Delhi District Court
Cisco Systems Capital India Pvt Ltd vs Manthan Broadband Services Pvt Ltd And ... on 10 December, 2025
THE COURT OF MR. VAIBHAV PRATAP SINGH
CIVIL JUDGE/JMFC, NEW DELHI DISTRICT
PATIALA HOUSE COURTS, DELHI
Cisco Systems Capital (India) Pvt. Ltd.
vs.
Manthan Broadband Services Pvt. Ltd.
Ct. Case 422/2019
Cisco Systems Capital (India) Pvt. Ltd.
7th Floor, East Tower
25, Barakhamba Road
New Delhi-110001
Through its Authorised Signatory:
Sh. Sudeep Sarkar
. . . COMPLAINANT
VERSUS
1. Manthan Broadband Services Pvt. Ltd.
Having its office at:
6, Ganesh Chandra Avenue
3rd and 6th Floor
Kolkata-700013
2. Sib Shankar Chattopadhyay
Director of Manthan Broadband Services Pvt. Ltd.
Having its office at:
6, Ganesh Chandra Avenue
3rd and 6th Floor
Kolkata-700013
3. Gurmeet Singh Jaspal
Director of Manthan Broadband Services Pvt. Ltd.
Having its office at: Digitally
signed by
6, Ganesh Chandra Avenue VAIBHAV
VAIBHAV PRATAP
PRATAP SINGH
SINGH Date:
3rd and 6th Floor 2025.12.10
15:43:03
+0530
Ct. Case 422/2019 Page No. 1 of 32
Kolkata-700013
4. Shew Prokash Saha
Director of Manthan Broadband Services Pvt. Ltd.
Having its office at:
6, Ganesh Chandra Avenue
3rd and 6th Floor
Kolkata-700013
5. Rajiv Damiji
Director of Manthan Broadband Services Pvt. Ltd.
Having its office at:
6, Ganesh Chandra Avenue
3rd and 6th Floor
Kolkata-700013
6. Digbijoy Dhar
Director of Manthan Broadband Services Pvt. Ltd.
Having its office at:
6, Ganesh Chandra Avenue
3rd and 6th Floor
Kolkata-700013
7. Sudip Ghosh
Director of Manthan Broadband Services Pvt. Ltd.
Having its office at:
6, Ganesh Chandra Avenue
3rd and 6th Floor
Kolkata-700013
. . . ACCUSED PERSONS
Case Number Record (CNR) DLND030013902019
Date of Institution 13.04.2018
Offence Complained of Section 138 NI Act, 1881
Police Station Barakhamba Road
Plea of Accused Persons Not Guilty
Final Decision Conviction
Final Arguments Concluded on 08.12.2025
Date of Decision 10.12.2025 VAIBHAV
PRATAP
SINGH
Digitally signed by
VAIBHAV PRATAP
SINGH
Date: 2025.12.10
15:43:06 +0530
Ct. Case 422/2019 Page No. 2 of 32
JUDGMENT IN SUMMONS TRIAL
(BRIEF STATEMENT OF REASONS FOR DECISION)
1. There is a criminal complaint case filed under Section 200
of the Criminal Procedure Code, 1973 (CrPC) read with
Section 142 of the Negotiable Instruments Act, 1881 (NI
Act) alleging the offence under Section 138 of the NI Act
regarding dishonour of cheques.
FACTS IN THE COMPLAINT
2. Briefly put, the facts as alleged in the complaint are that Complainant is a financial company incorporated under the Companies Act and Accused No.1 Company is a private limited company. Other Accused Persons are its Directors.
3. The Complainant granted loan facility under the Master Lease and Finance Agreement ("MLFA") bearing MLFA No.IND000238 to Accused No.1, executing the agreement on 15.05.2012 for the purposes of financing capital expenditure. The MLFA was further divided in sub-lease agreements. Pursuant to the loan facility disbursed to the Accused No.1 Company, Accused defaulted in repayment of the same and Complainant initiated cheque bounce proceedings and also a civil suit.
VAIBHAV
4. All proceedings came to be compromised before the Delhi PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH High Court Mediation and Conciliation Center and a Date: 2025.12.10 15:43:08 +0530 Ct. Case 422/2019 Page No. 3 of 32 mediation order dated 24.04.2015 was drawn and accepted and a consent decree was drawn. In compliance of the same, the Complainant withdrew the previously filed cheque bounce cases and Accused issued several post- dated cheques.
5. The present complaint pertains to cheque bearing no. 599636 dated 28.02.2018 for INR 1,50,00,000/- drawn on Canara Bank, Kolkata, West Bengal Branch which got returned dishonoured on 03.03.2018 due to reason "Insufficient Funds". Despite sending the statutory notice dated 13.03.2018, no payment was received and thus the present proceedings were initiated.
COGNISANCE AND NOTICE U/S 251 CrPC
6. On the basis of material on record, all Accused Persons were summoned by the learned Predecessor of the Court to face trial.
7. Notice of Accusation under Section 251 CrPC was given to Accused Persons wherein they pleaded not guilty and claimed trial.
8. After receiving notice of accusation, the Accused Persons disclosed their respective defences as follows:
Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:43:10 +0530 Ct. Case 422/2019 Page No. 4 of 32
9. Defence of Accused No.1 Company through its AR Mr. Priyom Dey:
"I state that the cheque in question was issued as security cheque to the complainant for the purchase of boxes from the complainant. However, the boxes supplied by the complainant were defective and we have repeatedly requested the complainant to take back those boxes. However, neither the complainant has taken back those boxes nor has delivered any services nor any replacement of the boxes were provided. I further state that due to the acts of the complainant, accused no.1 has suffered huge losses. I further state that we have already made arrangements for return of the set up boxes as per the Order of Hon'ble High Court of Calcutta and they have already been dispatched to the complainant. I further state that complainant being a financial institution is only responsible for the services provided by the sister concern i.e. Cisco System Inc. I have received the legal notice and I have replied the same."
10.Defence of Accused No.2 Sib Shankar Chattopadhyay:
"The impugned cheque is drawn on account of company accused no. 1. The impugned cheque was issued security cheque along with other cheques as part of the mediation agreement entered before mediation cell, Hon'ble Delhi High Court. The same was issued with an understanding that the complainant with continue to comply with its obligations under the master lease and finance agreement (MLFA) which was entered into between the complainant and the accused no.
1. Under the MLFA, the complainant was obliged to provide paid maintenance services to us which was not provided. The complainant was further obligated to obtain acceptance of the set top boxes (STB) from the accused no. 1. However, the complainant dumped third party STB on accused no. 1. Our consistent request to rectify the faulty Digitally signed by STBs was never heeded. The sister concern of VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
complainant also sold of its business of STB 2025.12.10 15:43:12 +0530 Ct. Case 422/2019 Page No. 5 of 32 manufacturing. I was the director of accused no. 1 and involved in day to day affairs in the year March, 2018. I have not signed the impugned cheque. I have received a legal demand notice from the complainant. There is no amount that is due and payable to the complainant."
11. Defence of Accused No.3 Gurmeet Singh Jaspal:
"I state that the cheque in question was issued to the complainant as a security cheque during the course of business on the understanding that the complainant will continue provide the services and from the income generated from the business of set top boxes, the accused company shall pay the instalments due towards the complainant. I further state that the accused no.1 company has faced huge problems due to the acts of the complainant company and even the business of complainant company was sold to someone else. It is further stated that the cheque in question was issued to the complainant during the mediation proceedings as the security towards the repayment of the EMIs."
12.Defence of Accused No.4 Shew Prokash Saha:
"The impugned cheque is drawn on account of company accused no. 1. The impugned cheque was issued security cheque along with other cheques. The same was issued with an understanding that the complainant with continue to comply with its obligations under the master lease and finance agreement (MLFA) which was entered into between the complainant and the accused no. 1. Under the MLFA, the complainant was obliged to provide paid maintenance services to us which was not provided. The complainant was further obligated to obtain acceptance of the set top boxes (STB) from the accused no. 1.
However, the complainant dumped third party STB on accused no. 1. Our consistent request to rectify the faulty STBs was never heeded. VAIBHAV The sister concern of complainant also sold of PRATAP SINGH Digitally signed by its business of STB manufacturing. I have not VAIBHAV PRATAP SINGH Date: 2025.12.10 15:43:14 +0530 signed the impugned cheque. There is no Ct. Case 422/2019 Page No. 6 of 32 amount that is due and payable to the complainant.
13.Defence of Accused No.5 Rajiv Damiji:
"I have issued the cheque in question for the purchase of boxes from the complainant. However, the boxes supplied by the complainant were defective and we have repeatedly requested the complainant to take back those boxes. However, neither the complainant has taken back those boxes nor has delivered any services nor any replacement of the boxes were provided. I further state that due to the acts of the complainant, accused no.1 has suffered huge losses. I further state that we have already made arrangements for return of the set up boxes as per the Order of Hon'ble High Court of Calcutta. I have received the legal notice and I have replied the same."
14.Defence of Accused No.6 Digbijoy Dhar:
"The impugned cheque is drawn on account of company accused no. 1. The impugned cheque was issued security cheque along with other cheques as part of the mediation agreement entered before mediation cell, Hon'ble Delhi High Court. The same was issued with an understanding that the complainant with continue to comply with its obligations under the master lease and finance agreement (MLFA) which was entered into between the complainant and the accused no.
1. Under the MLFA, the complainant was obliged to provide paid maintenance services to us which was not provided. The complainant was further obligated to obtain acceptance of the set top boxes (STB) from the accused no. 1. However, the complainant dumped third party STB on accused no. 1. Our consistent request to rectify the faulty STBs was never heeded. The sister concern of complainant also sold of its business of STB manufacturing. I was the director of accused no. 1 and involved in day to day affairs in the VAIBHAV year March, 2018. I have not signed the PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:43:17 +0530 Ct. Case 422/2019 Page No. 7 of 32 impugned cheque. I have received a legal demand notice from the complainant. There is no amount that is due and payable to the complainant. Under the orders of the Hon'ble Kolkatta High Court, approx, 15000 STBs have been returned to the complainant. On account of the omissions of the complainant the accused no. 1 has suffered a loss in the approx. sum of Rs. 51 Crores. Approx. 163000 faulty STBS are lying with us which we can return to the complainant."
15.Defence of Accused No.7 Sudip Ghosh:
"I state that the cheque in question was issued as security cheque to the complainant for the purchase of boxes from the complainant. However, the boxes supplied by the complainant were defective and we have repeatedly requested the complainant to take back those boxes. However, neither the complainant has taken back those boxes nor has delivered any services nor any replacement of the boxes were provided. I further state that due to the acts of the complainant, accused no.1 has suffered huge losses. I further state that we have already made arrangements for return of the set up boxes as per the Order of Hon'ble High Court of Calcutta and they have already been dispatched to the complainant. 1 further state that complainant being a financial institution is only responsible for the services provided by the sister concern i.e. Cisco System Inc. I have received the legal notice and I have replied the same."
16.The Accused Persons were allowed to cross-examine the Complainant. Though the trial was not formally converted from summary to summons, this Court is guided and bound by the judgment of the Hon'ble Supreme Court of India in J.V. Baharuni and Ors. vs. State of Gujarat and Ors., MANU/SC/0995/2014, wherein it was held thus: Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:43:20 +0530 Ct. Case 422/2019 Page No. 8 of 32 "32. Coming to the facts of the present cases, on scrutiny of record available in SLP (Crl) No. 5623 of 2012, we found that there has been in total 82 hearings spread over five years. Out of 82 hearings, 67 hearings were done by Jt.
C.J. (J.D.) and J.M.F.C., Veraval. The Magistrate was transferred on 24.02.2005 and was replaced by J.M.F.C., Veraval who heard the case for 14 more times and delivered judgment on 15th hearing i.e. on 12.09.2005. Thus by any stretch of imagination, the trial which extended over five years and was decided in over 82 hearings with elaborate cross examination, deposition and all trappings of regular trial cannot simply be termed as "summary trial".
(Emphasis supplied)
17.The trial at hand has taken more than five years and the Accused Persons have cross-examined the Complainant's witness for pages in detail and have also lead evidence in defence. Without a doubt, the present trial has not been tried in a summary manner at all and is hereby considered to be a summons trial case.
COMPLAINANT'S EVIDENCE
18.Complainant lead oral as well as documentary evidence for proving its case beyond reasonable doubt. Oral evidence was lead by way of affidavit Ex. CW-1/1 and the following documents were relied upon:
Sr.No. Exhibits/Mark Documents
(1) Ex.CW-1/A (OSR) Copy of Board Resolution
(2) Ex.CW-1/B Original Cheque Digitally
signed by
VAIBHAV
VAIBHAV PRATAP
PRATAP SINGH
Date:
SINGH 2025.12.10
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+0530
Ct. Case 422/2019 Page No. 9 of 32
(3) Ex.CW-1/C Return Memo
(4) Ex.CW-1/D Legal Notice
(5) Ex.CW-1/E (colly.) Speed Post receipt
(6) Ex.CW-1/F (colly.) Proof of delivery
(7) Mark CW-1/G Mediation settlement
agreement dated
24.04.2015
(8) Ex. CW1/A1 MLFA
(mentioned in the
evidence sheet but
not so mentioned
on the document)
(9) Mark X1 (Colly.) Emails
(mentioned in the
evidence sheet but
not so mentioned
on the document)
19.CW-1 was cross-examined by Learned Counsel for Accused Persons. No other witness was examined by the Complainant.
STATEMENT OF ACCUSED U/S 313 CrPC
20.To give the Accused Persons a chance to personally explain the circumstances appearing in evidence against them, their statement were recorded without oath under Section 313 CrPC.
21.Accused Persons further stated that they wanted to lead Defence Evidence (DE).
Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:43:24 +0530 Ct. Case 422/2019 Page No. 10 of 32 DEFENCE EVIDENCE (DE)
22.The file came before the undersigned at an advanced stage, with the evidence almost entirely recorded. The judicial record has left much to be desired and was almost painful to decipher. There are 11 connected cases. Multiple witnesses have been designated the same number. A witness with a later number has been examined prior to a witness given a lesser number. Same documents have been exhibited by multiple witnesses and have been given multiple different identification marks and exhibit numbers in their examinations-in-chief even though the concerned document in the file itself actually has no mark or exhibit written on it at all. The cases have been tried together and separately at will. The parties have shown a shocking amount of procedural apathy and there is a flagrant lack of diligence in how these cases have been pursued by both sides, despite being high-value. Be that as it may, there are essentially four documents that the Accused Persons have relied on i.e the MLFA including its Annexure-A, certain e-mails, and reply dated 29.12.2017 to the statutory notice. The parties are not in dispute over the identification of these documents and each party knows what they are. To be able to write the judgments, these documents will be referred to by their descriptions and not any exhibits/marks, as that is how final arguments have also been addressed.
Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
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23.Accused Digbijoy Dhar examined himself as DW-1, Accused Gurmeet Singh Jaspal examined himself as DW-2, Accused Rajiv Damiji examined himself as DW-3, Accused Sib Shankar Chattopadhyay examined himself as DW-4, Accused Shew Prokash Saha examined himself as DW-4, Accused Sudip Ghosh examined himself as DW-6, and Kaushik Dutta examined himself as DW-7.
24.All witnesses were cross-examined by Learned Counsel for the Complainant. There being no other witnesses, DE was closed.
FINAL ARGUMENTS
25.The case was then listed for final arguments. Final arguments were heard on multiple dates of hearing.
26.Complainant has argued that there are statutory presumptions in its favour, the issuance of and the signatures on the cheque having been admitted. It is further argued that the Accused Persons have failed to rebut the same and there are contradictions in the version of the Accused Persons.
27.Accused Persons, on the other hand, have argued that the Complainant has failed to provide services as per the MLFA and has caused losses to the Accused Persons and Digitally they are not liable to make any payments, the cheques signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:43:29 +0530 Ct. Case 422/2019 Page No. 12 of 32 having been given as security. Additionally, it is argued that the complaint is not properly instituted. Finally, it is argued that the Complainant has not proved the default on part of the Accused Persons.
LEGAL POSITION
28.This Court has gone through the record of the case, with the assistance of the counsel and has considered the arguments of all parties.
29.The Complainant is to prove its case beyond reasonable doubt while the Accused Persons need only prove the defence to the standard of preponderance of probabilities. Section 139 NI Act and Section 118 NI Act read together mandate that upon the establishment of foundational facts, the Court shall raise a presumption that the negotiable instrument passed for consideration and the cheque was issued for discharging a legally enforceable debt. The presumption is rebuttable and the reverse onus falls on the Accused to establish a probable defence which creates a doubt as to the existence of a legally enforceable debt or liability. [See Rangappa v. Sri Mohan, (2010) 11 SCC 441 and Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16.] Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 Ct. Case 422/2019 Page No. 13 of 32 15:43:31 +0530 POINTS FOR DETERMINATION
30.The foundational facts that lead to raising of the above- mentioned presumptions are the execution and issuance of the impugned cheque. The Accused Persons in the present case have admitted the issuance of the cheque in question and the signatures thereon and thus this Court is now bound to presume that the impugned negotiable instrument passed for consideration and was issued to discharge a legally enforceable debt. In addition to this, the dishonour by the return memo is also not disputed. The ingredient of non-payment within fifteen days after receipt of statutory notice is also not disputed. Thus, all the ingredients of Section 138 NI Act are undisputed except for the existence of a legally enforceable debt, which is presumed. To rebut the presumption of the legally enforceable debt, Accused Persons have cross-examined the Complainant to poke holes in its case and have also led DE.
31.The only point for determination which now arises is whether or not a probable defence has been raised by the Accused Persons by which the existence of a legally enforceable debt or liability has been made doubtful from the standard of preponderance of probabilities.
Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:43:33 +0530 Ct. Case 422/2019 Page No. 14 of 32 APPRECIATION OF EVIDENCE LIABILITY OF DIRECTORS
32.At the outset, it is to be noted that in a cheque bounce case for a cheque drawn on the account of a company, the principal accused is the company. The liability of the directors, if any, is vicarious and exists only by way of a deemed fiction under Section 141 NI Act.
33.In this case, the cheque in question is indeed drawn on the account of Accused No.1 Company and thus no personal liability can be fastened on other Accused Persons for it, otherwise than by way of Section 141 NI Act.
34. No evidence is led by any of the Accused Directors that they he was not in charge of and responsible to the Accused No.1 Company for the conduct of its business. Rather, they have all led detailed mostly copy-pasted evidence getting into the intricacies of the transaction in question, showing their direct involvement. They were all also personally party to the settlement before Samadhan. Thus, if the presumption of the legally enforceable debt is not rebutted, they shall all be liable under Section 138 NI Act r/w Section 141 NI Act.
Digitally
signed by
VAIBHAV
VAIBHAV PRATAP
PRATAP SINGH
SINGH Date:
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LIQUIDATION OF ACCUSED NO. 1 COMPANY
35.During the pendency of this trial, Corporate Insolvency Resolution Process ("CIRP") against the Accused No.1 company was initiated vide order dated 18.09.2019 in C.P. No.1634/KB/2018 of the Learned NCLT, Kolkata Bench, by which a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 ("IBC") was declared.
36.Thereafter, as per P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258, the trial continued against the directors.
37.By order dated 06.04.2022 of the Learned NCLT, Accused No.1 Company herein was ordered to be liquidated, thereby lifting the moratorium, per Section 14 IBC. Complainant Company is also pursuing its claims before the Liquidator as it did before the RP. The RP/Liquidator has also appeared in these proceedings from time to time though has not contested the case nor has chosen to cross- examine the Complainant's witness. Accused No.1 company was, therefore, proceeded in absentia under Section 305(4) CrPC.
38.The Accused Directors have defended the case effectively on behalf of the Accused No.1 Company on merits, denying its liability. Thus, for the sake of argument, I am inclined to even consider the defence offered by them to be for Accused No.1 Company as well. VAIBHAV PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:43:39 +0530 Ct. Case 422/2019 Page No. 16 of 32 DEFENCE OF SECURITY CHEQUE
39.Accused Persons have stated that the cheque in question was only given as security and was not meant to be presented, as can be seen from Clause 8(h) of the Mediation Settlement. Reliance is placed on Sri Sai Sapthagiri Sponge Pvt. Ltd., 2025:DHC:9362, where in paragraph 59 it was concluded that the cheques in question were security cheques and were not issued for any legally enforceable debt and that the complaints filed were not maintainable.
40.The defence of security cheque has been examined by the Hon'ble Delhi High Court in Suresh Chandra Goyal v. Amit Singhal, 2015 SCC OnLine Del 9459, wherein it was held as follows:
"28. There is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a 'security cheque' to say that a complaint in respect of such a cheque would not be maintainable. There can be myriad situations in which the cheque issued by the accused may be called as security cheque, or may have been issued by way of a security, i.e., to provide an assurance or comfort to the drawee, that in case of failure of the primary consideration on the due date, or on the happening (or not happening) of a contingency, the security may be enforced. While in some situations, the dishonor of such a cheque may attract the penal provisions contained in Section 138 of the Act, in others it may not."
41.Furthermore, the Hon'ble Supreme Court in Sripati Singh VAIBHAV v. State of Jharkhand & Anr., 2021 SCC OnLine SC 1002, PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:43:41 +0530 Ct. Case 422/2019 Page No. 17 of 32 explained the broad contours of a security cheque and held as follows:
"16. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. `Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.
17. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an `on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have VAIBHAV PRATAP SINGH the option of initiating the civil proceedings for recovery or Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:43:43 +0530 Ct. Case 422/2019 Page No. 18 of 32 the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."
42.Therefore, succinctly stated, the legal position as culled out is that it does not matter whether the cheque in question was given towards any payment actually due or for security purposes and rather what has to be examined by the Court is that there should be a legally enforceable debt or liability existing as on the date of presentation of cheque. In other words, the mere defence of security cheque is not sufficient to rebut the presumption under Section 139 of NI Act and the Accused Person has to prove that there was no legally enforceable debt or liability as on date of presentment of the cheque in question.
43. In Sripati Singh v. State of Jharkhand & Anr. (supra), the MoU between the parties under which the cheques were given included a stipulation that the cheques were being given only to show to the banker, auditor etc. and "not for depositing into Bank". It was in these facts that the summoning order was quashed. In the case at hand, paragraph 8(h) of the Settlement itself mentions that the cheques can be deposited after default accrues.
44.In any case, the judgment in Sripati Singh v. State of Jharkhand & Anr. (supra) would have to give way to the law laid down in Sripati Singh (supra).
Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
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45.Thus, the contention of the Accused Persons that the cheque in question was given as security cheque finds no force in view of the aforementioned binding judgments and the facts of this case.
COMPLAINT NOT VALIDLY INSTITUTED
46.It is argued by the Accused Persons that the complaint was not validly instituted as the CW-1/AR Sudeep Sarkar has not been authorised to sign on behalf of the Complainant Company, as can be seen from the Board Resolution in his favour. Additionally, it is argued that the minutes book has not been produced and so and adverse inference is to be drawn against the Complainant.
47.A look at the copy of the Board Resolution in favour of CW-1/AR Sudeep Sarkar would show that he was specifically authorised by the Complainant company to represent it for Section 138 cases in Court. As rightly argued by the Complainant, to represent a party in Court would include within itself all powers required to give effect to the representation including signing and filing of complaints and to withdraw them.
48.Learned Counsel for Accused Digbijoy Dhar has specifically referred to Order 29 CPC in his submissions.
49.In this regard, it is apposite to refer to United Bank of India v. Naresh Kumar, 1996 INSC 1073, wherein it was held that procedural defects which do not go to the root of Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH Date:
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the matter should not be permitted to defeat a just cause and a substantive right should not be allowed to be defeated on account of a procedural irregularity. Even in the absence of a valid board resolution, where pleadings have been signed by one of the officers of a company, a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The Court can. on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial come, to the conclusion that the corporation had ratified the act of signing of the pleading by its officer.
50.Further, in Bhupesh Rathod v. Dayashankar Prasad Chaurasiya, 2021 SCC OnLine SC 1031, it was held that a copy of the board resolution filed is sufficient and that the Accused was taking a technical defence to avoid liability.
51.In George Joseph & Another Vs. HMT (International) Ltd., 2014 Supreme (Kar) 609, the Karnataka High Court held that any defect in an authorisation before filing a complaint is a curable defect which can be addressed even in an appeal.
52.It is abundantly clear from the material on record that it is the Complainant Company itself that is prosecuting this complaint. There is nothing on record to show that the present complaint was filed or has been prosecuted for VAIBHAV PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:43:53 +0530 Ct. Case 422/2019 Page No. 21 of 32 about a decade clandestinely by an individual without the authorisation of the Complainant Company, which is the payee.
53.The Accused Persons did not take any objection as to the mode of proof at the time the authorisation was exhibited nor have they put any such questions to CW-1 during his cross-examination which would have put the Complainant to notice about such a plea and would have given an opportunity to rectify the defect, if any. Accused Persons could have very well summoned the minutes book of the Complainant Company to indeed verify if any such resolution actually exists or not.
54.Absent any such thing, the argument of the Accused Persons against it is an invitation to split hairs, which invitation this Court politely declines. Acquitting the Accused Persons solely on this ground cannot be permitted and would be a travesty of justice. Consequently, this argument is rejected.
LEGALLY ENFORCEABLE DEBT
55.The following facts in the trial are undisputed:
55.1. Complainant Company extended financing to the Accused Persons under the MLFA;
55.2. Complainant filed NI Act cases and a civil suit for recovery against the Accused Persons; 55.3. Cases were settled by the parties entering into a Mediation Settlement dated 24.04.2015 before the Delhi Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:43:56 +0530 Ct. Case 422/2019 Page No. 22 of 32 High Court Mediation Centre (Samadhan) acknowledging the outstanding debt of approximately Rs.46 Crores, to secure which the cheques in question were given. A consent decree was also drawn for this amount, which is being executed by the Hon'ble Calcutta High Court where the assets of the JDs therein/Accused Persons herein are present.
55.4. Accused Persons have not paid more than INR 6 Crores to the Complainant and the total value of all the cheques in the 11 complaints is approximately INR 19 crores and so even after deducting the amount of INR 6 crores, more than INR 19 crores is outstanding;
56.The defence of the Accused Persons essentially is that the set-top boxes supplied were defective and that they repeatedly asked the Complainant to take back the units, provide replacements, or render necessary services.
According to them, the Complainant failed to do so, causing substantial loss to Accused No.1 and disrupting its business operations.
57.The Complainant has filed a simple case. It states that certain disputes arose with the Accused No.1 Company, leading to the filing of certain cheque bounce cases before Dwarka Courts and a civil suit for recovery before the Hon'ble Delhi High Court.
Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
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58.The cases got settled before the Delhi High Court Mediation Centre (Samadhan) by Settlement Agreement dated 24.04.2015. All the parties to this case are party to the Mediation Settlement. In compliance with the terms thereof, the Accused No.1 Company issued certain post- dated cheques, which were to be presented upon failure to pay for two consecutive months, as per the schedule. The cheques having been dishonoured, case at hand is filed. It is argued that the Mediation Settlement is a binding contract between the parties and creates no obligations for the Complainant at all.
59.The Accused Persons, however, rely on the MLFA, alleging that it survived the settlement and that the Complainant's breaches under it extinguish any liability to pay.
60.In these facts, regard can be had to Alka Kaushal v. Gulshan Arora, 2025 SCC OnLine Del 2334, wherein the Hon'ble Delhi High Court, in a similar case involving a cheque given in settlement of a previous cheque bounce complaint, after referring to Lalit Kumar Sharma v. State of U.P. (2008) 5 SCC 638, Arun Kumar v. Anita Mishra, (2020) 16 SCC 118, and Gimpex (P) Ltd. v. Manoj Goel, (2022) 11 SCC 705, held as follows:
"24. The learned trial court has rightly observed that in Lalit Kumar Sharma v. State of U.P. (2008) 5 SCC 638, the original complaint was still pending due to which it was held that since the compromise did not fructify, the cheques issued VAIBHAV PRATAP SINGH as per settlement could not be said to be issued towards Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:44:01 +0530 Ct. Case 422/2019 Page No. 24 of 32 payment of debt. In the present case, the respondent withdrew the complaint and it cannot be said that the compromise did not fructify. In Arun Kumar v. Anita Mishra, (2020) 16 SCC 118, it was held that whether a cheque issued in pursuance of a settlement gives rise to a fresh cause of action, is to be seen in the facts of each case.
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29. It is also relevant to note that the Supreme Court in Gimpex (P) Ltd. v. Manoj Goel, (2022) 11 SCC 705 has considered the issue of liability arising out of a settlement agreement and bolstered that once settlement is effectuated, the parties cannot be allowed to go back on the same. . .
30. As noted by the Supreme Court, once the parties have entered into a settlement they cannot be allowed to reverse the effects of the same. Just as a complainant undertakes the risk of the accused failing to honor the settlement, the accused is also bound to the said settlement and cannot be allowed to violate the same and then raise defences as available in the original complaint. If the said proposition is accepted, it would render the settlement to be of no import. The accused would be at an unfair advantage where he could enter into a settlement and reap its benefits by getting exonerated in the original complaint, and subsequently, in case a second complaint is filed, he would be free to reagitate all the grounds as available to him originally and protract the proceedings to his whim. It is due to this that the settlement effected between the parties and the contents thereof will act as an adverse inference against the accused.
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32. The learned trial court has rightly noted that the compromise deed has all the essentials of a contract wherein once the respondent withdrew the original complaint, the petitioner could not be allowed to escape her liability under the same."
(emphasis by me)
61.This case is on all fours with Alka Kaushal (supra). The undisputed Mediation Settlement dated 24.04.2015 between the parties is found to be a binding contract. VAIBHAV PRATAP SINGH Digitally signed by VAIBHAV Accused Persons defaulted on payments in 2015 and their PRATAP SINGH Date: 2025.12.10 15:44:04 +0530 Ct. Case 422/2019 Page No. 25 of 32 cheques bounced. NI Act complaints were filed and were settled on more cheques being given. On this assurance and settlement, previous complaints were withdrawn. The Accused Persons cannot be allowed to now escape their liability under the same and they cannot be allowed to take defenses as were available in the original complaints, which stood withdrawn on their assurance to pay.
62.The basis of this complaint is the cheque issued under a binding settlement. The consideration for the settlement was the Complainant's forbearance to sue, which constitutes valid consideration. No other obligations were cast upon the Complainant, and the settlement is complete in itself.
63.As can be seen, under the MLFA, the Accused Persons herein were required to make regular payments to the Complainant. On their failure to do so, litigation ensued and resulted in this settlement. The settlement in paragraph 8(a) notes that approximately Rs.46 crores are outstanding toward the Complainant. It mentions the MLFA, and it also notes the default to pay by the Accused Persons, but it does not mention anything about any default on part of the Complainant herein.
64.Rather, in clause 10, it is specifically noted that the parties have no further claims or demands against each other. It VAIBHAV PRATAP only records that the Accused Persons shall make SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:44:06 +0530 Ct. Case 422/2019 Page No. 26 of 32 payments as per the schedule annexed thereto, and to secure which, PDCs are to be given.
65. It leads to the inescapable conclusion that as on the date of the Mediation Settlement, the Complainant was not in breach of the MLFA and the Accused Persons did not have any claim, complaint or demand against the Complainant. The default was exclusively on part of the Accused Persons herein and the Complainant was owed money.
66.Parties, of their own free will, entered into the said contract and if there were any defaults on part of the Complainant, they would have been recorded therein. There would also have been a stipulation toward the Complainant's duty to perform or continue to perform certain acts, which would be condition precedent to the making of any payments. The mediation settlement does not mention any such thing and therefore crystallised an unqualified liability to pay.
67.This unqualified liability, frozen in time by the settlement, cannot now be diluted by alleging earlier breaches, particularly when the Accused Persons have led no evidence proving any such breach.
68.At best, they have sought to rely on certain e-mails sent by them which refer to certain defects in the set-top boxes. Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH Date:
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These e-mails are of no help to the Accused Persons for two reasons. First, they have not led any evidence to show that the e-mails were in fact sent to the Complainant herein. Complainant has denied receiving the e-mails and rather has said that they are not addressed to it at all if the "sent to" is to be seen. No evidence is led to controvert this stand of the Complainant and to actually prove that they were sent to the Complainant Company. Second, stray references to defects cannot establish breach of contract so as to nullify a liability already settled and acknowledged.
69.All the e-mails were sent after the Mediation Settlement, in which the Accused Persons unconditionally acknowledged their defaults and agreed to pay.
70.Regarding the onus and burden in a cheque bounce trial, the Hon'ble Supreme Court of India in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148, held:
"61. The fundamental error in the approach lies in the fact that the High Court has questioned the want of evidence on the part of the complainant in order to support his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque."
71.Thus, instead of expecting a Complainant to prove the transaction to the hilt at the outset, we are required to look at the defence set up by the Accused Persons. Only if it Digitally signed by VAIBHAV VAIBHAV PRATAP PRATAP SINGH SINGH Date:
2025.12.10 15:44:11 +0530 Ct. Case 422/2019 Page No. 28 of 32 seems probable on a preponderance of probabilities is the onus shifted back on to the Complainant.
72.The phrase "preponderance of probabilities" in the case of Charles R. Cooper v. F.W. Slade, (1857-59) 6 HLC 746 was held to mean "more probable and rational view of the case" and this definition has stood the test of time, having been quoted with approval several times by Indian Courts, including as recently as in 2022 in Ramanand v. State of U.P., 2022 SCC OnLine SC 1396 para 100.
73.The mere ipse dixit of the Accused Persons is not sufficient to rebut the statutory presumptions and the case of the Accused Persons does not seem more probable compared to the case of the Complainant. Despite alleging all and sundry about the breach of contract and deficiency in services by the Complainant, the Accused Persons have not till date filed any suit against the Complainant for seeking damages, injunction or specific performance. Bottom line remains that they were sued a decade ago for defaults in payment and since their cheques bounced; they gave more cheques to "settle" those cases, and those cheques have also bounced.
74. It is merely a convenient afterthought defense that is now being taken, having been declared insolvent by the NCLT at the behest of its several creditors, all of whom have VAIBHAV PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:44:13 +0530 Ct. Case 422/2019 Page No. 29 of 32 faced payment defaults at the hands of the Accused No.1 Company.
75.The undisputed facts as noted above are sufficient to establish a legally enforceable debt and no part of the cross-examination or the DE has been able to change that.
76.Accused Persons have also repeatedly brought up that they tried to return the set-top boxes to the Complainant pursuant to the directions of the Calcutta High Court but the Complainant refused to take them. Those proceedings concern execution of a consent decree arising out of the same Mediation Settlement under which the present cheque was issued. They merely reinforce the existence of a binding decree and the obligation to pay, going against the Accused Persons instead of helping them.
77.A cheque bounce offence is complete when a cheque bounces and no payment is made within 15 days of the statutory notice being sent. What would determine the guilt or innocence is whether there was a legally enforceable debt on the relevant cut-off date and the same stands frozen in time. Any subsequent developments in related civil proceedings much less execution proceedings are alien to a criminal trial.
78.Accused Persons have thus failed to raise any kind of probable defence and are only seeking to indulge in a last VAIBHAV PRATAP SINGH Digitally signed by VAIBHAV PRATAP ditch-effort hair-splitting. What they have not been able to SINGH Date: 2025.12.10 15:44:15 +0530 Ct. Case 422/2019 Page No. 30 of 32 show is that they have made the payments to the Complainant and are not in default, which is all that matters.
79.Undoubtedly, CW-1 in his cross-examination has stated that he cannot recall or is unaware of certain relevant aspects of the case but the evidence of an AR in a cheque- bounce case, especially one which is in the nature of a commercial dispute, is not a test of his memory or of his oratory skills. The offence is one based on documentary evidence. A gotcha question here or a minor contradiction there does not change the facts of the case, which are established inter alia through terms of the contracts and proofs of payments.
80.It is a settled proposition of law that it is not the statement of parties rather their relationship with the documents which is relevant to assess the issue at hand. Reliance can be placed upon judgment of the Privy Council in Alluri Venkatapathi Raju and Anr. v. Dantuluri Venkaranarsimha Raju and Ors., 1936 SCC OnLine PC 45, wherein it has been observed that:
"It sometimes happens that persons make statements which serve their purpose, or proceed upon ignorance of the true position; and it is not their statements, but their relations with the estate, which should be taken into consideration in determining the issue."
81.If CW-1 states he is not aware of whether certain payment has been received, it does not amount to proof of the VAIBHAV PRATAP SINGH Digitally signed by VAIBHAV PRATAP SINGH Date: 2025.12.10 15:44:17 +0530 Ct. Case 422/2019 Page No. 31 of 32 payment having been made nor does it make the case of the Complainant unsustainable. It was really upon the Accused Persons to prove payments made by them either by asking CW-1 to bring the relevant bank statements or to prove the same during DE, which has been extensively led. They have not done any such thing. As rightly argued by the Complainant, even if the payment of INR 6 Crores is admitted, the outstanding liability of approximately 40 crores is still outlying and the total value of all the cheques in the 11 complaints is only approximately INR 19 Crores. Thus, it would not make any difference in any case.
82.Thus, for what it matters, Complainant has withstood cross-examination of CW-1 and has not only proved its case with the help of the statutory presumptions but has independently also established it beyond reasonable doubt. Even if there were no presumption, the Complainant has led cogent, consistent, and undisputed documentary evidence to establish a legally enforceable debt.
83.In the above conspectus, all the ingredients of the offence under Section 138 NI Act stand fulfilled. Accused Persons are held to be guilty of the offence under Section 138 NI Act and are hereby convicted for the same. Pronounced by me in the open Court today on 10.12.2025. VAIBHAV Digitally signed by VAIBHAV PRATAP PRATAP SINGH Date: 2025.12.10 SINGH 15:44:22 +0530 (VAIBHAV PRATAP SINGH) Civil Judge/JMFC, Patiala House Courts New Delhi District, Delhi Ct. Case 422/2019 Page No. 32 of 32