Delhi District Court
Naveen Chaudhary vs Rajesh Kathuria on 7 February, 2026
IN THE COURT OF DR. SUMEDH KUMAR SETHI,
ADDITIONAL SESSIONS JUDGE-05,
SHAHDARA, KARKARDOOMA COURTS, DELHI
CA No.27/2024
CNR No. DLSH01-001000-2024
In the matter of:
Naveen Chaudhary
R/o 1, Kotgaon,
(Near Old Arya Nagar)
Ghaziabad, Uttar Pradesh.
............ Appellant
Versus
Rajesh Kathuria
R/o H. No. C-180, Anand Vihar,
Delhi.
...........Respondent
Date of registration of appeal: 14.02.2024
Date when appeal was received by this Court: 14.02.2024
Date of conclusion of arguments: 23.01.2026
Date of pronouncement of judgment: 07.02.2026
JUDGMENT:
1) The present appeal has been preferred challenging the judgment dated 18.12.2023 vide which Naveen Chaudhary (hereinafter referred to as accused/appellant) was held guilty and convicted for the offence punishable under section 138 of Negotiable Instrument Act and the order on sentence dated 15.01.2024 vide which the accused/appellant was sentenced to undergo imprisonment for three months and to pay fine of CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 1/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:08:16 +0530 Rs.20,00,000/- which shall be payable to the respondent herein/ complainant within a month from the date of order and in default of payment of compensation, he will further undergo simple imprisonment for one month.
BRIEF FACTS:
2) The brief facts giving rise to the present appeal are that Rajesh Kathuria (hereinafter referred to as respondent/ complainant) filed the complaint against the accused/appellant alleging that since the accused/appellant was facing financial crisis, he approached the respondent herein/complainant for a friendly loan on which the respondent herein/complainant had advanced the amount of Rs.15,00,000/- to accused/appellant on 23.02.2016. Thereafter, the accused/appellant in discharge of his liability to repay the loan issued cheque bearing No.570574 dated 01.03.2018 for a sum of Rs.15,00,000/- in favour of respondent herein/complainant drawn on Andhra Bank, Navyug Market Branch. The cheque was presented for encashment by the respondent herein/complainant in his bank but the same was returned back dishonored for the reason 'Account Close' vide return memo dated 06.03.2018.
3) Thereafter, the respondent herein/complainant got legal demand notice dated 31.03.2018 served upon the accused/appellant through speed post, which was duly received. Further the accused/appellant received the legal notice and since one Tarun Chhabra, friend of accused/appellant, proposed a settlement wherein settlement terms were sent to the accused through Tarun Chhabra's email ID but accused kept avoiding payment on one pretext or another. Hence, the respondent CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 2/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:08:28 +0530 herein/complainant filed one complaint case No.2513/2018 against accused/appellant under section 138 of NI Act before the court of Ld. ACMM, Shahdara District, Karkardooma Court, Delhi.
PROCEEDINGS BEFORE THE LD. TRIAL COURT
4) After considering the complaint and the affidavit of evidence filed by the respondent herein/complainant, accused/appellant was summoned by Ld. Trial court for offence punishable under section 138 of Negotiable Instrument Act vide order dated 02.07.2018. Accused/appellant put his appearance.
Notice under section 251 CrPC for the offence punishable under section 138 of Negotiable Instrument Act was framed against accused/ appellant on 30.04.2022 to which he pleaded not guilty and claimed trial. He took the defence that he has not taken any loan from the respondent herein/complainant. He stated that elder brother of the respondent herein/complainant namely Naresh Kathuria was his college friend. In May 2013, he joined the factory namely Kathuria Roll Mills belonging to the respondent herein/complainant and he kept working there till July 2014. He further stated that at the time of his joining, respondent herein/complainant demanded a security cheque as per their factory/company policy. He stated that present cheque was given as a security cheque to the respondent herein/complainant in May 2013. He stated that the respondent herein/complainant had misused his cheque after a period of four years.
COMPLAINANT EVIDENCE:
5) Thereafter, the matter was fixed for CE without the application under section 145(2) NI Act upon the submission of CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 3/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:08:38 +0530 Ld. Counsel for the complainant that he had no objections in case the matter is fixed for CE without the application under section 145(2) NI Act. Respondent herein/complainant appeared in the witness box as CW1. He tendered his affidavit as Ex.CW1/A reaffirming all the facts mentioned in the complaint. He had also proved on record the cheque as Ex.CW1/A, the Bank returning memo dated 06.03.2018 as Ex.CW1/B, the legal demand notice dated 31.03.2018 Ex.CW1/C, the speed post receipt vide which the legal notice was sent to the accused/appellant is proved as Ex.CW1/E, the postal delivery slip is proved as Ex.CW1/F and the courier delivery report is proved as Ex.CW1/G.
6) CW1 was cross examined at length by ld. Counsel for the accused/appellant. During the cross examination, he deposed that he is doing his own business of Rolling Mill Manufacturing. He further deposed that he knew accused Naveen Chaudhary since his college time and accused is friend of his brother namely Naresh Kathuria. He further deposed that accused is not his direct friend. He further deposed that he had advanced the loan to the accused for a period of six months to one year only and accused assured him to return the loan within above stated period. He had advanced the loan to the accused on 23.02.2016. Accused approached him for loan, one week prior for 23.02.2016 on phone. Accused did not tell him the purpose for which he needed the money. He further deposed that accused was in good financial capacity to return the above stated loan. He further deposed that there was no relationship either professional between him and the accused except he was friend of his brother namely Naresh Kathuria. He further deposed that he had borrowed the above stated amount of Rs.15,00,000/- from his CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 4/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:08:48 +0530 wife and his sister-in-law namely Ms. Archana. He took the above stated money from his wife and sister-in-law on 22.02.2016. He further deposed that he had not returned the amount borrowed by him from his wife and sister-in-law till date.
He further deposed that on 23.02.2016 at about 12 PM, he handed over the amount to the accused in his office situated at A- 7/56, Electro Steel Compound, Vijay Nagar, Ghaziabad. He further deposed that the cheque in question was handed over by the accused to him on the date of advancement of loan i.e. 23.02.2016. The cheque given by the accused to him was already filled. He further deposed that it is correct that the cheque in question had been filled by two different ink. He further deposed that at the time when he advanced the loan to the accused, his salary was about 2.5 lacs per month and his monthly expenses were about 1-1.5 lacs per month. He did not remember the amount lying in his bank account when he had advanced the loan in question to the accused. He further deposed that at the time of advancement of loan, his wife was working as she was running software institute and she had monthly income of rupees about 2.5 lacs per month at that time and his sister-in-law namely Ms. Archana was also working at the time of advancement of loan as she was doing the job of government teacher. He further deposed that he had not shown the above stated loan amount in his ITR. His wife as well as his sister-in-law had also not shown the amount given to him in their ITRs. He further stated that he did not know whether a huge amount of Rs.15,00,000/- is illegal to give in cash. He was working as Director in Kathuria Roll Mills at the time of advancement of loan and he was Director since 1995. He further deposed that accused Naveen Chaudhary never worked in Kathuria Roll Mills. He denied the suggestion that CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 5/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:08:58 +0530 accused worked in Kathuria Roll Mills from May, 2013 to July, 2014. He did not know, if the accused was getting a salary of about Rs.45,000/- per month and he was also not aware, if same was to be credited from the account of Kathuria Roll Mills to the salary account of the accused. The form 26 AS of accused Ex. CW1/D1 was put to the witness, as per which salary had been credited into the account of the accused from the account of Kathuria Roll Mills from May, 2013 to July, 2014 to which he stated that the accused is the friend of his brother namely Sh. Naresh Kathuria who is also a Director in Kathuria Roll Mills and he had no knowledge regarding the employment, if any, of the accused with Kathuria Roll Mills. He also stated that he is Incharge of the production at Kathuria Roll Mills. He denied the suggestion that blank signed cheque i.e. cheque in question was given to him by the accused at the time he joined his company Kathuria Roll as security of his employment. He further denied the suggestion that the cheque in question had been misused by him after accused had left the job. He denied the suggestion that after leaving the job in July 2014, accused several times asked him return the cheque in question but same was not returned by him stating that same was not traceable at that time. He stated that he only came to know about the closure of the account of the accused when the cheque in question was bounced. He further denied the suggestion that no settlement ever took place between him and the accused. He further denied the suggestion that no legal notice was ever served upon the accused. He further denied that he had filed the present false case against the accused having misused his cheque given by accused as security at the time of joining company.CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 6/24 Digitally signed
SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:09:07 +0530
7) Thereafter, respondent herein/complainant closed his evidence on 23.08.2022 and the case was fixed for recording statement of accused.
STATEMENT OF ACCUSED:
8) Statement of accused was recorded under section 313 CrPC wherein he stated that he had friendly relations with the elder brother of the respondent herein/complainant namely Naresh Kathuria since his college times. In May 2013, he joined Kathuria Roll Mills of complainant and resigned/left the job in July 2014. The cheque in question was given as a security during his above stated job period. After leaving the job, he had asked Naresh Kathuria as well complainant to return his cheque but he was told that the cheque was not traceable and they will return the same when it is traced. He further stated that when his cheque was not returned, he closed his bank account in April 2017 and in the year 2018, complainant had misused his above stated cheque.
Accused opted to lead defence evidence and thereafter, the matter was fixed for defence evidence.
DEFENCE EVIDENCE:
9) On 03.12.2023, an application under section 315 CrPC was moved by the accused wherein he sought to examine himself as witness which was allowed vide order dated 03.12.2022, but accused failed to examine himself as witness despite multiple opportunities given by the Ld. Trial court and thereafter, the defence evidence was closed on 16.09.2023 and the matter was fixed for final arguments.CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 7/24 Digitally signed
SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:09:18 +0530 FINDINGS OF THE LD. TRIAL COURT:
10) Ld. MM after hearing the arguments passed the order of conviction on 18.12.2023 and order on sentence dated 15.01.2024 which are under challenge in the present appeal.
APPEAL:
11) Notice of the appeal was sent to the respondent herein/complainant who put appearance. Trial court record was also requisitioned.
12) The present appeal has been filed by relying upon the following grounds:
a) That the respondent herein/complainant has expressly admitted that he did not know appellant/accused personally in his cross examination while posing himself as his friend in the complaint, the reason for which the alleged loan was extended.
b) That the appellant/accused was an employee of the respondent herein/ complainant's company which the latter has no idea about which he has also admitted in his cross examination and once again, it is a conclusive proof that respondent herein/complainant did not know appellant/accused and gained access to the cheque in question from his company which was given to him as a security cheque for any future damages to the company.
c) That the credibility of the witness in this case, who is also respondent herein/complainant is too weak as to prove the liability of the appellant.
d) That the alleged/imaginary loan as an admitted fact was borrowed from the wife and sister-in-law of the respondent herein/complainant by the respondent herein/complainant himself CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 8/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
2026.02.07 SETHI 16:09:27 +0530 although as an admitted fact stated by the respondent herein/ complainant in his cross examination.
e) That it becomes utmost of relevance that even though the accused had sufficient resources regardless as per his concocted story he borrowed the money from his wife and his sister-in-law in cash and such a huge amount was never even mentioned in their ITR, as admitted by him and for reasons as no such money ever existed in the first place and neither there was any transaction between respondent herein/ complainant and appellant/ accused.
f) That the statements recorded of the respondent herein/ complainant in his cross examination were more than ample to prove contrary as to the presumption of liability of appellant/ accused towards the cheque drawn as security for and during the period of employment and misused by the respondent/ complainant.
g) That it is an admitted fact of the respondent herein/ complainant in para no.3 of the complaint bearing Ct. Case No.2513/2018, that he arranged the amount of Rs.15,00,000/- in cash to disburse the loan to appellant/accused.
h) That it is clear and becomes most significant that allegedly the respondent herein/ complainant was close friends with appellant/ accused for past many years and thus, as a long known friend respondent herein/ complainant arranged a huge amount of Rs.15,00,000/-, which he did not have but borrowed the money from others i.e. his relatives to support his dear old friend in need which raises a serious question on the respondent herein/ complainant that whether he ever lent the said amount to the appellant/ accused.
i) That the respondent herein/ complainant failed to prove his CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 9/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
2026.02.07 SETHI 16:09:39 +0530 financial capacity to advance such huge loan that too to the person with whom he has no relationship as admitted during the cross examination except for the fact that he was the friend of his brother. The Ld. Trial court has ignored this relevant fact vide passing the impugned judgment that neither the wife nor the sister-in-law of the respondent herein/complainant was produced as a witness in the proceedings.
j) That appellant/accused was an employee of the company of the respondent herein/ complainant during the period of 2013-
2014 and while joining the same he was made to draw a cheque i.e., the cheque in question bearing no.570574 without filling the name of drawee and amount as a security in a future event of mishap. That the respondent herein/complainant misused the said cheque by writing his own name and the difference is visible through the naked eye even to a prudent person.
k) That the legal notice was not served upon the accused and the same was sent at the incorrect address of the appellant/accused. That the legal notice reflects the address of the appellant as 38, Kotgaon, Opposite 45-A, Ghaziabad, whereas the correct address of the accused is H. No.1, Kotgaon, (Near Old Arya Nagar), Ghaziabad-201001.
ARGUMENTS:
13) Arguments have heard. Material on record perused.
Submissions considered. Written submissions have also been filed on behalf of both parties.
14) Ld. Counsel for the appellant/accused has argued that on one hand the respondent herein/complainant has stated that he is having friendly relationship with the appellant /accused, whereas CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 10/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:09:49 +0530 he has admitted later that the appellant was rather a friend of his brother. He further argued that the respondent could not even tell that the appellant has been an employee of his company. Thus, there was no occasion for the respondent herein/ complainant to extend a friendly loan to the appellant.
15) It is further argued that the purpose of the said loan has not been mentioned. Further, the funds used for extending the alleged friendly loan are not of the respondent but purportedly borrowed from his wife and sister-in-law. It is contended that it has been admitted by the respondent herein/ complainant that neither did he nor his wife and sister-in-law showed these loans in their respective ITRs. Further, the wife and sister-in-law of respondent herein have also not been examined as a witness to show financial capacity of the respondent herein/complainant to extend the alleged friendly loan.
16) It has further been contended that the presumption raised by section 139 of NI Act is a rebuttable presumption and the same need not be rebutted by leading evidence on part of the appellant but by impeaching the credit of the respondent herein/ complainant as a witness, which the appellant/accused was successful in doing during the cross examination of the respondent herein/ complainant before the Ld. Trial court.
17) Ld. Counsel for the appellant /accused has also argued that the similar facts were challenged before the Hon'ble Supreme Court in the matter of 'Basalingapa Vs. Mudibasappa' (2019) 5 SCC 418', it is held that:
"23. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 11/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:10:02 +0530 we now summarize the principles enumerated by this Court in following manner:-
(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 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence.
29. Thus, there is a contradiction in what was initially stated by the complainant in the complaint and in his examination-in-chief regarding date on which loan was given on one side and what was said in cross-examination in other side, which has not been satisfactorily explained. The High Court was unduly influenced by the fact that the accused did not reply the notice denying the execution of cheque or legal liability. Even before the trial court, appellant-accused has not denied his signature on CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 12/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
2026.02.07 SETHI 16:10:15 +0530 the cheque.
32. The High Court without discarding the evidence, which was led by defence could not have held that finding of trial court regarding financial capacity of the complainant is perverse. We are, thus, satisfied that accused has raised a probable defence and the findings of the trial court that complainant failed to prove his financial capacity are based on evidence led by the defence. The observations of the High Court that findings of the trial court are perverse are unsustainable. We, thus, are of the view that judgment of the High Court is unsustainable."
(Emphasis supplied.)
18) Ld. Counsel for the appellant/accused has further argued that similar facts were challenged before the Hon'ble Supreme Court in the matter of 'S. Murgan Vs. M.K. Karunagaran' decided by Hon'ble Supreme court of India on 31.10.2023 in which it was held that:
4. The learned Trial Court in the CC No.22/2019 noted that the complainant in order to show his financial capacity had indicated that he had borrowed Rs.8,00,000/- from his mother in order to advance Rs.8,00,000/- loan to the accused. It is however significant that the mother herself from whom the complainant claimed to have borrowed the sum, was not produced as a witness in the proceeding. That apart, the sale transaction dated 31.05.2013 which was made the basis for money coming into the hand of the complainant's mother, was canceled subsequently on 13.05.2015 and as such there was no concluded transaction which will justify any money in the hand of complainant's CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 13/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07
16:10:29 +0530
mother.
6. It is well settled that to rebut the presumption under Section 139 of Negotiable Instruments Act, 1881, it is open to the accused to not only rely on the evidence led by him but he can also rely on the materials submitted by the complainant, in order to raise a probable defence. The respondent's counsel rely on the ratio in Basalingappa vs Mudibasappa reported in (2019) 5 SCC 418 to say that complainant here failed to discharge his burden. The relevant paragraph is extracted hereasunder:-
"25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference or 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."
(Emphasis supplied)
19) Ld. Counsel for the appellant/accused has further argued that the Hon'ble Supreme Court, in the matter of 'Rajaram S/o Sriramulu Naidu (D) through LRS. Vs. Maruthachalam (D) through LRS.' 2023 SCC OnLine SC 48, held that:
"13. It can thus be seen that this Court has held that once the execution of cheque is admitted, Section 139 of the N.I. Act mandates a presumption that the cheque was for the discharge of any debt or other liability. It has however been held that 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 CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 14/24 SUMEDH Digitally by SUMEDH signed KUMAR KUMAR SETHI Date: 2026.02.07 SETHI 16:10:40 +0530 rebutting the presumption is that of preponderance of probabilities. It has further been held that to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. It has been held that 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."
(Emphasis supplied)
20) Ld. Counsel for the appellant/accused has further argued that the Hon'ble Supreme Court in a similar case of 'Sanjay Verma Vs. Gopal Halwai' 2019 SCC Online Del 7572: (2019) 262 DLT (CN 5B) 5: 2019 ACD 412 PLR (2019) 194 IJ 44, held that:
"13. It is very surprising that a person who earns only Rs. 15,000/- per month would make an arrangement of Rs. 4.90.000/- and give the same as a friendly loan. No date of extending the loan or rate of interest at which such loan was extended, has been mentioned. Neither there is any document executed nor the date when the loan was and of its repayment is mentioned.
14. The defence raised by the respondent that he had in fact transactions with Mr. Subhash Aggarwal and had handed over the cheque to Subhash Aggarwal who has then misused the same and filed the subject complaint as a proxy litigation through his own employee is a probable defence and rightly rebuts the statutory presumption.
15. Perusal of record as also the judgment of the Appellate Court shows that the finding returned by CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 15/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07
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the Trial Court was clearly erroneous and contrary to record. The view taken by the Appellate Court is a well reasoned and probable view in facts of the present case. The Appellate Court has rightly returned the finding that the respondent has been able to rebut the presumption and accordingly the onus shifted on the petitioner to prove beyond reasonable doubt that the loan was extended to the respondent and the subject cheque was issued for repayment of the loan. As rightly held by the appellate court, the petitioner has failed to show the same.
17. In view of the above, I find no infirmity with the view taken by the Appellate Court in its impugned order dated 19.12.2014".
(Emphasis supplied)
21) Ld. Counsel for the appellant/accused also filed the judgment delivered in the case of 'KV Vijay Kumar Vs. V. Madaiah' decided by Hon'ble High Court of Karnataka on 06.01.2026, to contend that the standard of proof for rebutting the presumption under section 139 NI Act would not be proof beyond reasonable doubt and it would suffice to raise probable defence. Further, reliance was placed in that case on various judgments of the Apex Court to observe that when accused disputed financial capacity of complainant, onus would shift back on complainant to prove financial capacity.
22) It has been contended by the ld. Counsel for the respondent herein/ complainant on the other hand that it is not as if the appellant is a total stranger to the respondent herein/ complainant so as to negate any possibility of extending a friendly loan by the CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 16/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:10:57 +0530 respondent to the appellant. As evidently, it is a matter of record that he is known to the respondent herein/ complainant since college.
23) It is also contended that when a blank cheque is handed over by one person to another then the drawer implicitly authorizes the holder to fill in other details.
24) It is also argued that it is rather unbelievable that a cheque of Rs.15,00,000/- would be given for security in relation to a job which holds a salary of Rs.45,000/-. In this regard it is contended that the amount in the cheque has been filled by the hands of the appellant himself.
25) It is also argued that rather than taking any action against the respondent herein/complainant for recovery of the cheque allegedly given as security, the appellant chose to close the account in question.
26) As regards capacity to pay, it has been submitted that the same is amply brought out in the cross examination of the respondent herein/complainant carried out before the Ld. Trial Court.
27) Ld. Counsel for the respondent herein/ complainant has relied upon the case of 'Rohitbhai Jivanlal Patel Vs. State of Gujrat', 2019 Legal Eagle (SC) 334 and 'Bharat Barrel and Drum Manufacturing Company Ltd. Vs. Amin Chand Pyarelal' 1999 Legal Eagle (SC) 202, with regard to the statutory presumption in his favour.CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 17/24 Digitally signed
SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:11:06 +0530
28) He also relied upon the case of 'Lekh Raj Sharma Vs. Yash Pal Gupta' Crl. L.P.567/2014 decided on 30.06.2015, with regard to absence of reference to a loan in the ITR of the complainant being inconsequential for the purpose of deciding such cases against an accused.
29) He also relied upon the case of 'Oriental Bank of Commerce Vs. Prabodh Kumar Tiwari' MANU/SC/1061/2022, in support of his contention that when the cheque has been signed by the drawer then filling up of other details by another person does not raise a valid defence against the cheque being issued towards payment of a debt or in discharge of liability.
ANALYSIS AND FINDINGS:
The respondent not being acquainted with the appellant to extend a friendly loan to him:
30) So far as the respondent herein/ complainant not being acquainted with the respondent herein /complaint is concerned, the respondent has rightfully explained that it is not as if they are total strangers. He has submitted in his evidence that the appellant is known to him since college. Even if it is assumed that the appellant was an employee of the company of the respondent herein/ complainant then also they appear to be acquainted. The respondent herein/ complainant has already explained in his cross examination that he did not know about the employment of the appellant in the same company as he was handling another vertical.CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 18/24
SUMEDH Digitally by SUMEDH signed KUMAR KUMAR SETHI Date: 2026.02.07 SETHI 16:11:16 +0530 Attempt to rebut presumption by impeaching the respondent's credit and casting doubt on the financial capacity of the complainant:
31) Ld. Counsel for the respondent herein/ complainant has sought to prove financial incapacity of the respondent herein/ complainant to lend the friendly loan on the ground that neither the wife and sister-in-law of the respondent herein/ complainant were examined as witness nor did he, his wife and his sister-in-
law show the loans in question in their respective ITRs.
32) So far as the presumption under section 139 of NI Act is concerned, it is true that as per the authorities relied upon by ld. Counsel for the appellant, the same can be rebutted on the basis of material produced by the complainant himself and impeaching the credit of the witness. The accused does not necessarily need to lead evidence in this regard. However, this luxury of not leading evidence is only afforded when the material produced by the complainant in evidence is such that the presumption itself stands rebutted from the bare perusal of the same. The ld. Counsel for the appellant/accused has tried to impeach credit of the witness i.e. the complainant on the aspect of his alleged incapacity to lend a friendly loan to the appellant and failure to produce any evidence regarding the source of the funds. In this regard it must be noted that in cases of friendly loan being given in cash the presumption under section 139 NI Act can be rebutted. However, it is not as if this presumption does not arise in such cases in first place. In the landmark judgment of 'Sanjabij Tari Vs. Kishore S. Borcar', decided on 25.09.2025, the Hon'ble Apex Court was faced with facts where the complainant had allegedly disbursed a friendly loan to the accused upon CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 19/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:11:25 +0530 borrowing the same from his father. In this case the Hon'ble Apex Court upheld the conviction of the convict by stating that it is not as if in all cases of loan being given in cash the presumption under section 139 NI Act does not arise or automatically stands rebutted. While upholding the conviction of the convict in the said case, the Hon'ble Apex Court had observed that upon reading of the complainant's evidence as a whole, it did not seem that the complainant did not have the wherewithal to extend the friendly loan in question. In the present case also the complainant has amply explained the capacity of his wife and sister-in-law to extend the loan to the him and his own capacity in turn to extend the loan to the appellant/accused. He has clearly mentioned that he was earning around Rs.2.5 lakhs per month at that time. He had also stated that his wife was running a Software Institute with a monthly income of about Rs.2.5 Lakhs per month and his sister-in-law was having the job of a teacher with the government. Nothing has been brought forward by the accused to the contrary. In the above referred case, the Hon'ble Apex Court also observed that when the legal notice of demand was first served upon the accused, he did not take such a defence of no friendly loan being extended by way of reply to the notice. It noteworthy that in the present case also no such reply has been given to the legal notice of demand served upon the appellant.
33) In Sanjabij Tari (supra), almost identical arguments had been led as have been led by the ld. Counsel for the appellant in the present case regarding the lack of financial capacity of the complainant therein to grant friendly loan and his attempt to rely upon material of the complainant himself to raise a probable CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 20/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:11:36 +0530 defence which creates doubt about the existence of a legally enforceable debt or liability. The Hon'ble Apex Court rather frowned upon the approach of some of the courts lower below to not give effect to the presumption under section 118 and 139 of the NI Act in such cases and held it to be contrary to the mandate of Parliament. The Hon'ble Apex Court held as under:
"APPROACH OF SOME COURTS BELOW TO NOT GIVE EFFECT TO THE PRESUMPTIONS UNDER SECTIONS 118 AND 139 OF NI ACT IS CONTRARY TO MANDATE OF PARLIAMENT
19. Recently, the Kerala High Court in P.C. Hari vs. Shine Varghese & Anr., 2025 SCC OnLine Ker 5535 has taken the view that a debt created by a cash transaction above Rs. 20,000/- (Rupees Twenty Thousand) in violation of the provisions of Section 269SS of the Income Tax Act, 1961 (for short 'IT Act, 1961') is not a 'legally enforceable debt' unless there is a valid explanation for the same, meaning thereby that the presumption under Section 139 of the Act will not be attracted in cash transactions above Rs. 20,000/- (Rupees Twenty Thousand).
20. However, this Court is of the view that any breach of Section 269SS of the IT Act, 1961 is subject to a penalty only under Section 271D of the IT Act, 1961. Further neither Section 269SS nor 271D of the IT Act, 1961 state that any transaction in breach thereof will be illegal, invalid or statutorily void. Therefore, any violation of Section 269SS would not render the transaction unenforceable under Section 138 of the NI Act or rebut the presumptions under Sections 118 and 139 of the NI Act because such a person, assuming him/her to be the payee/holder in due course, is liable to be visited by a penalty only as prescribed.
Consequently, the view that any transaction above Rs.20,000/- (Rupees Twenty Thousand) is illegal and void and therefore does not fall within the definition of 'legally enforceable debt' cannot be countenanced. Accordingly, the conclusion of law in P.C. Hari (supra) is set aside.
21. This Court also takes judicial notice of the fact that some District Courts and some High Courts are CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 21/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
2026.02.07 SETHI 16:11:44 +0530 not giving effect to the presumptions incorporated in Sections 118 and 139 of NI Act and are treating the proceedings under the NI Act as another civil recovery proceedings and are directing the complainant to prove the antecedent debt or liability. This Court is of the view that such an approach is not only prolonging the trial but is also contrary to the mandate of Parliament, namely, that the drawer and the bank must honour the cheque, otherwise, trust in cheques would be irreparably damaged.
NO DOCUMENTS AND/OR EVIDENCE LED WITH REGARD TO THE FINANCIAL INCAPACITY OF THE APPELLANT
22. It is pertinent to mention that in the present case, the Respondent No.1- Accused has filed no documents and/or examined any independent witness or led any evidence with regard to the financial incapacity of the Appellant- Complainant to advance the loans in question. For instance, this Court in Rajaram S/o Sriramulu Naidu (Since Deceased) Through LRs. vs. Maruthachalam (Since Deceased) Through LRs., (2023) 16 SCC 125 has held that presumptions under Sections 118 and 139 of the NI Act can be rebutted by the accused examining the Income Tax Officer and bank officials of the complainant/drawee".
(Emphasis supplied)
34) Thus, the absence of reference of the loans in question in the ITRs of the respondent herein/ complainant or his wife and sister-in-law also do not tantamount to rebuttal of the presumption under section 139 of the NI Act. Likewise, merely shooting in the dark without pointing out any material contradiction or incapacity to pay on part of the respondent herein/ complainant, the appellant cannot rebut this presumption and for the same reason, the authorities relied upon by his ld. counsel do not come to his aid.
CHEQUE BEING GIVEN AS SECURITY:
33) It is noteworthy that the onus to prove that the cheque was CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 22/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:11:54 +0530 given for security purposes lay upon the appellant himself. This court has come across several instances where security cheques are endorsed as such at the back. Such endorsement makes it clear that the cheque is being given for security purpose. In such cases, the liability only arises when the security becomes due. However, no such endorsement has been made on the cheque in question in the present case. No material has also been produced by the appellant to prove that the cheque was given for the purpose of security. Nothing has been brought forth in the cross examination of the respondent herein/complainant also which could establish that the cheque was given for the purpose of security.
DETAILS OF THE CHEQUE NOT FILLED BY DRAWER:
34) So far as the cheque being filled partially, it is noteworthy that it is the settled law that where drawer hands over a blank signed cheque to another person, then he impliedly authorizes such person to fill in the other details. No useful purpose would be served by citing multiple authorities on this point.
LEGAL NOTICE NOT SERVED:
35) This brings us to the next ground of appeal i.e. the service of notice upon the appellant. At the outset, it noteworthy that this defence was not taken when notice under section 251 CrPC was served upon the appellant. Be that as it may, as regards the service of notice on the appellant is concerned, the ld. Trial court has rightly pointed out that even the summons issued by the court have been served upon the appellant on the same address as given in the legal notice of demand. As a matter of fact, the process server of the bailable warrants issued against the CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 23/24 Digitally signed SUMEDH by SUMEDH KUMAR SETHI KUMAR Date:
SETHI 2026.02.07 16:12:06 +0530 appellant, when he did not appear on service of summons, has also categorically stated that the address of the appellant was correct and he met his mother Sarita Devi at the said address. Thus, there is no error on part of the Ld. Trial court regarding the finding that legal notice of demand was in fact served upon the appellant.
36) Hence, from the deliberations above, this court finds that there is no infirmity in the order of the Ld. Trial court.
Consequently, the appeal against the judgment 18.12.2023 stands dismissed.
37) No arguments have been led against the order on sentence dated 15.01.2024. Therefore, no interference is required in the said order as the same appears to be just and proper. As a corollary, the appellant is granted four weeks time to surrender before the Ld. Trial Court.
38) Copy of this judgment along with Trial Court record, be sent to the Ld. Trial Court for information. Appeal file be consigned to Record Room.
ANNOUNCED IN THE OPEN COURT ON 7th FEBRUARY, 2026 SUMEDH Digitally by SUMEDH signed KUMAR KUMAR SETHI Date: 2026.02.07 SETHI 16:12:13 +0530 (DR. SUMEDH KUMAR SETHI) ADDITIONAL SESSIONS JUDGE-05 SHAHDARA DISTRICT KARKARDOOMA COURTS, DELHI CA No.27/2024 NAVEEN CHAUDHARY Vs. RAJESH KATHURIA Page 24/24