Delhi District Court
Allahabad Bank vs Piyush Jain on 25 July, 2025
IN THE COURT OF MS. VINERJEET KAUR
JUDICIAL MAGISTRATE FIRST CLASS (N.I. ACT-03) SOUTH-WEST:
DWARKA COURTS: NEW DELHI
CNR No. DLSW02-052853-2018
Ct. Case No. 81/2019
U/s.138 N.I. Act.
Allahabad Bank vs. Mr. Piyush Jain
Date of Institution of case: 03.01.2019
Date of which Judgment reserved: 14.07.2025
Date on which Judgment pronounced: 25.07.2025
JUDGMENT
1) Unique ID no. of the case : DLSW02-052853-2018
2) Name of complainant : M/s Allahabad Bank Ltd.
Branch :- 120 Kakrola Housing Complex New Delhi - 110059.
Through its authorized officer Mrs. Bindu.
3) Name and address of accused : Mr. Piyush Jain R/O RZ 42 Santosh Park Near Govt School Uttam Nagar New Delhi 110059 And : M/S On Phone Shop Prop Piyush Jain RZ 48 Santosh Park Near Govt School Uttam Nagar New Delhi 110059.
4) Offence complained of : Section 138 N.I. Act
5) Plea of accused : Accused pleaded not guilty and claimed trial
6) Final Order : Convicted for the offence punishable U/s. 138 N.I. Act.
7) Date of order : 25.07.2025 Ct. Case No. 81/2019 Page No. 1/9 BRIEF STATEMENT OF REASONS FOR THE DECISION
1. The present complaint has been filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act") by Allahabad Bank Ltd. (hereinafter "complainant") against the accused Mr. Piyush Jain s/o Sh. Shikhar Chand (hereinafter "accused").
2. The complainant bank is a banking company constituted under the Banking Companies Act, 1970, having its head office at 2, Netaji Subhash Road, Kolkata-700001. Mrs. Bindu is the authorised representative of the complainant bank and has been authorised by the complainant bank to sign, institute, verify, and pursue the captioned proceedings, etc., on behalf of the complainant. It is stated that on 15.03.2016, based on the request of the accused, the complainant bank had sanctioned a term loan of Rs. 4,00,000/- vide loan account number 50319793610 in favour of the accused, and the accused executed loan documents with the commitment to clear the entire loan amount with interest as per the executed loan documents. It is further stated that after the sanction of the loan amount, the accused had paid part instalments at regular intervals. After some time, the accused avoided depositing the instalment on the due date and started requesting time on one pretext or another.
3. It is stated that the accused failed to repay the abovesaid loan amount. The accused had also not remitted any interest amount on the term loan availed by him from the complainant bank on a timely basis. The accused had approached the complainant on 11.10.2018 and apprised them that the aforesaid term loan amount was taken by him for his M/s ON Phone Shop, but the same was not yielding good returns and thus requested the complainant to wind up the outstanding till 11.10.2018. The accused had handed over a cheque bearing No. 000088 dated 11.10.2018 drawn on HDFC Bank Vikas Puri Branch, New Delhi, for a sum of Rs. 4,50,838/- (Rupees Four Lakhs Fifty Thousand Eight Hundred and Thirty Eight Only). It is stated that the Ct. Case No. 81/2019 Page No. 2/9 accused had assured the complainant that the said cheque will be honoured on its presentation and also acknowledged the balance loan amount.
4. It is stated that the aforesaid cheque bearing No. 000088 was presented for encashment by the complainant company with their banker ie. Allahabad Bank, at Kakrola Branch for onward collection, whereupon the said cheque was dishonoured with the reason 'Funds Insufficient' vide return memo dated 15.03.2018.
5. The complainant thereafter issued a legal notice dated 14.11.2018 through his advocate and demanded payment of the cheque amount. However, it is stated that the accused did not make the requisite payment of the dishonoured cheque within the stipulated time period of 15 days. Hence, the complainant instituted the present proceedings u/s 138 of NI Act.
6. Cognizance of the offence was taken by this Court and the accused was summoned vide order dated 03.01.2019. Notice u/s 251 Cr.P.C was served upon the accused by the Court on 22.08.2022 to which the accused pleaded not guilty and claimed trial. The case was listed for the complainant's evidence thereafter. During the complainant's evidence, the following oral and documentary evidence was led by the complainant against the accused to prove its case beyond reasonable doubts-
Oral Evidence CW-A Certified true copy of Board Resolution passed in the meeting of the Board of Director Documentary Evidence Ex.CW1/A Evidence by way of affidavit Ex.CW1/1 Power of Attorney Ex.CW1/2 Loan account statement and loan document Ex.CW1/3 Original cheque in question Ex. CW1/4 Original returning memo Ex. CW1/5 Legal notice Ex. CW1/6 Postal receipts Ex. CW-1/7 Tracking report Ex. CW-1/8 Tracking report Ct. Case No. 81/2019 Page No. 3/9 Ex. CW-1/9 Returned envelope Ex. CW-1/10 Returned envelope
7. Thereafter, upon the conclusion of the complainant's evidence, the statement of the accused was recorded U/s 313 Cr.P.C r/w 281 Cr.P.C on 03.03.2025 in which all incriminating material was put to the accused. The accused was also asked to personally explain the circumstances appearing in evidence against him. The accused stated before the Court that he does not owe the legal liability towards the complainant to the extent of the cheque amount mentioned and the said cheque was given to the complainant in a blank signed condition at the time of availing the loan.
8. The accused opted to lead defence evidence vide his statement dated 03.03.2025.
9. Sh. Piyush Jain was examined as DW-1 on 30.06.2025 wherein he stated that he had taken a loan of Rs. 4,00,000/- from the complainant which was to be repaid with interest. He stated that he has repaid some installments but he does not remember how many installments he has paid. He further stated that he needs time to make the payment. He was cross-examined by the Ld. counsel for the complainant.
9. Thereafter, detailed final arguments were heard by the Court. Ld. Counsel for the complainant had vehemently argued that the testimony of CW-1 and the documentary evidence placed on record proves the case of the complainant beyond reasonable doubts. Ld. Counsel has argued that the material available on record gives rise to the presumption U/s 118 of NI Act r/w Section 139 of NI Act. It is accordingly prayed that the accused be convicted of the offence U/s 138 of NI Act.
10. On the other hand, Ld. Counsel for the accused has argued that the complainant has been unable to prove its case beyond reasonable doubts. It has been argued that there is nothing on record which may prove that the cheque amount is the amount due from the accused to the complainant i.e. 'Allahabad Bank'. It has been Ct. Case No. 81/2019 Page No. 4/9 argued that as per the case of the complainant, the loan was granted by the complainant for a sum of Rs. 4 lakh and certain instalments have been paid already but the complainant company is trying to gain unfairly by claiming an unlawful and exaggerated amount.
11. The accused has been charged with commission of an offence involving dishonor of a cheque that has been defined and made punishable u/s 138 of the NI Act. The bare text of Section 138 of NI Act is being provided hereunder for ease of reference-
"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 be extended to two years, or with a fine which may extend to twice the amount of the cheque, or with both".
12. Hence, in order to ascertain whether the accused has committed an offence under section 138 NI Act, the following ingredients constituting the offence have to be necessarily proved:
(i) The drawer of the cheque should have issued the cheque for the discharge, in whole or in part, of a legally enforceable debt or other liability.
(ii) The cheque 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 Ct. Case No. 81/2019 Page No. 5/9 that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.
(iii) The drawer of such a cheque fails to make the payment of the said amount of money within fifteen days of the receipt of the notice from the payee or the holder in due course demanding the payment of the said amount of money.
It is only when all the above-mentioned ingredients are satisfied that the person who has drawn the cheque can be said to have committed an offence under section 138 NI Act.
13. The Negotiable Instruments Act, 1881 also provides for certain presumptions which must be taken into account while adjudicating any complaint under Section 138 of the Act. The presumptions are provided under Sections 118 and 139 of the Act which are reproduced herein below. Section 118 (a) of the NI Act provides that:
"until the contrary is proved, it shall be presumed that "that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration."
Further, Section 139 of the NI Act lays down that:
"it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
14. The combined effect of Section 118(a), NI Act and Section 139, NI Act is that a presumption exists that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. In Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16, Hon'ble Judges of the Hon'ble Supreme Court of India observed as follows:
Ct. Case No. 81/2019 Page No. 6/9"Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer AIR 1958 SC 61, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus onto the accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt."
15. Hon'ble Supreme Court of India has also analysed the relevant applicable provisions concerning the presumptions provided under the NI Act and laid down the conclusions in the case law titled as Basalingappa Vs. Mudibasappa, (2019) 5 SCC 418 : 2019 SCC OnLine SC 491 at page 432. The same are reproduced hereunder:-
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise a probable defence. The standard Ct. Case No. 81/2019 Page No. 7/9 of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence.
16. The present case pertains to the dishonour of cheque bearing no. 000088 dated 11.10.2018 that was allegedly issued by the accused in favour of the complainant. The cheque bearing No. 000088 dated 11.10.2018 has been placed on record as Ex.CW1/3 and the cheque return memo dated 15.10.2018 has been placed on record as Ex.CW1/4. The return memo clearly reflects that the cheque was returned unpaid by the drawee bank on 15.10.2018 with reasons - 'Funds Insufficient'.
17. As can be noted from the answers tendered by the accused at the time of framing of notice dated 22.08.2022, the issuance of the cheque and signatures appended on the cheque have been admitted by the accused. During his defence during the framing of notice on 22.08.2022, the accused has himself stated that he does not dispute the genuineness or correctness of the cheque in question (Ex.CW1/3) or the cheque dishonour memo (Ex.CW1/4). Hence, the complainant has been able to duly prove the issuance of the cheque in question and the cheque dishonour memo before the Court.
Ct. Case No. 81/2019 Page No. 8/918. The accused during the framing of notice under section 251 Cr.P.C admitted that he had received the legal notice.
19. Accordingly, the presumptions under Section 118 r/w 139 of the NI Act are raised in favour of the complainant and against the accused. However, as has been noted in the case of Basalingappa v. Mudibasappa (supra), the aforesaid presumption is a rebuttable presumption, and the accused has the right to raise a probable defence against the case of the complainant. However, in the present case, the accused has not taken any viable defence. He has admitted that he had taken a loan from the complainant and has not repaid it in full. He has disputed the cheque amount but has not proved that he had repaid any amount.
20. The complainant has been successful in establishing the case beyond reasonable doubt that the accused had issued the cheque in question in discharge of his legally enforceable liability. The presumptions under Section 118 and Section 139 of the NI Act were drawn against the accused. The accused has miserably failed to rebut the said presumption by raising a probable defence. The defence of the accused that he had repaid some amount and did not owe the cheque amount is not proved.
21. Resultantly, the complaint of the complainant is allowed, and the accused, Sh. Piyush Jain, is hereby convicted of the offence under Section 138 of the Negotiable Instruments Act, 1881. Let the convict be heard separately on the quantum of sen- tence.
Pronounced in the open court on 25.07.2025 (VINERJEET KAUR) JMFC (NI Act-06), Dwarka Courts, New Delhi (South West) 25-07-2025 Ct. Case No. 81/2019 Page No. 9/9