Delhi District Court
Arun Kumar Tomar vs Dheeraj Kumar on 26 May, 2025
UNIQUE QR CODE:
IN THE COURT OF JUDICIAL MAGISTRATE FIRST CLASS
N.I. ACT, (DIGITAL COURT NO. 03) (CENTRAL)
TIS HAZARI COURTS : DELHI
Presiding Officer: Ms. Meena Chauhan, DJS
CC NI ACT No. 9277/2022
Arun Kumar Tomar Vs. Dheeraj kumar
U/s 138 Negotiable Instruments Act
PS: Roop Nagar
JUDGMENT
a Case Number Record(CNR) : DLCT02461442022 b Date of dishonour of cheque : 30.08.2022 c Date of institution of case 14.11.2022 Arun Kumar Tomar S/o Mr. Om Prakash d Name of the Complainant :
r/o 19, Gujranwala Town, Part-II, New Delhi-110009 Dheeraj Kumar S/o Mr. Prakash Kumar e Name of Accused : R/o 11020, Gali Pipal Wali, Near Shiv Mandir, Pahar Ganj, Delhi-110055 f Offences complained of : U/s 138 Negotiable Instruments Act g Plea of the Accused : Pleaded not guilty.
h Arguments concluded on: 05.05.2025 i Final Order : Conviction j Date of Final Order : 26.05.2025 Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:40:28 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 1 of 27
BRIEF STATEMENT OF REASONS FOR THE DECISION:
1. Vide this judgment, I shall dispose off the present complaint filed by the complainant alleging the commission of an offence punishable U/s 138 of Negotiable Instrument Act, 1881 (hereinaBRIEF STATEMENT OF REASONS FOR THE DECISION:fter referred to as the "NI Act").
Facts Matrix:
2. Succinctly, the present complaint U/s 200 of The Code of Criminal Procedure (hereinafter referred to as 'Cr.P.C.') is filed by Mr. Arun Kumar Tomar (hereinafter referred to as 'Complainant') against the Accused Mr. Dheeraj Kumar (hereinafter referred to as 'Accused') alleging that the complainant had a visiting term with the accused. It is further alleged that the accused demanded Rs. 10,00,000/- from the complainant for his business needs and family requirements in May 2020. The complainant withdrew the said amount from his bank account. However, the accused limited his demand to Rs.
7,00,000/- and owing to their cordial relations, on 29.05.2020, the complainant advanced a friendly loan of Rs. 7,00,000/- (Rupees Seven Lakhs Only) in cash without any interest to the accused for 18 months. It is further alleged that a receipt-cum-understaking of the same date was executed between the parties and the accused assured to return the loan in 18 months, by 01.12.2021, failing which the Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:40:35 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 2 of 27 accused shall pay the principal amount with the interest rate of 18% per annum from 29.05.2020 till the date of repayment. After the completion of 18 months, the complainant sent repeated reminders to the Accused, however, he failed to repay the loan.
3. It is further alleged that Accused then issued the Cheque No. 000003 dated 29.08.2022 dated 29.08.2022 for an amount of Rs. 7,00,000/- drawn on Bank of Baroda, Sadar Bazar Branch, Delhi (hereinafter referred to as 'impugned cheque'), which was presentented for encashment and the same got dishonoured with the remark "Funds Insufficient" vide return memo dated 30.08.2022. Statutory Legal demand notice dated 08.09.2022 was served upon Accused, however, he failed to make payment within the stipulated time. Thus, the present complaint for an offence punishable under Section 138 of the NI Act is filed.
Summoning and Appearance:
4. Ld. Predecessor of this court took cognizance of the offence and summoned the accused vide order dated 03.01.2023. Consequent upon the appearance of the accused before the court, he was admitted to bail.
Notice of accusation:
5. Upon seeing the prima facie case against the accused, a Notice of accusation U/s 251 Cr.P.C was given to the accused on 01.12.2023 Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:40:39 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 3 of 27 to which he pleaded not guilty. Accused admitted the issuance of the impugned cheque, his signature on the impugned cheque and the receipt of the statutory legal demand notice from the complainant.
However, the accused disputed legal liability to pay the cheque amount to the complainant. On specific query, the accused denied filing of any police complaint in respect of the refusal of the complainant to return the impugned cheque and alleged misuse of the cheque.
6. As per the procedure laid down in Rajesh Agarwal Vs. State (Judgment of the Hon'ble High Court of Delhi ), defence plea was recorded as follows:
"I have availed loan facility from the complainant in the month of December, 2019 of an amount of Rs.1 lac and in lieu thereof the complainant obtained my four blank signed cheques (including the impugned cheque) besides four 4-5 blank signed papers. My account was crdited with an amount of Rs.91,000/- and I repaid the entire loan amount along with the interest within next 100 days as I was required to make payment of Rs.1,200/- daily for 100 days. The complainant refused to return the aforesaid security cheque despite my request. I do not owe any liability towards the complainant as the loan amount already paid "
7. Given an oral prayer U/s 145(2) of the NI Act made on behalf of Accused to cross-examine the complainant and no objection by the complainant, the cross-examination of the complainant was allowed on 01.12.2023. Considering the ground of defence, the trial was converted from summary to a summons case. MEENA Digitally signed by MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:40:47 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 4 of 27 Complainant Evidence:
8. The complainant was examined as CW1 and an affidavit of pre-
summoning evidence was tendered and adopted by him in post- summoning evidence also. Complainant has relied upon his evidence by way of an affidavit of evidence Ex. CW1/1 and the following documents:
(a) Original Receipt cum Undertaking dated 29.05.2020 Ex. CW1/A.
(b) Original cheque bearing no. 000003 dated 29.08.2022 Ex. CW1/B.
(c) Original return memo dated 30.08.2022 Ex. CW1/C.
(d) Legal demand notice dated 08.09.2022 Ex. CW1/D.
(e) Original Speed Post receipt dated 08.09.2022 Ex.CW1/E.
(f) Tracking report of Speed Post Ex.CW1/F.
9. During the cross-examination of CW1, he deposed that he never visited the residence or business place of the accused, however, the residential address and official address of the accused have been known to him. The complainant disclosed that the accused approached for the loan citing loss in his transport business and familial crises. The complainant further disclosed that the alleged loan was given in denomination of Rs. 500/- in cash to the accused, in presence of Mr. Pawan Kumar, who was a freelancer in trading business. The complainant deposed that the impugned cheque was issued in August, 2022, and not while advancing the loan.
10.The complainant has placed on record his Income Tax Return of the Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:40:55 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 5 of 27 assessment year 2021-2022, Ex.CW1/D1 (colly), wherein the alleged loan was mentioned. The complainant admitted the suggestion that in the year 2019, accused availed the loan of Rs. 91,000/- from the complainant through bank transfer, which was repaid in cash within 15 days by the accused. The complainant denied the suggestion that the earlier loan was of Rs. 1,00,000/-, out of which only Rs. 91,000/- was transferred to the accused after deducting Rs. 9,000/- as an advance payment. It is further denied that at the time of advancing the said loan, signatures of the accused were taken on two blank signed papers having revenue stamp and on security cheque. It is further denied that the complainant refused to return the said documents and cheque citing it to be misplaced and promised to return it when found.
11.The complainant admitted that he had advanced only Rs. 7,00,000/-
in cash out of the total sum of Rs. 10,00,000/- withdrawn by him from his bank account. The complainant stated his non-awareness as to the violation of section 269 SS of IT Act while advancing alleged loan in cash to the accused. Several other suggestions were put to the witness, which he denied.
12.No other witness was examined on behalf of the complainant.
Complainant's evidence was closed.
Statement of Accused U/s 311 Cr.P.C:
13.On 27.02.2025, the statement of Accused under Section 313 of Cr.P.C. was recorded, wherein he pleaded innocence and reiterated Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar 15:41:07 +0530 Page 6 of 27 the defence as taken as disclosed earlier. The accused opted to lead defence evidence.
Defence Evidence:
14.The accused examined himself as DW1 and relied upon the copy of the ledger inquiry of his bank account, Mark DW1/1(colly) to show two entries concerning the receipt of Rs. 91,000/- as a loan from the complainant on a previous occasion. The accused deposed qua the earlier loan of Rs. 91,000/- taken from the complainant in the year 2019, which was repaid within 100 days by paying Rs. 1,200/- per day as agreed. The accused further deposed that he signed on five blank papers having stamps and issued four blank signed cheques to the complainant, at the time of availing said loan. He further deposed that the complainant refused to return the said documents after repayment of the loan citing that the same had been placed and later on, the complainant misused the security cheque and the blank signed papers.
15.The accused was cross-examined on behalf of the complainant.
Defence Evidence was closed, vide giving a separate statement.
Final Submissions:
16.Final arguments were heard and the materials on record perused.
17. Mr. Mohinder Pal Singh, Ld. Counsel on behalf of the complainant submitted that the relations between the parties have been admitted and the receipt-cum-undertaking clearly proved the outstanding legal Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:41:13 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 7 of 27 liability of the accused, for which the impugned cheque has been issued. Accused has admitted his signature on the impugned cheque as well as his signature on the said receipt. The said receipt remained unrebutted, thus, admitted by the accused. He argued that all the essential requirements of Section 138 of the NI Act have been fulfilled in the present complaint and statutory presumptions are to be raised in favour of the complainant. The version of the complainant remained unrebutted and unconfronted during his cross- examination as well. On the contrary, the defence of the accused that he earlier took a loan of Rs. 1,00,000/-, out of which only Rs. 91,000/- has been advanced as reflected in Mark-DW1/1 (colly) remained unproved. The accused did not examine Mr. Girish Thakur or Mr. Birju as deposed in his defence and there is no reply to the legal demand notice, despite service nor any complaint for alleged misuse of the impugned cheque. The accused has not been able to raise any probable defence to rebut the presumptions and thus, the accused is liable to be convicted under Section 138 of the NI Act. Reliance is placed upon the judgment of Hon'ble Delhi High Court titled as Sheela Sharma vs. Mahendra Pal.
18. Mr. Mohd. Jarjish, Ld. Counsel on behalf of the accused submitted that the receipt was only signed by the accused as blank papers and the same have been later on prepared by the complainant without the knowledge of the accused. It is argued that the accused has admitted the receiving of the amount from the complainant, however, the said loan amount was of Rs.1,00,000/- only, out of which only Rs. 91,000/- has been transferred to the accused and the entire loan has Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:41:18 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 8 of 27 been repaid to the complainant. It is argued that non-disclosure of the previous loan by the complainant raises doubts on the complainant's case. Further, it is argued that it is not answered as to why the alleged loan was given in cash, while admittedly the previous loan was transferred through a banking channel, and the complainant did not answer the specific queries raised regarding the alleged transport business of the accused. Defence of the accused remained consistent throughout the trial. It is submitted that the accused did not have any legal liability towards the complainant at the time of presentation of the impugned cheque and therefore, the accused is not liable under Section 138 of the NI Act. Reliance is placed upon the judgment of Hon'ble Supreme Court titled as The correspondence RBANMS Educational Institution vs. B. Gunashekar & Another.
Points of Determination:
19.From the evidence put forth by the complainant and the accused, and after giving my anxious consideration to their respective arguments, the following points arise for determination:
A: Whether the complainant has been successful in raising the presumptions under Section 118 read with Section 139 of NI Act?
B: If yes, whether the accused can be said to have discharged his 'evidential burden', that the presumption of law supplied by Section 139 has been rebutted?
20.I heard rival submissions of the parties and carefully went through Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:41:22 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 9 of 27 all the available records.
Legal position:
21.Before the appreciation of the facts, it would be apt to refer to the relevant law propositions. The essential ingredients for constituting the offence U/s 138 of the NI Act are elaborated by the Hon'ble Supreme Court in Gimpex (P) Ltd. v. Manoj Goel (2022) 11 SCC in the following structure:
(i) The drawing of a cheque by a person on an account maintained by him with the banker for the payment of any amount of money to another from that account;
(ii) The cheque is drawn for the discharge in whole or in part of any debt or other liability;
(iii) Presentation of the cheque to the bank arranged to be paid from that account;
(iv) The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount;
(v) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank regarding the return of the cheque; and
(vi) The drawer of the cheque failed to make payment of the amount of money to the payee or the holder in due course within 15 days of Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:41:27 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 10 of 27 the receipt of the notice.
22.The factual position in the present case is that the accused has admitted his signature on the impugned cheque. The factum of the issuance of the cheque in question in favour of the complainant has also been admitted by the accused. Further, the impugned cheque has been drawn from the account of the accused.
23.Considering the above factual position, it is important to reproduce the legal position as enumerated in Sec.118(a) and Sec.139 of the NI Act here. Section 118(a) of the Act provides that until the contrary is proved, it shall be presumed 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."
24.Further, Section 139 of the 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."
25.There is no dispute regarding the issuance of cheque and signature.
When once issuance of cheque and signature is admitted, this court is required to draw a presumption as envisaged U/s 118 and U/S 139 of the NI Act. At this juncture, it is worth to place reliance on the following decision reported in K. Bhaskaran v. Shankaran Vaidhyan Balan (1999) 7 SCC 510 and another decision reported in Rangappa v. Mohan (2010) 11 SCC 441, APS Forex Services Pvt. Ltd. v. Shakti International Fashion linkers and ors. (2020) 12 SCC 724. Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar 15:41:31 +0530 Page 11 of 27
26.The law regarding the presumptions and evidentiary burden has been recently reiterated in the case of Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148. The Hon'ble Supreme Court held that the presumptions stipulated under Section 139 of the NI Act presumptions of law and the 'presumed fact' directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. It operates as a reverse onus clause and it requires the accused to prove the non- existence of the presumed fact, i.e., that the cheque was not issued in discharge of a debt/liability. It is further held that:
"37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further."
"39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non-existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of "preponderance of probabilities", similar to a defendant in a civil proceeding. [Rangappa v. Sri Mohan[Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184 : AIR 2010 SC 1898] ]"
"41. In other words, the accused is left with two options. The first option of proving that the debt/liability does not exist is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty-one to forty-nine and arising out of the entire circumstances of the case, which includes : the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his Section 313CrPC statement or at Digitally signed by MEENA MEENA CHAUHAN CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar CHAUHAN Date: 2025.05.26 15:41:36 +0530 Page 12 of 27 the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was "no debt/liability". [Kumar Exports v. Sharma Carpets [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 :
(2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823] ]"
"42. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e. oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact."
27.Keeping in view the above-stated law and since the impugned cheque has been drawn from the account of the accused which is duly signed by the accused, a statutory presumption is raised in favour of the complainant that the impugned cheque was issued for the discharge of a legally recoverable debt or liability. Hence, the first issue is answered in the affirmative.
28.Relying upon the foundational facts, once the statutory presumption has been raised in favour of the complainant, the burden of proof now lies upon the accused to rebut the statutory presumption as per the reverse onus of proof that now shifts upon the accused. It is now fairly settled that the accused can displace this presumption on a scale of "preponderance of probabilities" and the lack of consideration or a legally enforceable debt or liability need not be proved beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the non-existence of liability so probable that a reasonable person ought under the circumstances of the case, act upon the supposition that it does not exist. This the accused can do either by leading his/her own evidence in his defence or by bringing out such inconsistencies or contradictions in the case Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:41:41 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 13 of 27 of the complainant which go on to simply overthrow the complainant's case.
29.To rebut the presumption, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words 'until the contrary is proved' in Section 139 do not mean that accused must necessarily prove the negative that the promissory note is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [ Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) and Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513 relied upon] Analysis and Findings:
30.To counter the statutory presumption against the accused, the primary defence presented is that the accused took a loan of Rs. 1,00,000/- from the complainant in 2019, of which only Rs. 91,000/- was actually transferred. Furthermore, for this loan, the accused signed 4-5 blank papers and issued four blank signed cheques, including the cheque in question. The accused claims to have repaid the entire loan along with interest by paying Rs. 1,200/- daily for 100 days to the complainant. It is also alleged that the complainant misused the cheque, which was intended to be given for security purposes.
Digitally signed byMEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:41:46 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 14 of 27
31.To establish his defence, the accused relied upon the cross- examination of the complainant and the testimonial deposition of the accused.
32.Firstly, it was argued that the complainant's case is silent qua the loan given to the accused in the year 2019. The said non-disclosure raises the doubt on the allegation made by the complainant that the alleged loan was ever advanced to the accused and the impugned cheque has been issued by the accused to discharge the liability of the alleged loan.
33.Here, it is relevant to note that neither any suggestions were put to the complainant nor any document called from the complainant to challenge his financial capacity to advance the alleged loan to the accused.
34.The cross-examination of the complainant reveals that he was questioned about a loan that was advanced to the accused in 2019. The complainant admitted that the accused borrowed Rs. 91,000/- through an account transfer and repaid that amount. However, the complainant denied that the loan was for Rs. 1,00,000/-, of which only Rs. 91,000/- was provided after deducting Rs. 9,000/- as an advance for one week's payment. It is also denied that the accused repaid the entire loan by making payments of Rs. 1,200 per day for 120 days. Furthermore, the complainant denied the suggestion that he obtained blank papers signed by the accused and blank signed cheques at the time of granting the loan, asserting that these Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date:
2025.05.26 15:41:50 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 15 of 27 documents were misused to file the current complaint.
35.It is a proven fact that the accused took a loan from the complainant in 2019. However, the complainant has not acknowledged the amount of the loan or the method of repayment. While this admission confirms the existence of a prior loan transaction between the parties, it does not negate the alleged loan transaction of Rs.
7,00,000/- that is documented in the Receipt-cum-undertaking (Ex. CW1/A). The accused has acknowledged his signature and thumbprint on this document.
36.The failure to mention the earlier loan transaction in the current complaint does not undermine the complainant's case, as the complainant has not denied the existence of that transaction. In fact, it supports the complainant's argument that the complainant may have trusted the accused due to their prior experience with a similar transaction, in which the accused has acknowledged repaying the loan.
37.Considering the discussion above, this ground appears highly improbable and cannot effectively rebut the presumption against the accused.
38.The second defence put forth by the accused is that the previous loan transaction between the parties was conducted through a banking channel, as acknowledged by the complainant. Given this admission and the oral testimony of the accused, which is supported by a Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date:
2025.05.26 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar 15:41:55 +0530 Page 16 of 27 document marked as Mark-DW1/1 (colly), a key question arises:
why would the complainant advance such a significant loan amount in cash to the accused rather than through banking channels? Furthermore, it is argued that the alleged loan advancement is prohibited by law under Section 269SS of the Income Tax Act.
39.As per the complainant's cross-examination, the alleged loan of Rs.
7,00,000/- was given to the accused in cash as it was asked by the accused.
40.It cannot be denied that advancing a cash loan can have negative consequences for a party, particularly for an Income Tax assessee, as it may violate Section 269SS of the Income Tax Act, 1961. Chapter XXB outlines the requirements for the method of accepting, paying, or repaying loans or deposits in certain cases to prevent tax evasion. According to Section 269SS, after a specified cut-off date, no person is allowed to take or accept a loan or deposit exceeding Rs. 20,000/- in any form other than through an account payee cheque or an account payee bank draft. Violating Section 269SS can result in penalties under Section 271D of the Income Tax Act.
41.The Supreme Court in the case of Assistant Director of Inspection vs. A.B.Shanthi, (2002) 6 SCC 259 has observed as follows:-
"The object of introducing S. 269 is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seizure unaccounted money is unearthed and the taxpayer would usually give Digitally signed by MEENA MEENA CHAUHAN CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar CHAUHAN Date: 2025.05.26 15:42:00 +0530 Page 17 of 27 the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of the tax-payer. The main object of S. 269-SS was to curb this menace."
42.Given the observations made by the Apex Court, it must be acknowledged that Section 269-SS only regulates the method of accepting payment or repayment in certain cases to combat tax evasion. Section 269-SS does not render all cash loan transactions exceeding Rs. 20,000/- as invalid, illegal, or null and void. Rather, as noted by the Apex Court, the primary objective of this provision is to deter and uncover black money. Therefore, interpreting Section 269-SS as a law that declares all cash loan transactions above Rs. 20,000/- illegal and unenforceable is, in my opinion, not justifiable.
43.Furthermore, Section 271 -D which reads as:-
"271-D. Penalty for failure to comply with the provisions of Section 269-SS. (1) If a person takes or accepts any loan or deposit in contravention of the provisions of Section 269-SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.
2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner."
44.So, if a person takes or accepts any loan or deposit in violation of Section 269SS, they are liable to pay a penalty. This penalty will equal the amount of the loan or deposit taken or accepted, and it may be imposed by the Joint Commissioner. While the violation of Section 269 SS carries a significant penalty for the individual who takes the loan or deposit, the strictness of Section 271D is softened Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date:
2025.05.26 15:42:06 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 18 of 27 by Section 273B if good faith can be proven. Section 271D does not state that such a transaction is null and void. The individual who pays cash in violation of Section 269SS of the Income Tax Act can still recover the funds.
45.Therefore, it cannot be concluded that the type of transaction presented to this court can be deemed illegal, void, or unenforceable.
46.It is important to note that the alleged loan transaction of Rs.
7,00,000/- is documented as Ex. CW1/A. The complainant also testified that this transaction is reflected in his Income Tax Return, Ex. CW1/D1 (colly). This statement was made during the complainant's cross-examination. Throughout the trial, the complainant's deposition and testimony remained unchallenged and unrebutted. Additionally, no questions or suggestions were raised during the cross-examination to dispute the authenticity of the Receipt-cum-Undertaking, Ex. CW1/A or Ex. CW1/D1 (colly).
47.As a result, the said defence does not assist the accused in meeting his obligation to present a plausible defence.
48.Next, it was contended that the aforesaid cheque was issued as security cheque, however, it does not absolve the accused of liability U/s 138 of the NI Act. Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date:
2025.05.26 15:42:11 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 19 of 27
49.It is a clear legal position, that at the time of presentation of cheque, a debt must exist. The expression 'any debt or other liability' is unqualified in Section 138 of the NI Act, and it includes any future debt or liability that may arise after the issuance of the cheque. There could be any arrangement between the parties regarding the mode and manner of repayment. Merely because the debt may have been repayable subsequently in installments, it cannot be said that on the date of issuance of the cheque, the debt did not exist. [Case of Suresh Chandra Goyal v. Amit Singh, Crl LP No. 706/2014 decided on 14.05.2015 by the Hon'ble High Court of Delhi relied upon]
50.It is now a settled law that there is no appeal in the phrase 'security cheque' and that the cheque issued for security for a loan would mature for presentation if the loan is not paid by the borrower by any other means. In this regard the observations made by Hon'ble Supreme Court in the case of Sripati Singh v. State of Jharkand (2021 SCC OnLine SC 1002) is relevant which is reproduced as under:
"17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:42:16 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 20 of 27 under Section 138 and the other provisions of N.I. Act would flow. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."
51.In the recent judgment of the Hon'ble Supreme Court in a case titled as Sunil Todi and Ors. vs. State of Gujarat and Ors. 2021 INSC 823 , elaborately discussed the scope of debt or legal liability U/s 138 of the NI Act. Differentiating the judgment of Indus Airways Pvt. Ltd. and Ors. vs. Magnum Aviation Pvt. Ltd. and Ors. (Neutral citation:
2014 INSC 257) and Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited (Neutral citation:
2016 INSC 887), the Apex Court held that the key consideration is whether the cheque was issued to settle an existing enforceable debt or liability, or if it represented an advance payment without any outstanding debt or liability. In the former case law, the cheque was Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date:CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 21 of 27
2025.05.26 15:42:27 +0530 issued as an advance payment for a purchase order that ultimately did not materialize. In the latter case law, the post-dated cheque, provided as security, was meant for the repayment of a loan installment that had already come due.
52.The Apex Court concluded that Section 138 not only applies to situations where there is an outstanding debt at the time a cheque is drawn, but also covers instances where a cheque is issued for a debt incurred prior to the cheque's encashment. This interpretation aligns with the objective of the NI Act, which aims to enhance the acceptability of cheques and foster trust in the effectiveness of negotiable instruments for business transactions.
53.Thus, mere averment that the cheque in question was issued as a security cheque, or that it was not related to an existing debt or liability, cannot be sustained and is set aside. The accused must demonstrate that there was no legal debt or liability owed to the complainant, which the accused failed to do in this case.
54.Another argument presented by the accused to support his defence is that the complainant has never visited the accused's residence, despite claiming to have had a friendly relationship with him for about 7 to 8 years. Furthermore, the complainant is unaware of the vehicle registered in the name of the accused and has been unable to produce any documentation showing that the accused is a transporter whose services have been used by the complainant.
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55.During the cross-examination, several questions were posed to the complainant. The complainant stated that he had known the accused for about 7-8 years. Although the complainant claimed he never needed to visit the accused's residence or office, he acknowledged that he was aware of both addresses. Additionally, the complainant testified that the accused had come to his residence on two occasions to discuss the loans. There were no contradicting suggestions made to the complainant regarding this matter.
56.The complainant's case, supported by his unrebutted testimony and the documentary evidence of the alleged loan transactions, cannot be dismissed simply because he did not visit the accused or because he did not provide documentation related to the accused's transport business.
57.Thus, the said defence also falls on the ground and did not help the accused in raising his probable defence that the accused had not availed the loan of Rs. 7,00,000/- from the complainant and he does not owe legal liability to pay the cheque amount to the complainant.
Final observations:
58.After a comprehensive examination of the evidence, it is evident that all of said accused's defences remained improbable and have not been substantiated.
59.The documentary evidence provided by the complainant
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demonstrates the Accused's outstanding liability to pay the cheque amount. The complainant has provided consistent documentary evidence of the debt, which remained unchallenged, supported with the presumption that the cheque in question was issued for a legally enforceable debt.
60.The evidentiary burden of proof rested with the Accused to rebut the presumption and demonstrate that no debt was owed. However, the accused failed to discharge the said burden as all his defences remained unconvincing.
61.After a thorough examination of the evidence, it is evident that only a self-serving statement from the Accused remains on record, asserting that he does not owe the amount claimed by the Complainant, with no supporting documentation. [Reliance is placed upon the case of Kishan Rao vs. Shankargouda, (2018) 8 SCC 165, wherein the Hon'ble Supreme Court of India held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve any purpose]
62.Recently, the Hon'ble Apex Court in Tryambaka S Hedge v/s S.Sripad (2022) 1 SCC 742 reiterated the principle that when the accused admits their signature on a cheque, the presumption in Section 118 of the Act can be legally inferred that the cheque was made or drawn for consideration on the date it bears. Section 139 of the Act requires the court to presume that the holder of the cheque received it for the discharge of any debt or liability. The key Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:42:47 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 24 of 27 consideration is whether any probable defence was raised by the accused.
63.Further, the Hon'ble Supreme Court in Rakesh Jain v. Ajay Singh Crl. No. 12802 of 2022 has held that:
"44. The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of theEvidence Act. The burden of proof may shift by presumptions of law or fact. In Kundanlal's case- (supra) when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced, would have shown the non- existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Section 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well."
"56. At the stage when the courts concluded that the signature had been admitted, the Court ought to have inquired into either of the two questions (depending on the method in which accused has chosen to rebut the presumption): Has the accused led any defense evidence to prove and conclusively establish that there existed no debt/liability at the time of issuance of cheque? In the absence of rebuttal evidence being led the inquiry would entail: Has the accused proved the nonexistence of debt/liability by a preponderance of probabilities by referring to the 'particular circumstances of the case'?"
64.Section 138 of the Negotiable Instruments Act delineates specific criterias that must all be met to establish the offence of cheque bounce, as outlined in paragraph 21 of the current judgment. The legal principles pertaining to this matter are well-established. The Hon'ble Supreme Court in Tedhi Singh v. Narayan Dass Mahant, Digitally signed by MEENA MEENA CHAUHAN CHAUHAN Date: 2025.05.26 15:42:51 +0530 CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 25 of 27 (Supra) succinctly encapsulates the prevailing stance and is quoted below:
"7. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. Act provides that Court shall presume 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. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of 'probable defence' has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa, this Court notes that Section 139 of the N.I. Act is an example of reverse onus [see (2010) 11 SCC 441). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist."
65.In the absence of any contrary evidence from the accused, the court has made presumptions in favour of the complainant as provided under Sections 118 and 139 of the NI Act. In this case, the defence presented by the accused is not convincing, and no credible evidence has been provided to counter the presumption established under Section 139 of the N.I. Act. Therefore, the second issue is decided in the negative.
The Decision:
66.Accused person Mr. Dheeraj Kumar S/o Mr.Prakash Kumar is held to be guilty of the offence under Section 138 of the NI Act and is hereby convicted for the same.
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67.Copy of the judgment be given to the Convict free of cost along with the coversheet and let the Convict be heard on sentencing.
Announced in the open court today i.e. 26.05.2025.
Digitally signed by MEENAMEENA CHAUHAN CHAUHAN Date:
2025.05.26 15:43:02 +0530 (Meena Chauhan) JMFC (NI Act), Digital Court-03, Central, THC, Delhi/26.05.2025 This judgment contains 27 pages and all the pages are digitally signed by the undersigned.CC No. 9277/2022 Arun Kumar Tomar Vs. Dheeraj Kumar Page 27 of 27