Delhi District Court
Harish Kandwal vs Kunal Rustagi on 20 March, 2026
CC NI ACT 6996 of 2021
HARISH KANDWAL VS KUNAL RUSTAGI
IN THE COURT OF MS. SURABHI RASTOGI, JMFC( NI ACT)
01, S-W DISTRICT, DWARKA COURT, NEW DELHI
DLSW020161362021
IN THE MATTER OF: CC NI ACT/ 6996/2021
CNR NO. DLSW020161362021
HARISH KANDWAL
S/O SH. RAMESH KANDWAL
R/O D-17, NAVADA HOUSING
DWARKA MOR
UTTAM NAGAR, DELHI-110059
COMPLAINANT
VERSUS
KUNAL RUSTAGI
S/O SH. SANJAY RUSTAGI
R/O E-26 GALI NO. 2
E BLOCK, KHAJOORI EXTENSION
DELHI ACCUSED
DATE OF INSTITUTION : 19.03.2021
OFFENCE COMPLAINED OF : U/S 138 NI ACT
PLEA OF ACCUSED : NOT GUILTY Digitally
signed by
DECISION QUO ACCUSED : ACQUITTAL SURABHI
SURABHI RASTOGI
RASTOGI Date:
DATE OF DECISION : 20.03.2026 2026.03.20
16:51:57
+0530
CC NI ACT/ 6996/2021 DOD 20.03.2026 1 of 14
CC NI ACT 6996 of 2021
HARISH KANDWAL VS KUNAL RUSTAGI
JUDGMENT
1. Vide this judgment, this court shall decide the complaint filed by the complainant under section 138 of the Negotiable Instrument Act (hereinafter referred to as NI Act) against the accused for dishonour of cheque bearing no. 406915 dated 15.01.2021 for Rs. 6,00,000/- (hereinafter referred to as cheque in question).
2. The case of the complainant in brief is that the the complainant and accused are known to each other. The accused told that complainant that he has many contacts and made false promise to provide the complainant various government contracts and business works (Railway Manpower Provider, Bharat Gas Agency Provider, LPG Gas Agency Provider, NGO work/project from Government). On this pretext the accused took Rs 12,75,000/- in various installments in advance from the complainant but the accused failed to provide any such work/project. The accused gave four cheques in discharge of this liability. Accused thereafter paid partial amount of Rs 1,25,000/-. Accused thereafter stopped making payment and asked the complainant to present the cheque in question. The cheque when presented for encashment was dishonoured with remarks Digitally signed by SURABHI SURABHI RASTOGI RASTOGI Date:
Insufficient Funds and Drawer Signature Differ. Thereafter, legal 2026.03.20 16:52:05 +0530 demand notice was issued against the accused and the accused CC NI ACT/ 6996/2021 DOD 20.03.2026 2 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI failed to make payment within 15 days of receiving of the notice which resulted in the present complaint.
PRE TRIAL PROCEDURE
3. In support of this complaint, the complainant tendered his evidence by way of affidavit and relied on the following documents:
a. Original Cheque (Ex. CW1/1) b. Return Memo (Ex.CW1/2) c. Legal Demand Notice (Ex. CW1/3) d. Receipt of Postal Department (Ex. CW1/4) e. Tracking Report (Ex. CW1/5)
4. Upon appreciation of pre-summoning evidence, accused was summoned for the offence u/s 138 NI Act. Notice of accusation u/s 251 of the Criminal Procedure Code, 1973 (hereinafter referred to as Cr.PC) was served on the accused. The accused stated the cheques in question bears his signature but he had not filled particulars on it. He stated that he has not received the legal demand notice. The accused further stated that the complainant approached him to build a website and he has audio recording of the conversation. It was then stated that the complainant asked him Digitally signed by SURABHI to invest his money with them and the cheque in question was SURABHI RASTOGI RASTOGI Date:
2026.03.20 16:52:11 +0530 given by him as security. He then stated that he had also made a CC NI ACT/ 6996/2021 DOD 20.03.2026 3 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI paymnet of approximately Rs 1,25,000/- (Rs 75,000 through bank and Rs 50,000/- in cash ) to the complainant.
5. Application u/s 145(2) NI Act was allowed, and the accused was given the opportunity to cross-examine the complainant and his witnesses. CW1/complainant was examined, cross-examined and discharged. CE was closed.
STATEMENT OF ACCUSED
6. Statement of accused was recorded. In his statement he had stated he has not made any promise to the complainant to provide services mentioned in the complaint. It was then stated that he has given seven cheques to the complainant (four cheques in his name and 3 cheques in the name of his father) for website development. It was then stated that in 2019, he has paid Rs 15,000/- to the complainant through bank for website development. It was further stated that the complainant made website as per his wish and added 500 users costing Rs 300/- per user without taking his instructions, even then he agreed to make the payment in installments. It was then stated that in total he has paid Rs. 1,25,000/-. It was further stated that the complainant developed the website on trial basis and even visited his offce to show the website. It was then stated that Digitally signed by the complainant never handed over to him the website and he has SURABHI SURABHI RASTOGI RASTOGI Date:
2026.03.20 even filed a police complaint against him in 2020 at PS Khajuri. At 16:52:18 +0530 the end it was stated that the complainant misused his security CC NI ACT/ 6996/2021 DOD 20.03.2026 4 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI cheque and filed a false case against him. He stated that he want to lead DE. No defence witness were examined. DE was closed on 24.02.2024. Then the matter was listed for final arguments.
7. Written arguments were filed by the Ld. Counsel for the complainant and Ld. Counsel for the accused.
8. Arguments perused. Record Perused.
9. I have perused the record and have gone through relevant provisions of law. The following points required determination in the present case:
1.Whether the offence punishable under section 138 of the NI Act is made out against the accused?
2.Whether the complainant proved the guilt of the accused beyond a reasonable doubt?
LAW UNDER CONSIDERATION
10. To bring home the guilt of the accused, the complainant is duty-bound to prove the following ingredients of Section 138 NI Act as held by the Hon'ble Supreme Court of India in the case titled Aparna A. Shah vs. M/s Sheth Developers P. Ltd & Anr. Digitally signed by SURABHI SURABHI RASTOGI (2013) 8 SCC 7 RASTOGI Date:
2026.03.20 16:52:24 +0530
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment CC NI ACT/ 6996/2021 DOD 20.03.2026 5 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI of a certain amount of money to another person from out of that account;
(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) that cheque has been presented to the bank within six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(iv) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or because it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
11. Further, once the accused had admitted his signature on the Digitally signed by SURABHI SURABHI RASTOGI cheque in question, the presumption u/s 139 NI Act and Section RASTOGI Date:
2026.03.20 16:52:31 +0530 118 (a) of the NI Act becomes applicable.
CC NI ACT/ 6996/2021 DOD 20.03.2026 6 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI Section 118 (a) of the NI Act provides, Until the contrary is proved, the following presumptions shall be made:--(a)of consideration
--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
Section 139 of the NI Act provides, It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
The presumptions raised against the accused are rebuttable presumptions, and the burden to rebut the same lies on the accused, and the standard of proof required for rebuttal is preponderance of probabilities. The accused can discharge this burden either by bringing his own evidence or by cross-examination of the complainant.
FINDINGS Digitally
signed by
SURABHI
SURABHI RASTOGI
RASTOGI Date:
2026.03.20
16:52:37
+0530
12. In the present case, the complainant had prima facie proved the following ingredients of offence u/s 138 of the NI Act. These are-
CC NI ACT/ 6996/2021 DOD 20.03.2026 7 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI
(i) Cheque in question is drawn on account maintained by the accused as the same is admitted by the accused
(ii) Cheque in question was signed by the accused- Accused has admitted his signature on the cheque in question in his notice u/s 251 Cr.P.C.
(iii) The cheque was dishonoured as shown in return memo therefore presumption u/s 146 of the NI Act becomes applicable.
(iv) Legal demand notice- Accused has stated that he has not received the same. The accused has not stated anything to show that the address metioned on the legal demand notice belongs to him. But this is to be seen with the fact that the tracking report shows the delivery of the legal demand notice and that the statement of the accused u/s 313 CrPC also records the same address as the adddress of the accused.
(v) The accused had not made the payment within 15 days from receipt of the notice.
Now in respect of the question of legally enforceable debt, presumption u/s 118(a) of the NI Act and Section 139 of the NI Act comes into play since the accused has admitted his signature on the cheque in question in the notice of accusation put to him u/s 251 CrPC. Now the accused has the burden to rebut the case of the complainant. Digitally signed by SURABHI SURABHI RASTOGI RASTOGI Date:
2026.03.20
13. The defence of the accused is that he has not offered any 16:52:44 +0530 service for providing contracts in government to the complainant.
CC NI ACT/ 6996/2021 DOD 20.03.2026 8 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI The other defence is that the cheque in question was given as security in respect of website development work assigned to the complainant by him.
FIRST DEFENCE- CHEQUE ISSUED IN RESPECT OF WEBSITE DEVELOPMENT WORK ASSIGNED TO THE COMPLAINANT
14. To prove the version of the accused that the cheque in question was issued in respect of a website development agreement, the accused had brought on record Ex. CW1/DX1 which is not supported with certificate u/s 65B of the Indian Evidene Act but this objection was not taken during the evidence. In the conversation brought on record, conversation at page 29 and 30 bleakly shows some website development issue between the parties but nothing more can be seen from that conversation to show that the cheque in question was issued in respect of website development agreement. Further the whole conversation brought on record (except for the page 29 and 30) apparently convey that there was other transaction between the complainant and accused. In page 15 of the conversation, the complainant has stated that...... agar us bande me kisi aur company se karwa diya na to main apko bakayda jis company me jaayega na uski statement dikha doonga...... tab aap kahoge galti kar di acha khasa paisa aa rha tha SURABHI RASTOGI maine haath aata paisa chod diya. In page 19 the complainant has Digitally signed by SURABHI RASTOGI Date: 2026.03.20 stated that itna badhiya mauka hai paise kamaane ka, main bhi usi 16:52:53 +0530 CC NI ACT/ 6996/2021 DOD 20.03.2026 9 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI chakkar me phas rakha hoon tere saath. This conversation does not appear to be of the transaction of website development as stated by the accused.
SECOND DEFENCE- NO PROMISE OF PROVIDING GOVERNMENT CONTRACTS
15. One of the essential ingredient for the offence under NI Act is the existence of legally enforceable debt. As per the complaint, the accused took his money to secure various government contracts. Before moving further, it is important to take into consideration the settled legal position in respect of existence of legally enforceable debt when the cheque is given for repayment of amount taken for admission in some government institution. Hon'ble High Court of Delhi in Virender Singh v Laxmi Narain & Anr, (2007) 1 DLT(CRL) 337 has laid down law on this point. Relevant paragraphs of the judgment are given below-
Now, the explanation in Section 138 of the said Act makes it clear that the expression "debt or other liability" has reference only to a legally enforceable debt or liability. Conversely, if a cheque is issued in respect of a debt or liability which is not legally enforceable then, Section 138 of the said Act would not apply. Section 23 of the Indian Contract Act, 1872, inter alia, stipulates that every agreement of which the object or consideration is unlawful is void. The said Section 23 reads as under:
In each of these cases, the consideration or object of an Digitally signed by agreement is said to be unlawful. Every agreement of which the SURABHI SURABHI RASTOGI object or consideration is unlawful is void. RASTOGI Date:
2026.03.20 16:53:01 An agreement which is void is not enforceable by law (Sections +0530 2(g) and 10 of the Indian Contract Act, 1872). The question, CC NI ACT/ 6996/2021 DOD 20.03.2026 10 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI therefore, is - Was the agreement between the petitioner and the complainant for securing a job for the complainant's nephew in the Haryana Police, legally enforceable? Fortunately, the answer is provided straightaway by illustration (f) to Section 23 of the Indian Contract Act, 1872. The said illustration (f) reads as under:
(f) A promises to obtain for B an employment in the public service, and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.
Clearly, the facts of the present case fit into this illustration. Therefore, it can be safely stated that the agreement between the petitioner and the complainant was void as the consideration of Rs.80,000/- was in the nature of an illegal gratification and was unlawful. The next question, taking illustration (f) further, is - B having paid A the promised sum of 1,000 rupees but, A not fulfillling his promise of obtaining for B an employment in public service, does B have a remedy in law to seek restitution and return of the 1000 rupees that he has paid to A? What is the obligation of a person who has received an advantage under a void agreement? Is A bound to return the sum of 1,000/- rupees to B?
8. Apparently, these questions are answered by Section 65 of the Indian Contract Act, 1872 which reads as under:
65. When an agreement is discovered be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.
But, the provision applies to (1) an agreement which is "discovered to be void" or (2) a contract which "becomes void". ........ Thus, the phrase "a contract becomes void" appearing in the said Section 65 would Digitally signed by SURABHI not have any application in the case where an SURABHI RASTOGI RASTOGI Date:
agreement is void ab initio. It has already been 2026.03.20 16:53:08 indicated above that the agreement in the present case +0530 was void from the very beginning. Therefore, the agreement in question as also the agreement of the CC NI ACT/ 6996/2021 DOD 20.03.2026 11 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI type mentioned in illustration (f) to the said Section 23 cannot fall within the phrase "a contract becomes void". This leaves us with agreements which are "discovered to be void". This has reference to those agreements which, the contracting parties or one of them did not know, at the time of entering into the agreement, that the same was not enforceable in law but, it was later "discovered" by them or one of them as being void. Where the parties are aware and have knowledge that the agreement is unlawful and despite this knowledge they go ahead with the agreement, they would not be able to take recourse to the provisions of the said Section 65 because there would be no "discovery" of the invalidity of the agreement.
16. The version of the complainant is that the agreement with the accused was to provide government contracts to him. As per the above cited judgment, section 65 of the Indian Contract Act 1872, which gives the right of repayment applies in only these cases where contract is discovered to be void or where the contracts become void. Here in this case, from starting the object of the agreement between parties was to get the government contracts. This is per-se not enforceable and its non-enforceability is not something which is discovered later. The allotment of government contract requires transparency. Legally the allotment of government contract includes publishing of advertisement, fulfillment of eligibility criteria, filling of forms, bidding, opening of tender etc. The complainant/CW1 himself stated that I did not Digitally fill any form/applications in Railway, Bharat Gas Agency, LPG signed by SURABHI SURABHI RASTOGI RASTOGI Date:
2026.03.20 and other government sector to secure the contract. Voluntarily it 16:53:14 +0530 was stated that the accused agreed to fill forms applications on my CC NI ACT/ 6996/2021 DOD 20.03.2026 12 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI behalf after making the payment. The complaint as well as the evidence of the complainant is silent on the point that the agreement was to secure government contract through any legally prescribed mode or that the accused was legally authorised to provide government contracts. It is also not that the accused played fraud on the complainant and represented himself to be authorised person. The complaint clearly mentions that accused told the complainant that he have many contacts. Though the complainat/CW1 had denied the suggestion that the amount of Rs 12.75 lakh was given to bribe the government official to secure government contract and business but he himself has failed to disclose the legally supported purpose of advancing huge sum of Rs 12.75 lakh to the accued even before filing the forms for these contracts.
17. As per above, the complainant had failed to prove the ingredients of offence u/s 138 NI Act and the accused had admitted his signature on the cheque in question. Admission of signature only give rise to presumtpion of legally enforceable debt against the accused. Facts of the case raised doubt regarding existence of legally recoverable debt for which cheque in question was issued by the accused.
Digitally signed by SURABHI SURABHI RASTOGI
18. Considering the above, this court is of the view that the RASTOGI Date:
2026.03.20 16:53:22 +0530 accused Mr. Kunal Rustagi cannot be held liable for the offence u/s CC NI ACT/ 6996/2021 DOD 20.03.2026 13 of 14 CC NI ACT 6996 of 2021 HARISH KANDWAL VS KUNAL RUSTAGI 138 of the NI Act and is therefore acquitted for the offence u/s 138 of the NI Act.Digitally signed by SURABHI
ANNOUNCED IN THE OPEN COURT SURABHI RASTOGI RASTOGI Date:
2026.03.20 16:53:28 ON 20.03.2026 +0530 (SURABHI RASTOGI) JMFC (NI Act)-01 DWARKA COURT, SWD, DELHI This judgment contains 14 pages, and each page has been signed by the undersigned.
(SURABHI RASTOGI) Digitally signed by SURABHI SURABHI RASTOGI JMFC (NI Act)-01 RASTOGI Date:
2026.03.20 DWARKA COURT, 16:53:32 +0530 SWD, DELHI CC NI ACT/ 6996/2021 DOD 20.03.2026 14 of 14