Delhi District Court
Balak Ram Gautam vs Davinder Pal Singh And Ors on 16 September, 2025
DLST020058122017
IN THE COURT OF SH. NITIN SHAH, JMFC-05,
N.I. ACT, SOUTH DISTRICT, SAKET, NEW DELHI
CC No. : 4908/2017
U/s : 138 N. I. Act
PS : Malviya Nagar
Balak Ram Gautam vs. Davinder Pal Singh Chauhan
JUDGMENT
1. CC No. : 4908
2. Date of institution of the case : 12.04.2017
3. Name of complainant : Balak Ram Gautam
S/o Sh. Ami Chand,
R/o H. No. 336, 3rd Floor,
Shivalik, Malviya Nagar,
New Delhi
4. Name of accused, parentage
and address : Davinder Pal Singh Chauhan
S/o Lt. Sh. Ami Chand
R/o H. No. 12, Khirki Village,
Malviya Nagar, New Delhi.
5. Offence complained of : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
7. Final order : Acquittal
8. Date on which order was : 04.09.2025
reserved
9. Date of pronouncement : 16.09.2025
Digitally
signed by
NITIN NITIN
Date:
SHAH
SHAH 2025.09.16
17:40:33
+0530
CC No. 4908/17 (Nitin Shah)
Balak Ram Gautam vs. Davinder Pal Singh Page no 1 of 26 JMFC-05 (NI Act)/South
DLST020058122017
FACTUAL BACKGROUND OF THE CASE
1. Vide this judgment, this Court shall dispose off the present complaint case instituted by the Complainant invoking the provisions of Section 138 of the Negotiable Instruments Act, 1881(as in after referred to as NI Act).
2. The facts giving rise to the instant complaint case, as per the complainant, may be summarized as hereafter: That accused approached the complainant in the third week of April 2011 for a friendly loan as he was in dire need of money. The complainant gave friendly loan of Rs. 60 lacs with the interest of 24% per annum. The accused promised to return the said amount till 21.05.2011. That both the parties was entered into a collaboration agreement for property bearing no. 126 & A-147, measuring 562 square yards, out of khasra no. 129 situated at Panchsheel Vihar, New Delhi. That both the parties executed the said collaboration agreement dt. 30.04.2011 and all the payments were to be made in cash. That at the time of execution of collaboration agreement, accused handed over memorandum of family settlement dt. 01.09.2009 in which subject matter of collaboration agreement was shown. That when complainant asked for possession of plot for development as per collaboration agreement, accused delayed it for one reason or the other. That again accused entered into an agreement to sell with the complainant for sale of his plot by saying that he was the owner of the said plot and Rs. 18,50,000/- were paid by the complainant to him in cash as 10% of the sale amount, against which accused handed over 9 cheques to the complainant for an amount of Rs. 78,50,000/- as return of Rs. 60 lacs given with collaboration agreement and Rs. 18,50,000/- given with agreement to sell. That when Digitally signed by NITIN NITIN Date:
SHAH SHAH 2025.09.16 17:40:38 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 2 of 26 JMFC-05 (NI Act)/South DLST020058122017 complainant presented one of the cheque bearing no. 799552 dt. 16.02.2017 for Rs. 14.50 lacs, drawn on SBI Bank, Saket Court Complex Branch, for enashment, same was returned unpaid with remarks "payment stopped by drawer". Thereafter, complainant issued a legal demand notice dated 15.03.2017 calling upon the accused to pay the amount of the aforesaid cheque within the stipulated period but the accused did not make the payment within the statutory period.
PROCEEDINGS BEFORE COURT
3. The complainant tendered his evidence by way of affidavit and relied upon following evidences:-
a) Collaboration Agreement Ex. CW1/1 (OSR)
b) Copy of Memorandum of family settlement Mark- CW1/2
c) Copy of suit filed by accused Ex. CW1/3
d) Copy of handwriting of brother of accused Ex. CW1/4 namely Naresh Chauhan to sign the collaboration agreement
e) Cheque in question Ex. CW1/5 f) Return memo Ex. CW1/6
g) Legal demand notice dt. 15.03.2017 Ex. CW1/7
h) Postal receipts Ex. CW1/8, CW1/9 & CW1/10
i) Affidavit of service Ex. CW1/11
j) Copy of advance receipt cum agreement to Ex.CW1/12 (OSR) sell and purchase
k) Certificate u/s 65B Indian Evidence Act Ex. CW1/13 colly.Digitally signed by NITIN
NITIN SHAH Date:
SHAH 2025.09.16 17:40:42 CC No. 4908/17 (Nitin Shah)+0530 Balak Ram Gautam vs. Davinder Pal Singh Page no 3 of 26 JMFC-05 (NI Act)/South DLST020058122017 alongwith CD
l) Evidence by way of affidavit Ex. CW1/A
4. Upon appreciation of pre-summoning evidence, only accused no. 1 was summoned for an offence punishable under Section 138 of NI Act and notice under Section 251, Code of Criminal Procedure, 1973 (herein after referred to as Cr.P.C.) was served upon accused on 13.09.2019 to which he pleaded not guilty and claimed trial. The accused took the defence that he does not know the complainant. His cheques in question were lost on 16.02.2017 from his Delhi address mentioned in the legal notice and thereafter he issued instructions to bank to stop the payment and also lodged police complaint for the loss of cheques in question.
5. Thereafter, on oral plea of accused, application u/s 145 (2) of NI Act was allowed vide order dated 13.09.2019 and the accused was granted opportunity to cross examine the complainant as well as his witnesses, if any.
6. The complainant has only examined himself as CW-1. In the post summoning evidence, the complainant (CW1) has adopted his pre-summoning evidence. The complainant was cross examined at length by the Ld. Counsel for accused. CE was closed vide order dated 15.11.2022.
7. Accused was, thereafter, examined U/s 281 r/w Sec 313 Criminal Procedure code, 1872 on 09.08.2023 wherein entire incriminating evidence was put Digitally signed by NITIN NITIN Date:
SHAH SHAH 2025.09.16 17:40:46 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 4 of 26 JMFC-05 (NI Act)/South DLST020058122017 to them. The accused took defence that he has no liability towards the cheque in question.
8. Accused has led following oral and documentary evidences to raise probable defence :
i) Sh. Sonu, Junior Asst. DW-1 ii) HC Kanhaiya Lal DW-2 ii) Sh. Mohd. Istikhar, Asst. Ahlmad as DW-3 DW-3 iv) ASI Sarjeet Singh DW-4 v) Accused himself DW-5
The defence evidence was closed vide order dt. 10.12.2024 and the matter was fixed for final arguments.
9. I have considered the rival submissions of the parties and perused the entire evidence led by the parties and the material available on record.
FINAL ARGUMENTS
10. During the course of final arguments, Ld. counsel for the complainant has argued that the complainant has successfully fulfilled all the essential ingredients required for attracting liability under Section 138 of the Negotiable Instruments Act, 1881. It is contended that the accused has admitted his signatures Digitally signed by NITIN NITIN Date:
SHAH SHAH 2025.09.16 17:40:50 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 5 of 26 JMFC-05 (NI Act)/South DLST020058122017 on the cheque in question, and thus, a statutory presumption under Sections 118(a) and 139 of the NI Act operates in favour of the complainant. The burden to rebut this presumption squarely lies upon the accused.
11. It is further submitted that the cheques were duly signed and handed over by the accused, and the defence taken regarding the alleged theft of the cheques is a mere afterthought, lacking in credibility. In any event, the matter concerning the alleged theft is still under investigation, and therefore, it cannot be presumed that the complainant was responsible for any such theft.
12. In support of the complainant's case, a CD has been placed on record by way of additional evidence, which is stated to contain an audio recording wherein the accused allegedly admits to having voluntarily issued the cheques.
13. With respect to the delay in commencement of construction work under the collaboration agreement, it is argued that the delay occurred solely due to the acts of the accused himself. The accused, in collusion with his family members, is stated to have orchestrated the filing of a civil suit by his brother to stall the construction. It is further submitted that the said civil suit resulted in a status quo order which obstructed the development of the property, and that the suit was eventually withdrawn in the year 2016.
14. In view of the above submissions, it is prayed that the accused be convicted for the offence under Section 138 of the NI Act.
Digitally signed by NITIN NITIN SHAH SHAH Date:
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15. Per contra, Learned counsel for the accused has submitted that the cheque in question was not issued towards any legally enforceable debt or liability, but was in fact stolen by the complainant from the residence of the accused on 16.02.2017. It is argued that the complainant had access to the accused's residence and had visited the premises on the said date for signing a loan agreement.
16. Upon discovering that certain cheques were missing, the accused searched for them on 16.02.2017 and 17.02.2017. When the same could not be traced, he lodged an NCR on 18.02.2017 reporting the loss of the cheque book, and simultaneously issued stop payment instructions to his bank. It was only upon receiving a legal notice from the complainant that the accused realised the cheques had been misappropriated, whereafter he lodged an FIR against the complainant. All these facts have been duly proved by the accused during the course of his evidence.
17. As regards the CD filed by the complainant as additional evidence, it is submitted that the same was never proved in accordance with law. The CD was never played in open court, nor was the accused confronted with its contents. Therefore, its evidentiary value is nullified.
18. It is further submitted that the relationship between the parties was one of commercial collaboration, and the only transaction between them was in the form of a collaboration agreement. The complainant has, without basis, attempted to portray the same as a loan transaction and claimed that the collaboration agreement was executed as security for a friendly loan, which is contrary to record.
Digitally signed by NITIN NITIN SHAH SHAH Date:
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19. The accused has specifically deposed that the amount of ₹14 lakhs given by the complainant was towards the collaboration arrangement and was forfeited due to the complainant's failure to complete the construction within the stipulated period. The cheque book had been pre-signed and kept for convenience, as the accused was residing in Pune and had authorised his son to use the cheques if required.
20. The complainant's story is riddled with contradictions and inconsistencies, and the accused is only required to raise a probable defence to rebut the presumption under Section 139 of the NI Act, not to prove his case beyond reasonable doubt. It is submitted that the accused has discharged this burden satisfactorily by placing credible documentary and oral evidence on record.
21. Accordingly, it is prayed that the accused be acquitted of the offence under Section 138 of the Negotiable Instruments Act.
INGREDIENTS OF OFFENCE UNDER SECTION 138 NI ACT
22. Before delving into discussion over the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides in trial of offence under Section 138 NI Act. In Gimpex Private Limited vs. Manoj Goel1 Hon'ble Supreme Court has divided the ingredients forming the basis of the offence under Section138 of the NI Act in the following structure:
1) The drawing of a cheque by person on an account main-
tained by him with the banker for the payment of any amount of money from that account to another person;
1(2022) 11 SCC 705 (Decided on October 08, 2021) Digitally signed by NITIN NITIN SHAH Date:
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2) The cheque being drawn for the discharge in whole or in part of any debt or other liability;
3) Presentation of the cheque to the bank arranged to be paid from that account,
4) The return of the cheque by the drawee bank as unpaid ei-
ther because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount.
5) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and
6) The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.
APPRECIATION OF EVIDENCE
22. The accused can be held guilty of the offence under Section 138 NI Act only if the above-mentioned ingredients are proved by the complainant co- extensively. Moreover, conditions stipulated under Section 142 NI Act have to be fulfilled in addition to above-mentioned ingredients. Hence, unless all the above ingredients are fulfilled in a trial under Section 138 NI Act, accused cannot be held liable.
With Respect To First, Third And Fourth Ingredient:
23. It is pertinent from the pleadings and evidence adduced by the par- ties that there is no dispute qua the proof of first, third and fourth ingredient. The complainant had proved the original cheque vide Ex-CW1/5, which the accused had not disputed as being drawn on the account of the accused and is duly signed Digitally signed NITIN by NITIN SHAH Date: SHAH 2025.09.16 17:41:05 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 9 of 26 JMFC-05 (NI Act)/South DLST020058122017 by the accused. Accused, during framing of notice under Section 251 CrPC has admitted that cheque in question Ex-CW1/5 bears his signature. It was not dis- puted that the cheque in question was presented within period of validity. The cheque in question was returned unpaid vide return memo Ex-CW1/6 with the remark "payment stopped by the drawer". The said reason is duly covered within the scheme of NI Act. Therefore, requirement of first, third and fourth ingredi- ents stand fulfilled in the present matter.
With Respect To fifth and sixth Ingredient:
24. In case of CC Alavi Haji Vs. Palapetty Muhammed2 Hon'ble Supreme Court has held that giving a legal notice to the drawer before filing of complaint under Section 138 of NI Act is a mandatory requirement. As far as proof of fifth and sixth ingredient is concerned, the complainant sent a legal de- mand notice Ex. CW1/7 to the accused on 15.03.2017. Speed post receipt and tracking report are Ex-CW1/8 to CW1/10 respectively. Accused during the stage of notice under Section 251 Cr.P.C. submitted that "I have not received the le- gal demand notice". Similarly, at the stage of statement under Section 313 Cr.P.C, accused submitted that "I did not receives the legal demand notice from the complainant". Perusal of above documents reveals that legal demand notice was sent on the proper address of the accused and by virtue of presump- tion u/s 27 General Clauses Act accused is deemed to have received the legal no- tice, if the notice has been sent to correct address by post.
25. Even otherwise, law expects a person pleading non-receipt of any demand notice to prove his bona fide by making the payment of the cheque 2 2007 6 Supreme Court Cases 555 (Decided on May 18, 2007) NITIN Digitally signed by NITIN SHAH Date: SHAH 2025.09.16 17:41:10 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 10 of 26 JMFC-05 (NI Act)/South DLST020058122017 amount within 15 days of receiving court summons. This is crystallized by the verdict of Hon'ble Supreme in C.C. Alavi Haji v. Palapetty Muhammed & anr :(2007) 6 SCC 555 "17. It is also to be borne in mind that the requirement of giv- ing of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not re- ceive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under sec- tion 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be re- jected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the com- plaint under section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and section 114 of the Evi- dence Act."
In the case at hand, despite issuance of summons and appearance of accused before the court, accused has failed to pay the cheque amount to the complainant and thus is precluded from raising the plea of non-service of de- mand notice. Thus, it is proved that the legal notice was sent to accused within thirty days of receipt of intimation of dishonor of cheque in issue. Hence, fifth and sixth ingredient also stand fulfilled.
With respect to second ingredient:
26. With respect to second ingredient, the complainant has to prove that Digitally signed by NITIN NITIN Date:
SHAH SHAH 2025.09.16 17:41:13 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 11 of 26 JMFC-05 (NI Act)/South DLST020058122017 the cheque in question was drawn by the drawer for discharging a legally enforceable debt or liability. In the present case, accused at the stage of notice u/s 251 has admitted that cheque in question Ex-CW1/5 bears his signature.
27. As per the scheme of NI Act, once the accused admits signature on the cheque in question, certain presumptions shall be drawn, which lead to shifting of onus on accused. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Similarly, another presumption is enumerated in Section 139 of NI Act. This provision lays down the presumption that the holder of the cheque received the cheque for the discharge, in whole or part, of any debt or other liability. The collective effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which shows that the presumption provided for in the Act is a 'presumption of law' and makes it imperative for the court to raise such presumptions, once the introductory facts required for the same are proved.
Similarly, In the recent judgment, Kalamani Tex v. P. Balasubramaniyan3, the larger bench of the Supreme Court, held that:
"U/s 118 & 139, once issuance of cheque and signature admitted, it is required to presume that the cheque was issued as consideration for a legally enforceable debt."
Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan4 that-
"The presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable 3 (2021) 5 SCC 283 (Decided on ) Digitally signed by NITIN 4 (2010) 11 SCC 441 (Decided on May 07, 2010) NITIN SHAH SHAH Date:
2025.09.16 17:41:18 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 12 of 26 JMFC-05 (NI Act)/South DLST020058122017 debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 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 from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 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."
Therefore, accused can rebut the presumption under Section 139 NI Act either by cross-examination of complainant and complainant witnesses or by leading his defence evidence or both.
28. In order to raise probable defence, the accused has raised following defences :-
A. Cheque in question was stolen. B. This was not a matter of taking a friendly loan through a complaint, but rather a transaction related to a collaboration agreement. C. The complaint failed to comply with terms of collaboration agreement.
Each of these defences shall be dealt with as follows:
A. Cheque in question being stolen: -
Digitally signed by NITIN NITIN Date:
SHAH
SHAH 2025.09.16
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Balak Ram Gautam vs. Davinder Pal Singh Page no 13 of 26 JMFC-05 (NI Act)/South
DLST020058122017
29. In his statement under Section 251 CrPC as well as in his examination under Section 313 CrPC, the accused stated that his cheque had been stolen.
Furthermore, the accused examined himself as DW-5 and, in his chief examination, deposed that on 16.02.2017, a loan agreement was executed between him and the complainant for the advancement of a loan amounting to ₹40 lakhs. After the complainant left, the accused was searching for his cheque book in order to issue a cheque to someone else, but he was unable to trace it. He continued searching on the 16.02.2017 and 17.02.2017, and when he could still not find it, he lodged an NCR on 18.02.2017 regarding the missing cheque book. On the same day, he also approached his bank and gave instructions to stop payment. Thereafter, upon receiving a legal notice from the complainant, the accused claims he realised that the cheque book was not merely missing but had allegedly been stolen by the complainant. Consequently, he filed an FIR under Section 380 IPC against the complainant, which was registered as FIR No. 174/2019 at Police Station Malviya Nagar on 08.06.2019.
30. The accused was cross-examined on this aspect by the counsel for the complainant; however, no contradictions emerged during the said cross- examination.
31. Further, the accused examined the official from his bank State Bank of India, Saket Branch, as DW-1. The said witness deposed that the bank had received instructions dated 18.02.2017 from the accused to stop payment of cheques bearing numbers 799541 to 799570 pertaining to Account No. 33892420774. In addition, the said witness proved, as Ex. DW1/A (colly), the copy of the stop payment Digitally signed by NITIN NITIN Date:
SHAH SHAH 2025.09.16 17:41:27 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 14 of 26 JMFC-05 (NI Act)/South DLST020058122017 request letter submitted by the accused, a copy of the accused's identity card, and the system updation record maintained by the bank. A perusal of the stop payment instructions given by the accused reflects that the request to stop payment of cheques bearing numbers 799541 to 799570 was made on the ground that the cheque book had been lost.
32. In addition, the accused examined a police official as DW-4 to prove the NCR. The witness proved a copy of NCR LR No. 151584/2017 dated 18.02.2017 as Exhibit DW4/1 along with the certificate under Section 65B of the Evidence Act. A perusal of this document further establishes that the accused reported the loss of cheque numbers 799541 to 799570 of Account No. 33892420774, and it is specifically mentioned therein that the said cheque book was signed and blank.
33. Furthermore, the accused also examined a police official, HC Kanhaiya Lal, as DW-2. The said witness produced the FIR register of Police Station Malviya Nagar, which contains FIR No. 174/2019 registered under Section 380 IPC. He brought an attested copy of the said FIR as Exhibit DW2/A (OSR). A perusal of the said FIR reveals that the version stated by the accused is duly recorded therein. It also reflects that the accused came to know about the alleged theft of his cheques by the present complainant only after receiving the legal notice, and not merely that his cheques were lost.
34. In addition, the complainant has filed a CD as additional evidence to rebut the defence of the accused. It is alleged by the complainant that the CD Digitally signed NITIN by NITIN SHAH Date: SHAH 2025.09.16 17:41:31 +0530 CC No. 4908/17 (Nitin Shah) Balak Ram Gautam vs. Davinder Pal Singh Page no 15 of 26 JMFC-05 (NI Act)/South DLST020058122017 contains telephonic conversations between the complainant and the accused, wherein the accused purportedly admits to agreeing to issuance the cheque.
35. In this regard, Hon'ble Supreme Court in R.M Malkani vs. State of Maharastra - AIR 1973 SC 157, has made it clear that electronically recorded conversation is admissible in evidence, if the conversation is relevant to the matter in issue and the voice is identified and the accuracy of the recorded conversation is proved by eliminating the possibility of erasure, addition or manipulation. Hon'ble Court further held that a contemporaneous electronic recording of a relevant conversation is a relevant fact comparable to a photograph of a relevant incident and is admissible as evidence under section 8 of the Act. There is, therefore, no doubt that such electronic record can be received as evidence.
36. However, during cross-examination, the complainant admitted that the CD was not recorded on his computer and was prepared by his lawyer. Furthermore, he was unable to disclose the name of the advocate, or the model number of the computer used for recording. The record further reveals that no certificate under Section 65B of the Evidence Act has been produced in relation to this CD, nor was the CD ever confronted with the accused. The accused has categorically denied the authenticity of the CD, describing it as forged. Neither was the accused confronted with the said CD at any time, nor was it played or produced during the cross-examination of the accused. Furthermore, the CD was never sent for forensic examination for voice identification. Therefore, no reliance can be placed on the contents of this CD.
Digitally signed by NITIN NITIN SHAH SHAH Date:
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37. Further, it is also pertinent to note that the complainant, in his deposition, admitted that he shared friendly relations with the accused and had access to his house. He further stated that the cheques in question were handed over to him on 16.02.2017 at around 12:00 noon at Rama Automobiles, Khirki Village, in the presence of the accused and Mr. Susheel Chauhan, the owner of Rama Automobiles. However, despite specifically naming Mr. Susheel Chauhan as a witness to the alleged transaction, the complainant has not examined him during trial, nor has any explanation been furnished for his non-examination. In such circumstances, an adverse inference is liable to be drawn against the complainant under Section 114(g) of the Indian Evidence Act, 1872, for withholding a material witness who could have corroborated the complainant's version. This further weakens the credibility of the complainant's case and supports the defence version.
38. Thus, the accused has consistently asserted that the cheques were stolen and not issued against any legally enforceable liability. This defence is supported by documentary and oral evidence, including NCR registration, stop payment instructions, and an FIR against the complainant. The absence of contradictions in the accused's cross-examination further strengthens his version. Moreover, despite opportunities, the complainant has failed to produce any evidence to show that the accused ever issued the cheques to him. Taken together, the evidence casts serious doubt on the complainant's case.
B. Regarding the Nature of the Transaction -- Not a Friendly Loan but a Collaboration Agreement wherein only 15 lacs was paid to the accused: -
Digitally signed by NITIN NITIN Date:
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39. The complainant has alleged that in April 2011, the accused approached him for a friendly loan of ₹60 lakhs and assured that the said amount would be returned before 21.05.2011 along with interest at the rate of 24% per annum. Thereafter, upon consultation with his family, a mutual understanding was reached between the parties, pursuant to which the accused and his brother entered into a collaboration agreement in respect of Property No. 126 and A-147, measuring 562 sq. yards, situated in Khasra No. 129, Panchsheel Vihar.
40. It is the complainant's case that the said collaboration agreement was executed as security for the friendly loan of ₹60 lakhs, which was allegedly disbursed in various instalments on different dates. The complainant further contends that due to a stay granted by the court, possession of the said property could not be handed over to him, resulting in delay and consequent financial loss.
41. Subsequently, another agreement to sell was executed between the complainant and the accused, under which the complainant allegedly paid ₹18.5 lakhs as 10% of the consideration, for the purpose of developing the said plot through collaboration. The complainant, thus, claims that the accused is liable to repay a total sum of ₹78.5 lakhs.
42. It is also pertinent to note that during his cross-examination dated 15.11.2022, the complainant stated that the amount of ₹18.5 lakhs was also given to the accused to assist him in connection with his son's marriage and divorce proceedings. Thus, as per the complainant he had given total amount of Rs. 97 lacs to the accused. Digitally signed by NITIN NITIN SHAH SHAH Date:
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43. It is pertinent to note that, according to the complainant, a sum of ₹60 lakhs was advanced to the accused as a friendly loan, for which a collaboration agreement was executed as security. However, a careful perusal of the collaboration agreement reveals that there is no reference whatsoever to any such loan, or the complainant's status as a lender.
44. This omission becomes particularly significant in light of the admitted fact that, in the year 2017, both parties executed a formal loan agreement for an amount of ₹40 lakhs. This clearly demonstrates that the parties were in the practice of documenting financial dealings through formal written agreements. It inconceivable that a much larger amount i.e. Rs. 60 lakhs, would be advanced without any written acknowledgment, agreement, or security clause recorded in the collaboration agreement itself.
45. Such glaring inconsistency not only undermines the credibility of the complainant's version but also raises serious doubts as to whether the transaction was ever intended to be a loan. The complainant's failure to produce any documentary evidence substantiating the existence of a friendly loan, despite the magnitude of the amount, casts grave suspicion over the story put forth. It appears more plausible that the transaction was limited to a collaboration arrangement, and the narrative of a friendly loan has been subsequently constructed to support the present complaint.
Digitally signed by NITIN NITIN Date:
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46. The accused has stated that only ₹1 lakh in cash and ₹14 lakhs through Cheque No. 000003 were paid to him. As per the accused, the remaining amount was never paid, although it was allegedly agreed to be paid after the execution of the collaboration agreement. According to him, no such payment was ever made.
47. On the other hand, the complainant has claimed that ₹45 lakhs were paid in cash. When questioned in cross-examination about the source of this cash, the complainant stated that ₹15 lakhs were withdrawn from his bank account and the remaining ₹48.5 lakhs were received from the sale of property located at D-1st 604, Madangir, Behind Gurudwara, in the year 2011. However, the complainant also admitted that no documentary proof regarding either of these sources has been placed on record. No bank statement or sale deed has been filed to substantiate these claims.
48. The complainant has also placed on record a copy of an "Advance Receipt-cum-Agreement to Sell and Purchase," however, same is only an agreement to sell stating that Rs. 4 lacs have been given to the present complainant. Moreover, no evidence has been placed on record to show that actual sale took place and the complainant received rest of the amount. In addition, no witness has been examined to prove the said Advance Receipt-cum-Agreement to Sell and Purchase Ex. CW1/12. Therefore, the complainant has failed to prove the source of the cash amount he claims to have paid, which creates a serious doubt as to whether the remaining ₹45 lakhs were ever advanced as alleged.
Digitally signed by NITIN NITIN Date:
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49. Further, with respect to the claim of having paid ₹18.5 lakhs under a subsequent agreement to sell, the complainant has not filed any such agreement.
He has merely stated that the said agreement to sell was torn by the accused himself. However, it is ordinary prudence that when any agreement is entered into, at least one party retains a copy for record. In this case, no such copy has been produced. Moreover, no details of the property for which the alleged agreement to sell was executed have been mentioned, further weakening the credibility of this claim.
50. Thus, it appears that the transaction in question was not that of a friendly loan, as alleged, but was primarily in the nature of a collaboration agreement, as reflected in the documentary record. The complainant has not been able to establish, through any reliable documentary evidence, that the remaining amounts of ₹45 lakhs and ₹18.5 lakhs were ever paid to the accused. These inconsistencies raise serious doubts about the complainant's version and the alleged financial transactions.
C. Non-Compliance of Terms of Collaboration Agreement by the Complainant: -
51. The accused has stated that the complainant failed to comply with the terms and conditions of the collaboration agreement. As per the agreement, the complainant was required to make a total payment of ₹60 lakhs and was also obligated to construct a five-storey building on the subject property within a period of 18 months. However, no construction activity whatsoever was undertaken by the Digitally complainant in pursuance of the said obligation. signed by NITIN NITIN Date:
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52. The accused has further submitted that the collaboration agreement contained a specific penalty clause, which provided that in case an extension of six months was sought beyond the agreed construction period, the complainant would be liable to pay ₹1.80 lakhs per month to the accused. Since no construction was carried out and the terms of the agreement were breached, the accused has contended that the amount of ₹14 lakhs paid to him by the complainant stood forfeited in accordance with the terms of the agreement.
53. To this, the complainant has contended that the accused never handed over possession of the subject property. The complainant has further asserted that the property in question was also under a stay order passed by Saket court during the relevant period, due to which he was legally restrained from carrying out any construction activity. Hence, the complainant submits that the non-execution of construction work was not due to his default but due to circumstances beyond his control, for which the accused alone is responsible.
54. As regards the issue of possession, the complainant has himself made contradictory statements. In his cross-examination dated 15.11.2022, the complainant initially stated that possession of Property No. 126 and 129, Panchsheel Vihar, Khirki, was handed over to him on 30.04.2011, when the collaboration agreement was executed, and that he was instructed to begin construction. However, in the same cross-examination, he later contradicted himself by stating that no possession was ever given.
Digitally signed by NITIN NITIN Date:
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55. In support of his defence, the accused has also examined DW-3, the Assistant Ahlmad of the court concerned who produced summoned documents Ex. DW-3/1, where the present accused had filed a complaint under Section 138 of the NI Act against the present complainant based on the 2017 loan agreement. In that proceeding, when the complainant was confronted with the question as to why construction had not commenced since 2011, despite his own claim that he came to know about the stay as late as 2021, he responded that he had submitted an architectural map to the bank and was in the process of clearing the plot when he was stopped by the police.
56. As regards the issue of the stay order, the complainant has alleged that when he demanded possession of the plot for the purpose of development, the accused, under one pretext or another, deliberately caused delay. Thereafter, the accused, in collusion with his brother, filed a civil suit bearing CS No. 146/2011 challenging the family settlement. In the said suit, the Ld. ADJ Court is stated to have passed a status quo order.
57. Further, when the complainant was questioned in his cross- examination about when he became aware of the status quo order, the complainant stated that he came to know about it on 16.02.2017. However, in the connected case, the record of which is exhibited on file as Ex. DW-3/1, the present complainant himself stated that he became aware of the stay order concerning the subject property only in the year 2021. These inconsistencies seriously undermine the credibility of the complainant's explanation regarding not delivery of possession of said plots for construction. Digitally signed by NITIN NITIN SHAH SHAH Date:
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58. During the cross-examination of the accused, when he was confronted with CS No. 164/2011 titled Suresh Kumar Chauhan v. Dinesh Chauhan pending before the Ld. ADJ (South), he denied any knowledge of the said case. He was further confronted with copies of the order dated 02.06.2011, wherein his attendance was allegedly marked as a defendant. In response, the accused stated that he does not recall and is unaware of any status quo order having been passed in respect of Plot Nos. 126 and 147.
59. It is relevant to note that the documents produced by the complainant, which are claimed to be certified copies of the court proceedings, consist only of a copy of memo of parties and a single order sheet. These are, by themselves, inadmissible in evidence and insufficient to establish the existence or applicability of any stay or status quo order.
60. Even if, for the sake of argument, it is presumed that these are true copies, they do not indicate which specific property the said order pertains to, nor do they establish that the property forming the subject matter of the collaboration agreement is the same as the one involved in the said civil suit. Moreover, no document has been placed on record to establish that the civil suit referred to, i.e., CS No. 146/2011, pertains specifically to the property involved in the present matter.
61. It is also relevant to note that the collaboration agreement contains a specific clause whereby the builder undertook to complete the project within aDigitally signed by NITIN NITIN Date:
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62. If the complainant's case is that the project could not be completed due to falling within any of these exceptions, it was incumbent upon him to produce cogent evidence to substantiate the same. However, no such material or documentary proof has been placed on record to demonstrate that the delay in completion of the project was due to any unforeseen event or any intervention by government authorities. The absence of such evidence further weakens the complainant's justification for non-performance under the agreement.
63. Accordingly, the complainant has failed to prove that any status quo order was ever passed with respect to the property in question, and the plea taken by him to justify the non-performance of his obligations under the collaboration agreement remains unsubstantiated.
64. Hence, in the light of discussion and the authorities cited in the aforegoing para(s), it is apparent that the case of the complainant has failed to prove legal liability against the accused. Consequently, it can be said that the accused has been able to raise the probable defence. Thereafter, onus is again shifted to the complainant to prove the case beyond reasonable doubt which the complainant has failed to do so, thus, the second ingredient to the offence under section 138 of NI Act does not stands proved.
CONCLUSION: Digitally signed
NITIN by NITIN SHAH
Date:
SHAH 2025.09.16
17:42:16 +0530
CC No. 4908/17 (Nitin Shah)
Balak Ram Gautam vs. Davinder Pal Singh Page no 25 of 26 JMFC-05 (NI Act)/South
DLST020058122017
65. In the result of the analysis of the present case, the accused Davinder Pal Singh Chauhan is hereby acquitted of the offence punishable under Section 138, Negotiable Instruments Act, 1881.
66. This judgment contains 26 pages. This judgment has been signed and pronounced by the undersigned in open court.
67. Copy of this Judgment be given dasti free of cost as per rules.
Digitally signed
NITIN byDate:NITIN SHAH
SHAH 2025.09.16
17:42:38 +0530
ANNOUNCED IN THE OPEN (NITIN SHAH)
COURT ON 16.09.2025 JMFC-05/NI ACT/SOUTH/SAKET
NEW DELHI
CC No. 4908/17 (Nitin Shah)
Balak Ram Gautam vs. Davinder Pal Singh Page no 26 of 26 JMFC-05 (NI Act)/South