Delhi District Court
Narender Yadav vs Ajay Batteries And Auto Electricals on 6 May, 2025
IN THE COURT OF SH. RISHABH TANWAR,
JUDICIAL MAGISTRATE FIRST CLASS/NI ACT-01/WEST/TIS
HAZARI COURT/DELHI
CT Cases no. 12823/2018
CNR No. DLWT020139652018
Narender Yadav
S/o Late Sh. Ganpat Ram,
R/o. WZ-317-A,
Madipur Village,
New Delhi-110026 ...Complainant
Vs.
M/s. Ajay Batteries and Auto Electricals
through its Proprietor Sh. Ajay Singh,
Having office at Shop No.3, Adarsh Market,
Opposite Road No.33, Local Shopping Centre,
Punjabi Bagh Extension, New Delhi-110026 ...Accused
::J U D G M E N T::
1. Date of institution of case : 28.09.2018
2. Date of reserving the judgment : 05.03.2025
3. Date of pronouncement of judgment : 06.05.2025
4. Offence complained or proved : 138 N.I. Act
5. Plea of Accused : "Not Guilty"
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 1/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
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6. Final Order : CONVICTION
7. Date of Final Order : 06.05.2025 BRIEF FACTS AND REASONS FOR DECISION
1. The present case arises from a complaint filed under section 138 read with section 142 of the Negotiable Instrument Act, 1881 (referred to as 'NI Act') by Sh. Narender Yadav (referred to as 'the Complainant') regarding the dishonor of cheque numbered 588058 dated 05.06.2018 for amount of Rs.1,00,000/-, drawn on Syndicate Bank, Paschim Vihar branch (referred to as 'the cheque in question') issued by Ajay Singh in the capacity of proprietor of M/s. Ajay Batteries and Auto Electricals (referred to as 'the accused') in favor of the complainant.
2. It is the case of the complainant that the accused and the complainant were known to each other and the accused had approached the complainant for a friendly loan of a sum of Rs.1,00,000/- for his business requirements on 02.02.2018 and the same was given to the accused in cash on the same day for a period of four months. It is further alleged that after the expiry of four months, the accused had the cheque in question in discharge of his liability, which was subsequently dishonored upon presentation, as indicated by the return memo dated 17.07.2018 from the complainant's bank, citing 'Fund Insufficient'. The complainant issued a legal demand notice dated 09.08.2018 under section 138(b) of the NI Act. The complaint was filed when the accused failed to pay the amount specified in the cheque despite receiving the legal demand notice.
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 2/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
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3. The complainant examined himself as CW-1 on 29.08.2018 and tendered his evidence on affidavit which was exhibited as Ex. CW-1/A. He also placed reliance on the following documents: -
(a) Ex. CW-1/1 is the cheque in question.
(b) Ex. CW-1/2 and Ex. CW-1/3 are the bank return memos dt. 15.06.2018 and 17.07.2018 respectively.
(c) Ex. CW-1/4 is the demand notice dated 09.08.2018.
(d) Ex. CW1/5 is the postal receipt.
(e) Ex. CW-1/6 is the invoice of the courier company.
(f) Ex. CW-1/7 and Ex. CW-1/8 are tracking reports.
4. The accused was summoned on 28.09.2018 and made his first appearance on 02.12.2019. On 28.01.2020, the defense under section 251 Criminal Procedure Code, 1973 (hereinafter referred to as "Cr.P.C." for the sake of brevity) was recorded. The accused pleaded not guilty and stated that he had only taken a loan of Rs.50,000/- on interest from the complainant returnable on a daily basis. He further stated that he had repaid the principal amount of Rs.50,000/- and only an interest of Rs.10,000/- was remaining to be paid. He confirmed his signatures on the cheque but denied receiving legal notice, despite acknowledging the address was correct. He further stated that the complainant had misused his security cheque.
5. This court had allowed the application of the accused u/s.145(2) NI Act to cross-examine the complainant which was allowed on 28.01.2020 based on his defense raised under section 251 Cr.P.C. The complainant's CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 3/17 Digitally signed by RISHABH RISHABH TANWAR Date: TANWAR 2025.05.06 16:21:25 +0530 evidence on affidavit (Ex. CW-1/A) was read as his examination in chief under section 145(1) NI Act. CW-1 was cross-examined by Ld. Counsel for the accused.
6. The Statement of accused u/s. 313 Cr.P.C. was recorded on 30.05.2024 wherein he stated that he had taken a loan of Rs.50,000/- from the complainant in lieu of which he had given one security cheque. He further stated that he had to repay an amount of Rs.60,000/- which had to be paid including the interest of Rs.10,000/-. He claimed to have paid Rs.48,000/- to the complainant and stated that complainant had imposed a penalty of Rs.20,000/-. He further stated that his security cheque had been misused by the complainant.
7. The accused examined himself as a witness under section 315 Cr.P.C as DW-1 and he was cross examined by Ld. counsel for the complainant. As the accused did not examine any further witnesses, the case was then listed for final arguments.
THE APPLICABLE LAW
8. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. It is well settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled:
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 4/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
2025.05.06 16:21:29 +0530 (1) That the cheque in question has been drawn by a person on an account maintained by him with a banker, for payment to another person from out of that account.
(2) The cheque has been drawn for discharge in whole/part any debt or liability.
(3) That the said cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity whichever is earlier. (4) That the cheque was returned dishonoured by the drawee bank for want of sufficient funds or the same exceeded any arrangement with the banker to pay the sum covered by the cheque. (5) That the complainant gave a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount.
(6) The accused has received the legal notice. (7) Lastly that the accused failed to make payment to the payee (the complainant), or the holder in due course, the cheque amount within 15 days of the receipt of the notice.
9. It is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N I Act. The Act also raises two presumptions in favour of the holder of the cheque namely first, in Section 118(a) which says that every negotiable instrument was made or drawn for consideration, and, second, a presumption under Section 139, that the holder CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 5/17 Digitally signed by RISHABH TANWAR RISHABH Date:
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of cheque receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in 'Basalingappa v. Mudibasappa, AIR 2019 SC 1983', noted at para 23 Bharat Barrel and Drum Manufacturing Company v. Amin Chand Pyarelal, (1999) 3 SCC 35; M.S. Narayana Menon alias Mani v. State of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC 441]:
(i) Once the execution of cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposes an evidentiary burden and not a persuasive burden.
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 6/17 Digitally signed by RISHABH RISHABH TANWAR Date: TANWAR 2025.05.06 16:21:36 +0530
(v) It is not necessary for the accused to come in the witness box to support his defence.
ARGUMENTS ADVANCED ON BEHALF OF THE PARTIES
10. Sh. Rajesh Tanwar, Ld. counsel for the complainant has argued that the complainant has been able to prove all the pre-requisites of Section 138 NI Act against the accused and the accused has failed to rebut the presumption u/s. 138 NI Act. Ld. counsel has prayed that the accused be convicted of the offence u/s. 138 NI Act.
11. Per contra, Sh. Satish Kumar, Ld. Counsel for the accused had argued that the accused the complainant had not brought any documentary proof of loan and he had failed to disclose the source of the loan. He has further stated that one alleged witness Sumit was not examined by the complainant and that the complainant has misused the security cheque of the accused. He has further stated that the accused has not received legal notice and Ld. counsel for the accused has further prayed that the accused be acquitted of the offence alleged against him.
POINTS OF DETERMINATION
12. The following points of determination arise in the present case:
A. Whether the complainant has successfully proven the facts which would raise the presumption u/s. 118 r/w Section 139 of NI Act by CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 7/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
2025.05.06 16:21:40 +0530 proving that the cheque in question bears the signature of the accused?
B. If yes, whether the accused has been successful in raising a probable defence to rebut the presumption under section 139 NI Act?
C. If yes, whether the complainant has proved its case, beyond the shadow of reasonable doubt, without taking the aid of presumption under section 139 NI Act?
FINDINGS OF THE COURT Point of determination number (A):
13. Whether the complainant has successfully proven the facts which would raise the presumption u/s. 118 r/w Section 139 of NI Act by proving that the cheque in question bears the signature of the accused?
14. It is settled law that once the signature upon the cheque in question has been admitted by the accused, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is enumerated in Section 139 of NI Act. The provision lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
15. The combined effect of these two provisions is a presumption that the CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 8/17 Digitally signed by RISHABH TANWAR RISHABH Date:
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cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved. Reliance is placed upon the judgment of the Hon'ble Supreme Court in 'Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16'.
16. The Hon'ble Supreme Court in 'Kumar Exports vs. Sharma Carpets (2009) 2 SCC 513', while elaborating upon the interplay of section 118(a) r/w 139 of the N I Act, has held that:
"14. Section 139 of the Act 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.
15. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under section 118 and 139 of the Act help him shift the burden on the accused. The presumption will live, exist and survive and shall end only when the CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 9/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
2025.05.06 16:21:48 +0530 contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists."
17. In the present case, the accused at the time of framing of notice u/s 251 and statement recorded u/s 313 Cr.P.C has admitted his signatures on the cheque in question. The complainant is not required to prove admitted facts. Once signatures are admitted, the presumption under section 118(a) r/w 139 NI Act becomes operative in favour of the complainant in the present case. Therefore, the said presumption arises in favour of the complainant in the present case.
18. Accordingly, the point of determination number A is decided in the affirmative.
Points of determination number (B):
19. There is no dispute with respect to the ingredients no. (1), (3), (4), (5) and (7) as defined in the paragraph no. 8, as they are admitted facts in the present case. As per section 58 Indian Evidence Act 1872 (hereinafter "I.E.A.") (corresponding section 53 of Bharatiya Sakshya Adhiniyam 2023), the complainant need not prove the admitted facts.
20. The point of focus of this judgment would hereinafter be on the fact in issue i.e., (a) whether the legal demand notice under section 138(b) NI Act CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 10/17 Digitally signed by RISHABH RISHABH TANWAR Date: TANWAR 2025.05.06 16:21:51 +0530 was served upon the accused, and (b) whether the cheques in question were issued by the accused in favour of the complainant in discharge of the legally recoverable liability?
21. As far as point no. (a) is concerned. The accused has denied receiving legal notice. When his defense under section 251 Cr.P.C. was recorded, he had stated that the address mentioned on the legal demand notice was cor- rect. The burden of proving that he had not received the legal notice was on the accused. Section 103 I.E.A. lays down the rule that the burden of proving a particular fact is on the person who asserts that fact. Since the accused ad- mitted that the address on the legal notice was correct, there was limited scope for him to prove that the legal notice was not served upon him. Sec- tion 27 of the General Clauses Act establishes a presumption of service with respect to letters or documents sent through post and states: "... the service shall be deemed to be effected by properly addressing, pre-paying, and post- ing by registered post, a letter containing the document, and, unless the con- trary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. " There has been no dispute regard- ing the complainant sending the legal demand notice to the accused via pre- paid registered post. The accused has also acknowledged that his address on the legal demand notice was correct. Therefore, the presumption under sec- tion 27 of the General Clauses Act applies in this case, and it can be assumed that the legal demand notice was served upon the accused in the ordinary course of business.
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 11/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date: 2025.05.06 16:21:55 +0530
22. Moreover, the Hon'ble Supreme Court in the case of "C.C. Alavi Haji vs Palapetty Muhammad & Anr AIR 2007 SC (SUPP) 1705" held that: "17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act."
23. There is no dispute the fact that the accused has not paid the amount of the cheques in question within 15 days of appearing in this court. Consequently, based on the aforementioned caselaw, the accused cannot claim that he did not receive the legal demand notice, and no liability can be attributed upon him.
24. Let us now consider the point no. (b) i.e., whether the accused had been able to prove that the cheques were not issued towards any legally recoverable debt or any other liability?
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 12/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
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25. The accused has disputed that he had taken a loan of Rs. 1,00,000/- from the complainant. On the contrary, he asserts that he had only taken Rs. 50,000/- as loan from the complainant repayable by him daily. The accused had asserted that he had returned the entire loan amount to the complainant and only Rs. 10,000/- was remaining to be paid comprising of the interest amount. Even if the version of the accused is to be believed, he has not brought any iota of evidence or any other material to substantiate his defence.
26. Moreover, the accused has failed to impeach the credibility of the complainant in his cross-examination. Repeated suggestions were given to the complainant that he had given a loan of Rs. 50,000/- only and not what he had alleged in the complaint. It is trite law that mere suggestions cannot, in itself, rebut the presumption under section 139 NI Act. CW-1 had admitted that there was no loan receipt was executed or that he had Rs. 1,00,000/- cash at home. It is pertinent to note that Rs. 1,00,000/- cannot be called such a huge amount that one cannot be expected to keep at home. Moreover, putting the burden upon the complainant to prove his case first before the accused would be akin to putting the horse behind the cart, when the presumption under section 139 NI Act operates in his favour. The Hon'ble Supreme Court in the case of "Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148" had observed that: "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 CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 13/17 Digitally signed by RISHABH RISHABH TANWAR TANWAR Date:
2025.05.06 16:22:02 +0530 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." The accused has not, apart from his oral testimony, brought on record any evidence to support his case or examined any independent witnesses.
27. Moreover, the Hon'ble Delhi High Court in the case of "Amit Jain Vs. Sanjeev Kumar" CRL.A. 1248/2019 decided on 16.08.2024 had observed that: "17. We often find that acquittals in Section 138 NI Act proceedings place the burden of proving the existence of the debt on the complainant, which is diametrically opposite to the presumption placed on the accused under Section 139 NI Act. The accused often gets away with an acquittal, despite having tendered and even admitting to the cheque, merely because the complainant is unable to produce documents to support the existence of the debt (usually in the form of a friendly loan provided in cash, which does not have any document trail). It would be unwise for the court to not acknowledge that friendly cash loans are provided by parties, sometimes based on small savings of the lender. In these circumstances rather than focussing on the question as to why the accused gave the cheque in the first place (which he or she admits), the complainant is left unhinged for inability to provide any documentation. Often when accused is asked by the court, as to for what purpose they gave the cheque in the first place, a cogent and rational answer is not forthcoming." Even in the present case, apart from superficial suggestions given to the complainant in his cross-examination regarding absence of any receipt or acknowledgement, the accused has not been able to put up a strong defence.
CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 14/17 Digitally signed by RISHABH RISHABH TANWAR Date: TANWAR 2025.05.06 16:22:06 +0530
28. The accused further claims that the complainant misused his security cheque. However, it is notable that no complaint had been filed by him against the complainant, which is atypical in the ordinary course of human behaviour. If the accused had borrowed Rs. 50,000/- and was required to repay Rs. 60,000/-, he should have indicated the limit on the cheque. No such indication was made by the accused. It is a settled law, a cheque issued as security in a financial transaction cannot be considered worthless; it ensures the fulfilment of an obligation. If a cheque secures repayment of a loan and the loan is not repaid by the due date, the drawee can use the cheque for payment. If the cheque bounces, consequences under section 138 of the NI Act will apply. Reliance is placed upon 'Sripati Singh v. State of Jharkhand,2021 SCCOnline1002'. Further as to the plea of cheque being a security cheque, it was held in 'ICDS v. Beena Shabir & Anr. (2002) 6 SCC 426', that security cheque would also fall within the purview of section 138 NI Act and a person cannot escape is liability unless he proves that the debt or liability for which cheque was issued as security is satisfied otherwise. Simply stating that a blank signed cheque was provided does not constitute a valid defence, as Section 20 of the NI Act grants prima facie authority to the holder to complete the instrument as a negotiable one.
29. Therefore, in the considered finding of this court, the accused has failed to rebut the presumption under section 139 NI Act and accordingly, the point of determination no. (B) is decided in the negative.
30. Since point of determination no. (B) has been decided in the negative, it would not be necessary to discuss the point of determination no. (C).
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31. It is trite law that when the accused has failed to rebut the presump- tion under section 139 NI Act, the court can proceed to convict the accused. reliance is placed upon the judgment of Hon'ble Supreme Court in Supreme Court in 'Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148', which discusses the correct approach in dealing with presumption under Section 139 ob- served as under; relevant extracts are reproduced hereunder:
"54. ...Once the presumption under Section 139 was given effect to, the courts ought to have proceeded on the premise that the cheque was, in- deed, issued in discharge of a debt/liability. The entire focus would then nec- essarily have to shift on the case set up by the accused, since the activation of the presumption has the effect of shifting the evidential burden on the ac- cused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138...."
CONCLUSION
32. Accordingly, this Court finds the accused Sh. Ajay Singh, proprietor of M/s Ajay Batteries and Auto Electricals, S/o Sh. Sabhajeet Singh 'guilty' of the offence under Section 138 NI Act and accordingly he is convicted of the said offence.
33. This judgment contains 17 pages, and each page has been signed by CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 16/17 Digitally signed by RISHABH RISHABH TANWAR Date: TANWAR 2025.05.06 16:22:13 +0530 the undersigned as per rules.
34. Let the copy of digitally signed judgment be uploaded on the website of Tis Hazari District Court as per rules.
Digitally signed by RISHABHRISHABH TANWAR TANWAR Date:
2025.05.06 16:22:17 +0530 Announced in open Court (RISHABH TANWAR) On the 06th Day of May 2025 JMFC (NI ACT)-01/WEST TIS HAZARI COURTS CC No. 12823/2016 Narender Yadav Vs. M/s. Ajay Batteries and Auto Electricals pg. no. 17/17