Delhi District Court
Ms Jai Shree Balaji Papers vs Manish Jain on 8 January, 2026
IN THE COURT OF MR. ARVIND TOMAR
JUDICIAL MAGISTRATE FIRST CLASS (NI ACT)-07
CENTRAL DISTRICT, NCT of DELHI
DLCT020015892016
Ct. Cases.: 510823/2016
M/s Jai Shree Balaji Papers,
through its partner Sh. Vijay Bhushan
4016, Raghu Ganj, Chawri Bazar,
Delhi-110006. ...... Complainant
Versus
Sh. Manish Jain,
Proprietor of M/s Ansh Enterprises
Shop No. 114, First Floor, Maharaja Agrasen Market,
Chawri Bazar, Delhi-110006.
Also At: 9/1997/A, Gali no. 4, Kailash Nagar,
New Delhi-110031. ...... Accused
Offence complained of U/s 138, Negotiable Instruments Act, 1881.
Case instituted on 05.05.2016
Plea of accused Not guilty
Final order Conviction
Date of decision of the case 08.01.2026
:: J U D G M E N T ::
1. This judgment disposes of the case registered on the complaint filed on behalf of M/s Jai Shree Balaji Papers, through its Partner Sh. Vijay Bhushan (hereinafter referred to as the "complainant") against Manish Jain, proprietor of M/s Ansh Enterprises (hereinafter referred to as the "accused") alleging commission of an offence punishable u/s 138 of the Negotiable Instruments Act,1881 (hereinafter referred to as "NI Act"). Digitally signed by ARVIND ARVIND TOMAR Date:
TOMAR 2026.01.08 15:37:57 Ct. Cases.: 5108232016 +0530 M/s Jai Shree Balaji Papers Vs. Manish Jain 1/12 FACTS OF THE CASE
2. According to the complaint, the complainant is engaged in the business of trading paper of different types and grades, and the accused, acting as proprietor of M/s Ansh Enterprises, entered into commercial dealings with the complainant for purchase of paper. In the course of these business transactions, the accused procured various goods from the complainant against invoices. The complainant maintains that, as per its ledger account, the total outstanding of Rs.15,87,641/- remained outstanding against the accused. To discharge this liability, the accused issued three cheques bearing nos. 001169 of ₹5,32,600/- dated 25.01.2016; 001206 of ₹4,07,640/- dated 07.02.2016 and 001207 of ₹6,47,401/- dated 07.02.2016, all drawn on Karur Vysya Bank. However, the cheques were dishonoured with the remarks "Funds Insufficient" upon their presentation. Believing he was deceived, the complainant got a legal notice served upon the accused, but the accused failed to repay the cheque amount within statutory time. Consequently, the complainant filed the present case.
3. On these allegations, a prima facie case was established and after conducting pre-summoning inquiry, accused Manish Jain was summoned as proprietor of M/s Ansh Enterprises. On 06.02.2018, the substance of accusation was stated to the accused, to which he pleaded not guilty and claimed trial. In his plea of defence, the accused acknowledged that the cheques in question, along with other cheques, had indeed been issued by him to the complainant but in a blank signed condition purely as security, intended to cover the payment for goods allegedly to be supplied by the complainant. He further claimed that no goods were ever supplied to him and, therefore, denied any liability to pay the cheque amount. On this basis, he alleged misuse of his cheques by the complainant. Digitally signed by ARVIND ARVIND TOMAR Date:
TOMAR 2026.01.08 15:38:12 +0530 Ct. Cases.: 5108232016 M/s Jai Shree Balaji Papers Vs. Manish Jain 2/12 COMPLAINANT EVIDENCE
4. The complainant examined himself as CW-1. He adopted his pre-summoning evidence affidavit (Ex.CW1/A), in lieu of his examination-in-chief and relied upon the following documents: Letter of authority Ex.CW1/1; Invoices Ex.CW1/2(colly); Delivery Note Ex.CW1/3 (colly); Cheques in question Ex.CW1/4 to Ex.CW1/6; Original returning memos Ex.CW-1/7 to Ex.CW1/9; Legal notice Ex.CW-1/10; Postal receipts Ex.CW-1/11 (colly); Tracking reports Ex.CW1/12(colly). He was then cross-examined and discharged. The complainant also examined one Sh. Shahanwaz, official from Dept. of Taxes and trades as CW-2 on 29.07.2022, who produced Form DVAT-16 of the complainant firm for the period 01.10.2015 to 31.12.2015 (Ex.CW-2/1); Annexure 2A for the period 01.10.2015 to 31.12.2015 (Ex.CW-2/2); Annexure 2B for the period 01.10.2015 to 31.12.2015 (Ex.CW-2/3); Form DVAT-16 of the complainant company for the period 01.01.2016 to 31.03.2016 (Ex.CW-2/4); Annexure 2A for the period 01.01.2016 to 31.03.2016 (Ex.CW-2/5); Annexure 2B for the period 01.01.2016 to 31.03.2016 (Ex.CW-2/6) and Certificate u/s 65B of IEA. CW-2 was then cross examined and discharged.
STATEMENT OF ACCUSED
5. Thereafter, the evidence led by the complainant was put to the accused and his statement u/s 313 Cr.P.C. was recorded on 08.10.2018, wherein he admitted his signature on the cheque in question and stated that he had issued the cheques in question to the complainant as security for payment of goods to be supplied by the complainant, which were never so supplied. He accordingly, denied any liability towards the complainant.
DEFENCE EVIDENCE
6. The accused opted to lead DE. He examined Sh. Satyapal Singh, official from Dept. of Trade and taxes as DW-1 on 26.09.2019, who produced Digitally signed by ARVIND Ct. Cases.: 5108232016 ARVIND TOMAR TOMAR Date:
M/s Jai Shree Balaji Papers Vs. Manish Jain 2026.01.08 3/12 15:38:19 +0530 VAT returns of the complainant for the period dated 01.10.2015 to 31.03.2016 (Ex. DW-1/A) and VAT returns of the accused for the period dated 01.10.2015 to 31.03.2016 (Ex. DW-1/B). DW-1 was then cross examined and discharged.
FINAL ARGUMENTS
7. For final arguments, the complainant filed written submissions and argued that all essentials of the offence punishable u/s 138 of NI Act are made out beyond reasonable doubt and that the accused has been unable to substantiate his defence to rebut the presumption against him. He also argued that the parties had long-standing business dealings of about three years involving transactions worth nearly ₹60 Lakhs, which were never disputed by the accused. The AR of the complainant clearly explained the manner of transactions, identified the delivery challans on record, and stated that the initials thereon were from the accused's office. The defence suggestions were specifically denied. It was further contended that the accused's attempt to rely on VAT returns through a defence witness failed, as only incomplete returns without annexures were produced. On the other hand, the complainant duly proved complete VAT returns with annexures through an official witness, demonstrating that sales to the accused firm were declared for the relevant period. Accordingly, the complainant submitted that the invoices, delivery of goods, and liability stood proved, the accused admitted signatures on the cheques, failed to rebut the statutory presumption of legally enforceable debt, and prayed that the accused be convicted and sentenced as per law.
8. Per contra, the accused argued that the complainant failed to prove the existence of any legally enforceable debt or liability and that the cheques in question were issued merely as security for payment of goods which were never supplied. The accused denied receipt of the statutory legal notice. It was contended that the complainant did not prove actual delivery of goods, as the delivery challans and invoices neither mentioned vehicle numbers, destination Digitally signed by ARVIND Ct. Cases.: 5108232016 ARVIND TOMAR M/s Jai Shree Balaji Papers Vs. Manish Jain TOMAR Date:
2026.01.08 4/12 15:38:28 +0530 of goods, nor the name and address of the carrier, despite the alleged supply involving goods of substantial weight. It was further argued that the delivery challans and invoices did not bear the signatures of the accused, and even the complainant's witness expressed inability to identify the accused's signatures on these documents, thereby rendering the documents doubtful. The accused further submitted that although the complainant relied upon an alleged ledger account to claim outstanding liability, the same was never filed or proved, warranting an adverse inference against the complainant for withholding best evidence. On this basis, it was argued that the statutory presumptions under the NI Act stood rebutted by raising a probable defence from the complainant's own evidence, entitling the accused to acquittal. Reliance was placed on judicial precedents, including Kumar Exports v. Sharma Carpets AIR 2009 SC 1518 and Indus Airways v. Magnum Aviation AIR Online 2014 SC 89 among others, to submit that mere issuance of cheques does not establish liability u/s 138 of NI Act in the absence of consideration.
RELEVANT LAW & ANALYSIS OF EVIDENCE
9. S. 138 of the NI act reads as follows, "Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless-
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder in due course of the cheque, as the case may be, 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 thirty days of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.Digitally signed
Ct. Cases.: 5108232016 by ARVIND
ARVIND Date:
TOMAR
M/s Jai Shree Balaji Papers Vs. Manish Jain 5/12
TOMAR 2026.01.08
15:38:35 +0530
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
10. In the instant case, CW-1's authority to prosecute the case on behalf of the complainant firm, the accused's signature on the cheques (Ex.CW1/4 to Ex.CW1/6), their presentation within the maturity/validity period by the complainant, their dishonour for "Funds Insufficient" by way of return memos (Ex.CW1/7 to Ex.CW1/9), dispatch of legal notice (Ex.CW-1/10) within the statutory timeline and non-payment of cheque amount, are not disputed between the parties. The dispute remains only as to whether or not the accused issued the cheques in question to discharge a legally enforceable debt or a liability towards the complainant.
11. In his statements recorded u/s 251 Cr.P.C. and s. 313 Cr.P.C, the accused has admitted his signature on the cheque in question. The Hon'ble Supreme Court of India, through its judgments in cases titled Basalingappa v. Mudibasappa, (2019) 5 SCC 418; Kalamani Tex v. P. Balasubramanian 2021 SCC OnLine SC 75, has held that presumptions u/s 118(a) & s.139 of NI act, have to be compulsorily raised, as soon as execution of cheque is admitted by the accused or proved by the complainant. As the accused has admitted his signatures on the cheques in question, it is presumed that he issued the cheques for consideration and in discharge of his legally enforceable debt or liability towards the complainant.
12. The law and legal precedents establish that it is the accused's responsibility to rebut the aforesaid presumption against him. To rebut the same, he does not need to prove his defense beyond a reasonable doubt but only needs to create reasonable doubt in the complainant's case by highlighting inconsistencies therein or by presenting a plausible alternate story that makes the complainant's version improbable.
Digitally signed by ARVIND ARVIND TOMAR
Ct. Cases.: 5108232016
TOMAR Date:
2026.01.08
15:38:46 +0530
M/s Jai Shree Balaji Papers Vs. Manish Jain 6/12
13. To rebut the presumption against him, the accused has challenged
the complainant's account and provided an alternative version. The defence of the accused, as emerging from his plea u/s 251 Cr.P.C., statement u/s 313 Cr.P.C. and final arguments is that the cheques in question, though admittedly signed by him, were issued only as blank security cheques for payment of goods proposed to be supplied by the complainant and not in discharge of any existing legally enforceable debt or liability. The accused asserts that no goods were ever supplied to him against the alleged invoices and delivery challans and that, in the absence of any such supply, no consideration existed for the cheques. He further claims that the cheques have been misused by the complainant. He also denies receipt of legal demand notice.
14. The principal and foremost plank of the defence is that the cheques in question were handed over to the complainant in a blank signed manner as security for goods proposed to be supplied by the complainant. With respect to the defense of issuing the cheques in blank and not filling their particulars, S. 20 of the NI Act provides that the holder of a signed cheques i.e. the complainant, has the authority to fill in the particulars and complete the instruments. As the accused has admitted that the cheques were signed and issued by him to the complainant, the accused's defense of not filling in the particulars himself is untenable in light of the abovesaid provision.
15. With respect to the defence of issuance of the cheques in question as security, the accused has not led any documentary evidence or produced any independent corroboration. No contemporaneous record such as a written acknowledgment from the complainant, an agreement or any communication/ correspondence indicating that cheques were issued without consideration has been produced. Moreover, the Hon'ble Supreme Court in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002, has held that a cheque given as security does not fall outside the ambit of SectionDigitally 138 unless signed it is by ARVIND ARVIND TOMAR Ct. Cases.: 5108232016 Date:
M/s Jai Shree Balaji Papers Vs. Manish Jain TOMAR 2026.01.08 7/12 15:38:56 +0530 shown that no liability subsisted at the time of its presentation. The reliance placed by the accused on Indus Airways Pvt. Ltd. v. Magnum Aviation Pvt. Ltd., (supra) is thus misconceived. In the said case, the cheques were issued as advance payment against a specific purchase order which was admittedly cancelled prior to supply of goods, and it was an undisputed fact that no legally enforceable debt existed on the date of presentation of the cheques. The Supreme Court, in those peculiar circumstances, held Section 138 of the NI Act to be inapplicable. The present case stands on a completely different footing, as there is no admitted cancellation of any transaction and the alleged non-supply of goods & consequent liability, is seriously disputed. The scope of Indus Airways has been explained and distinguished in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458, wherein it was held that even a cheque described as a security cheque would attract Section 138 if the liability had crystallised on the date of its presentation. In the absence of any cogent evidence to show issuance of cheque as an advance payment cheque, the ratio of Indus Airways does not apply to the facts of the present case and does not aid the accused.
Therefore, the claim of issuance of the cheques as "security" remains ipse dixit and is in itself, insufficient to escape liability unless the accused proves that the underlying liability had been discharged, became unenforceable, or did not exist when the cheques were presented.
16. To establish that there existed no liability towards the cheques, the second line of defence taken by the accused is that no goods whatsoever were supplied against the alleged invoices and delivery challans relied upon by the complainant and that the cheques have been misused. The accused has alleged infirmities in the complainant's case, including absence of vehicle numbers, destination and carrier details on the delivery challans despite alleged supply of heavy goods, non-existence of the accused's signatures on the invoices and Digitally signed by ARVIND Ct. Cases.: 5108232016 ARVIND TOMAR Date: M/s Jai Shree Balaji Papers Vs. Manish Jain TOMAR 2026.01.08 15:39:06 8/12 +0530 delivery challans, and the complainant's own admission that he could not identify the accused's signatures on those documents and that they differed from the cheque signatures. The accused further contends that the complainant deliberately withheld the ledger account despite relying upon it in the complaint, inviting an adverse inference. On these grounds, the accused submits that the delivery of goods by the complainant has been rendered doubtful and presumption u/s 118 and s.139 of the NI Act stands rebutted on a balance of probabilities.
17. However, apart from a bare allegation of non-delivery, the accused has produced no contemporaneous material such as protest letters, rejection notes, credit/debit notes, stop-payment instructions, or legal notices alleging non-supply of goods. In an admitted long-standing commercial relationship involving substantial transactions, such complete inaction renders the defence inherently improbable. The omission of vehicle numbers, destination, or carrier details on the delivery challans, even if assumed, constitutes at best procedural lapses and does not by itself establish non-supply of goods. These omissions do not displace the presumption of liability arising from the admitted issuance of cheques.
18. Much emphasis has also been laid on the fact that the invoices and delivery challans do not bear the accused's signatures and that the complainant could not identify the accused's signatures thereon. This Court has judicial notice of the fact that in commercial dealings, it is not uncommon for goods to be received by employees or agents, and absence of the proprietor's signature on each document does not negate the transaction itself. The complainant has explained the mode of transactions, the business relationship is undisputed, and no case of impersonation or fabrication by any specific person has been set up by the accused. Significantly, the accused has admitted his signatures on the cheques but failed to lead any positive evidence Digitally signed by ARVIND Ct. Cases.: 5108232016 ARVIND TOMAR Date: M/s Jai Shree Balaji Papers Vs. Manish Jain TOMAR 2026.01.08 9/12 15:39:12 +0530 such as examination of a transporter or proof of impossibility of delivery to substantiate the plea of non-delivery. Therefore, mere absence of the accused's signatures on the invoices or delivery documents, in the absence of any allegation or proof of impersonation, fabrication by any identified person, or misuse of the cheques through an employee or agent, does not probabilise the defence so as to displace the statutory presumption operating in favour of the complainant.
19. Notably, despite alleging non-supply of goods, the accused also did not issue any written request or notice seeking return of the cheques, did not lodge any police complaint or initiate any legal proceedings alleging misuse, and did not even issue stop-payment instructions to his bank upon non-delivery of goods and cheques, prior to their presentation. The Hon'ble Supreme Court in APS Forex Services Pvt. Ltd. v. Shakti International Fashion Linkers, AIR 2020 SUPREME COURT 945, has held that once issuance of cheques is admitted, a bald plea that the cheque was issued as a "security cheque" or was subsequently misused, without leading cogent and specific evidence to substantiate such a plea, is insufficient to rebut the presumption. Applying the said principle to the present case, such inaction is wholly inconsistent with the conduct of a prudent person alleging misuse of his negotiable instrument and materially undermines the defence version. In the absence of any protest or preventive step, the plea of misuse also remains speculative and does not constitute a probable defence.
20. It was also contended that the complainant failed to file the ledger account despite referring to it in the complaint and that an adverse inference ought to be drawn. This Court is unable to accept the said contention as fatal to the complainant's case. In a prosecution u/s 138 NI Act, the foundational requirement is proof of issuance of cheque, its dishonour and non-payment despite notice. Once these ingredients are established and issuance is Digitally signed by ARVIND Ct. Cases.: 5108232016 ARVIND TOMAR Date: M/s Jai Shree Balaji Papers Vs. Manish Jain TOMAR 2026.01.08 15:39:24 10/12 +0530 admitted, the presumption of liability follows. The ledger account, which is anyway a self-prepared document, though relevant, is not sine qua non for proving liability in proceedings u/s 138. In Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106, the Supreme Court categorically held that once presumption arises, the complainant is not required to prove the debt like a civil suit, unless the accused first rebuts the presumption. In the present case, the accused has failed to do so. Therefore, mere non-production of the ledger, in the absence of a credible rebuttal, neither warrants an adverse inference nor does it displace the statutory presumption, more so, when the invoices have been placed on record by the complainant.
21. Additionally, the accused examined DW-1 from the Department of Trade and Taxes to rely upon VAT returns. However, DW-1 categorically admitted that he had no personal knowledge of the transactions and that the documents produced by him were computer-generated extracts without annexures or invoice-wise details. He further admitted that he could not state whether the alleged transactions were reflected therein. Thus, the testimony of DW-1 does not advance the defence case. Conversely, the complainant examined CW-2, who produced VAT returns along with Annexure-2B for the relevant periods. Though CW-2 also lacked personal knowledge, the documents produced through him were statutory records maintained in the ordinary course of business and reflected disclosure of sales to the accused firm. While VAT records may not, by themselves, conclusively prove physical delivery of goods, they certainly lend corroborative support to the complainant's version and dilute the defence of complete absence of consideration.
22. Ancillary to his main defence, the accused has also contended that the legal demand notice was not delivered to him and the complainant has not filed any proof of its service. The record shows that the address stated by the Ct. Cases.: 5108232016 Digitally signed by ARVIND M/s Jai Shree Balaji Papers Vs. Manish Jain ARVIND TOMAR 11/12 TOMAR Date:
2026.01.08 15:39:42 +0530 accused in his personal bond furnished on 04.03.2017 and the address mentioned in the legal demand notice is the same. As per the settled law in N. Parameswaran Unni v. G. Kannan (2017) 5 SCC 737 and V. Rajakumari v. P. Subaramma Naidu (2004) 8 SCC 774, once a notice is properly addressed and sent by registered post, its service is deemed to be affected. Furthermore, in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555, the Hon'ble Supreme Court has held that:
"Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons. A person who does not pay within 15 days of receipt of summons cannot obviously contend that there was no proper service of notice." (para 17) 22.2 Thus, even if the accused denies service of the notice, once summons of the court proceedings are received/ the accused has entered appearance and yet payment is not made within the statutory period, the defence of non-service of notice is not available. Thus, the service of legal notice is proved and the complainant's responsibility to prove service of notice is dispensed with.
CONCLUSION
23. In view of the foregoing discussion and findings, it is evident that the accused has neither led cogent evidence to support his alternative version of misuse of blank cheques issued as security for payment of goods not supplied by the complainant nor has he dismantled the version of the complainant and prove that he did not issue the cheque towards payment of goods supplied against invoices. Thus, the accused has failed in rebutting the presumption raised by the NI act in favour of the complainant. Accordingly, the accused Manish Jain is convicted of the offence punishable u/s 138 of Digitally signed ARVIND by ARVIND the NI Act. TOMAR TOMAR Date: 2026.01.08 15:40:00 +0530 Announced in the open court on ARVIND TOMAR 08th day of January, 2026 JMFC(NIAct)-07 (The judgment consists of 12 pages) Central District, Delhi Ct. Cases.: 5108232016 M/s Jai Shree Balaji Papers Vs. Manish Jain 12/12