Delhi District Court
M/S Peejay Finance Co. Ltd vs Smt. Shama Yadav on 17 April, 2025
DLET020032672016
Presented on : 01-04-2016
Registered on : 04-04-2016
Decided on : 17-04-2025
Duration : 9 years, 0 months, 16 days 5
In The Court of Sh. Divyam Lila, Municipal Magistrate, East District,
KKD. Courts, Delhi.
CC NI ACT/57011/2016
10
(Complainant):
M/s. Peejay Finance Co. Ltd.
Through its Authorized Representative,
At : 75, Vijay Block, First Floor, Vikas Marg, Delhi-110092.
15
VERSUS
(Accused)
Smt. Shama Yadav, S/o Sh. Satish Yadav,
R/o 2/26, Ram Mohalla, Johripur, Delhi-94.
20
Adv. for appearing for Complainant: Mr. B.B. Sharma.
Adv. for appearing for accused: Mr. Deepak Kumar.
Offence punishable under :138 of Negotiable Instruments Act,
Final Order : Acquittal, under Section 138 NI Act 25
CC no. 57011/2016 Page no. 1 / 24
In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
JUDGMENT:-
1 Background of the Case.
1.1 The complainant, Peejay Finance Co. Ltd., through its authorized representative Sh. Naveen Khanna, filed a complaint 30 under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") against the accused, Smt. Shama Yadav, alleging dishonor of a cheque issued by her for a legally enforceable debt.
1.2 The complainant is a company engaged in the business of 35 financing, leasing, and hire purchase of vehicles. The accused approached the complainant on 17.09.2012 for financing a second-hand Mahindra Xylo vehicle (Registration No. UP-16-T- 7234, Model 2010). A loan agreement (Ex. CW-1/4) was executed, under which the complainant disbursed Rs. 4,00,000, 40 with hypothecation charges of Rs. 1,12,000, making the total repayable amount Rs. 5,12,000. The repayment was structured in 23 installments: one installment of Rs. 21,400 and 22 installments of Rs. 22,300 each.
1.3 The complainant alleged that the accused defaulted on several 45 installments and, to settle the outstanding dues, issued a cheque bearing No. 524823 dated 05.03.2016 for Rs. 2,50,000, drawn on CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 2 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
Punjab National Bank, Johripur Branch, Delhi (Ex. CW-1/6). The cheque was presented for encashment but was dishonored on 07.03.2016 with the remark "Funds Insufficient" (Ex. CW-1/7). 50 1.4 The complainant issued a legal notice dated 10.03.2016 (Ex. CW-1/8) demanding payment within 15 days, which the accused failed to comply with. Consequently, the complainant filed the present complaint, alleging an offense under Section 138 of the NI Act. 55 1.5 The accused admitted to issuing the cheque but claimed it was a blank signed cheque given as security for the loan. She further contended that she had paid 8 installments, Rs. 50,000 in cash, and surrendered the vehicle to the complainant in June 2015, believing the loan was fully settled. The accused alleged misuse 60 of the cheque and suppression of material information by the complainant regarding the vehicle's sale proceeds.
2 Issues for Determination:
2.1 The following issues are framed for determination:
2.2 Whether the complainant has proved that the accused issued 65 the cheque (Ex. CW-1/6) for a legally enforceable debt or liability?
2.3 Whether the cheque was dishonored due to insufficient funds, CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 3 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
and the complainant complied with the statutory requirements of Section 138 of the NI Act? 70 2.4 Whether the accused has rebutted the presumption under Section 139 of the NI Act that the cheque was issued for a legally enforceable debt?
2.5 Whether the accused is guilty of an offense under Section 138 of the NI Act? 75 3 Evidence and Arguments 3.1 Complainant's Evidence : The complainant examined Sh. Naveen Khanna (CW-1), its authorized representative, who filed an affidavit in evidence (Ex. CW-1/A) and relied on the following documents: 80 3.1.1 Resolution authorizing Sh. Naveen Khanna (Ex. CW- 1/1).
3.1.2 Certificate of Incorporation and Registration (Ex. CW- 1/2, Ex. CW-1/3).
3.1.3 Loan Agreement dated 17.09.2012 (Ex. CW-1/4). 85 3.1.4 Account Statement/Ledger (Ex. CW-1/5).
3.1.5 Dishonored Cheque (Ex. CW-1/6).
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 4 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi. 5 3.1.6 Bank Memo dated 07.03.2016 (Ex. CW-1/7).
3.1.7 Legal Notice dated 10.03.2016 (Ex. CW-1/8, colly).
3.1.8 Postal Receipt and Tracking Report (Ex. CW-1/9, Ex. 90 CW-1/10).
3.1.9 Letter dated 08.06.2015 regarding vehicle surrender (Ex. CW-1/11).
4 CW-1 deposed that the accused defaulted on installments, and on 05.03.2016, issued the cheque for Rs. 2,50,000 to settle the 95 outstanding loan amount. The cheque was dishonored due to insufficient funds, and despite serving a legal notice, the accused failed to make payment. The ledger account (Ex. CW-1/5) showed an outstanding liability of Rs. 3,26,000 as of 31.03.2015, adjusted by vehicle sale proceeds of Rs. 1,18,500 and documentation charges 100 of Rs. 40,000.
5 In cross-examination, CW-1 admitted:
5.1 The vehicle was surrendered by the accused in June 2015, as evidenced by a letter signed by the accused's husband (Ex. CW-1/11). 105
5.2 No documents related to the vehicle's sale (e.g., sale agreement, buyer details) were produced.
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 5 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
5.3 The insurance claim adjustment (Rs. 56,377) was based on the accused's oral consent, with no written record.
5.4 The ledger account was not maintained by CW-1, and the 110 director who signed it did not testify.
5.5 No written communication was sent to the accused regarding the vehicle sale proceeds or remaining liability.
5.6 During court questioning under Section 165 of the Indian Evidence Act, 1872, CW-1 clarified that the loan was sanctioned 115 at 14% per annum, and the outstanding liability as of 31.03.2015 was Rs. 3,26,000, adjusted by the sale proceeds and documentation charges.
6 Accused's Evidence:
6.1 The accused did not lead defense evidence but relied on her 120 statement under Section 313 of the Code of Criminal Procedure, 1973 (Cr.P.C.), and cross-examination of CW-1.
6.2 In her Section 313 statement, the accused admitted:
6.3 She issued the cheque (Ex. CW-1/6) as a blank signed cheque for security, not for a specific debt. 125 6.4 She received the legal notice (Ex. CW-1/8) at her correct address.
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 6 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
6.5 She financed the vehicle in 2012, paid 8 installments, Rs. 50,000 in cash, and surrendered the vehicle in June 2015, believing the loan was settled. 130 6.6 The complainant did not issue a No Objection Certificate (NOC) and misused the blank cheque by filling an inflated amount.
6.7 The accused denied pleading guilty and claimed trial, asserting that no liability remained after the vehicle surrender 135 and payments.
7 Final Arguments 7.1 Complainant's Arguments:
7.1.1 The accused issued the cheque to discharge a legally enforceable debt, as evidenced by the loan agreement and 140 ledger account.
7.1.2 The vehicle sale proceeds (Rs. 1,18,500) and documentation charges (Rs. 40,000) were accounted for in the ledger (Ex. CW-1/5), and the remaining liability justified the cheque amount. 145 7.1.3 The accused failed to rebut the presumption under Section 139 and has no valid defense.
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 7 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
7.1.4 The complainant complied with all statutory requirements under Section 138, warranting conviction.
7.2 Accused's Arguments: 1507.2.1 The cheque was a blank security cheque, misused by the complainant by filling an inflated amount.
7.2.2 The complainant failed to produce documents related to the vehicle's sale or prove how the sale proceeds were adjusted against the loan. 155 7.2.3 The complainant suppressed material information, such as the sale agreement and communication of remaining liability, warranting an adverse inference under Section 114(g) of the Indian Evidence Act, 1872.
7.2.4 The accused paid 8 installments, Rs. 50,000 in cash, 160 and surrendered the vehicle, discharging her liability.
7.2.5 The complainant's failure to issue an NOC and reliance on an unauthenticated ledger undermines their case, entitling the accused to acquittal.
8 Legal Framework: 1658.1 Section 138 of the NI Act, Section 138 provides that where a cheque is dishonored due to insufficient funds or exceeds the CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 8 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
arrangement with the bank, and the drawer fails to make payment within 15 days of receiving a legal notice, they shall be deemed to have committed an offense punishable with 170 imprisonment up to two years, or fine up to twice the cheque amount, or both. The complainant must prove:
8.1.1 The cheque was issued by the accused to the complainant.
8.1.2 The cheque was presented within its validity period. 175 8.1.3 The cheque was dishonored due to insufficient funds or other specified reasons.
8.1.4 A legal notice was served within 30 days of dishonor.
8.1.5 The accused failed to pay within 15 days of receiving the notice. 180 8.1.6 The cheque was issued for a legally enforceable debt or liability.
8.2 Section 139 of the NI Act, Section 139 creates a presumption that the cheque was issued for a legally enforceable debt or liability, unless the accused proves otherwise. The accused's 185 burden is to establish a preponderance of probabilities, not proof beyond reasonable doubt (Rangappa v. Sri Mohan, (2010) 11 CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 9 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi. 10 SCC 441).
9 Findings and Reasoning
9.1 Issue 1: Whether the complainant has proved that the 190 accused issued the cheque for a legally enforceable debt or liability?
9.2 The complainant's case hinges on the assertion that the accused issued a cheque (No. 524823, dated 05.03.2016, for Rs. 2,50,000, Ex. CW-1/6) to discharge a legally enforceable debt 195 arising from a loan agreement dated 17.09.2012 (Ex. CW-1/4). The accused admitted to issuing and signing the cheque but contended that it was a blank signed cheque provided as security for the loan, not for a specific debt. She further claimed that the loan was settled through installment payments, a cash payment 200 of Rs. 50,000, and the surrender of the financed vehicle in June 2015.
9.3 The complainant's evidence includes the loan agreement (Ex. CW-1/4), ledger account (Ex. CW-1/5), dishonored cheque (Ex. CW-1/6), bank memo (Ex. CW-1/7), legal notice (Ex. CW-1/8), 205 postal receipts (Ex. CW-1/9), tracking report (Ex. CW-1/10), and a letter confirming vehicle surrender (Ex. CW-1/11). The ledger account indicates an outstanding liability of Rs. 3,26,000 as of 31.03.2015, adjusted by vehicle sale proceeds of Rs. 1,18,500 CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 10 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
and documentation charges of Rs. 40,000. 2109.4 However, the complainant's evidence suffers from critical deficiencies that undermine the claim of a legally enforceable debt:
10 Failure to Produce Vehicle Sale Documents: The complainant admitted that the vehicle was surrendered by the 215 accused in June 2015 (Ex. CW-1/11) and subsequently sold, with proceeds of Rs. 1,18,500 credited to the accused's loan account. However, no documentary evidence--such as a sale agreement, buyer details, or transfer records--was produced to substantiate the sale amount or its fairness, despite adverse suggestions given by the 220 counsel for the accused and the specific questions being put. CW-1 (Sh. Naveen Khanna) admitted in cross-examination that he could not produce these documents, stating, "I cannot bring the documents pertaining to the sale of the car bearing no. 7234." This omission is significant, as the vehicle sale directly impacts the calculation of the 225 outstanding liability. The absence of such records raises doubts about whether the sale proceeds were accurately accounted for or if the complainant deliberately undervalued the vehicle to inflate the remaining debt.
11 Unauthenticated Ledger Account: The ledger account (Ex. 230 CW-1/5) is the primary document relied upon to establish the CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 11 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
outstanding debt. However, CW-1 admitted that he did not maintain the ledger, and the director who signed it did not testify to authenticate its contents. The accused challenged the ledger's authenticity, alleging it was "forged and fabricated" due to the lack 235 of corroboration. The complainant's failure to call the accountant or director as a witness weakens the ledger's evidentiary value .
12 Lack of Transparency in Loan Adjustments: The complainant adjusted Rs. 56,377 from an insurance claim against the accused's loan on 22.03.2013, claiming it was based on the 240 accused's oral consent. However, no written consent or communication was produced to confirm this arrangement. Similarly, after the vehicle surrender in June 2015, the complainant did not inform the accused in writing about the sale proceeds, the adjusted liability, or the basis for claiming Rs. 2,50,000 via the 245 cheque. CW-1 admitted, "No written communication of the amount of sale proceeds and remaining liability was communicated to the accused by the complainant." This lack of transparency suggests that the accused was not apprised of her alleged liability, supporting her claim that she believed the loan was settled. 250 13 Suppression of Material Information: The complainant's failure to produce vehicle sale documents, despite admitting their relevance, constitutes suppression of material evidence within their knowledge and control. CW-1's vague responses during cross-
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 12 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
examination, such as not recalling the sale date or amount, further 255 indicate an attempt to withhold critical information. The accused argued that the vehicle's sale proceeds likely covered the remaining loan, and the complainant's refusal to produce sale records supports this contention. Under Section 114(g) of the Indian Evidence Act, 1872, an adverse inference must be drawn against the complainant 260 for withholding evidence that could have clarified the debt's extent.
14 Discrepancy in Liability Calculation: The ledger shows an outstanding liability of Rs. 3,26,000 as of 31.03.2015, but the cheque was issued on 05.03.2016 for Rs. 2,50,000. The complainant did not provide a clear reconciliation of how the liability was 265 reduced to Rs. 2,50,000, especially after accounting for the vehicle sale (Rs. 1,18,500) and documentation charges (Rs. 40,000). The lack of a detailed statement of accounts for the period between 31.03.2015 and 05.03.2016 undermines the complainant's claim that the cheque represented a specific debt. 270 15 The accused's claim that the cheque was a blank security cheque is plausible, as blank cheques are a common practice in loan agreements in India. The complainant's act of filling in the cheque details (date, amount, payee) is legally permissible unless misuse is proven (Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197). However, 275 the accused's assertion of misuse is supported by the complainant's failure to substantiate the debt's existence with clear evidence. The CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 13 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
absence of sale documents, unauthenticated ledger, and lack of communication about the liability create a reasonable probability that the cheque was filled with an inflated or unsubstantiated 280 amount.
16 Applying Basalingappa v. Mudibasappa (2019) 5 SCC 418, the complainant bears the burden of proving the existence of a legally enforceable debt beyond mere procedural compliance with Section 138. The complainant's evidence, riddled with gaps and 285 inconsistencies, fails to meet this standard. The suppression of sale documents and reliance on an unauthenticated ledger do not inspire confidence in the claim of a Rs. 2,50,000 debt. Consequently, the complainant has not discharged its burden under Issue 1.
17 Issue 2: Whether the cheque was dishonored due to 290 insufficient funds, and the complainant complied with the statutory requirements of Section 138?
17.1 The cheque was presented for encashment and dishonored on 07.03.2016 with the remark "Funds Insufficient" (Ex. CW-1/7). The accused did not dispute this fact, stating in her Section 313 295 Cr.P.C. statement, "It is a matter of record." Thus, the dishonor due to insufficient funds is established.
17.2 The complainant issued a legal notice dated 10.03.2016 (Ex. CW-1/8) within 30 days of dishonor, as required under Section CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 14 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi. 15 138(b). The notice was sent via speed post to the accused's 300 correct address, supported by postal receipts (Ex. CW-1/9) and a tracking report (Ex. CW-1/10). The accused initially denied receiving the notice but later admitted receipt in her Section 313 statement, confirming, "Yes, I did receive the legal notice. The address mentioned on the legal notice belongs to me." This 305 admission satisfies the requirement of service.
17.3 The accused failed to make payment within 15 days of receiving the notice, fulfilling the condition under Section 138(c). The complainant has thus complied with the procedural requirements of Section 138 regarding presentation, dishonor, 310 notice, and non-payment.
17.4 However, compliance with these procedural elements is insufficient without proof of a legally enforceable debt; While the complainant has established the statutory prerequisites, the failure to prove the debt's existence under Issue 1 remains a 315 critical barrier to conviction.
18 Issue 3: Whether the accused has rebutted the presumption under Section 139?
18.1 Section 139 of the NI Act creates a presumption that a cheque was issued for a legally enforceable debt or liability, unless the 320 accused proves otherwise. The Hon'ble Supreme Court in CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 15 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
Rangappa v. Sri Mohan (2010) 11 SCC 441 clarified that the accused's burden is to establish a preponderance of probabilities, not proof beyond reasonable doubt. The accused can rely on the complainant's evidence, cross-examination, and circumstances to 325 rebut the presumption.
18.2 The accused's defense rests on the following contentions:
18.2.1 The cheque was a blank signed cheque issued as security for the loan, not for a specific debt.
18.2.2 She paid 8 installments, Rs. 50,000 in cash, and 330 surrendered the vehicle in June 2015, believing the loan was fully settled.
18.2.3 The complainant misused the blank cheque by filling an inflated amount and suppressed material information about the vehicle sale proceeds. 335 19 Evaluation of the Accused's Defense:
19.1 Blank Cheque as Security: The accused's claim that the cheque was a blank security cheque is credible, given the widespread practice of requiring security cheques in loan agreements. The accused admitted to signing the cheque and 340 confirmed it pertained to her account, but she denied filling in the details (date, amount, payee). The complainant did not CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 16 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
dispute that the cheque was initially blank, and CW-1 stated, "I do not remember who filled the body of the cheque." The absence of evidence showing that the accused authorized the 345 specific amount of Rs. 2,50,000 supports her claim of misuse. The complainant's failure to prove the debt's extent strengthens the accused's defense that the cheque was not issued for a legally enforceable liability.
19.2 Loan Settlement through Payments and Vehicle Surrender: 350 The accused claimed she paid 8 installments, Rs. 50,000 in cash, and surrendered the vehicle, believing the loan was settled. The claim of Rs. 50,000 in cash is unsupported by receipts, and her assertion of 8 installments contradicts the complainant's evidence of 14 installments (11 by cheque, 3 via insurance claim 355 of Rs. 56,377). However, the vehicle surrender in June 2015 is undisputed, as evidenced by a letter signed by the accused's husband (Ex. CW-1/11). The accused stated in her Section 313 statement, "They told us that loan is now over," suggesting that the complainant led her to believe the loan was settled upon 360 vehicle surrender. The complainant's failure to issue a No Objection Certificate (NOC) or communicate the remaining liability supports this belief. CW-1 admitted, "No letter was issued after 08.06.2015 for seeking remaining dues from the accused," and no NOC was provided, despite the vehicle's 365 CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 17 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
transfer. This lack of communication creates a reasonable probability that the accused genuinely believed her liability was extinguished.
19.3 Complainant's Suppression of Evidence: The accused's defense is bolstered by the complainant's suppression of critical 370 documents, particularly those related to the vehicle sale. The complainant's admission that the vehicle was sold, coupled with their inability to produce sale records, suggests an attempt to conceal the true proceeds. The accused argued that the sale proceeds likely covered the remaining loan, and the 375 complainant's failure to rebut this claim with evidence strengthens her case. The absence of written communication about the adjusted liability, despite the vehicle surrender nine months before the cheque's presentation, further supports the accused's contention that no enforceable debt existed. The 380 complainant's reliance on an unauthenticated ledger and oral assertions (e.g., insurance claim adjustment) undermines their credibility.
19.4 Preponderance of Probabilities: The accused's defense does not require conclusive proof but only a probable explanation to 385 rebut the Section 139 presumption. The combination of the following factors establishes such a probability:
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 18 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
19.4.1 The cheque's status as a blank security cheque, with no evidence of the accused's authorization for the Rs. 2,50,000 amount. 390 19.4.2 The undisputed vehicle surrender, which the accused reasonably believed settled the loan, especially in the absence of contrary communication from the complainant.
19.4.3 The complainant's suppression of vehicle sale documents, which could have clarified the adjusted liability. 395 19.4.4 The lack of transparency in loan adjustments, including the unauthenticated ledger and oral consent for the insurance claim.
19.5 The Supreme Court in Rangappa v. Sri Mohan emphasized that the accused can rebut the presumption by exploiting gaps in 400 the complainant's evidence. Here, the complainant's failure to produce sale documents, authenticate the ledger, or communicate the liability creates significant doubts about the debt's existence.
The accused's defense, supported by these evidentiary gaps, meets the threshold of preponderance of probabilities, effectively 405 rebutting the Section 139 presumption.
20 Issue 4: Whether the accused is guilty of an offense under Section 138?
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 19 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi. 20 20.1 To secure a conviction under Section 138, the complainant must prove all elements of the offense, including the existence of 410 a legally enforceable debt. While the complainant has established the procedural elements--cheque issuance, dishonor, notice, and non-payment--the critical requirement of a legally enforceable debt remains unproven in view of the rebuttal made by the accused. 415 20.2 The accused has rebutted the Section 139 presumption by raising a probable defense that the cheque was a blank security cheque, and no liability remained after the vehicle surrender and payments. The complainant's evidence, marred by suppression of material documents, unauthenticated records, and lack of 420 transparency, fails to counter this defense. The adverse inference under Section 114(g) of the Indian Evidence Act, 1872, further weakens the complainant's case due to their withholding of vehicle sale records.
20.3 The Supreme Court in Basalingappa v. Mudibasappa held that 425 if the accused raises reasonable doubts about the debt's existence, and the complainant fails to provide clear evidence, acquittal is warranted. Here, the accused's defense, coupled with the complainant's evidentiary shortcomings, creates sufficient doubt about the debt's enforceability. The complainant's claim 430 that the ledger account "suffices" to address the accused's doubts CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 20 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
is untenable, given the ledger's lack of authentication and the absence of supporting documents.
20.4 Additionally, the complainant's conduct--failing to issue an NOC, not communicating the sale proceeds, and relying on oral 435 assertions--suggests a lack of good faith. The accused's belief that the loan was settled is reasonable, given the vehicle surrender and the complainant's silence for nine months before presenting the cheque.
20.5 The court's questioning under Section 165 of the Indian 440 Evidence Act clarified the liability as Rs. 3,26,000 as of 31.03.2015, adjusted by sale proceeds and documentation charges. However, the complainant's failure to provide a clear statement of accounts for the cheque's issuance date (05.03.2016) leaves the exact debt amount speculative. In 445 criminal proceedings under Section 138, where the standard of proof is beyond reasonable doubt, such speculation cannot sustain a conviction.
20.6 The accused's failure to lead defense evidence does not automatically warrant conviction, as she can rely on the 450 complainant's evidence and cross-examination to rebut the presumption. The accused has effectively done so by highlighting the complainant's suppression of evidence and CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 21 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
inconsistencies, entitling her to the benefit of doubt.
21 Conclusion : This Court finds that the complainant has failed 455 to prove beyond reasonable doubt that the cheque (Ex. CW-1/6) was issued for a legally enforceable debt of Rs. 2,50,000. The accused has rebutted the presumption under Section 139 of the NI Act by establishing a preponderance of probabilities that the cheque was a blank security cheque, and no liability remained after the vehicle 460 surrender and payments. The complainant's suppression of vehicle sale documents, reliance on an unauthenticated ledger, and failure to communicate the adjusted liability create significant doubts about the debt's existence.
22 The detailed reasons for acquittal are as follows: 465 22.1 Suppression of Material Evidence: The complainant's failure to produce vehicle sale documents, despite admitting their relevance, warrants an adverse inference under Section 114(g) of the Indian Evidence Act. This suppression suggests that the sale proceeds may have been sufficient to settle the loan, supporting 470 the accused's defense.
22.2 Unauthenticated Ledger: The ledger account (Ex. CW-1/5), relied upon to prove the debt, lacks credibility due to the absence of testimony from the accountant or director who maintained or signed it. The complainant's failure to corroborate the ledger's 475 CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 22 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
calculations undermines its reliability.
22.3 Lack of Transparency: The complainant's failure to communicate the vehicle sale proceeds or remaining liability to the accused, despite the vehicle surrender in June 2015, suggests a lack of good faith. The accused's belief that the loan was 480 settled is reasonable in the absence of contrary communication.
22.4 Blank Security Cheque: The accused's claim that the cheque was a blank security cheque is plausible, and the complainant's failure to prove the cheque was issued for a specific debt aligns with Vijay v. Laxman. The absence of evidence authorizing the 485 Rs. 2,50,000 amount supports the accused's allegation of misuse.
22.5 Evidentiary Gaps: The complainant's reliance on oral consent for the insurance claim adjustment, lack of a clear statement of accounts for the cheque's issuance date, and failure to issue an NOC or demand notices after the vehicle surrender create a 490 cumulative doubt about the debt's enforceability.
22.6 Preponderance of Probabilities: The accused has discharged her burden under Section 139 by raising a probable defense, supported by the complainant's evidentiary shortcomings. The Supreme Court's rulings in Rangappa v. Sri Mohan and 495 Basalingappa v. Mudibasappa mandate acquittal in such circumstances.
CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 23 / 24 In the court of Sh. Divyam Lila, MM/JMFC, East district, Karkardooma courts, Delhi.
22.7 The complainant's compliance with the procedural requirements of Section 138 (cheque issuance, dishonor, notice, and non-payment) is insufficient without proof of a legally 500 enforceable debt. The accused's defense, coupled with the complainant's failure to meet the evidentiary standard, entitles her to acquittal.
23 Accordingly, Smt. Shama Yadav is acquitted of the offense under Section 138 of the Negotiable Instruments Act, 1881. The 505 bail bond and surety bond, if any, is considered and accepted for purpose of bail under Section 437A Cr.P.C. The case file be consigned to the record room after due compliance Pronounced in open court on this 17th day of April 2025.
510(DIVYAM LILA) Municipal Magistrate, East District Karkardooma Court/Delhi 17.04.2025 CC no. 57011/2016 M/s. Peejay Fin. Co. Ltd. Vs. Shama Yadav Page no. 24 / 24