Delhi District Court
Micromax Informatics Ltd vs Universal Distributors And Ors on 23 December, 2025
IN THE COURT OF SH. SNEHIL SHARMA,
JUDICIAL MAGISTRATE FIRST CLASS, NI ACT -01,
PATIALA HOUSE COURTS NEW DELHI
JUDGMENT
MICROMAX Vs. UNIVERSAL DISTRIBUTORS CC NO: 3135/2019 P. S. Barakhamba U/s 138 NI Act a CNR No. of the case : DLND02-005297-2019 b Date of institution of the case : 08.03.2019 c Cheque number and dated : 633379 dt. 21.12.2018 d Cheque amount : Rs. 31,02,237/-
e Name of the complainant : Micromax Informatics Ltd.
(through its AR) Add:- 21/14A, Phase- II, Naraina Industrial Area, Delhi - 110028.
f Name of the accused and his : Universal Distributiors (partnership) through Pawan Daga parentage Akshat Daga (not summoned VO 05.12.2019 and 18.07.2022) Ms. Shahi Daga (not summoned VO 05.12.2019 and 18.07.2022) Add: 9/415, Swami Vivekanand ward, Budha Para, Raipur -
177031
g Offence complained of : 138 NI Act
h Plea of accused : Not guilty
i Orders reserved on : 13.12.2025
j Final order : Accused Universal Distributiors
(partnership) through Pawan Daga
is convicted for offences
punishable under sections 138 NI
Act.
k Date of judgment : 23.12.2025
Digitally
signed by
SNEHIL
SNEHIL SHARMA
CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 1 of 25
SHARMA Date:
2025.12.23
16:16:22
+0530
1. Vide this judgment the present complaint case for an offence punishable U/S.138 of the Negotiable Instruments Act, 1881 (hereinafter "the NI Act") is being decided.
2. It is case of the complainant that complainant company duly registered under the provisions of Companies Act, 1956 having its registered office at 21/14 A, Phase-II, Naraina Industrial Area, Delhi, inter alia, engaged in the business of, sales, marketing and distribution of GSM and CDMA mobile handsets, data cards, smart phones, LED TV, Air Conditioner, etc. under the brand name and style 'MICROMAX' (Products).
3. Accused No.1 is a Partnership concern having its office at the address mentioned herein above.. Accused Nos. 2 to 5 are the Partners of the Accused No.1 and being the Partners of Accused No.1 are in charge and duly responsible for day to day affairs and dealings of Accused No.1. Accused No.2 is also signatory of the cheque in question. Accused used to personally visit the office of Complainant and deal with representatives of Complainant.
4. Accused through its partners, represented to be in the business of selling of mobile handsets and other related products and assured about its sound financial position. Accused requested Complainant to appoint Accused as its distributor for selling the Products of Complainant. Based on the representations of Accused , through its partners, and believing the same to be true, Complainant had entered into Micromax Consumer Distributor Agreement dated 28.03.2015 with Accused No.1 and appointed Accused No.1 Authorized Distributor, on non-exclusive basis, for distributions of Products of the Complainant Company.
Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 22025.12.23 of 25 SHARMA Date:
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5. Accused No.1, through its partners, used to place orders upon Complainant Company, for supply of Micromax brand Products. Complainant Company has been supplying the Products to the Accused No.1 through its partners and other representatives on regular basis and used to raise invoices upon the Accused No.1 for supply of said products. Accused No.1, through its partners and other representatives, acknowledged the receipt and delivery of the quantity of the Products supplied by the Complainant Company as per the descriptions and specifications mentioned in the orders placed by Accused Persons from time to time. Accused Persons never raised any objection with the Complainant Company at any given point of time with respect to the quality / quantity and or non - delivery of the Products.
6. Accused No.l, through its partners, was regularly taking supply delivery of the Products from Complainant Company, the Complainant Company was maintaining a running account of the transactions undertaken with the Accused Persons. As per the accounts duly maintained by the Complainant Company, there is an admitted outstanding balance of Rs. 31,02,236.63 (Rupees Thirty One Lakh Two Thousand Two Hundred Thirty Six and Sixty Three Paisa Only) towards the Products supplied/ delivered by Complainant Company to Accused Persons.
7. Complainant Company has time and again intimated the Accused Persons about the delayed payments and also requested the Accused Persons to release the outstanding payment as stated herein above. Despite repeated reminders and requests from Complainant Company and its representatives, the Accused Persons deliberately avoided making payments of legally enforceable debt and/ or admitted outstanding dues towards Complainant Company.
Digitally
signed by
SNEHIL
CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 3 of 25
SNEHIL SHARMA
SHARMA Date:
2025.12.23
16:16:31
+0530
8. After much persuasion and follow up by Complainant, the Accused Persons had agreed to pay the above noted legally enforceable debt / outstanding amount to Complainant. Accused No.1, on the instructions and under the signature of Accused No.2 had issued a cheque bearing No. 633379 dated 21.12.2018 fora sum of Rs. 31,02,237 /- (Rupees Thirty One Lakh Two Thousand Two Hundred Thirty Seven Only) drawn on State Bank of India, Shastri Market, Raipur towards payment of the aforementioned legally enforceable outstanding debts/dues.
9. That based upon the assurances given by the Accused Persons, Complainant Company presented the aforesaid cheque with its banker within the validity period of the said cheque. To the shock of the Complainant the above stated cheque was returned unpaid vide Returning Memo dated 05.01.2019 with remark payment stopped by drawer.
10. The complainant had sent a legal notice dated 29.01.2019 to the accused through his counsel regarding the dishonour of the aforesaid cheque through registered AD & speed post but the accused has denied his liability and had not made payment of the cheque amount vide reply dt. 20.02.2019 and therefore, the present complaint is filed by the complainant against the accused for the offence under Section 138 of the NI Act.
11. On being satisfied of the prima facie ingredients of Section 138 of the NI Act, cognizance was taken and summons were directed to be issued against the accused vide order dated 05.12.2019.
12. Accordingly, on 18.09.2021 and 17.05.2022 notice under Section 251 Cr.P.C. r/w Section 263(g) Cr.P.C was framed and served upon the accused no. 1 (Universal Distributors partnership) and accused no. 2 (Pawan Daga) to which he pleaded not guilty and claimed trial. While Digitally signed CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 4 of 25 by SNEHIL SNEHIL SHARMA SHARMA Date:
2025.12.23 16:16:34 +0530 putting forth his plea of defence, and he stated that cheque belong to his account and bears his signature. He also filled the name of the payee i.e. Micromax but has not filled amount and date. He has stopped the payment by intimating the bank in writing. He admit to receive the legal notice and also replied it on 20.02.2019. He further stated that his firm was the distributor of the complainant company and used to deal in sale and purchase of LED TV. As a condition for entering into distribution agreement with complainant company, he had given one security cheque bearing no. 633379 to the complainant company as security for the transaction of Rs. 1.5 Crore in March 2015. His firm has given Rs.15 Crore to the complainant company in two parts somewhere in the April 2015. He does not have the record of the same with him but he could produce the same as the amount has been transferred through RTGS.
13. Complainant company has assured that they would provide interest of 10% per annum on the aforesaid amount. They have not executed any agreement regarding the aforesaid transactions and payment of interest but their firm has received an email somewhere in March 2015 from one Sunil Dut Sharma who was the All India Sales head of the complainant company.
The complainant company paid them interest amount of around Rs. 16 lacs for year 2015-2016 accounting year i.e. April to March. Then despite their repeated emails to him they have not paid a singly penny to them till date. They have only given their assurance of payment through email but no amount apart from the interest given of the first year was sent by them. Then in the year 2018 we have returned somewhere around 80-90 TV whose approximate value of around Rs.8 lacs to the complainant company and in this regard before returning the TV they had sent mails to the complainant company regarding the non-repairable TV supplied to them. He had receipt of the return of the aforesaid TVs to the complainant Digitally signed by SNEHIL CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 5 of 25 SNEHIL SHARMA SHARMA Date:
2025.12.23 16:16:37 +0530 company. However, the complainant company presented the aforesaid cheque in the bank even before the return of TVs could be completed.
14. In Complainant's evidence, the complainant stood as CW1 and relied upon the following documents:
i) Ex. CW1/1 : Copy of authority
letter.
ii) Ex. CW1/2 : Distributor agreement.
iii) Ex. CW1/3 : Statement of account.
iv) Ex. CW1/4 : Original cheque
(admitted u/s 294 Cr.P.C.)
v) Ex.CW1/5 : Returning memo
(admitted u/s 294 Cr.P.C.)
vi) Ex. CW1/6(colly.) : Postal receipts
alongwith tracking
vii) Ex.CW1/7 : Reply of legal notice
viii) Ex.CW1/8 : Certificate u/s 65B IEA.
ix) Ex.CW1/X : Evidence affidavit.
15. CW1 was cross examined on behalf of accused and CW1 deposed that he came into contact with the accused when he approached the complainant company for the purposes of settlement after the filing of the present complaint. Accused Pawan Daga used to come to their office but there is no such record to show the visits of the accused. CW1 voluntarily deposed that he remembered when he visited for settlement purposes in the year 2019 after filing of the present complaint. There was an agreement between the parties which signed on 28.03.2015. Accused Pawan Daga had signed the said agreement on behalf of the accused no.1 firm. No bank guarantee/ security deposit was demanded by the complainant company at Digitally signed by SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS SNEHIL Page 6 of 25 Date:
SHARMA 2025.12.23
16:16:40
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the time of signing of the said agreement. The communication regarding the statement of account was sent to the accused through e-mails, however, the same are not on record. Field team had also communicated to the accused the balance amount to be paid by him and after regular. follow ups the present cheque was issued by the accused towards payment of the outstanding amount. No document is annexed in support of the said communication as the field team had verbally communicated the same to the accused. The proof of delivery and invoices for the supply of the goods are not on record, however, he could produce the same on the NDOH.
There has been no dispute between the parties apart from the present complaint.
16. No complaint has been raised by the accused regarding the defective goods like LCD, LED etc. The distributor can file the complaints regarding faulty/defective products on the MCM portal which means the Micromax Claim Managenment portal within the days as prescribed under the respective policies pertaining to the faulty/defective products. The grievance resolution mechanism has not been mentioned in the agreement. There is no document in support of the fact that the grievance resolution mechanism was ever communicated to the accused. The outstanding amount is pertaining to the products supplied to the accused firm on regular basis and the balance is derived from the running statement of account.
17. The defective goods were returned to the complainant company by the accused and the corresponding credit notes issued to him, have been duly mentioned in the statement of account. By the acts of the accused by issuing the cheque in question, he has admitted his liability to the tune of cheque amount. The cheque in question was handed over to the field team and subsequently, it was provided to the Finance team for encashment. He does not know the place where the cheque in question was handed over to Digitally signed CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS SNEHIL Page 7 of 25 by SNEHIL SHARMA SHARMA Date: 2025.12.23 16:16:44 +0530 the field team. 1TR of the complainant company has not been annexed. The cheque in question was issued in furtherance of the agreement against the outstanding liability of the accused towards the complainant company. They did not communicate the accused prior to the presentation of the cheque in question.
18. CW1 had brought invoices No. IN2200000088 and IN2200000078 both dated 31.07.2017. Same are Ex.CWI/9 & Ex.CW/10. Vide the invoice Ex.CW1/9 the complainant company had supplied 78 LED TVs to the accused firm. It is corectly admitted that the invoice Ex.CW1/9 was duly communicated to the accused firm alongwith the proof of delivery bearing No. 4367 and both the documents have been duly received by the accused firm by affixing its stamp. The payment regarding the same invoice is pending to be received and no communication regarding payment of the said invoice has been received by the complainant company. Vide the invoice Ex.CW1/10 the complainant company had supplied 200 LED TVs to the accused firm., It is corectly admitted that the invoice Ex.CW1/10 was duly communicated to the accused firm alongwith the proof of delivery bearing No. 4362 and both the documents have been duly received by the accused firm by affixing its stamp.
19. The payment regarding the same invoice is pending to be received and no communication regarding payment of the said invoice has been received by the complainant company. Witness is confronted with copies of emails dated 30.05.2015, 20.06.2015. The same are taken on record and are Mark CW1/D1 (Colly running into 4 pages). He had not come across through any such email in the records of complainant company. He had to check from the company's record whether any security deposit was received or not. He was not aware of any interest on security deposit in the financial year 2015-2016, 2016-2017. Witness is confronted with copy of Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 8 of 25 SHARMA Date:
2025.12.23 16:16:47 +0530 email dated 25.04.2018. The same is taken on record CW1/D2. He had not come across through any such email in the records of complainant company. At this stage, witness is confronted with copy of invoices dated 31.01.2019 & 18.02.2019. The same are taken on record and are now Mark CW1/D3 (Colly running into 4 pages). He had not come across through any such invoice ' in the records of complainant company. CW1 has denied all suggestions put to him and thereafter CE was closed.
20. The accused was then examined under Section 313 Cr.P.C., 1973 wherein all the incriminating evidence were put to the accused and he stated that his firm was the distributor of the complainant company and used to deal in sale and purchase of LED TV. As a condition for entering into distribution agreement with complainant company, he had given one security cheque bearing no. 633379 to the complainant company as security for the transaction of Rs. 1.5 Crore in March 2015. His firm has given Rs.1.5 Crore to the complainant company in two parts somewhere in the April 2015. He does not have the record of the same with him but he could produce the same as the amount has been transferred through RTGS. Complainant company have assured that they would provide interest of 10% per annum on the aforesaid amount. They had not executed any agreement regarding the aforesaid transactions and payment of interest but their firm has received an email somewhere in March 2015 from one Sunil Dutt Sharma who was the All India Sales head of the complainant company.
21. The complainant company paid them interest amount of around Rs.16 lacs for year 2015-2016 accounting year i.e. April to March. Then despite their repeated emails to him they have not paid a single penny to them till date. They have only given their assurance of payment through email but no amount apart from the interest of the first year was sent by Digitally signed by SNEHIL CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 9 of SHARMA SNEHIL 25 SHARMA Date:
2025.12.23 16:16:50 +0530 them. Then in the year 2018 they have returned somewhere around 80-90 TV whose approximate value of around Rs.8 lacs to the complainant Company and in this regard before returning the TV, they have sent mails to the complainant company regarding the non-repairable TV supplied to them. He had receipt of the return of the aforesaid TVs to the complainant company. However, the complainant company presented the aforesaid cheque in the bank even before the return of TVs could be completed. He also received the legal demand notice and also replied to the same. He had issued stop paymnent instructions to his banker with respect to the cheque in question. The cheque in question bears his signatures in the capacity of partner and is drawn on account maintained by accused no.1 partnership firm. He admit the execution of Ex. CW1/2 (OSR) and the same bears his signatures at every page. He deny Ex. CW1/3. He admit Ex. CW1/9 and Ex. CW1/10. However, the interest component was not adjusted by complainant company with respect to defective goods worth Rs. 9 Lacs returned by accused no.1 firm in January 2018. Accused has opted to lead DE.
22. Accused examined himself as DW1 and he deposed that from 30.05.2015, he started business with the Micromax company. The micromax has taken Rs.1.5 Cr. Deposit from him on the asurance that they will give him 12% interest per annum. He had given Rs. 1 cr. On 30.05.2015 and Rs. 50 Lacs on 20.06.2015. They have paid the interest of the year 2015-2016 in the year 2016. Complainant has not paid the interest in the year 2017 but they had shown the same in TDS portal and withdrawan the TDS later on. Thereafter, they had not given accused any interest. In 2019, they had took back Tvs of Rs.8,84,000/- approx. from accused as sales return.
Digitally signed by SNEHIL SNEHIL SHARMA SHARMA Date:
CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 10 of 252025.12.23 16:16:54 +0530
23. DW1 was cross examined on behalf of the complainant. DW1 was asked that did he entered into the distribution agreement Ex.CW1/2 dt. 28.03.2015 to which he answered that Yes. DW1 was asked that Is the distribution agreement Ex.CW1/2 in addition to the alleged agreement dt. 30.05.2015 to which he answered that The email was of 30.05.2015 sent by Sunil Dutt Sharma, India Head, Micromax in the year 2015. DW1 was asked that were the payments made by the party on invoice to invoice basie to which he answered No. DW1 was asked that is it true that the parties used to maintain running account to which he answered yes. DW1 was put that in his statement u/s 313 Cr.P.c. dt. 12.03.2024, wherein he had mentioned that the cheque bearing number 633379 was issued to complainat company as security for the transaction of Rs.1.5 cr. in March 2015, is it correct , to which he answered No.
24. It is corectly admitted that he had filed the interest received document for the year 2015-2016 (TDS Certificate regarding int. of Rs. 1.5 Cr) DW1 was asked that is it correct that apart from the TDS document, no other document have been annexed for showing the interest for the year 2016-2017 to which he answered that Yes. DW1 was put that his statement u/s 315 BNSS, wherein he had mentioned that the amount of Rs.
1.5 Cr. was adjusted towards outstanding liability on multiple dates in 2017, is it correct, to which he answered Yes. It is corectly admitted that the cheque in question bears his signature. DW1 was asked that in his statement u/s 313 Cr.P.C. the cheque in question was security of Rs. 1.5 Cr., but in his application u/s 315 CrP.C. the cheque in question was security cheque for pending payement of Rs.23,60,288/-, which one is correct to which he answered that both are wrong.
25. DW1 voluntarily stated that it was issued for fresh transcation. DW1 is asked that is there any document to show that the TVs were supposed to Digitally signed by SNEHIL CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 11 of 25 SNEHIL SHARMA SHARMA Date:
2025.12.23 16:16:59 +0530 be returned back to Micromax to from the accused apart from the invoices, to which he answered No. DW1 voluntarily stated that he had not filed any document but Godwon of Micromax only accepts the goods after sending any mail and they have accepted the goods (TVs). DW1 was asked that is there any process to get the goods returned back to which he answered that Yes, through email. DW1 was asked that in the year 2018 as per his own statement there was a pending claim of Rs. 23, 60288/- payable by accused to which he answered that No. it was payable to accused. DW1 was asked that he had admitted in your statement u/s 315 Cr.P.C. that you paid Rs.10 lacs in two installements to complainant. Is it correct to which he answered that It is correct. DW1 voluntarily stated that he had to check it. DW1 was asked that Is it correct that Rs. 10 lacs, if paid was towards the outstanding payment on his part to which he answered that Yes. He voluntarily stated that he had to check. DW1 has denied all the suggestions put to him.
26. Accused has examined Rajesh Pal as DW2 and he deposed that he was the branch manager of Micromax during that period in Raipur Chhatisgarh. As per the requirement of the company they need bank gurantee from the accused person of Rs.1.5 cr. in which the cost was Rs.7-8 lacs. Accused informed that the cost is too much then complainant company through him offered accused to pay Rs.1.5 cr. as a security deposit and they will pay 12% per annum interest to the accused. Accused has paid Rs.1.5 Cr. security deposit to the company. When the business closed with the accused then balance confirmation was issued by him on behalf of company to accused. As per the last balance accused was to pay Rs.23 lacs to the complainant. Accused paid Rs. 10 lacs after issuance of the balance confirmation to the company. Accused was having defective stock of Rs 8-9 lacs approved by the company. Cheque in question was taken by him on behalf of the company from the accused as a security.
Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 12 of 25 SHARMA Date:
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27. DW2 was cross examined on behalf of complainant and he deposed that he is currently employed with the company called Informatik. Company works in the field of Information and Technology. He was employed with Micromax from 2012 to 2019. I resigned from Micromax in July 2019. He had not brought any documents to show his employement or his tenure with Micromax. It is corectly admitted that he had not brought any document to show the balance confirmation of Rs. 23 lacs. It is corectly admitted that he had not brought any document to show that accused has paid Rs. 10 lacs after issuance of balance cofirmation. It is corectly admitted that he had not brought any document to show that company has asked Rs. l.5 cr. Security deposit from the accused. He had not brought any document to show that company agreed to pay 12 annum interest to the accused. Accused and company Worked together for 2 - 3 years. He does not remember the said period. DW2 has denied all the suggestions put to him.
28. Accused examined Gandharv Daga as DW3 and he deposed that accused used to do business with the micromax for Chattisgarh. Micromax has asked for bank gurantee from the accused at the inception of the business. As the cost of bank gurantee was too much therefore Micromax proposed accused to give security deposit of Rs.1.5 Cr. and micromax will pay 12% annum interest to the accused. Intially Micromax paid interest @9% per annum in 26A TDS but paid by 12% on ledger. After sometime they stopped giving the interest also. Balance confirmation was made after the negotition with the branch manger which was approved by the company. It was around Rs. 26 lacs again said Rs. 23 lacs, out of which Rs.10 lacs was paid by accused. Some defective products were also lying with the accused approved by the company which company picked up Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 13 of SHARMA 25 Date:
2025.12.23 16:17:06 +0530 from them after 7-8 months. Only Rs.4-5 lacs is pending to be paid to the complainant. Micromax has misused the security cheque.
29. DW3 was cross examined on behalf of complainant and he deposed that Accused is his cousin brother (tauji ka ladka) and his mother is sleeping partner in the partnership firm of the accused. It is corectly admitted that he does not have any official link with the partnership firm of the accused. DW3 voluntarily deposed that he used to look accounts of the partnership firm as his mother was the sleeping partner. He was also involved in day to day business of the firm. He never get or received any remuneration from the firm. It is correctly admitted that he had not brought any document to show the confirmation of Rs. 23 lacs. It is correctly admitted that he had not brought any document Show that accused has paid Rs. 10 lacs after issuance of balance cofirmation. It is correctly admitted that he had not brought any document to show that company has asked Rs. 1.5 cr. security deposit from the accused. It is corectly admitted that he had not brought any document to show that company agreed to pay 12% per annum interest to the accused. It is corectly admitted that he had not brought document to show that defective goods were picked by the company from the accused. DW3 has denied all the suggestions put to him and thereafter DE was closed and matter was kept for final arguments.
30. It has been argued by Ld. Counsel for the complainant that case of the complainant is proved and cheque is also in the favour of the complainant, therefore, accused must be convicted and amount should be recovered. On the other hand, Ld. Counsel for accused has argued that accused has been falsely implicated in this case and that complainant has not been able to prove its case beyond reasonable doubt against the accused.
Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 14 of 25 SHARMA Date:
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31. I have heard ld counsel for the complainant and Ld. Defence counsel for accused & considered the respective arguments as well as gone through case file very carefully.
32. The essential ingredients in order to attract Sec. 138 of NI Act, 1881 are as following:
i) The cheque for an amount is issued by the drawer to the payee/complainant on a bank account being maintained by him.
ii) The said cheque is issued for the discharge, in whole or in part of any debt or liability.
iii) The cheque is returned by the bank unpaid on account of insufficient amount to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with the bank.
iv) The cheque is presented within 3 months from the date on which it is drawn or within the period of its validity.
v) within 30 days a legal demand notice is issued by the payee or the holder in due course to the drawer of the cheque on receipt of information by him from the bank regarding the dishonour of the cheque.
vi) The drawer of the said cheque fails to make payment of the said amount of the money as demanded in the legal demand notice to the payee or the holder in due course within 15 days of the reciept of said notice.
vii) The debt or other liability against which the cheque was issued is legally enforceable.
33. Now, coming to the facts of the present complaint case keeping in view the essential ingredients of section 138 of NI Act. In this case, it is not disputed and duly admitted by the accused that the cheque in question bears his signatures and name of the payee also filled by him but denies filling the particulars on the cheque. Therefore, it can be said that the cheque was drawn by him in favour of the complainant as complainant is the holder of the cheque. Therefore, the essential ingredient (i) as discussed in the preceding paragraph stands fulfilled.
Digitally
signed by
SNEHIL
SNEHIL SHARMA
CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 15 of 25
SHARMA Date:
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34. Accused has further admitted the fact of dishonour of the cheque in question, hence, another essential ingredients (iii) and (iv) also stand proved by the complainant. Accused has admitted the fact of receiving the legal demand notice and also filed the reply therefore ingredients (v) and
(vi) also gets fulfilled.
35. In the present case, as the accused has admitted siganture and handing over the cheque including the filling of name of payee, therefore, the statutory presumptions under section 118(a) and 139 would be raised in favour of the complainant regarding the fact that the impugned cheques have been drawn for consideration and issued by the accused in discharge of legally enforceable debt.
36. It has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner:
25.1. 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.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
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 of preponderance of probabilities can be drawn not only Digitally signed by SNEHIL SNEHIL SHARMA SHARMA Date:
2025.12.23 CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 16 of 25 16:17:24 +0530 from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 25.4. 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.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
It is explicit in the NI Act that the said presumption shall remain untill contrary is proved.
37. Now coming to the last and the remaining core ingredients (ii) and
(vii) of Section 138 of NI Act as discussed above and the real issue of controversy herein i.e. whether the cheque in question was issued in discharge of any debt or liability, whole or in part and whether the same is a legally enforceable debt.
38. With respect to the point of blank cheque raised by the accused, it is pertinent to mention that Section 20 of the NI Act talks about inchoate instruments. As per this provision if a person gives a duly signed cheque which is either blank or partly filled then he is deemed to have given implied authority to the holder to fill up the particular in it and complete the cheque, thus making the draw liable for the payment mentioned in it. It is immaterial that the cheque may have been filled in by any person other than the drawer, when the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provision of section 138 would be attracted. At this stage, reference may be sought from the decision of Hon'ble Supreme Court in the case of Bir Singh vs. Mukesh Kumar (2019) 4 SCC 197 wherein the Apex Court while upholding the validity of blank signed cheque in a proceeding u/s 138 of the Act has interalia held the following:
"If a signed blank cheque is voluntarily presented to a payee,towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on Digitally signed CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 17 of by SNEHIL 25SNEHIL SHARMA SHARMA Date: 2025.12.23 16:17:30 +0530 the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
39. In the present case, the defence raised by the accused is found to be inherently contradictory and mutually destructive. At the stage of framing of notice and in his statement under Section 313 Cr.P.C., the accused stated that the cheque was issued in March 2015 as a security cheque for a transaction of Rs 1.5 crore. However, in his application under Section 315 Cr.P.C., the accused took an altogether different stand and claimed that the same cheque was a security cheque for pending payment of Rs 23,60,288/-. During cross-examination, when confronted with these inconsistent stands, the accused stated that both versions were wrong, without offering any coherent or consistent explanation as to the true purpose for which the cheque was issued. Such shifting and irreconcilable stands strike at the very root of the defence and render the explanation of the accused wholly unreliable. It is well settled that when the accused himself is uncertain about the purpose of issuance of the cheque, the statutory presumption cannot be said to have been rebutted.
40. The plea that the cheque was a mere security cheque also does not advance the case of the accused. Even assuming for the sake of argument that the cheque was initially issued as security, it is now settled law that a security cheque, if presented against an existing and crystallized liability on the date of its presentation, would still attract the provisions of Section 138 of the NI Act.
41. It is a settled proposition of law that a cheque issued as security, pursuit of financial transaction, cannot be considered as a worthless piece of paper. It is given to ensure the fulfilment of an obligation undertaken. If a cheque issued to secure repayment of a loan advanced and if the loan is not repaid on or before the due date, the drawee would be entitled to get Digitally the signed by SNEHIL SNEHIL SHARMA SHARMA Date:
CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 18 of 252025.12.23 16:17:35 +0530 cheque for payment, and if such a cheque is disordered, the consequences contemplated under section 138 NI act would follow. 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 cheques 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.
42. Also, the accused has admitted the existence of a running account between the parties and has further admitted unpaid invoices Ex. CW1/9 and Ex. CW1/10. The accused has also claimed part payment of Rs 10 lakhs, which itself indicates subsisting liability on the date of presentation of the cheque. Therefore, the defence of "security cheque" stands negated by the accused's own admissions.
43. It is further pertinent to note that the defence of the accused suffers from a fundamental inconsistency at the very inception. In the reply to the statutory legal demand notice, the accused categorically took the stand that the cheque in question was handed over merely as a security cheque for initiating future business with the complainant. However, at the stage of framing of notice under Section 251 Cr.P.C., the accused altogether altered his stand and stated that the cheque was given as security for a transaction of Rs 1.5 crore allegedly paid by the accused to the complainant. These two stands are mutually destructive and cannot co-exist. If, as per the version taken at the stage of notice framing, the accused had already advanced a sum of Rs.1.5 crore to the complainant, the question of the accused issuing a security cheque to the complainant does not arise at all. On the contrary, in such a situation, it would have been the complainant who would have been required to furnish security to the accused.
Digitally signed by SNEHIL CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 19 of 25 SNEHIL SHARMA SHARMA Date:
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44. During cross examination of DW1/accused, he has brought a new defence of security cheque for payment of approx Rs 23 lacs. The defence, therefore, not only lacks consistency but also fails the test of ordinary human conduct and commercial prudence. The accused himself abandoned his first version at a later stage and substituted it with a completely different explanation. Such shifting stands clearly indicate that the defence is an afterthought, devised to evade criminal liability, and not a truthful account of events. This Court cannot lose sight of the fact that the alleged transaction of Rs 1.5 crore with security cheque is of such magnitude that documentary evidence would naturally exist, had the transaction actually taken place verbatim.
45. Further, The story put forth by the accused regarding payment of Rs 1.5 crore as a security deposit and the alleged promise of interest by the complainant company is also not supported by any reliable evidence. No written agreement, no ledger account, no bank statement, no authorization from the complainant company and no legally proved correspondence has been placed on record to substantiate this claim. Even the defence witnesses DW2 and DW3, though attempting to support the version of the accused, admitted in their cross-examination that they had not brought any document to show payment of security deposit, payment of interest, issuance of balance confirmation or adjustment of accounts. Their testimonies thus remain uncorroborated and insufficient to rebut the statutory presumption.
46. The defence witnesses further fail the test of credibility. DW2 could not produce any document to establish his authority, tenure or actions on behalf of the complainant company. DW3 admittedly is a close relative of Digitally signed by CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 20 of 25 SNEHIL SNEHILSHARMA SHARMADate:
2025.12.23 16:17:44 +0530 the accused and has a direct interest in the outcome of the case. Moreover contradictory stand is taken by DW3 by stating on one side that his mother is sleeping partner and then by stating that he looks after the accounts as his mother is sleeping partner and he does not have the links. If his mother is only sleeping partner then why he is checking and indulging in firm account. Both witnesses admitted that they had not brought any documentary proof to support their oral assertions. It is a settled principle of law that when oral testimony is contrary to documentary record or remains unsupported by documents which are expected to exist, such testimony cannot be relied upon to dislodge statutory presumptions.
47. Furthermore, The defence regarding return of defective goods is also found to be an afterthought. No return challans, debit notes, credit notes, portal claims or acknowledgments have been proved by the accused. On the contrary, the complainant witness has deposed that defective goods were duly accounted for by issuance of credit notes reflected in the statement of account. The accused has failed to show that any amount on account of alleged defective goods remained unadjusted as on the date of presentation of the cheque. Mere assertion of return of goods, without cogent proof, does not absolve the accused of liability.
48. The dishonour of the cheque on account of "payment stopped by drawer" also does not aid the accused. Once the existence of legally enforceable debt is established, stoppage of payment by the drawer squarely attracts the penal consequences under Section 138 of the NI Act. The accused has not been able to show any legally sustainable reason for issuing stop payment instructions or any contemporaneous protest disputing the liability prior to presentation of the cheque.
Digitally
signed by
SNEHIL
SNEHIL SHARMA
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49. The inconsistency in the defence of the accused further stands exposed from a comparative reading of the reply to the statutory legal demand notice and the evidence led during trial. In the reply to the legal notice, the accused took a categorical stand that there existed no liability whatsoever towards the complainant. However, during trial, DW1 himself undertook calculations and admitted that some amount was payable, while DW2 & DW3 went a step further and stated that a sum of Rs 4-5 lakhs was still pending towards the complainant. These admissions are wholly irreconcilable with the stand taken in the reply to the legal notice.
50. The defence of the accused is further rendered doubtful on account of yet another material contradiction emerging from the record. In the application moved under Section 145(2) of the Negotiable Instruments Act and in notice framing and in SA as well, the accused specifically pleaded that the complainant had agreed to pay interest at the rate of 10% per annum on the alleged security deposit. However, during the course of evidence, the accused himself as DW1, as well as DW2 and DW3, consistently deposed that the agreed rate of interest was 12% per annum. This inconsistency is not minor or trivial, but goes to the root of the defence story regarding the very existence and terms of the alleged security deposit arrangement. If such an arrangement had in fact existed, the accused would have been certain and consistent about its fundamental terms, particularly the rate of interest. The shifting stand regarding the rate of interest clearly indicates that the defence has been improvised at different stages of the proceedings and is not based on any settled or genuine transaction.
51. Even if, for the sake of argument, it is assumed that there were certain disputes between the parties regarding non-payment of interest, non-replacement of LED TVs or adjustment of defective goods, as has Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 22 ofDate:
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been alleged by the accused during trial, the conduct of the accused does not inspire confidence. Admittedly, the accused did not initiate any civil or criminal proceedings against the complainant for recovery of the alleged security deposit, unpaid interest or replacement of defective goods, nor did he place on record any contemporaneous legal action, correspondence or demand seeking redressal of such grievancesn or email for the same.
52. Significantly, the accused appears to be attempting to set off the cheque liability by raising alleged counter-claims in the nature of unpaid interest and defective goods, which itself amounts to an implied admission that some liability towards the complainant existed. The defence, therefore, is not a denial of liability but an attempt to adjust or negate it through unproven counter-claims, which is impermissible in proceedings under Section 138 of the Negotiable Instruments Act and further reinforces the existence of legally enforceable debt.
53. As the presumption is against the accused, therefore burden was upon the accused to prove his defence. During the case, he has failed to inform the ultimate date of the repayment to the complainant. Also, no document or witness or whatsapp chat is produced by the accused to prove the repayment qua the cheque in question, if any, to the complainant or supporting his defence and showing zero balance against the accused. No repayment slip or no repayment message or no digital record of clearing all the dues towards the complainant is filed by the accused for the perusal of the court and for his support. Even the accused has not challenged or rebutted the deposition of the complainant.
54. As neither the effective cross examination of complainant was conducted by the accused persons nor he has led effective DE. The Cross examination of CW1 does not show any relevant contradiction or Digitally signed by SNEHIL SNEHIL SHARMA CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 23 Date:
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ommission, fatal to the case. No doubt is raised upon the cheque liability shown by the complainant. No doubt is raised upon the story deposed by the complainant. Once the cheque is drawn in favour of the complainant, it was the duty of the accused to keep money in his bank account to discharge his legal liability against the complainant or if he has already repaid the money he should ask the complainant in writing (documentary or through whatsapp) to return the cheque.
55. Non-discharge of the liability of cheque amount by the accused is not a ground of acquittal without any evidence/witness/record etc. No plea of alibi is taken by the accused on the dates deposed by the complainant. No repayment slip is shown by the accused so as to suggest that he does not have this much liability towards the complainant. Mere verbal submission of the accused is no evidence.
56. On the aspects of preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the court to conclude either that the consideration did not exist or that its non existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. As per the facts and circumstances of this case accused has not led any cogent and believable evidence to support his defence and has failed to rebut the presumptions.
57. The Hon'ble Supreme Court in Rohitbhai Jivanlal Patel vs State of Gujarat and another 2019) 18 SCC 106 and in various other rulings have time and again, emphasized that though There may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of Digitally signed by SNEHIL SNEHIL SHARMA Date:
SHARMA 2025.12.23 CC NO. 3135/2019 MICROMAX Vs. UNIVERSAL DISTRIBUTORS Page 24 of 25 16:18:01 +0530 rebuttal as envisaged under section 118 and 139 of the NI Act. further, it has been held in Rajesh Agarwal v. State, 2010 SCC online Del 2501 that:-
"9. .....There is no presumption that even if an accused fails to bring out his defence, he is still to be considered innocent. If an accused has a defence against dishonour of the cheque in question, it is he alone who knows the defence and responsibility of spelling out this defence to the court and then proving this defences is on the accused....."
58. Keeping in view the facts and circumstances of the present case and the settled position of law in this regard, the presumption of law as per section 118(a) and section 139 of NI Act clearly come in picture for the favour of complainant and his burden of proving the fact of issuance of cheque in question in discharge of legally enforceable debt stands discharged and the accused has miserably failed to discharge his reverse onus. Accordingly, the ingredients mentioned at (ii) & (vii) of Para No. 32 of this judgment are also fulfilled.
59. In my view, the complainant has proved that the accused has issued the cheque in question in his favour for discharge of the legally enforceable liability and has proved his case against the accused for the offence under Sec. 138 Negotiable Instruments Act. Resultantly, accused Universal Distributiors (partnership) through Pawan Daga is thus, held guilty and stands conivcted for the said offence.
Digitally signed
SNEHIL by SNEHIL
SHARMA
SHARMA Date: 2025.12.23
16:18:07 +0530
Announced in Open Court (SNEHIL SHARMA)
today on 23.12.2025 JMFC (NI Act-01), PHC NDD
Copy of this judgment be given free of cost to convict.
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