of Rs.3,00,000/- drawn on Union Bank, Geroad, Raipur Branch, (hereinafter referred to as the 'cheque in question') in favour of the complainant and the same is subject matter of this complaint. On presentation, the cheque in question was got dishonoured on the ground of 'Funds Insufficient' vide cheque returning memos dated 01.07.2022. The complainant served the accused with the legal notice dated 29.07.2022. The respondent/accused failed to make the payment within the stipulated time of receiving the demand notice and accordingly, the complaint was filed against the accused.
05. The trial court record transpires that post summoning and upon completion of necessary formalities, Ld Trial Court served notice u/s 251 Cr.P.C upon the appellant to which he pleaded not guilty and claimed trial. The plea of defence as taken by appellant at that stage is being reproduced for the sake of convenience which is as under :-
"I received the legal demand notice. The cheque in question Digitally was issued to the complainant in a blank singed condition by signed by Pawan Pawan Kumar way of security. I was appointed as a dealer by the Kumar Date:
2026.04.08 15:56:04 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 3 of 17 complainant. I used to work with the complainant but during COVID, some dispute arrives with regard to payment. According to me only around Rs. 2.5 lakhs is due towards the complainant."
06. Record further transpires that in post summoning evidence, CW-1/complainant deposed on line of his complaint and relied upon following documents :-
i) Copy of Certificate of Incorporation as Mark A.
ii) Affidavit as Ex.CW-1/A.
iii) Authority letter as Ex.CW-1/1(OSR).
iv) Invoices alongwith transport receipt duly signed and stamped by accused as Ex.CW-1/2(colly).
v) Original cheque in question as Ex.CW-1/3.
vi) Original return memo as Ex.CW-1/4.
vii) Copy of Legal Demand Notice alongwith postal receipt as Ex.CW-1/5(colly).
viii) True copy of registered post as Mark B.
07. Trial Court record further reveals that in the statement of the accused recorded u/s 313 Cr.P.C, he stated that he was dealer of the complainant and was doing business in the name of his proprietorship firm. The accused admitted the invoice of the complainant and explained that he received defective material from the complainant and the same was returned against acknowledgement. The accused admitted to have signed the cheque in question but denied to fill up the particulars of the same. It is stated that he had given the cheque as security at the Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:56:17 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 4 of 17 time of dealership on 28.06.2021.
08. In Defence evidence, the accused examined himself as DW-1 and he deposed that in June 2021, he applied for dealership of the complainant company and the representative of the company took the documents and two signed blank security cheques from him for the purpose of dealership. He sent email of the same to the complainant vide mail Ex.CW1-DX1. On 15.07.2021, the witness received material from the complainant and it was defective. The accused made part payment of the material in August 2021 and returned the defective material in November 2021 and it was received by the complainant against acknowledgement Mark CW-1/DX3. The complainant alleged to have misused the security cheque by presenting the same without consent. The complainant had not supplied the replacement of defective material.
09. Ld Trial Court vide impugned judgment observed that accused has successfully rebutted the presumption in favour of the complainant under section 139 NI Act. The Ld. Trial Court observed that the complainant failed to prove that he had financial capacity to pay the friendly loan and the accused has successfully raised doubts as to legally enforceable debt or liability regarding cheques in question. Ld. Trial court found the accused not guilty of offence under section 138 NI Act and acquitted him vide impugned judgment which is under challenge in the present appeal. Pawan Kumar Digitally signed by Pawan Kumar Date: 2026.04.08 15:56:22 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 5 of 17
10. The appellant/complainant is aggrieved with the said judgment and has assailed the same vide instant appeal. The sum and substance of arguments advanced on behalf of appellant/convict are as under :-
i) That Ld Trial Court failed to consider the material / evidence available on record;
ii) That Ld Trial Court wrongly observed that the accused has successfully rebutted the presumption;
iii) The Ld Trial court has wrongly observed that the cheque was issued for dealership purpose and not in discharge of legally enforceable debt or liability.
iv) That Ld Trial Court failed to appreciate the law laid down that cheque issued by way of security can be legally enforceable as and when liability arises.
v) That Ld Trial Court has wrongly relied upon the inadmissible documents produced by the accused.
vi) That Ld. Trial Court has erred in passing the impugned judgment on the basis of uncorroborated submissions of the accused despite the fact that he failed to rebut the presumption under Section 139 NI Act.
11. I have heard rival contentions and perused the record. I shall now examine whether the case of appellant/complainant stands proved beyond all reasonable doubts or respondent/accused deserves benefit of doubt ?
12. Before entering into factual matrix of the present case, I deem Digitally signed by it fit to discuss certain statutory provisions of Negotiable Instruments Pawan Pawan Kumar Kumar Date:
2026.04.08 15:56:27 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 6 of 17 Act. Section 118 (A) of NI Act provides for presumptions regarding consideration for a Negotiable Instrument. It reads as under :
"That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
13. Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as under :
"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, or any debt or other liability".
14. In Hiten P Dalal vs Bratindranath Banerjee, AIR 2001 Supreme Court 3897, Hon'ble Supreme Court observed that the defence submission that the cheques were not drawn for the discharge in whole or in the part of any debt or other liability is answered by the third presumption available to the banks U/s 139 of the NI Act. This section provides that "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". The effect of these presumptions is to place the evidential burden on the defence of proving that the cheque was not received by the bank towards the discharge of any liability.
Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:56:35 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 7 of 17
15. In Kumar Exports Vs Sharma Carpets, (2009) 2 Supreme Court Cases 513, it has been held in para 20 :- "The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the prosecution in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances upon consideration of which, the court may either believe that the consideration and debt did not exist or their non existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist......................".
Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:56:50 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 8 of 17
16. In case titled, "Bharat Barrel & Drum Mfg. Co. Vs. Amin Chand Pyarelal" (1999) 3 SCC 35, while interpreting Section 118 (a) of the Act, Hon'ble Supreme Court opined, "Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118 (a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:56:55 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 9 of 17 evidence is neither possible nor contemplated and even if led, is to be seen with a doubt."
17. In another case titled, "K. Prakashan Vs. P. K. Surenderan" 2007 IX AD (S.C.) 334 Hon'ble Supreme Court opined, "
The Act raises two presumptions; firstly in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability. Presumptions both under Sections 118 (a) and 139 are rebuttable in nature. Having regard to the definition of terms proved and disproved as contained in Section 3 of the Evidence Act as also the nature of said burden upon the prosecution vis a vis an accused it is not necessary that the accused must step into the witness box to discharge the burden of proof in terms of the aforementioned provision. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability. "
18(A). In nutshell, the accused was the authorized dealer of the complainant company and during the business dealing, the complainant supplied the material to the accused and raised invoices of Rs.
Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:57:04 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 10 of 17 3,33,916/-. In lieu of the liability, the accused had issued the cheque in question and the same got dishonoured on presentation.
18(B). The defence of the accused is that he had not issued the cheque in discharge of the liability as the same was given alongwith the documents at the time of application for dealership of the complainant company. It is further the defence of the accused that the 95% of the material supplied by the company was defective and he returned the material against acknowledgment. The complainant company stated to have misused the cheque in question as there was no legal debt/liability qua it.
19. It is admitted as well as proved that the cheque in question was signed by the appellant. In the plea of defence taken by the accused in the notice u/s 251 Cr.P.C., he stated to have given the blank signed cheque to the complainant at the time of dealership.
20. The execution of the cheque in question is admitted by the accused. It is argued on behalf of accused that there was no existing legally recoverable debt or liability towards the him. Since the signature on the cheques in question are not in dispute, therefore, the burden to rebut the presumption of liability is upon the accused.
Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:57:11 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 11 of 17
21. It is the settled preposition of law that presumption under Section 118 and 139 Negotiable Instruments Act is rebuttable presumption and the accused can rebut the same on the basis of preponderance of probabilities. The accused can rebut the presumption either by way of cross examination of complainant witness or by leading defence evidence.
22. It is the case of the complainant that the five invoices from 23.07.2021 to 09.08.2021 were raised for sum of Rs. 3,33,916/- and in discharge of part liability, the accused had issued the cheque in question of Rs. 3,00,000/-. The cheque is dated 29.06.2022 and it was presented on the same day. In the cross-examination of CW-1, it is stated that cheque in question was given to one of the person of sales team. The cheque in question was stated to be collected by the sales team.
23. The accused/DW-1 has deposed that he has sent an email to the complainant company Ex.CW-1/DX-1. The email dated 26.06.2021 records that the accused has submitted the documents i.e. GST certificate, PAN card, Driving License and two blank security cheques no. 002919 and 002920. The AR for the complainant company/CW-1 admitted in the cross-examination that this mail was sent to the company and it may be in the company record. The factum of the aforesaid email has not been denied by the complainant. Since, the cheque in question was already submitted before the complainant company and after this Pawan Kumar Digitally signed by Pawan Kumar Date: 2026.04.08 15:57:17 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 12 of 17 email, the company had granted dealership to the accused. The accused has proved the factum of giving the cheque in question at the time of dealership and not after the supply the material. This email demolished the complainant's version that the accused had issued this cheque after raising invoice of supplied material.
24. It is further the defence of the accused that part of the supplied material was defective and he returned back the same vide challan dated 30.11.2021 Mark CW-1/DX-3. CW-1 was confronted with this document and he failed to give any satisfactory reply as to this letter. Furthermore, DW-1 was not cross-examined by the complainant in this regard and he established the factum of returned material. The document Mark CW-1/DX-3 is on the letterhead of the proprietorship concern of the accused and as per this letter, the accused had returned 58 Drums and 02 cartons to the complainant company and the same has been duly received by the complainant company. The receiving on this letter bears stamp of the complainant company. The CW-1 admitted the stamp of the company on this letter. The complainant failed to controvert this aspect of return of defective material and no satisfactory explanation is forthcoming in the testimony of CW-1.
25. The accused has successfully established that the cheque in question was not issued in discharge of the liability which arose in respect of the supplied material by the complainant company. The email Pawan exchange between the accused and the complainant clearly proved that Kumar Digitally signed by Pawan Kumar Date: 2026.04.08 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 13 of 17 15:57:24 +0530 the cheque in question was given to the complainant prior to the grant of dealership to the accused. It is further established that part defective material with respect to the invoice was already returned to the complainant company and the same has not been adjusted while presenting the cheque in question. The complainant has failed to disclose all the relevant facts and appears to have deliberately concealed the material facts regarding the transaction in question.
26. The complainant has raised the invoice of Rs. 3,33,916/-
and the cheque in question was of Rs. 3,00,000/-. The accused has stated in the cross-examination that 95% of the material was defective and the same was return vide letter dated 30.11.2021. There is nothing in the cross-examination of DW-1 to contradict him on this aspect. There is not even suggestion to contradict the accused that no defective material was returned to the complainant company. In the light of the return of supplied material, the complainant failed to establish legal liability qua cheque in question.
27. Contrary to the case of the complainant, the accused had proved that the cheque in question was given for the dealership purpose much prior to the alleged transaction. I agree with the submission of Ld. Counsel for the complainant on the legal proposition that the cheque issued for the purpose of security can be used as and when liability arose. The Ld. Trial Court has rightly distinguished facts of this case Pawan Kumar from the judgment of the Apex Court in the case of Sripati Singh (since Digitally signed by Pawan Kumar Date: 2026.04.08 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 14 of 17 15:57:34 +0530 deceased) through his son Gaurav Sing Vs. The State of Jharkhan And Anr. Criminal Appeal No. 1269-1270 of 2021 (Arising out of SLP (Criminal No. 252-253/2020)).
28. It is not the case of the complainant that the accused had given the signed cheque with the understanding that the same may be used for payment of supplied material. The email sent by the accused categorically record that the cheque were given for the dealership purpose and not for the purpose of security of payment of supplied material.
29. The scope of interference by the appellate court in an order of acquittal is beautifully summed up in the judgment titled and reported as Ramesh v. State of Haryana 2016 Supreme Court Online 0109, PLRonline # 310901, the court held :
"24.The appellate court, therefore, is within its power to re appreciate or review the evidence on which the acquittal is based. On reconsideration of the evidence on record, if the appellate court finds the verdict of acquittal to be perverse or against the settled position of law, it is duly empowered to set aside the same. On the other hand, if the trial court had appreciated the evidence in right perspective and recorded the findings which are plausible and the view of the trial court does not suffer from perversity, simply because the appellate court comes to a different conclusion on the appreciation of the evidence on record, it will not substitute its findings to that of findings recorded by the trial court.
Digitally signed by
25. In the instant case, we find that the High Court has Pawan Pawan Kumar Kumar Date:
interfered on the ground that the very approach of the trial 2026.04.08 15:57:45 +0530 court in appreciating the evidence on record was legally CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 15 of 17 unsustainable. If such observations of the High Court are correct, it was fully justified in interjecting with the verdict of the trial court."
30. In the case Sadhu Saran Singh v. State of Uttar Pradesh and Others (2016) 4 SCC 357; the Apex Court observed that;
"20. Generally, an appeal against acquittal has always been altogether on a different pedestal from that of an appeal against conviction. In an appeal against acquittal where the presumption of innocence in favour of the accused is reinforced, the appellate court would interfere with the order of acquittal only when there is perversity of fact and law. However, we believe that the paramount consideration of the Court is to do substantial justice and avoid miscarriage of justice which can arise by acquitting the accused who is guilty of an offence. A miscarriage of justice that may occur by the acquittal of the guilty is no less than from the conviction of an innocent."
31. In the present case, the accused has been able to raise probable defence on the basis of preponderence of probablilities. The accused had raised sufficient doubts over the issuance of cheque in question to the complainant company in discharge of legally recoverable debt and liability. There are material inconsistencies and contradiction in the testimony of the complainant and sufficient to raise doubt over his version. The deliberate concealment of material fact regarding the transaction in question further add doubt over the complainant's case. The accused has successfully rebutted the presumption u/s 118 r/w Section 139 of NI Act. Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:57:51 +0530 CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 16 of 17
32. With these observations, on consideration on the evidence, I do not find any perversity of fact or law in the impugned judgment of acquittal passed by Ld. Trial Court. There is no occasion to interfere with the findings and the conclusion given by the Ld. Trial Court in the impugned judgement. Accordingly, the appeal stands dismissed.
33. TCR be sent back to the Ld. Trial court alongwith copy of this judgment.
34. Revision file be consigned to Record Room after due compliance.
Digitally signed by Pawan Pawan Kumar Kumar Date:
2026.04.08 15:58:06 +0530 Announced in the open (PAWAN KUMAR) Court on 07th of April 2026. Additional Sessions Judge-06, South District, Saket Courts, New Delhi CA No.351/2025 Shalimar Paints Ltd. Vs. State Page No. 17 of 17