Delhi District Court
Pernod Ricard India Pvt Ltd vs Shiva Wines Ors on 13 August, 2025
IN THE COURT OF MS. VANSHIKA MEHTA
JMFC (NI ACT)- 04/ PHC/ NEW DELHI
CC No. 18148/2016
Unique Case ID No. DLND02-002298-2016
In the matter of: -
M/s. Pernod Ricard India Pvt. Ltd.,
through its
Sales Manager/ Authorised Signatory
Mr. Sunil Lakhotia,
Office at:-
104/105, Ashoka Estate,
Barakhamba Road, New Delhi-110001
...........Complainant
Versus
1) M/s. Shiva Wine,
Through Sh. Sanjeev Kumar @ Sanjeev Gupta,
At Govind Palace, Bhagat Mandi Chowk,
Gau Shala Road, Karnal.
2) Mr. Vijay Gupta,
S/o Lt. Sh. Raj Kumar,
R/o 1357, Sector 7,
Karnal-132001.
3) Mr. Parbash Gupta,
S/o Lt. Sh. Ved Prakash Gupta,
R/o 83-B, Wazir Chand Colony,
Karnal-132001.
4) Mr. Ankush Gupta,
S/o Sh. Parbash Gupta,
R/o 83-B, Wazir Chand Colony,
Karnal-132001
5) Mr. Sanjeev Kumar @ Sanjeev Gupta (Expired)
S/o Sh. Ishwar Dayal,
R/o H.No. 145, Sector-14,
Urban Estate, Karnal-132001.
6) Mr. Nitesh Gupta,
S/o Sh. Surinder Gupta,
R/o H.No. 145, Sector-14,
Urban Estate, Karnal-132001.
............ Accused Persons Digitally
signed by
VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
16:41:08
+0530
CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 1 of 20
Date of Institution : 02.04.2016
Offence Punishable Under Section : U/s 138 Negotiable Instrument Act, 1881
Plea of Accused : Not guilty
Date of presentation : 31-03-2016
Date of decision : 13.08.2025
Final Order: : Conviction
Argued by: : Ms. Shipra Chaudhary, Ld. Counsel for complainant.
: Mr. Daljeet Singh, Ld. Counsel for accused.
JUDGMENT
"If we do not maintain justice, justice will not maintain us." - Francis Bacon INTRODUCTION AND FACTUAL MATRIX
1. Accused persons are produced before the court to stand trial for the offence punishable u/s 138 of the Negotiable Instruments Act, 1881 ("Act" or "NI Act"). They were summoned by this court to face the trial vide order dated 08.03.2017.
2. Tersely put, it is the case of the complainant that the complainant company is engaged in the business of manufacturing, distribution, and sale of alcoholic beverages and has instituted the present complaint through its duly authorized representative, Mr. Sunil Lakhotia, under a valid Special Power of Attorney backed by a Board Resolution dated 23.04.2014. The accused No.1 is a partnership firm, M/s Shiva Wine, and accused Nos.2 to 6 are its partners, jointly and severally responsible for the firm's business and liabilities. The accused entered into commercial transactions with the complainant by executing a Customer Selection Form and submitting a partnership deed, pursuant to which they placed orders for supply of goods from time to time. The complainant supplied the goods against confirmed orders, issued invoices accordingly, and maintained a running account showing an outstanding liability of Rs. 63,30,628.31/- against the accused. Towards part payment of this liability, the accused issued Cheque No. 005382 dated 16.11.2015 for Rs.63,10,000/-, drawn on The Karnal Central Cooperative Bank. On presentation through the complainant's banker, HSBC, the cheque was dishonoured on 11.01.2016 for the reason "Funds Insufficient." Despite service of a statutory legal demand notice dated 10.02.2016, the accused failed to make payment and instead sent a vague reply denying liability.
Digitally
signed by
VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
16:41:12
+0530
CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 2 of 20
2.1. In reply to the legal notice dated 10.02.2016, the accused persons categorically denied all allegations and assertions contained therein. They stated that the demand raised was erroneous, baseless, and contrary to the actual state of affairs. Their firm was not liable to pay any amount to the complainant, much less the alleged sum of Rs.63,30,628.31/-. The cheque bearing No. 005382 dated 16.11.2015 was never issued by them in discharge of any liability; rather, it appeared to have been fabricated and misused by the complainant, who had earlier procured signatures and blank cheques from the partners of the accused firm at the inception of business dealings in April 2014 under the pretext of completing formalities. As per their records, the cheques in the relevant series (Nos. 005375 to 005387) had already been used and cleared between April 2014 and July 2014, with cheque No. 005383 cleared on 06.05.2014, leaving no occasion to issue cheque No. 005382 in November 2015. The accused persons emphatically denied the allegation that they had promised encashment of the cheque or intended to evade payment. They further stated that the accounts relied upon by the complainant were incorrect, manipulated, and inconsistent with the actual business transactions. They asserted that the threatening language of the notice was intended only to harass, humiliate, and blackmail them.
3. The accused persons were summoned vide order dated 08.03.2017, and on 10.11.2022, notice was framed against all the accused persons under Section 251 Cr.P.C. for the offence punishable under Section 138 of the Negotiable Instruments Act.
3.1. The accused No. 2 (Mr. Vijay Gupta, representing Accused no. 1 as well) pleaded not guilty and claimed trial. He admitted having signed the cheque in question, however, denied that the handwriting of the particulars on the cheque was his. He stated that the other signature on the cheque belonged to Mr. Sanjeev Kumar, who has since expired. He further asserted that the particulars on the cheque in question were not filled in by him.
He admitted having received the legal notice and stated that the same was duly replied to. According to him, the cheque in question was given to the complainant at the inception of business merely for the purpose of matching signatures. He claimed that all the business dealings of the firm were handled exclusively by Late Sh. Sanjeev Kumar, who used to keep signed cheques in his possession. He therefore denied having any liability towards the complainant and submitted that he had already disclosed his defence in the application under Section 145(2) of the NI Act.
Digitally
signed by
VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
16:41:15
+0530
CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 3 of 20
3.2. The accused No. 3 (Mr. Parbash Gupta) pleaded not guilty and claimed trial. He denied having signed the cheque in question and further denied that the handwriting of the particulars on the cheque was his. He stated that the cheque belonged the firm and asserted that the particulars on the cheque in question were not filled in by him.
He admitted having received the legal notice and stated that the same was duly replied to. He further asserted that he has no knowledge of the transaction with the complainant and that he has no liability towards the complainant. He also stated that he has disclosed his defence in the application under Section 145(2) of the NI Act.
3.3. The accused No. 4 (Mr. Ankush Gupta) pleaded not guilty and claimed trial. He denied having signed the cheque in question and further denied that the handwriting of the particulars on the cheque was his. He stated that the cheque belonged the firm and asserted that the particulars on the cheque in question were not filled in by him.
He admitted having received the legal notice and stated that the same was duly replied to. He further asserted that he has no knowledge of the transaction with the complainant and that he has no liability towards the complainant. He also stated that he has disclosed his defence in the application under Section 145(2) of the NI Act. He further pleaded that he was only a sleeping partner and that all dealings were handled by Late Mr. Sanjeev Kumar.
3.4. The accused No. 5 (Mr. Sanjeev Gupta) has expired.
3.5. The accused No. 6 (Mr. Nitesh Gupta) pleaded not guilty and claimed trial. He denied having signed the cheque in question and further denied that the handwriting of the particulars on the cheque was his. He stated that the cheque belonged the firm and asserted that the particulars on the cheque in question were not filled in by him.
He admitted having received the legal notice and stated that the same was duly replied to. He further asserted that he has no knowledge of the transaction with the complainant and that he has no liability towards the complainant. He also stated that he has disclosed his defence in the application under Section 145(2) of the NI Act. He further pleaded that he was only a sleeping partner and that all dealings Digitally were handled by Late Mr. Sanjeev Kumar and Mr. Vijay Gupta. signed by VANSHIKA VANSHIKA MEHTA MEHTA Date:
2025.08.13 16:41:18 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 4 of 20 EVIDENCE LED BY THE COMPLAINANT
4. The complainant in order to prove its case, examined its AR as CW-1 in its evidence and led CE before the court on 20.05.2023. CW-1 tendered in evidence by way of affidavit Ex. CW-1/A and relied upon the following documents:-
(a) Ex. CWI/L (OSR)- Power of Attorney (objected to as to not authorized to give any evidence and also mode of proof):
(b) Ex. CW1/2 (OSR)- Board resolution (Objection as to mode of proof):
(c) Ex. CW1/3 (colly)- Invoices(Objection as to mode of proof);
(d) Ex. CW1/4- Ledger of accused no.1 maintained by complainant(Objection as to mode of proof);
(c) Ex. CW1/5- Cheque bearing no. 005382 dt. 16.11.2015(Objection as to mode of proof); (1) Ex. CW1/6 (colly)- Returning memos dt. 11.01.2016 and 15.01.2016 (Objection as to mode of proof);
(g) Ex. CW1/7 (colly)- Legal demand notice along with postal receipts dt. 10.02.2016(Objection as to mode of proof);
(h) Ex. CW1/8- Reply to the legal demand notice dt. 25.02.2016;
(i) Ex. CW1/9- Present complaint u/s 138 NI Act (Objection as to mode of proof).
4.1. The accused persons moved an application under Section 145 (2) of NI Act and submitted that no legal debt or liability existed against them, as the cheque in question had never been issued in discharge of any lawful liability. On the contrary, the cheque had been misused by the complainant company. It was submitted that the complainant had fraudulently obtained a cheque bearing No. 005383 dated 06.05.2014, along with other cheques, at the inception of business dealings in April 2014.
4.2. It was further submitted that the accused firm was not liable to pay any amount to the complainant, much less the alleged sum of Rs.63,30,628.31/-, which appeared to be an inflated and concocted figure deliberately introduced only to harass, humiliate, and blackmail the accused firm and its partners. As per the books of account maintained by the accused firm, no such liability existed against them and the figures mentioned in the complaint were manipulated and false. It was further submitted that Digitally signed by VANSHIKA VANSHIKA MEHTA MEHTA Date:
2025.08.13 16:41:22 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 5 of 20 at the time when the excise license had been granted to the accused firm by the State of Haryana, the complainant had approached the accused firm for supply of liquor and, under the guise of completing certain formalities, had fraudulently obtained the signatures of the partners of the accused firm on blank papers and also procured cheques. The complainant had thereafter fabricated the cheque in questionIt was also submitted that only accused No.2, Shri Vijay Gupta, and accused No.5, Late Shri Sanjeev Kumar, had been authorized to operate the bank account jointly, and no other partners had such authority. The complainant, however, had falsely implicated all the accused persons in the case.
4.3. Upon his cross-examination, complainant CW-1, inter alia, stated that he had been working with the complainant company since February 2023. He admitted that the transaction in question had not taken place in his presence. He stated that at the commencement of business with a wholesale license holder, the company used to take KYC forms and documents. He deposed that he had no personal knowledge of Ex.
CW1/4 but volunteered that the transactions were recorded as and when they took place. He admitted that there was no document to show that any benefit regarding promotional schemes or rebates was to be given to the accused and that such benefits were verbally communicated. He volunteered that all such benefits were shown in the ledger statement.
4.4. At that stage, the witness was shown a copy of an email, which was marked as Mark 01 (2 pages). CW-1 stated that he had no knowledge of the said email dated 25.02.2016 or its annexures. Thereafter, he was shown a copy of the Customer Selection Form supplied by the complainant's counsel to the accused's counsel, which was marked as Mark CW1/D2 (10 pages). He admitted that the said form had not been filled in his presence and that he was not aware of which documents had been collected at the time of receiving the said form. He stated that he could not say whether a blank security cheque had been taken along with the KYC form or the above said form. He denied the suggestion that the complainant had misused any blank security cheque. At that stage, the witness was shown a copy of the ledger account maintained by the accused firm, which was marked as Mark CW1/D3 (07 pages). When confronted with the suggestion that as per the said ledger account, no dues were pending against the accused towards the complainant and that in fact a sum of Rs.7,513/- was payable by the complainant company to the accused, CW-1 denied the same and stated that it was incorrect.
4.5. He admitted that the complainant company had also dealt with the firm Shiva Wines prior to dealing with the present firm, Shiva Wines through Sanjeev Kumar. He further admitted that Sanjeev Digitally signed by VANSHIKA VANSHIKA MEHTA MEHTA Date: 2025.08.13 16:41:28 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 6 of 20 Kumar had been a partner in both the said firms and that the firm Shiva Wines had since been dissolved. He stated that he could not say whether the share of Rs.15,00,000/- (profit/promotional benefits) of the firm Shiva Wines was to be adjusted in the new firm Shiva Wines through Sanjeev Kumar. At that stage, the partnership deed was shown to the witness and exhibited as Ex. CW1/D4. CW-1 deposed that he was aware that Ex. CW1/D4 was given at the time of filing of the KYC form. He also denied the suggestion that the said cheque had been given only as a KYC document along with Mark CW1/D2. He further denied the suggestion that after receipt of the email, the accused firm had contacted the concerned person, apprised him of the correct ledger account maintained by the accused company, and that the concerned person had been satisfied with Ex. CW1/D3. He denied all suggestions that he was deposing falsely.
STATEMENT OF THE ACCUSED PERSONS
5. Thereafter, on 09.12.2024, the statement of the accused persons under Section 313 Cr.P.C., read with Section 281 Cr.P.C., was recorded.
5.1. The accused No. 2 (Mr. Vijay Gupta, representing Accused no. 1 as well) submitted that it was correct that they had approached the complainant for selling the complainant's products, but they had no liability towards the complainant. They denied that the cheque in question was issued in discharge of any liability and stated that the said cheque had only been given as a blank security cheque at the time of KYC at the beginning of the business relationship. He further submitted that they had no knowledge about the presentation of the cheque and came to know about it only after receiving the notice. The accused stated that he did not remember whether he had received the legal demand notice dated 10.02.2016 or whether any reply had been issued thereto, though the address mentioned on the notice was their correct address. He admitted his signatures on the cheque but clarified that no particulars were filled by him except the signatures, as the cheque had been issued only as a blank security cheque. The accused further contended that he could not say why the complainant had deposed against them or filed the present case, as they were merely sleeping partners and all business dealings of the firm were handled by Late Sh. Sanjeev Gupta. He admitted that the accused firm had business dealings with the complainant but reiterated that they personally had no liability towards the complainant.
5.2. The accused No. 3 (Mr. Parbash Gupta) submitted that he did not know if accused no.1 firm had business dealings with the complainant as he had only been a sleeping partner in accused no.1 firm and had no liability towards the complainant since he did not even know the complainant personally. He VANSHIKA CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 7 of 20 MEHTA Digitally signed by VANSHIKA MEHTA Date: 2025.08.13 16:41:35 +0530 further stated that he could not say whether the cheque in question belonged to accused no.1 firm, reiterating that he was only a sleeping partner with no role in the firm's business and had no liability towards the complainant. He added that he could not say whether the cheque in question had been dishonoured earlier and came to know about it only after receiving the notice. He admitted that he had received the legal demand notice dated 10.02.2016 at his correct address and came to know about the proceedings in the present case only upon receipt of the said notice. He denied having signed the cheque in question and also denied filling in any of its particulars, including the date and the name of the payee. The accused further submitted that he could not say why the complainant had deposed against him, reiterating that he had merely been a sleeping partner in accused no.1 firm and that he had no liability towards the complainant. He further stated that he did not know the complainant personally and had nothing else to add.
5.3. The accused No. 4 (Mr. Ankush Gupta) submitted that he could not say whether accused no.1 firm had any business dealings with the complainant company as he had no knowledge of the same and that he had no liability towards the complainant since he did not even know the complainant company. He further stated that he did not know whether the cheque in question belonged to accused no.1 firm and clarified that he had not signed the said cheque. He also submitted that he did not know whether the cheque was dishonoured and came to know about it only after he had received notice of the case. With regard to the legal demand notice dated 10.02.2016, he stated that he did not remember whether he had received it, although the address mentioned therein was his correct address. He categorically denied having signed the cheque in question or having filled in any of its particulars, including the date or the name of the payee. He further stated that he did not know why the complainant company had deposed against him, asserting that he had been falsely implicated in the present case, as he did not know the complainant company at all.
5.4. The accused No. 5 (Mr. Sanjeev Gupta) has expired.
5.5. The accused No. 6 (Mr. Nitesh Gupta) submitted that he had business dealings with the complainant only to the extent that he had signed KYC documents at the inception of the business transaction, but he maintained that he had no liability towards the complainant. He stated that he was merely a sleeping partner in accused no.1 firm and, therefore, could not say whether the invoices or ledger relied upon by the complainant were correct. He admitted that the cheque in question belonged to accused VANSHIKA MEHTA CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 8 of 20 Digitally signed by VANSHIKA MEHTA Date: 2025.08.13 16:41:39 +0530 no.1 firm but denied that the signatures on the same were his, and further stated that he could not say why the cheque had been given to the complainant. He further submitted that he did not know whether the cheque had been dishonoured and that he came to know of it only after receiving the legal demand notice dated 10.02.2016. He admitted that the said notice was received by him at his correct address and that he had also replied to it, but claimed that he came to know about the present proceedings only upon receipt of the said notice. He categorically denied having signed the cheque in question or having filled in any of its particulars, including the date or the name of the payee. He further submitted that he could not say why the complainant had deposed against him, and that he did not personally know the complainant or whether accused no.1 firm had any business dealings with him.
EVIDENCE LED BY THE DEFENCE
6. The DW-1 deposed that he used to look after the accounts of Shiva Wines belonging to Sh. Sanjeev Kumar and was fully aware of the day-to-day affairs of the accused firm. He stated that the staff made the entries under his supervision and, on the instructions of Sh. Sanjeev Kumar, he used to get the entries recorded into the system. He further deposed that he had received an email from the representative of the complainant company on 25.02.2016, in which the complainant company had shared its statement of account for the year 2014-15 as an attachment. The said email was already marked as Mark CW1/D1 (two pages). He further deposed that when Sh. Sanjeev Kumar enquired from him regarding the difference in the statement of account filed by the complainant company and that of accused no.1 firm, he showed the statement of account of the firm to the representative of the complainant company and explained its details to him. According to him, the complainant's representative agreed that the statement of account of the firm was correct. He further deposed that he handed over a hard copy of the said statement of account to the complainant's representative, who assured him that he would revert; however, no reply was received thereafter from the complainant company. He further deposed that, as per the statement of account maintained by accused no.1 firm i.e., Mark CW1/D3, there was no liability of accused no.1 firm except for an amount of Rs. 7,513/-, which was, in fact, recoverable from the complainant company. He identified the statement of account of accused no.1 firm as Mark CW1/D3. The email dated 25.02.2016 was exhibited as Ex. CW1/D1, the statement of account was exhibited as Ex. CW1/D3, and the Certificate under Section 65B of the Indian Evidence Act was exhibited as Ex. DW1/1.
Digitally
signed by
VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
16:41:42
+0530
CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 9 of 20
7. During the cross-examination of DW-1, admitted that he had been associated with Shiva Wines through Sanjeev Kumar since 2014-15 and had also been associated with the earlier firm by the same name. He stated that he was informed by Sanjeev Kumar about the transactions and accordingly used to record them in the books of accounts, though he was personally not aware of the understanding between Sanjeev Kumar and the complainant company. He admitted that he was orally informed about rebates by Sanjeev Kumar and used to make entries in the books of accounts in the regular course of business as the transactions happened and as informed to him.
7.1. At this stage, witness was shown Ex. CW1/D3. He stated that he did not recall when he had prepared Ex. CW1/D3, but clarified that the statement was prepared in the regular course of business as and when entries were informed to him by Sanjeev Kumar. He admitted that he was not in regular contact with representatives of the complainant company, though he volunteered that he had received one email dated 25.02.2016 from one Mr. Vinay Singh, possibly at the instructions of Sanjeev Kumar. He admitted that no reply was sent by him to the said email. He further stated that somewhere towards the end of February or in the first week of March 2016, he was called by Sanjeev Kumar and explained the statement of account to a person whom Sanjeev Kumar introduced to him as a representative of the complainant company. He also admitted that no receiving was taken by him after handing over the statement Ex. CW1/D3 to that person.
7.2. He further stated that he did not check any understanding regarding rebates as captured in the statement maintained by him, as everything was recorded as per the instructions of Sanjeev Kumar. He admitted that he used to check the bank statement with the books of account for reconciliation and confirmed that Ex. CW1/D3 was a reconciled statement with the bank statement of accused no.1 firm. He denied the suggestion that Ex. CW1/D3 had been unilaterally prepared without any understanding with the complainant.
ARGUMENTS ADVANCED BY THE PARTIES
8. Ld. Counsel for the complainant has argued that the cheques in question was issued by the accused towards repayment of the loan obtained by him. She further argued that the accused has admitted his signatures on the cheques in question. She also contended that the accused has not been able to rebut the presumption of law in favour of the complainant and, accordingly, is liable to be convicted.
Digitally
signed by
VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
16:41:46
+0530
CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 10 of 20
9. Per contra, the Ld. Counsel for the accused contended that the complainant has failed to establish the existence of any legally enforceable debt or liability, which is a sine qua non for sustaining conviction under Section 138. The sole witness of the complainant, CW1, namely Mr. Apoorva Srivastava, candidly admitted in his cross-examination that he joined the complainant company only in February 2023, whereas the transactions in question pertain to an earlier period. He further admitted that he has no personal knowledge of the ledger entries or transactions reflected in Ex. CW1/4.
10. Ld. Counsel for accused has further argued that the Statement of Account (Ex. CW1/4), heavily relied upon by the complainant, has not been proved in accordance with law. The entries therein also contradict the email dated 25.02.2016 (Ex. CW1/D1), which contained a different set of accounts shared by the complainant itself. On the contrary, the ledger maintained by the accused (Ex. CW1/D3), duly proved through DW1 along with Certificate under Section 65B of the Evidence Act, clearly shows that no liability was outstanding and in fact, Rs. 7,513/- was recoverable from the complainant. This completely demolishes the complainant's case and fortifies the defence that the cheque in question was not issued towards any liability but was a blank security instrument obtained in April 2014 at the time of furnishing KYC documents, and later misused. The returning memos (Ex. CW1/5 and CW1/6) show dishonour of the cheque on 23.11.2015, whereas the legal notice was admittedly issued only on 10.02.2016, well beyond the statutory period. The subsequent memo dated 11.01.2016 could not condone such delay.
ANATOMY OF FACTS AND FINDINGS THEREON LEGAL JURISPRUDENCE
11. So far so good. Having considered all the submissions, it is apposite to have a quick glance at relevant position of law. Section 138 of the Act provides as under:
138. Dishonour of cheque for insufficiency, etc., of funds in the account. --
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 fine which may extend to twice the amount of the cheque, or with both:
VANSHIKA CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 11 of 20 MEHTA Digitally signed by VANSHIKA MEHTA Date: 2025.08.13 16:41:50 +0530 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 cheque 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.
Explanation. --For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.]
12. It is a well-established principle of law that the Negotiable Instruments Act, 1881 (NI Act) provides for two critical presumptions--one under Section 118 and the other under Section 139.
Section 118 of the Act provides that it shall be presumed, until proven otherwise, that every negotiable instrument has been made or drawn for consideration. This presumption places the onus on the party challenging the instrument to disprove this presumption of consideration.
Section 139 of the Act further provides that, unless proven otherwise, it shall be presumed that the holder of the cheque received it for the discharge of, in whole or in part, any debt or liability. This creates a strong legal presumption in favor of the complainant, especially in cases involving dishonored cheques.
APPLICATION OF LAW
13. Applying the aforesaid law at hand to the facts of the case, the accused during framing of notice u/s 251 Cr.P.C on 10.11.2022 admitted his signatures on the cheque in question, however, denied that the handwriting of the particulars on the cheque was his. Thus, signature on the cheques is an admitted fact.
14. A careful examination of the Negotiable Instruments Act's provisions, particularly Sections 20, 87, and 139, makes it abundantly evident that whoever signs a cheque and gives it to the payee is still accountable unless he provides proof to refute the assumption that the cheque was written to settle a debt or release a liability. In the event that the drawer has properly signed the cheque, it makes no difference who filled it out. The criminal provisions of Section 138 would apply if the cheque was otherwise legitimate.1 Digitally signed by VANSHIKA VANSHIKA MEHTA MEHTA Date:
2025.08.13 16:41:53 1 Basalingappa v. Mudibasappa, AIR 2019 SC 1983. +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 12 of 20
15. In view of the aforesaid, the presumption upon Section 139 of NI Act is liable to be attracted.
DISCUSSION OF EVIDENCE Authorization of CW-1:
16. The Ld. Counsel for the accused has vehemently argued that the sole witness of the complainant, CW1, namely Mr. Apoorva Srivastava, candidly admitted in his cross-examination that he joined the complainant company only in February 2023, whereas the transactions in question pertain to an earlier period. He further admitted that he has no personal knowledge of the ledger entries or transactions reflected in Ex. CW1/4.
17. At this stage, it is pertinent to note that the Hon'ble Apex Court in A.C. Narayanan vs. State of Maharashtra & Anr., (2014) 11 SCC 790 : 2013 AIR SCW 6807, held as under -
"When a company is the payee of the cheque based on which a complaint is filed under Section 138 of the N.I. Act, the complainant necessarily should be the company, which would be represented by an employee who is duly authorized. Prima facie, in such a situation, the indication in the complaint and the sworn statement (either orally or by affidavit) to the effect that the complainant (Company) is represented by an authorized person who has knowledge, would be sufficient. The expression 'specific assertion as to the knowledge of the power of attorney holder' and the requirement that such assertion about knowledge should be 'explicitly made' cannot be understood to mean that the assertion must be made in any rigid manner, much less in the manner understood by the accused. All that is necessary is to demonstrate before the learned Magistrate that the complaint has been filed in the name of the payee, and if the person who is prosecuting the complaint is different from the payee, the authorization therefore, and that the contents of the complaint are within his knowledge. When the complainant/payee is a company, an authorized employee can represent the company. Such averment and prima facie material are sufficient for the learned Magistrate to take cognizance and issue process."
18. Further, in Manisha Mahendra Gala & Ors. v. Shalini Bhagwan Avatramani & Ors. , 2024 INSC 293, the Hon'ble Supreme Court clarified:
"It is settled law that a Power of Attorney holder can only depose about the facts within his personal knowledge and not about those facts which are not within his knowledge, or which fall within the personal knowledge of the person he represents, or about events which transpired much before he entered the scene."
Digitally signed by VANSHIKA VANSHIKA MEHTA MEHTA Date:
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19. In the present case, the complainant has duly placed on record Ex. CW1/A i.e., the Board Resolution, and Ex. CW1/1 i.e., the Power of Attorney, authorizing Mr. Apoorva Srivastava to act and appear in any court on behalf of the company. It is well settled that while the Power of Attorney holder is competent to represent the company, he can only depose with respect to the facts which are within his personal knowledge.
20. Hence, in view of Ex. CW1/A and Ex. CW1/1, coupled with the aforesaid legal position, the foundational competence of CW1 to represent and depose on behalf of the complainant company stands proved. However, his evidentiary value is confined to matters within his personal knowledge, and he cannot depose about transactions or events which occurred prior to his joining the company.
Defence taken by Accused no. 2:
At the stage of Section 251 CrPC:
21. The Accused No.2 (representing Accused no. 1 as well) stated that the cheque in question had been handed over to the complainant merely at the inception of the business for the limited purpose of matching signatures. He further claimed that all the business dealings of the firm were exclusively handled by Late Sh. Sanjeev Kumar, who used to retain signed cheques in his possession. He therefore denied having any liability towards the complainant.
At the stage of Section 145(2) NI Act:
22. The Accused No.2 (representing Accused no. 1 as well) contended that the cheque in question had not been issued in discharge of any lawful liability but was misused by the complainant. It was alleged that at the commencement of business dealings in April 2014, the complainant fraudulently procured cheque no. 005383 dated 06.05.2014, along with other cheques, under the pretext of completing formalities. It was further alleged that the complainant fabricated the impugned cheque. The accused denied any outstanding liability towards the complainant, let alone the amount of Rs.63,30,628.31, which he termed inflated, concocted, and introduced only to harass and blackmail the firm. As per the books of account maintained by the accused firm, no such liability existed. It was further submitted that the accused firm never signed any customer selection form, nor was any copy of such form ever supplied to Digitally signed them. VANSHIKA MEHTA by VANSHIKA MEHTA Date:
2025.08.13 16:42:01 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 14 of 20 At the stage of Section 313 CrPC:
23. The Accused No.2 (representing Accused no. 1 as well) reiterated that the cheque had been given only as a blank security cheque at the time of KYC formalities at the inception of the business relationship.
During Defence Evidence:
24. DW-1, a Chartered Accountant associated with the accused firm, deposed that as per the statement of account maintained by accused no.1 firm (Mark CW1/D3), there was no liability of the firm towards the complainant, except for Rs.7,513/-, which was in fact recoverable from the complainant. He identified the said statement of account as Mark CW1/D3 and also relied on the email dated 25.02.2016 (Ex. CW1/D1), along with a certificate under Section 65B of the Indian Evidence Act (Ex. DW1/1).
25. It is pertinent to note that during final arguments, Ld. Counsel for the complainant candidly admitted Ex. CW1/D1, i.e., the email sent by the complainant to the accused.
Oral Arguments of the Accused:
26. The accused argued that no liability to the tune mentioned in the impugned cheque existed as the complainant had failed to extend the benefit of rebates/promotional schemes. Reliance was placed on the cross-examination of CW-1, where he admitted that there was no written document showing grant of rebates and that such benefits were only verbally communicated, though he volunteered that they were reflected in the ledger. The accused emphasized that the complainant had not placed any documentary proof of rebates. Reliance was also placed on Ex. CW1/D1 (the admitted email), which, as per the accused, demonstrated discrepancies in the outstanding amount.
27. A perusal of Ex. CW1/D1 reveals a closing balance of Rs.63,37,191/-, whereas Ex. CW1/4 shows a closing balance of Rs.63,30,628.31 as on 31.03.2015. On the other hand, Ex. CW1/D3 shows a closing liability of only Rs.7,513/- as on 31.03.2015. the accused has relied upon Ex. CW1/D1 to show the discrepancy in the statement supplied by the complainant to the accused through email and Ex.
Digitally signed by VANSHIKA VANSHIKA MEHTA MEHTA Date: 2025.08.13 16:42:05 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 15 of 20
CW1/4 i.e., the ledger account of the complainant. Even if the said argument is believed for the sake of it, and there is any discrepancy as alleged, the very fact that the accused did not raise any such objection contemporaneously either in reply to the legal notice dated 25.02.2016 or during the course of business transactions significantly weakens the credibility of this defence, or even during the stage of Section 313 CrPC. It is further well settled that mere existence of variations in account statements, without any cogent explanation supported by independent evidence, cannot by itself absolve the drawer of liability under Section 138 of the NI Act.
Deposition of DW-1:
28. In his examination-in-chief, DW-1 claimed that when a discrepancy was pointed out by Sanjeev Kumar, he explained the statement of account (Mark CW1/D3) to a representative of the complainant company, who allegedly agreed with its correctness. However, no documentary proof or correspondence corroborating such discussion was produced. The alleged conversation thus remains a bald assertion.
29. His cross-examination revealed that:
"I was performing the advisory/ management roles for Shiva Wines through Sanjeev Kumar. I was informed by Mr. Sanjeev Kumar about the transaction and accordingly, I used to record them in the books of accounts. I was personally not aware about the understanding of Sh. Sanjeev Kumar with the complainant company. I used to be informed by Mr. Sanjeev Kumar only. I was informed orally about the rebates. I used to make entries in the books of accounts in the regular course of business as the transaction used to happen and as informed to me by him. I used to inform the accused firm as and when asked for it from me.
At this stage, witness is shown Ex. CW1/D3. I do not recall when I prepared Ex. CW1/D3. This statement was prepared in the regular course of business as and when the entries were informed to me by Sh. Sanjeev Kumar. I was not in regular contact with representatives of complainant company. (Vol. I only received one email dt. 25.02.2016 from one Mr. Vinay Singh, may be at the instructions of Mr. Sanjeev Kumar)."
30. From his testimony, it emerges that DW-1 had no personal knowledge of the transactions and prepared Ex. CW1/D3 only on the instructions of Sanjeev Kumar. In view of the same, Ex. Ex. CW1/D3 cannot be relied upon.
31. The complainant has argued that Ex. CW1/D3 was prepared after receipt of the legal notice, as it purports to show a balance as on 31.03.2015, whereas the reply to legal notice is dated 25.02.2016. This court finds strength in the arguments of the complainant as despite the fact that reply to legal notice is CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 16 of 20 Digitally signed by VANSHIKA VANSHIKA MEHTA Date:
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dated 25.02.2016, yet, no mention of such statement was made in the reply, and it was introduced only later during the defence evidence. The accused has not provided any sufficient justification as to why the alleged discrepancy in the account was not pleaded in the reply to the legal notice dated 25.02.2016, despite the fact that Ex. CW1/D3 had been prepared on 31.03.2015. It is further relevant that the accused never raised the issue of rebate in their application under Section 145(2) NI Act, nor disputed the complainant's ledger during the course of business, or adduced any evidence to show that the said ledger of complainant was disputed during the course of business transaction.
32. The accused has submitted that he does not owe any legally enforceable liability to the complainant. Under Section 139 of the NI Act, however, there exists a statutory presumption in favour of the holder of a cheque that it was issued for the discharge of a debt or other liability. Even if the defence of the accused is accepted, namely, that the cheque in question had been handed over merely at the inception of business for the purpose of matching signatures, the accused has failed to rebut the presumption that he owed a legally enforceable liability to the complainant at the time of presentation of the cheque for encashment.
33. It is a settled principle that criminal liability under Section 138 of NI Act arises only where a legally enforceable debt or liability exists on the date of presentation of the cheque. While there may not have been any subsisting liability on the exact date of issuance of the cheque, the offence under Section 138 NI Act is nonetheless made out if a legally enforceable debt or liability exists on the date of its maturity or presentation.
34. In this context, the law recognizes that although a post-dated cheque may be drawn before a debt actually becomes due, it operates to represent a legally enforceable liability as on the date of its encashment. Thus, if no legally enforceable debt or liability exists at the time of presentation, no offence under Section 138 of NI Act would be attracted. Conversely, if such liability exists at maturity, Section 138 of NI Act stands attracted regardless of whether it was present at the exact date of issuance.
35. Needless to say, the expression "debt" under Section 138 refers to an ascertained sum owed on the date of issuance, whereas "other liability" is wider in scope and encompasses obligations crystallizing by the date of maturity or presentation of the cheque. Consequently, accused no. 2 has failed to discharge his burden of proving that no legally enforceable liability existed in favour of the complainant on the date of presentation of the cheque.
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Digitally signed
by VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
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36. In the present case, apart from relying upon Ex. CW1/D1, CW1/4, and CW1/D3 to point out alleged discrepancies, the accused has not produced any independent or contemporaneous material to show that no liability existed on the date of presentation of the cheque. This Court is well conscious of the fact that the accused may rely upon the complainant's case to discharge the burden under Section 139 of the NI Act and is not mandatorily required to lead independent evidence. However, at the same time, it must also be noted that the improvisation in the stand of the accused discounts the credibility of his defence, and merely pointing out nominal discrepancies in the accounts does not per se exculpate the accused from his liability
37. The accused has also failed to reconcile how such discrepancies negate the issuance of the cheque itself or the presumption of liability arising therefrom. It is well settled that the presumption under Section 139 NI Act is a presumption of law and not merely of fact, and the Court is duty bound to draw the same once execution of the cheque is admitted.2
38. Therefore, even assuming that minor variations exist in the statements relied upon by both parties, such variations do not, in themselves, discharge the statutory presumption in favour of the complainant. The core fact remains that the cheque in question was drawn on the account of the accused, was presented within the period of validity, and was dishonoured upon presentation for insufficiency of funds. The accused has failed to rebut the presumption by raising a probable defence, and hence, the liability stands established.
Defence taken by Accused no. 3, 4, and 6:
39. Accused Nos. 3, 4 and 6 have taken a common defence that they did not sign the cheque in question, nor are the particulars filled therein in their handwriting. They further contended that they were only sleeping partners of the firm, while all business dealings were exclusively handled by Late Sh. Sanjeev Kumar.
40. At this stage, it is pertinent to consider Ex. CW1/D4, i.e., the partnership deed brought on record by the accused persons. The said document unequivocally records that the business of M/s Shiva Wines through Sanjeev Kumar was commenced on 28.03.2014 by its partners, including the present accused persons. The deed further provides that the bank account(s) of the firm were to be jointly Digitally signed by VANSHIKA 2 VANSHIKA MEHTA Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16. MEHTA Date:
2025.08.13 16:42:20 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 18 of 20 operated only by two partners, namely, Sh. Vijay Gupta and Sh. Sanjeev Kumar. No other partner was authorized to operate the bank account. The accused have thus sought to rely on this clause to argue that they had no role in the issuance of the cheque in question.
41. The concept of a "sleeping partner" denotes a partner who remains in the background of the business operations. Such a partner's involvement is ordinarily limited to contributing capital and sharing profits or losses as per the partnership deed. He does not participate in the day-to-day management, does not represent the firm in external dealings, and generally maintains a passive role in business activities.
42. However, it is equally settled in law that, notwithstanding such passive participation, a sleeping partner is nevertheless a full-fledged partner in the eyes of law unless specifically excluded by the partnership deed or by registration. In an ordinary partnership firm, all partners -- active or sleeping --
are subject to the principle of mutual agency and joint and several liability. This means that where the partnership firm fails to discharge its financial obligations, the personal assets of every partner, including a sleeping partner, may be used to satisfy the firm's debts.
43. Accordingly, sleeping partners are liable towards third parties who transact with the firm, particularly when their names are reflected in the partnership deed or in the official records of the firm. To outsiders, the disclosure of a person as a partner creates a legitimate presumption of liability. The plea of being a "sleeping partner" does not, by itself, absolve such partners from liability towards third parties under the Negotiable Instruments Act. Ex. CW1/D4, i.e., the partnership deed brought on record by the accused persons, clearly mentions the names of Accused Nos. 3, 4 and 6. Merely because the bank account(s) of the firm were to be jointly operated only by two partners, namely, Sh. Vijay Gupta and Sh. Sanjeev Kumar, and no other partner was authorized to operate the bank account, does not, by itself, absolve Accused Nos. 3, 4 and 6 from liability for the acts of Accused No. 1, i.e., the partnership firm.
DECISION
44. It is axiomatic that the degree of proof expected from the accused is not as rigorous as that of the complainant. He could discharge his onus by making dents in the case of the complainant. Therefore, once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no debt/ liability in the manner pleaded in the complaint or the demand notice or Digitally signed by VANSHIKA VANSHIKA MEHTA MEHTA Date:
2025.08.13 16:42:24 +0530 CC No. 18148/2016 Pernod Ricard India Pvt. Ltd. Vs. Shiva Wines Ors. page no. 19 of 20 the affidavit-evidence, the burden shifts to the complainant and the presumption 'disappears' and does not haunt the accused any longer.3
45. In view of the foregoing discussion, this Court finds that the complainant has successfully established all the ingredients of the offence under Section 138 of the Negotiable Instruments Act. The issuance of the cheque in question by the accused is admitted. Its dishonour upon presentation is also undisputed. The statutory presumptions under Sections 118(a) and 139 of the Act thus operate in favour of the complainant. The accused persons have attempted to rebut the presumption by raising pleas of discrepancies in the account statements, absence of liability, and misuse of a blank cheque. However, such pleas remain unsubstantiated by credible or contemporaneous evidence. The discrepancies pointed out are nominal in nature and, by themselves, do not displace the presumption of a legally enforceable liability. The defence of issuance of the cheque merely for the purpose of matching signatures or for completing formalities has not been proved. As regards the defence of the "sleeping partners," it is well settled that all partners of a firm are jointly and severally liable for the acts of the firm unless specifically excluded. The partnership deed Ex. CW1/D4 clearly records the names of accused nos. 3, 4 and 6 as partners of the firm. Their plea of being "sleeping partners" is of no avail against third parties transacting with the firm.
46. Accordingly, this court hereby convicts the accused no. 1) M/s. Shiva Wine, 2) Mr. Vijay Gupta, 3) Mr. Parbash Gupta,4) Mr. Ankush Gupta & 6) Mr. Nitesh Gupta for the offence punishable u/s 138 of the Negotiable Instruments Act, 1881 in respect of cheque in question.
PRONOUNCED IN OPEN COURT ON 13.08.2025.
Digitally
signed by
Present judgment consists of 20 pages and each page bears my initials. VANSHIKA
VANSHIKA MEHTA
MEHTA Date:
2025.08.13
16:42:28
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(VANSHIKA MEHTA)
JMFC (NI ACT)-04/ PHC / New Delhi/13.08.2025
3
Basalingappa v. Mudibasappa, AIR 2019 SC 1983.
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